Annual report
The Norske Skog of tomorrow
is a team effort and can only
be realised through external
and internal
cooperation
.
Our business is by definition
circular as it’s based on
renewable resources, aiming
to replace fossil alternatives.
We increasingly use recycled
material. We are
honest
about our processes, and
strive to make all aspects of
our business sustainable.
This is something we
realise through innovation,
openness
to new
opportunities, competence
and hard work. It doesn’t
come by itself. It’s up to us.
We provide
value
in many
meanings of the word:
for society in general, for local
communities, for customers, for
employees, for shareholders.
Our core values:
openness, honesty and cooperation
Photo: Unsplash, Alexander Guimont
Design
: BK.no,
Print:
BK.no
Paper:
Artic Volum white
Editor:
Carsten Dybevig
Cover photo:
Adobe Stock. All images are Norske Skog’s property and should not be used
for other purposes without the consent of the communication department of Norske Skog
Summary
4
Norske Skog - The big picture
4
Key figures
6
Operational analysis
7
A glimpse of 2022
8
The history of Norske Skog
10
Collage of the conversion projects
14
CEO’s comments
16
Board of directors
18
Corporate management
19
Share information
20
Sustainability report
24
About Norske Skog’s operations
24
Stakeholder and materiality analysis
25
Change in risk assessment
26
The sustainable development goals are an integral part of our strategy
28
About the sustainability report
29
Environment
30
Ensure sustainable resource management
31
Biodiversity and sustainable ecosystems
34
Combat climate change
36
Ensure long term access to sustainable energy
41
Social
42
Ensure healthy lives and promote well-being for all
43
Promote lifelong learning opportunities for all
45
Promote inclusive and productive employment
46
Corporate governance
48
Ambition and performance
56
Key figures
57
Our response to the TCFD recommendations
60
GRI standards index
64
Independent Auditor’s Report - sustainability report
68
Report of the board of directors
70
Consolidated financial statements
79
Notes to the consolidated financial statements
84
Financial statements Norske Skog ASA
123
Notes to the financial statements
127
Statement from the board of directors and the CEO
134
Independent Auditor’s Report - financial statements
135
Alternative performance measures
141
Contents
2 140
employees
20.4%
EBITDA-margin
NOK
1 000 000
Skogn, Norway
Saugbrugs, Norway
Golbey, France
Bruck, Austria
Boyer, Australia
Business units
in 4 countries
5
Photo: Carsten Dybevig
4
I
Norske Skog
I
Annual report 2022
SUMMARY
91%
0.8
-23%
A-
85%
certified wood fibres
lost time injuries
per million working hours
reduction in scope
1 & 2 emissions in 2022
CDP - climate
change score 2022
renewable energy
consumption
17%
female in top
management positions
Annual report 2022
I
Norske Skog
I
5
SUMMARY
Key figures
NOK MILLION (UNLESS OTHERWISE STATED)
2015
2016
2017
2018
2019
2020
2021
2022
INCOME STATEMENT
Total operating income
11 132
11 852
11 527
12 642
12 954
9 612
10 315
15 214
EBITDA*
818
1 081
701
1 032
1 938
736
662
3 105
Operating earnings
19
-947
-1 702
926
2 398
-1 339
-160
2 845
Profit/loss for the period
-1 318
-972
-3 551
1 525
2 044
-1 884
-363
2 572
Earnings per share (NOK)**
-13.98
-10.31
-37.67
16.18
21.68
-19.99
-3.85
27.28
CASH FLOW
Net cash flow from operating activities
146
514
404
881
602
549
191
2 040
Net cash flow from operating activities per share (NOK)**
1.55
5.45
4.28
9.34
6.39
5.82
2.02
21.65
Net cash flow from investing activities
-174
-105
-278
-188
-180
302
-891
-1 956
OPERATING MARGIN AND PROFITABILITY (%)
EBITDA margin*
7.30
9.10
6.10
8.20
15.00
7.65
6.42
20.41
Return on capital employed (annualised)*
5.20
8.90
6.60
14.10
28.50
2.06
-7.78
14.79
PRODUCTION/DELIVERIES/CAPACITY UTILISATION
Production (1
000 tonnes)
2 366
2 506
2 494
2 492
2 310
1 800
1 921
1 713
Deliveries (1
000 tonnes)
2 356
2 520
2 491
2 485
2 285
1 825
1 952
1 714
Production/capacity (%)
85
93
93
95
89
77
89
87
BALANCE SHEET
Non-current assets
9 620
7 184
4 939
4 789
5 879
4 084
4 538
7 069
Current assets
3 512
3 313
3 170
3 776
4 360
3 703
4 587
6 539
Total assets
13 133
10 497
8 109
8 565
10 240
7 787
9 125
13 609
Equity
4 729
2 090
-1 427
2 365
5 493
3 219
3 133
5 909
Net interest-bearing debt
4 528
5 038
5 717
2 268
919
725
1 054
1 092
*
As defined in Alternative performance measures. See page 141.
** Cash flow per share and earnings per share are calculated based on 94
264 705
shares.
An analysis of 2022 key figures compared with 2021 is included in the Report of the board of directors.
NET INTEREST-BEARING DEBT
TOTAL OPERATING INCOME
EBITDA
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2022
2021
2020
2019
2018
2017
2016
2015
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2022
2021
2020
2019
2018
2017
2016
2015
0
1 000
2 000
3 000
4 000
5 000
6 000
2022
2021
2020
2019
2018
2017
2016
2015
15 214
3 105
1 092
SUMMARY
6
I
Norske Skog
I
Annual report 2022
0
10
20
30
40
50
60
70
80
2022
2021
2020
2019
Listing
SHARE PRICE (NOK)
Year-end
0
3
6
9
12
15
18
21
24
2022
2021
2020
2019
2018
2017
2016
2015
CASH FLOW PER SHARE (NOK)
0
10
20
30
40
50
60
70
80
90
100
2022
2021
2020
2019
2018
2017
2016
2015
OPERATING EFFICIENCY
Operating efficiency
Average
0
5
10
15
20
25
2022
2021
2020
2019
2018
2017
2016
2015
EBITDA MARGIN
EBITDA margin (%)
Average
Publication paper target:
Achieve an EBITDA margin of at least 10-15% over the cycle
Publication paper target:
Maintain an operating rate of at least 90%
Operational analysis
Norske Skog ASAs operating income varies over time in line with the volume
produced and the sales prices achieved. The main exposures for the group
are linked to demand development in key sectors within publication paper
and capacity management by the suppliers and thereby impacting prices.
Sales prices for publication paper relative to production cost, and in particular
cost of materials, is the most important factor for the profitability for Norske
Skog and the industry. In addition to publication paper price levels, the
operating result is exposed to movements in the prices of key input factors
such as energy, recovered paper, wood and chemicals. Having a customer
contract structure that matches production are key to mitigate these risk
factors and reduce the impact on the group’s profitability.
Over the period, Norske Skog has achieved an average EBITDA margin of
10%, which is in line with its target of a least 10-15%. This has been achieved
due to high focus on the operational efficiency of the business. Operational
efficiency has been 88.5%, which is only slightly below the target of 90%
.
Historically, the results and operations of the group are highly influenced by
the supply/demand balance of the publication paper industry, which will vary
over time due to the cyclical nature of the industry and the expected structural
decline in the consumption. By entering the recycled containerboard market
in 2023, Norske Skog will provide further diversification with regards to both
products and markets. The recycled containerboard market contrary to
publication paper market is expected to show growth in the coming years.
Norske Skog has set separate operational targets for the recycled
containerboard operations.
Annual report 2022
I
Norske Skog
I
7
SUMMARY
Norske Skog Golbey receives award
from Secretary of State
On 17 January, French Secretary of State Ms.
Bérangère Abba, presented General Manager
Yves Bailly at Norske Skog Golbey with the
Ecological Transition Award from Choose
France before she attended a tour of the mill
to learn more about its circular business
model and paper recycling capabilities.
“Norske Skog Golbey can be proud of being a
model of green transition,”
says Ms. Abba,
Secretary of State in charge of biodiversity
issues.
Norske Skog biocomposite plant at
Norske Skog Saugbrugs officially opens
As a more sustainable alternative to plastic,
Norske Skog has developed the biocomposite
product CEBICO by combining thermome-
chanical pulp (TMP) with recycled plastic. By
replacing 1 kg plastic with TMP, emissions
are reduced by 6 kg of CO
2
equivalents.
“We will revitalize Norwegian industry in a
sustainable way - this great CEBICO invest-
ment is a part of that,”
says Minister of
Industry and Trade, Jan Christian Vestre.
Norske Skog Boyer receives AUD 2
million grant, further 2 million promised
Due to the decline in the Australasian market, the
Boyer Mill is now the last publication paper mill
operating in Australasia. Recent world events
have highlighted why sovereign manufacturing
capacity is so important for our industry and for
manufacturers of other key commodities, which
is why we have been working closely with the
government over the past year to ensure publi-
cation paper is manufactured in Australia.
“Adding Norske Skog’s AUD 2.9 million commit-
ment, we can deploy an AUD 6.9 million package
of initiatives to support the long-term future of
the Boyer mill, allowing us to reduce emissions,
keep costs down and continue to deliver an Aus-
tralian source of newsprint,”
says Patrick Dooley,
General Manager of Boyer.
Carbon capture pilot at
Norske Skog Skogn
Ocean GeoLoop - a novel carbon capture
company - has set up its first carbon cap-
ture pilot at Norske Skog Skogn.
This pilot will catch the biogenic CO
2
from
the flue gas that is released when bark and
wood chips are burned in the bio boiler at
the mill.
Norske Skog has a 2.06% ownership stake
in Ocean GeoLoop.
Official opening of waste-to-energy
plant at Norske Skog Bruck
The official opening of Norske Skog’s waste-
to-energy plant at Bruck was celebrated with
the
Norwegian
ambassador
Kjersti
E.
Andersen, the Finnish ambassador Pirkko
Hamalainen and Austria’s Federal Minister for
Climate Action, Environment, Energy, Mobility,
Innovation and Technology Leonore Gewessler,
in addition to several members of the local
government and the industry association Styria.
Reliable access to affordable sources of
green energy will be crucial for the long-term
competitiveness at Bruck. In addition to
significantly
improving the energy situation
at the factory, it also contributes to a
substantial reduction of the mill’s fossil CO
2
footprint.
A glimpse of
2022
SUMMARY
8
I
Norske Skog
I
Annual report 2022
CEBINA used for coating of land-
based salmon farming facility
In collaboration with Gjøco and BMO Entre-
prenør, Norske Skog has supplied CEBINA for
the epoxy spray used for the coating of
Salmon Evolution’s first production facility in
Indre Harøy, Norway.
The first phase of the innovative land-based
facility includes a total of 12 tanks, where the
first tank is already filled with seawater and
salmon.
Due to the properties of our nanocellulose
CEBINA the epoxy can be sprayed directly
onto the wall without dripping as it hardens,
reducing the application time from 2 weeks
to approximately 4 days.
In 2016, Norske Skog Saugbrugs developed
microfibrillated cellulose (MFC) with the in-
tention of enhancing the surface and tensile
strength of paper produced at the mill. The
increase in paper quality attracted interest
from other industries, leading to the launch of
CEBINA as a multi-purpose product.
NOK 60 million award for research on
nanocellulose and biocomposites
The Norwegian government’s Green Platform
Programme has awarded NOK 60 million to
support Norske Skog Saugbrugs’ research
project on nanocellulose and biocomposites.
The portfolio of products to be developed
aims to remove or greatly reduce the use of
petroleum-based raw materials and harmful
materials, as well as to contribute to in-
creased recycling of plastics.
“It is through research and innovation that we
create tomorrow’s sustainable society. Green
platform is an important measure to ensure
profitable green transition, and will help us
become more skilled at scaling up and linking
research to the market,”
says Minister of
Trade and Industry Jan Christian Vestre.
Final roll of newsprint produced at
machine named “Emma” in Norske Skog
Bruck
The final roll of newsprint was produced at our
machine “Emma” in Bruck, Austria, marking the
end of a 69 year-long era of newsprint production.
This also meant the beginning of the conver-
sion process of the machine, making “Emma”
ready for containerboard production during the
first quarter of 2023.
Norske Skog joins UN Global Compact Norway
To strengthen our commitment to green growth and sustainable
business practices, Norske Skog has joined UN Global Compact
Norway - the world’s largest corporate sustainability initiative.
“At Norske Skog, we create green value through innovation and
leadership. To make truly meaningful impact, we need to work
together with stakeholders to improve sustainability across our
entire value chain. Working in partnerships with others leads to
greater impact, which is why we are very excited to join the
world’s largest knowledge network on corporate sustainability
and continue to make progress on the UN Sustainable
Development Goals,”
says Mari Brekke Mogen, Head of
Sustainability at Norske Skog.
Biomass boiler at Norske Skog Golbey
ready for construction
The Green Valley Energie (GVE) joint venture,
in which Norske Skog is a 10% minority equity
holder, is ready to commence construction of
a biomass boiler at the mill site of Norske
Skog Golbey.
GVE will produce electricity and heat from
waste and residue materials and will be the
largest cogeneration plant of its kind in
France.
“This energy project is one more milestone in
the on-going transition of Norske Skog to-
wards new growth markets and sustainable
energy. The biomass boiler will ensure a sta-
ble, long-term supply of cost competitive and
100 percent renewable steam as an alterna-
tive to fossil energy sources like natural gas,
shielding us from increasingly volatile energy
markets,”
says Sven Ombudstvedt, CEO of
Norske Skog.
Annual report 2022
I
Norske Skog
I
9
SUMMARY
The history
of Norske Skog
Norske Skog was established in 1962, but our Boyer, Bruck and Saugbrugs mills
have been in operation much longer. Until the 1990s, the company grew in
Norway, acquiring businesses in pulp, paper and wood-based construction
materials.
Through the nineties, Norske Skog expanded internationally, first with the
construction of a mill in France and later through acquisitions of other
newsprint and magazine paper companies all over the world. The activities
within other paper grades, market pulp, energy and construction materials
were sold off. In recent years, the company has entered into several projects
related to recycled containerboard, energy and bio products.
As of 2022, Norske Skog has five mills in four countries and is one of the
world’s largest producers of publication paper to newspapers, magazines,
periodicals and for advertising purposes. Norske Skog is listed on the Oslo
Stock Exchange, and had 2
140 employees at year-end 2022.
1996-1997
Purchase of paper mills in Austria
and the Czech Republic.
1962
Norske Skog was established by
Norwegian forest owners. The
purpose was to exploit timber
resources in central Norway, and a
newsprint mill was built at Skogn,
starting production in 1966.
1992
Expansion outside Norway, Start-up
of production in Golbey in France,
our first business outside of Norway.
2000
Sale of pulp mills in Norway.
Purchase of Fletcher Challenge
Paper in New Zealand, a firm with
operations in Australasia, South
America, Canada and Asia.
2001
Purchase of mills in Germany and
the Netherlands. Comprehensive
restructuring of the business, and
divestment of activities outside the
defined core area of newsprint and
magazine paper.
Expansion in Norway
1970 - 1990
Global expansion
1991 - 2005
Foto: Otto Bugge/ Anno Norsk Skogmuseum.
SUMMARY
10
I
Norske Skog
I
Annual report 2022
2012
Sale of two mills in Chile and the
Netherlands, shut-down of Follum
paper mill in Norway.
2013
Sale of two mills in Brazil and
Thailand. Two machines idled at
Tasman and Walsum.
2014
Ramp-up of a converted newsprint
machine to LWC-products at Boyer
in Australia.
2009
Sale of two mills in China, shut-down
of one paper machine in Europe.
2018
New beginning with Oceanwood
purchasing the shares in Norske
Skog AS, which included
all the mills.
2021
Closure of Tasman mill in New
Zealand. Expansion into
biocomposites and starting
construction of a waste-to-energy
plant at Bruck. Financing the
conversion of two newsprint
machines at Bruck and Golbey into
containerboard production.
2024
The Green Valley Energie (GVE)
joint venture at Golbey will start
production at the largest bio energy
plant of its kind in France. In 2024 at
Skogn, a new thermo-mechanical
pulp (TMP) line, substituting
expensive recovered paper with
fresh fibre, will commence.
2006
Five newsprint machines shut
down, shares in the Canadian
business sold.
2015
Closure of the Walsum mill in
Duisburg, Germany.
2019
New three-leg strategy within
publication paper, packaging paper,
and bio and energy related
products.
Norske Skog ASA was listed on the
Oslo Stock Exchange.
2022
Sale of Nature’s Flame 90
000 tons
pellets facility in New Zealand.
Start-up waste-to-energy plant at
Bruck. At Saugbrugs, a 500 tonnes
bio-composite pilot plant was
officially opened by the Norwegian
Trade and Industry Minister
Jan Chr. Vestre.
2008
Sale of two mills in South Korea, sale
of property, shut-down of two paper
machines in Europe.
2017
The Royal Highness King Harald of
Norway officially opened opened
new biogas facility at Saugbrugs.
Norske Skogindustrier ASA was
delisted from the Oslo Stock
Exchange and the mill portfolio
continued by Norske Skog AS.
2020
Sale of the Albury mill in Australia
and the forest in Tasmania.
Establishing commercial activities
within nanocellulose and expansion
in biopellets.
2023
Bruck will commence recycled
packaging paper production based
on recycled fibre in the first quarter
of 2023, and from Golbey in the
fourth quarter. The production
capacity of containerboard will be
760 000
tonnes per year. Norske
Skog Skogn explores opportunities
to build a biogas plant in
cooperation with local farmers
based on animal manure.
Comprehensive restructuring
2005 - 2014
Financial restructuring
2015 - 2018
New beginning
2019
- 2021
Execution of
new strategy
Annual report 2022
I
Norske Skog
I
11
SUMMARY
Photo: Lézards Création
Norske Skog Golbey
Here are some pictures from Norske
Skog Golbey conversion projects.
Films that follow the development of
Golbey industrial site can be seen on
Norske Skog’s Linkedin account.
Photos: @Nuit Blanche Production
SUMMARY
14
I
Norske Skog
I
Annual report 2022
Norske Skog Bruck
Here are some pictures from Norske
Skog Bruck conversion projects.
Managing Director at Norske Skog
Bruck, Enzo Zadra:
“The entire Bruck team
are well tuned for
containerboard production.”
Photos: Markus Stübinger, Klaus Eibl
Annual report 2022
I
Norske Skog
I
15
SUMMARY
The transformation of Norske Skog is developing according to our chosen strategy with dedicated
contribution from our suppliers and own employees. We are transforming from an almost pure
publication paper business to also a packaging and bio-energy company. We are creating new green
products and processes necessary to reach the global zero emission ambition by 2050. The long-
term strategic ambition to diversify our product portfolio through creative utilization of fibre sources
will add value not only for our shareholders but also for numerous stakeholders.
The UN has in 2022 completed two major global conferences, one in Egypt to combat climate change,
and another in Canada to protect the planet’s biodiversity. The decisions and consensus from these
conferences will have a significant impact on the way we operate. There will not only be a critical look
at how we operate our industrial facilities, but how we deal with the entire value chain from sourcing
of raw materials and energy to production of products and the distribution of goods to the market.
We will be committed to create value for our shareholders, and simultaneously deliver value to our
other stakeholders through ambitious emission targets, prudent sourcing of raw materials, and
supplying circular and green products to the markets. We are responsible for our own destiny, and our
strategy is already designed to meet these global changes.
The promotion of our environmental efforts and growth story will strengthen the valuation of the
entire group and most importantly the local reputation of each mill. Europe and Australia will until
2050 strive to fulfil the common commitments of a carbon neutral industry and altered biodiversity
conditions. Through our strategic choices, we are without doubt well positioned to be a competitive
business leader in the green shift.
We are on a threshold to be an entirely new company. In 2023, we will start production of packaging
paper. Firstly, Norske Skog Bruck will start delivering packaging paper in first half of 2023. Secondly,
Norske Skog Golbey will start delivering packaging paper in the fourth quarter. Our entire commercial
team has been outstanding in promoting our market presence and establishing profound customer
relations for almost two years already.
Our Bruck and Golbey project teams are transforming the former publication paper machines (PM3
at Bruck and PM1 at Golbey) into 760
000 tonnes of packaging paper capacity. This is a demanding
We are committed to be competitive in the global
marketplace, leaving us with no other options than
being innovative, creating new products and exploring
new business opportunities.
We cr
eat
e
gre
en
value
SUMMARY
16
I
Norske Skog
I
Annual report 2022
task involving hours of detailed planning, technical adaptions
to existing infrastructure, and adjustments of entirely new
equipment by our clever engineers.
After the corona pandemic, the demand for publication paper
has surpassed the production capacity, putting an upward
pressure on sales prices. During this market scenario, Europe
was suddenly struck by the Russian invasion of the Ukraine
leaving Europe with the largest energy crisis since the early
1970s. Despite market turbulence, our financial performance
in 2022 has been excellent due to our ability to respond
effectively to volatile markets and changing conditions.
For years, we have been loyal to our long-term strategy, which is to:
•
Become a leading producer of renewable packaging paper
•
Improve and optimise publication paper cash flows
•
Diversify and innovate within fibre and energy
Clearly, Norske Skog has moved from the planning stage to
the execution phase. In April 2022, Norske Skog demonstrated
the long-term commitment to the Norske Skog Bruck mill by
officially opening the new waste-to-energy plant, which will
significantly reduce the fossil carbon footprint and eliminate
dependency on the volatile gas market. Similarly, in a joint
venture, the largest biofuel plant in France is under
construction at the Golbey site, securing green and low-fossil
carbon energy to the Norske Skog Golbey mill.
In May, Norske Skog Saugbrugs opened a pilot plant for
producing bio-composites, which has a huge market potential,
especially considering the decommissioning of fossil-based
plastic products expected well before 2050. New green
products like CEBINA and CEBICO developed at Saugbrugs,
have successfully entered new markets, replacing high carbon
footprint products.
Norske Skog Skogn has developed a strategy that will see the
mill capitalising on exciting new opportunities at the
crossroads of fibre and green energy, including utilisation of
biogenic CO
2
. In Tasmania, Norske Skog Boyer will spend AUD
6.9 million to reduce emissions, keep costs down and continue
to deliver an Australian source of newsprint and magazine
paper.
At Norske Skog, we are committed to be competitive in the
global marketplace, leaving us with no other options than
being innovative, creating new products and exploring new
business opportunities. Certainly, we are committed to our
slogan: We create green value!
SVEN OMBUDSTVEDT
CEO
STRATEGY
Publication paper
Improve and optimise publication
paper cash flows
Packaging paper
Become an independent and
leading European producer of
renewable packaging paper
Bio products and energy
Diversify and innovate within bio
products and energy
We cr
eat
e gr
e
en value
from sustainable fibre and
energy for the benefit of
all stakeholders.
OPERATIONAL EFFICIENCY
TARGETS FOR PACKAGING
PAPER
Packaging paper (from 2025-26)
Achieve an EBITDA margin
of at least
Maintain an operating rate
of at least
+20%
95%
Photo: Unsplash, Bryce Evans
Annual report 2022
I
Norske Skog
I
17
SUMMARY
Board of directors
OBSERVERS
GEIR DRANGSLAND
(1962)
Chair since 2023
Current election period:
Elected Chair
on 9 March 2023, for a two-year period
(2021-2023)
Independent:
No
Residence:
Oslo, Norway
Position:
Chief Executive Officer, Byggma ASA
Education:
Master of Economics and Business
Administration, BI Norwegian Business School
(Norway)
Other directorships:
Subsidiaries in Byggma
group
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 22
274 079
shares
Options:
0
NIKOLAI JOHNS
(1961)
Board member since 2022
Current election period:
Elected Board member
on 21 April 2022, for a two-year period
(2022-2024)
Independent:
Yes
Residence:
Hosle, Norway
Position:
Investment Director in Norfund
Education:
Master of General Business with
specialisation in International Management,
Norwegian School of Management (Norway)
Other directorships:
Selected boards in Norfund’s
investees
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 2
500 shares
Options:
0
TORE CHRISTIAN
ØSTENSVIG
(1976 /
Observer since 2022
Position:
Main employee
representative Norske
Skog Saugbrugs. Line
operator pulp (TMP) mill
at Norske Skog Saugbrugs
ASBJØRN ANDRÉ
DYPDAHL
(1972) /
Observer since 2023
Position:
Main employee
representative Norske
Skog Skogn, winder
operator Norske Skog
Skogn
ARVID GRUNDEKJØN
(1955)
Board member since 2018
Current election period:
Elected Board member
on 15 April 2021, for a two-year period
(2021-2023)
Independent:
Yes
Residence:
Oslo, Norway
Position:
Investor and professional board member
Education:
Executive programme, Harvard
Business School (USA)
Master of Law, University of Oslo (Norway)
Master of Business and Economics, Norwegian
School of Economics, Bergen (Norway)
Other directorships
: Currently on 18 different
boards of directors, ao. Chair of Infima AS, Chair of
Creati Estate AS, Chair of Cardid AS, Chair of
Stiftelsen Fullriggeren Sørlandet, Board Member
KLP Eiendom, Chair of AKO Art Foundation and
Chair of Strømme Foundation
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 41
617 shares
Options
: 0
TRINE-MARIE HAGEN
(1977)
Board member since 2019
Current election period:
Elected Board member
on 15 April 2021, for a two-year period
(2021-2023)
Independent:
Yes
Residence:
Oslo, Norway
Position:
Group CFO Felleskjøpet Agri SA
Education:
Four-year programme in economics
and business administration consisting of three
years at bachelor/undergraduate level and one
year at master/graduate level, Norwegian School
of Economics, Bergen (Norway)
First section of law studies, University of Bergen
(Norway)
Other directorships:
Subsidiaries of Felleskjøpet
Agri SA
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 0 shares
Options:
0
JOHANNA LINDÉN
(1974)
Board member since 2022
Current election period:
Elected Board member
on 21 April 2022, for a two-year period
(2022-2024)
Independent:
Yes
Residence:
Gothenburg, Sweden
Position:
CEO Petro Bio AB (Gothenburg, Sweden)
Education:
Master of Science, Chemical
Engineering, Chalmers University of Technology
(Gothenburg, Sweden)
Other directorships:
Board Member Swedish
Bioenergy Association, Svebio (Sweden)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 2
500 shares
Options:
0
SUMMARY
18
I
Norske Skog
I
Annual report 2022
Corporate management
SVEN OMBUDSTVEDT
(1966)
President and Chief Executive Officer
In Norske Skog since 2010
Professional experience:
Senior Vice President SCD, SAS
Chief Financial Officer and Head of Strategy &
Senior Vice President Upstream Operations,
Yara International ASA
Senior Vice President Corporate Strategy,
Norsk Hydro ASA
Various positions in Hydro Agri and Norsk Hydro
Education:
Master in International Management,
Thunderbird (USA)
Bachelor in Business Administration at Pacific
Lutheran University (USA)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 62
631 shares
Options:
563 000
synthetic options
RUNE SOLLIE
(1966)
Chief Financial Officer
In Norske Skog since 2014
Professional experience:
Senior Director Financial Reporting & Compliance
Statoil Fuel & Retail AS
Various positions at UNIconsult AS and Yara
International ASA and KPMG AS
Education:
State Authorised Public Accountant at Norwegian
School of Economics (Norway)
Bachelor of Science in Accounting and Auditing at
Oslo University College (Norway)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 31
315 shares
Options:
291 000
synthetic options
LARS P. S. SPERRE
(1976)
Senior Vice President Corporate Strategy
In Norske Skog since 2006
Professional experience:
President and Chief Executive Officer,
Norske Skog
Senior Vice President Corporate Strategy & Legal,
Norske Skog
Vice President Legal, Norske Skog
Legal Counsel, Norske Skog
Associate lawyer, Wikborg Rein
Education:
Practising Certificate
Master of Law (Cand. Jur.) at University of Bergen
(Norway)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 42
947 shares
Options:
291 000
synthetic options
ROBERT A WOOD
(1962)
Senior Vice President Commercial
In Norske Skog since 1987
Professional experience:
Vice President Commercial, Norske Skog
Managing Director Central European Hub,
Norske Skog
Vice President European Sales, Norske Skog
General Manager Norske Skog PanAsia
(Shanghai)
Various positions in Commercial Consulting Co.
Ltd. (China), Herald and Times (Glasgow),
Strathclyde Police (Glasgow)
Education:
Bachelor of Science (1st Class Hons), University
of Strathclyde (Scotland)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 5
263 shares
Options:
291 000
synthetic options
TORE HANSESÆTRE
(1984)
Senior Vice President Strategic Projects
In Norske Skog since 2009
Professional experience:
Chief Operating Officer, Norske Skog
Vice President Operations, Norske Skog
Manager Operation Support, Norske Skog
Senior Advisor Business Performance,
Norske Skog
Corporate Strategy Analyst, Norske Skog
Education:
Master of Industrial Economics and Technology
Management, Norwegian University of Science
and Technology, Trondheim (Norway)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 14
263 shares
Options:
291 000
synthetic options
AMUND SAXRUD
(1972)
Chief Operating Officer
In Norske Skog since 1996
Professional experience:
Managing Director, Norske Skog Skogn
Production Manager, Norske Skog Follum
Performance Manager, Norske Skog Follum
Production Manager in Pulp and Energy
Department manager Energy/Effluent,
Norske Skog Follum
Process engineer, Norske Skog Follum
Education:
Master of Science, Faculty of Chemistry and
Chemical Technology at the Norwegian Institute
of Technology, Trondheim (Norway)
Shares in Norske Skog ASA per 28.03.2023:
Owns and/or controls 0 shares
Options:
291 000
synthetic options
Annual report 2022
I
Norske Skog
I
19
SUMMARY
INTRODUCTION
Norske Skog aims to provide long-term value growth and an attractive return
for its shareholders which exceeds that of relevant investment alternatives,
this ambition will be supported by a responsible capital allocation strategy and
a conservative capital structure. Norske Skog is listed on the Oslo Stock
Exchange where it trades under the ticker code NSKOG. All shares have equal
rights and are freely transferable.
The Norske Skog corporate management and board of directors are committed
to serving all shareholders and potential new investors with consistent,
accessible, and immediate disclosure of relevant information through the Oslo
Stock Exchange, media, and financial newswires. Norske Skog has a policy of
equal treatment of all stakeholders to the group.
SHARES AND SHARE CAPITAL
On 31 December 2022, the share capital of Norske Skog was NOK 377
058 820,
consisting of 94
264 705
shares each with a par value of NOK 4.00
. All shares
have equal rights.
The Norske Skog share price was NOK 67.25 on 30 December 2022,
representing a market value of approximately NOK 6
339 million. The return
for 2022 was positive NOK 28.85 or positive 75.1 percent
. The Oslo Stock
Exchange Benchmark Index (OSEBX) had a return of negative 1.0 percent in
2022. For Norske Skog, the highest share price in 2022, based on close-of-
trading, was NOK 75.70 on 18 August, and the lowest price was NOK 37.30
on 10 January. Norske Skog paid no dividends during the year.
VOLUME
In 2022, 125
233 711
Norske Skog shares were traded in the market, equivalent
to a turnover of NOK 6
951 million. The average daily trading volume was 494
995 shares. This volume excludes the off-market transaction of NS Norway
Holding AS selling 11
000 000
shares in August.
DIVIDEND POLICY AND PROPOSAL
Norske Skog’s dividend policy is to pay dividends reflecting the underlying
earnings and cash flow while ensuring efficient capital allocation in the group.
When deciding the dividend level, the board of directors will among other things
take into consideration capital expenditure plans, financing requirements and
maintaining the appropriate strategic flexibility of the group.
Dividend payments are restricted under the group’s financing facilities of
maximum up to 50% of net profit for the previous financial year, subject to an
incurrence test, maximum leverage ratio of 1.50x following dividend payment,
being met and only after 31 July 2025.
The board of directors has requested the authority to pay a dividend of NOK
5.00 per share for the financial year 2022, to be granted by the Annual General
Meeting on 20 April 2022. The dividend payment is subject to certain lenders
waiving restrictions on shareholder distributions.
0.0
1.0
2.0
3.0
4.0
5.0
30
40
50
60
70
80
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Volume
Share price
Share price, NOK
Daily trading volume, million of shares
Share
information
Photo: Petra Ploner
20
I
Norske Skog
I
Annual report 2022
SUMMARY
LONG-TERM INCENTIVE PROGRAMME
The board of directors has approved a synthetic option programme for senior
executive employees in Norske Skog. By year-end 2022, 4
.713 million
synthetic options had been awarded. The programme is described in the
guidelines for determining salary and other remuneration to leading
personnel, which are available on company’s website
www.norskeskog.com.
FUNDING AND CREDIT QUALITY
Maintaining a strong financial position is considered an important risk mitigating
factor, supporting Norske Skog’s possibilities for strategic development of its
businesses. Access to external financial resources is required to maximise
value creation over time, balanced with acceptable risk exposure. Norske Skog
targets, freely available and unrestricted cash and cash equivalents of minimum
NOK 100 million, EBITDA to net interest costs of minimum 2.0:1, and book
equity to total assets of minimum 25%, see Note 23 Interest-bearing liabilities in
the consolidated financial statements.
MAJOR SHAREHOLDERS AND VOTING RIGHTS
On 31 December 2022, the largest shareholder was Byggma ASA with
16 030 431
shares corresponding to a 17.0% ownership share
. Byggma ASA
is controlled by Geir Drangsland. On 31 December 2022, Geir Drangsland
controlled an additional 4
716 148
shares through Drangsland Kapital AS,
corresponding to a 5.0% ownership share
. In aggregate, Geir Drangsland
controlled 20
774 079
shares corresponding to a 22.0% ownership share
.
On 31 December 2022, the foreign ownership was 30.20%
. Based on the
information in the Norwegian Registry of Securities, Norske Skog had a total of
9 677
shareholders on 31 December 2022 of which 466 resided outside of
Norway.
SHAREHOLDING INTERVAL
NO. OF SHAREHOLDERS
NO. OF SHARES
% of share capital
1 - 100
3 728
137 168
0.15
101 - 1
000
3 933
1 661 756
1.76
1 001
- 10
000
1 627
5 118 500
5.43
10 001
- 100
000
306
8 749 871
9.28
100 001
- 1
000 000
69
23 116 614
24.52
above 1
000 000
14
55 480 796
58.86
Total
9 677
94 264 705
100.00
Shareholder citizenship
No. of shareholders
No. of shares
% of share capital
Norway
9 211
65 799 057
69.80
Luxembourg
18
10 862 202
11.52
United Kingdom
48
5 852 050
6.21
United States
37
4 016 210
4.26
Ireland
35
3 973 738
4.22
Sweden
75
999 714
1.06
Germany
30
711 975
0.76
Switzerland
13
389 509
0.41
France
16
367 958
0.39
Belgium
6
348 024
0.37
Denmark
38
307 391
0.33
Canada
13
177 073
0.19
Liechtenstein
1
169 000
0.18
United Arab Emirates
1
85 334
0.09
Finland
4
60 306
0.06
Guernsey
1
32 800
0.03
Cayman Islands
1
20 428
0.02
Australia
1
17 377
0.02
Estonia
3
11 930
0.01
The Netherlands
7
11 491
0.01
Other
118
51 138
0.05
Total
9 677
94 264 705
100.00
Annual report 2022
I
Norske Skog
I
21
SUMMARY
ANALYST COVERAGE
ANALYST
TELEPHONE
ABG Sundal Collier
+47 22 01 61 37
Arctic Securities
+47 95 10 08 87
Carnegie
+47 22 00 93 58
DNB Markets
+46 8 475 6844
Pareto Securities
+47 24 13 21 78
Sparebank 1 Markets
+47 24 13 37 72
2022 ANNUAL GENERAL MEETING
The Norske Skog Annual General Meeting for 2022 will be held on Thursday 20 April 2022, at
13:00 CET. Shareholders who wish to attend are asked to follow the instructions on the Notice
of Annual General Meeting and to inform the registrar by 16:00 CET on Monday 17 April
:
DNB Bank ASA
Registrar’s Department
P.O. Box 1600 Sentrum
N-0021 Oslo, Norway
You may also register electronically on our website www.norskeskog.com or via VPS Investor
Services. Any shareholder may appoint a proxy with written authority to attend the meeting
and vote on his or her behalf. The meeting will be held online.
First quarter
April
July
October
January
May
August
November
February
June
September
December
March
Second quarter
Third quarter
Fourth quarter
FINANCIAL CALENDAR FOR 2023
Norske Skog reserves the right to revise these dates.
2 February 2024
Fourth quarter
results
20 April
Annual General
Meeting
27 April
First quarter
results
14 July
Second quarter
results
20 October
Third quarter
results
Chad Nichols
PM2 machine tender
Norske Skog Boyer
Hello, I am Chad Nichols.
I am a 43 year old and
work at the Boyer mill
in Tasmania, Australia. I
completed year 12 at
college, then picked up
a traineeship at Boyer, aged 17, and have worked my
way up the career path from Trainee through to Training
as a PM2 machine tender.
I started working for Norske Skog by word of mouth
from someone who worked there.
I am currently training as a machine tender, which is the
senior operator level in the paper mill operating the Wet
end of PM2. It’s a busy and demanding job.
Outside of work, I have a young family which is growing
up fast. I enjoy time at the shack on the farm and also
enjoy motorbikes and running marathons.
Photo: Tom Mathisen
SUMMARY
22
I
Norske Skog
I
Annual report 2022
INFORMATION FROM NORSKE SKOG
Communicating with the stock market is given high priority, and Norske Skog
aims to maintain an open dialogue with market participants. Our objective is
to provide sufficient information on a timely basis to all market participants to
ensure a fair valuation of our shares. Information that is considered price
sensitive
is
communicated
by
news
releases
and
stock
exchange
announcements. We host regular meetings for investors, both in-person and
virtually. All information about Norske Skog is published on our website:
www.norskeskog.com.
Our annual and quarterly reports are available on www.norskeskog.com.
Printed version of the annual and quarterly reports can be received at our
office at Sjølyst Plass 2, 0278 Oslo, Norway.
Three weeks before the announcement of quarterly results, Norske Skog
practices a “silent period”, meaning that contact with external analysts,
investors and journalists is limited. This is done to minimise the risk of
information leaks and potentially unequal information in the marketplace.
SHARE PRICE
2019
2020
2021
2022
Share price high (close-of-trading), NOK
43.99
44.00
43.00
75.70
Share price low (close-of-trading), NOK
37.00
24.10
29.30
37.30
Share price average (volume weighted average price), NOK
38.42
31.98
35.14
56.60
Share price year-end, NOK
43.70
38.70
38.40
67.25
Dividend paid per share, NOK
0.00
6.25
0.00
0.00
Market capitalisation year-end, NOK million
3 605
3 193
3 620
6 339
Volume (excluding off-market transactions)
Number of shares traded, million
10.68
38.05
90.99
125.23
Turnover, NOK million
427
1 217
3 186
6 951
Number of trades
12 359
68 834
166 577
267 136
Number of trading days
49
252
252
253
Average daily number of shares traded
217 995
150 983
361 074
494 995
Average daily turnover, NOK million
8.7
4.8
12.6
27.5
Average daily number of trades
252
273
661
1 056
Shareholders
Non-Norwegian ownership year-end, % share
15.74
9.70
27.89
30.20
Shareholding interval 1 - 100, % share
0.02
0.07
0.09
0.15
Shareholding interval 101 - 1
000, % share
0.64
1.41
1.62
1.76
Shareholding interval 1
001 - 10
000, % share
1.65
4.51
6.09
5.43
Shareholding interval 10
001 - 100
000, % share
3.63
6.29
9.11
9.28
Shareholding interval 100
001 - 1
000 000,
% share
19.75
9.28
24.27
24.52
Shareholding interval above 1
000 000,
% share
74.32
78.44
58.82
58.86
Top 5 shareholders, % share
71.77
72.02
42.21
45.77
Top 10 shareholders, % share
77.74
79.47
51.32
54.38
Top 15 shareholders, % share
82.50
83.20
57.73
59.92
Top 20 shareholders, % share
85.66
85.26
62.89
64.28
Top 25 shareholders, % share
88.14
86.63
66.91
67.70
Top 30 shareholders, % share
89.82
87.58
70.21
70.25
Number of shareholders
2 120
5 322
7 615
9 677
Outstanding shares year-end
82 500 000
82 500 000
94 264 705
94 264 705
Annual report 2022
I
Norske Skog
I
23
SUMMARY
About Norske Skog’s
operations
SUMMARY
Norske Skog is a world leading producer of publication paper with strong
market positions and customer relations in Europe and Australasia. The
Norske Skog group operates four mills in Europe, of which two will also
produce recycled containerboard following the completion of the conversion
projects in 2023. In addition, the group operates one publication paper mill in
Tasmania in Australia.
Norske Skog aims to further diversify its operations and continue its
transformation into a growing and high-margin business through a range of
promising conversions, energy and bio products projects. The group has
approximately 2
100 employees in seven countries, is head-quartered in
Norway and listed on the Oslo Stock Exchange under the ticker NSKOG.
PUBLICATION PAPER
– IMPROVE AND OPTIMISE
The group’s newsprint paper products include standard and improved grades,
while the group’s magazine paper products comprise uncoated super-
calendared paper (“SC”) and lightweight coated paper (“LWC”). The end uses
of the group’s products are mainly newspapers and magazines, but also
include catalogues, inserts and flyers, supplements, free-sheets, directories,
direct mail, brochures and book paper. The group sells its products under well-
known brands, including Nornews, Norbright, NorX, Norstar, Norcote, NorSC,
Norbook, and Vantage.
The group’s customers include publishers of leading newspapers and
magazines in Europe, Australasia and the rest of the world. The group has
longstanding relationships with several of its largest customers. In Europe, the
group serves a diversified customer base including internationally recognised
publishers, retailers and commercial printers, with the top 15 customers
representing approximately 40% of the revenue.
The group’s market shares based on production capacity for newsprint, SC
magazine paper and LWC magazine paper in Western Europe are approximately
25%, 9% and 6% respectively, according to PPPC. In Australasia, the group is
the sole producer of publication paper, but the group estimates a market share
in terms of publication paper deliveries of approximately 75% for newsprint
and 65% for magazine paper.
PACKAGING PAPER
– LEADING INDEPENDENT PRODUCER
Following the completions of the conversions of two newsprint machines, one
at Norske Skog Bruck and one at Norske Skog Golbey, Norske Skog will
become an independent European producer of recycled containerboard. In
2023, Norske Skog will introduce 760
000 tonnes of competitive container-
board capacity to meet the growing demand for renewable packaging. The
group has chosen Strato as the new recyclable packaging paper product brand
name. The commercial team has prepared several promotional activities and
campaigns to attract customers to new packaging products. The Skogn mill
produces inter-liner, a complementary packaging paper product to Strato, on
one of its three newsprint machines.
Following the conversions, Norske Skog Bruck and Norske Skog Golbey will
have access to renewable energy and will have reduced their carbon footprints
to become among the best performers in the industry. The 50 MW renewable
waste-to-energy boiler in Austria commenced production in the first half of
2022.
BIO AND ENERGY PRODUCTS
– DIVERSIFY AND INNOVATE
Norske Skog actively works to realise value from the industrial sites by
developing existing infrastructure and industry competence.
The continued development of CEBICO at Saugbrugs progressed well during
the year now effectively producing bio-composites for commercial sale. The
start-up of a 300 tonnes pilot-plant at Norske Skog Saugbrugs, enabling a
significant increase in the bio-composite quality to selected customers, was
officially opened in May by the Trade and Industry Minister of Norway, Jan
Christian Vestre.
Following significant marketing efforts and further customer testing in 2022,
Norske Skog have realised commercial sales and proof-of-concept for its
CEBINA products. CEBINA is a natural fibre product developed at Norske
Skog Saugbrugs, which is suitable in adhesives, paints, and putties, fibreboards
and more. In epoxy systems, demonstrations in putty and spray filler have
shown great potential with customers.
At the Golbey industrial site, in a joint venture with Green Valley Energie
(GVE), a biomass boiler is under construction. The biomass boiler will produce
about 200 GWh of electricity and about 700 GWh of renewable heat, thus
generating CO
2
savings of 210
000 tonnes per year. The biomass boiler will
ensure a stable, long-term supply of cost-competitive and renewable steam as
an alternative to fossil energy sources.
Norske Skog Skogn will build a new thermo-mechanical pulp (TMP) line,
substituting expensive recovered paper with fresh fibre. The new TMP line will
reduce varialble costs, significantly reduce NOx and fossil CO
2
emissions, and
reduce waste sent to landfill. The start-up is expected to be in the first half of
2024.
Norske Skog is the largest shareholder in Circa Group. With a EUR 9
.2 million
from the EU Flagship Grant and NOK 500 million from a private placement, a
1 000
tonnes biochemicals plant, which is patented on Furacell technology, is
under the construction in France. Circa Group is listed on the Euronext Growth
market in Oslo.
SUSTAINABILITY REPORT
24
I
Norske Skog
I
Annual report 2022
Stakeholder
and materiality analysis
The stakeholders affect Norske Skog’s decisions, activities and thus
performance. The key stakeholders include the employees in Norske Skog,
local communities where we operate, investors and owners, our customers and
suppliers. In determining the most material sustainability topics for Norske
Skog, we have assessed to what extent different stakeholder groups influence
our operations. Our ongoing interactions and dialogues with stakeholder
groups will influence and define the management response. Likewise, altered
political decisions will clearly define the conditions under which we operate.
One example of stakeholder influence is how customer surveys will directly
influence the commercial team’s activities and deliveries.
The materiality analysis highlights areas of business risks but also opportunities
fundamental to the group’s strategy and will be integrated in daily operations.
Norske Skog business units have during the last 50 years been seeking best
environmental practice, and the reported figures show great progress in the
same period. The group has achieved significant results in collaboration with
stakeholders, national authorities and employee initiatives. Norske Skog has
been nationally recognised for its labour practices and excellent work
environment. Norske Skog’s health and safety performance is outstanding
compared to the industry average for decades as result of tenaciously efforts.
Unexpected events such as the corona pandemic, and fundamental changes
in the demand for our products as well as change in legislation and increased
expectations from society, especially to environmentally friendly operations,
have demanded a thorough risk assessment process. Group management has
reviewed the risk factors and prepared the necessary operational contingency
measures. The materiality analysis has been revised and approved by the
corporate management. The sustainability strategy is based on both external
and internal input.
A comprehensive risk assessment process has been conducted at the
business units. The mill’s management groups have assessed both the
likelihood for the GRI-topic (risk) to occur, and the consequence for the mill if
that risk, event and/or incident happens. They have given a number character
from 1 – 5 for each GRI-topic, both for the likelihood and the consequence.
Likelihood is how likely the risk is to materialise, whereas consequence is the
impact on the group, not just financial, but also operational and reputational
and, in some instances, its license to operate.
The outcome of the materiality review is listed below.
Economic performance
Economic performance
Waste and emissions
Waste and emissions
Public policy
Public policy
Occupational Health
and Safety
Non-discrimination
Energy
Water and effluents
The GRI Standards topics
with the most vital impact
on Norske Skog’s operations
The GRI standards topics
with the most vital impact
on Norske Skog’s external
stakeholders
SUSTAINABILITY REPORT
Annual report 2022
I
Norske Skog
I
25
EXPLANATION TO THE MATRIX:
Likelihood/Probability - how likely it is for the risk to occur
1. Rare/Improbable (unlikely to occur)/(1% chance)
2. Unlikely/Remote (unlikely, though possible to occur)/(1-20% chance)
3. Possible/Occasional (likely to occur occasionally during standard operations)/
(21-50% chance)
4. Likely/Probable (not surprised, will occur in a given time)/(51-90% chance)
5. Almost certain/Frequent (likely to occur, to be expected)/(90% chance)
Consequences (impact/severity - determines the effects that the incident/
hazard can cause for the company/mill:
1. Insignificant – will cause insignificant harm to the business or operation
2. Minor – can only cause minor harm to the business or operation
3. Significant – can cause significant harm to the business or operation
4. Major – can cause irreversible harm to the business or operation that demand
actions
5. Severe – can result in fatal harm to the business or operation demanding
immediate actions
Our priorities will have a significant impact throughout the sustainability
report, and are included in the presentations related to each of the 17 UN
Sustainable Development Goals. A total overview of which GRI Standards we
report on, can be seen from the GRI Index presented in the back of this report
and on our homepages below:
www.norskeskog.com/sustainability
Risk assessment 2022
Global Reporting Initiatvie Index refererence
Likelihood
Consequences
Score
201
Economic performance
5
5
5
302
Energy
5
5
5
403
Occupational health and safety
5
5
5
303
Water and effluents
4
4
4
413
Local communities
3
4
3
306
Waste
3
3
3
206
Anti-competitive behaviour
2
4
3
301
Materials
3
3
3
305
Emissions
3
3
3
304
Biodiversity
3
3
3
307
Environmental compliance
2
3
3
401
Employment
2
3
2
407
Freedom of association and collective bargaining
2
2
2
416
Customer health and safety
2
2
2
412
Human right assessment
2
2
2
405
Diversity and equal opportunity
2
2
2
205
Anti-corruption
1
2
2
406
Non-discrimination
1
2
2
Change in risk
assessment
There is no change in the assessment of GRI topics economic performance (201),
energy (302), occupational health and safety (403) and public policy (415).
Uncertainty around political framework conditions, developments in the energy
market and the global economy will affect Norske Skog’s operating performance.
The GRI score for anti-competitive behaviour (206), materials (301) and emissions
(305) are lower compared to 2021 due to lower likelihood of occurrence but may
still cause severe operational and reputational damage if occurred. There are only
minor adjustments in the other GRI topics.other GRI topics.
The most active stakeholders are investors, financial institutions, local
communities and environmental organisations. For investors and financial
institutions are concerned about the long term economic performance and GRI
topic that will have severe impact on Norske Skog’s operational ability. The
execution of Norske Skog’s strategy to convert machines into packaging paper
products has been followed closely by all these stakeholders. The regional and
local communities and environmental groups have also been concerned about
the handling of raw material, degree of fibre certification and emission issues.
SUSTAINABILITY REPORT
26
I
Norske Skog
I
Annual report 2022
Business opportunities
-
Industrial sites with access to effective infrastructure and green
energy
-
Society demanding and consumers asking for more sustainable
products
-
Exploring new activities in synergy with existing production at
our industrial facilities
-
Public programs to reach net zero society enabling the
development of new sustainable business
Business risks
-
Stricter regulatory requirements, expected or unexpected
-
Specific costs related to the transition to low carbon economy
imposed in single countries weaken the competitiveness
-
Market development for publication paper and capacity
adjustments in the industry
-
Cost of input factors, volatile energy prices and increased
pressure on the availability of biomass
Our business environment offers both
business opportunities but also risks
Additional information on Climate related Risks and Opportunities are available in our
TCFD report, see Appendix B, and in our CDP Climate Change report available at
www.CDP.net/responses.
Photo: Carsten Dybevig
SUSTAINABILITY REPORT
Annual report 2022
I
Norske Skog
I
27
The UN sustainable development
goals are an integral part of our strategy
THE SDGS ARE AN INTEGRAL PART OUR STRATEGY
Leading and independent
Improve and optimise
Diversify and innovate
We create
green value
Packaging paper
Publication paper
Bio and energy
products
Ambition
Strategy
Prioritised SDGs
The UN Sustainable Development Goals (SDGs), adopted by world leaders in
September 2015, are a call for action for all countries and businesses to
promote prosperity while protecting the planet. The 17 SDGs address the
global challenges we face, including those related to poverty, inequality,
climate, environmental degradation, prosperity, and peace and justice. The
SDGs interconnect, and it is important that the world achieves each of the
SDGs and its targets set for 2030.
Norske Skog supports all 17 SDGs but realise that some are more relevant to
our business than others. We believe that we can make the greatest difference
and contribute positively through the prioritized SDGs highlighted in the
illustration. We have summarized what the prioritized SDGs mean to us in one
sentence:
Norske Skog shall create value for people and society in a
responsible way, while promoting a sustainable environment
and principles of circular economy.
To be a profitable business is fundamental for creating jobs and value for
society through our operations and products. Innovations and operational
excellence encompassing high-level governance practice and employee
health and safety focus will spur long-term profitable business. Our operations
must be based on sustainable sourcing by using certified wood and chips
documented through the Chain of Custody certifications and use of recycled
paper. Improved margins and reduced environmental impacts from the value
chain and the mills are achieved through effective resource and energy
management. We monitor activities to achieve sustainable products and
processes throughout the entire value chain.
In addition, Norske Skog continuously strives to maintain our status as the
most attractive industry partner for suppliers and customers. The corporate
strategy consists of three elements and gives us a well-defined foundation for
our work related to the prioritized SDGs:
•
Improve and optimise publication paper cash flows
•
Become a leading, independent producer of renewable packaging paper
•
Diversify and innovate within bio and energy products
These strategic goals are communicated extensively throughout the organisa-
tion, and are well known to external, crucial stakeholders, especially the press
and investors.
To make the SDG targets relevant for the board, management and the rest of
the group, the intention was to align and integrate the 5 prioritized sustainable
development goals to the resolved strategic goals already effectuated by the
board of directors.
The following five sustainable development goals that were selected to be
most relevant to the existing strategy:
SDG 3:
Good health and well-being
SDG 4:
Quality education
SDG 9:
Industry innovation and infrastructure
SDG 12:
Responsible consumption and production
SDG 13:
Climate action
In the appendix, there is a matrix summarizing our ambitions, targets and
planned activities.
SUSTAINABILITY REPORT
28
I
Norske Skog
I
Annual report 2022
About the
sustainability report
The report covers the most material sustainability topics to Norske Skog.
The sustainability report is divided into
four sections
:
Norske Skog is committed to contribute to sustainable development and
supports the ten principles in the UN Global Compact.
Norske Skog use the Global Reporting Initiative’s (GRI) Standards for
reporting relating to sustainability as a tool in our work to report
environmental and corporate responsibility. In 2022, Norske Skog reported to
the Carbon Disclosure Project and follow
the reporting expections set forth
in the GHG-protocol regarding Scope 1, 2 and 3.
1
Environment
2
Social
Governance and
economy
3
Ambition and
performance
4
Photo: Adobe Stock
Annual report 2022
I
Norske Skog
I
29
1
Environment
Photo: Carsten Dybevig
Ensure sustainable
resource management
Norske Skog shall have an environmental performance that ensures our
production and activities have minimal environmental impact. The key
objectives in all our business units are efficient production processes with
efficient raw material and energy utilisation. Norske Skog expects all business
partners to comply with the applicable laws, regulations and principles set out
in Norske Skog’s Code of Conduct.
Norske Skog is committed to maintain sustainable environment and
responsible use of natural resources. We are committed to foster innovation
and implement continuous improvement activities to have none or only
minimal adverse impact on the environment.
The production process is in nature circular. The finished publication and
packaging paper products are collected and reused to make new paper
products. All residues from the production processes are reused or disposed of
either through energy recovery, landfill, agricultural fertilizer or sale/delivery.
Sustainable fibre management:
The fibre source used at the different Norske Skog mills depends upon
availability, production facilties and economic considerations. The minimisation
of transport distances and costs is an increasingly important economic and
environmental consideration.
Forestry and use of forest products play an important role in the combat of
climate change and for the preservation of biodiversity and ecosystems. For
the forest value chain to be a part of the climate change solution, the forests
must be managed sustainably. Norske Skog is not a forest owner. Norske Skog
has systems and processes to make sure that all wood used in Norske Skog’s
products comes from sustainably managed forests. All Norske Skog mills
utilising fresh wood fibre have third-party verified Chain of Custody (CoC)
certification systems in place. Our goal is to have 100% certified wood in our
products. The ability to increase the share of certified wood therefore depends
mainly on decisions made by forest owners.
The main global forest challenges are related to deforestation in developing
countries and forest biodiversity degradation through the logging of high-
conservation areas in many parts of the world. In order to meet these
challenges, we need to ensure that more of the world’s forest areas are
managed on a sustainable basis. Forest certification is an important tool in this
context.
The roundwood component of our fresh fibre came from both forests (81%)
and plantations (19%). In all countries where Norske Skog sources wood,
forest areas are increasing. The average share of certified fresh fibre in 2022
was 91%. In 2022, Norske Skog consumed 2
,9 million m
3
of fresh fibre and
0.57 million tonnes of recovered paper
.
Roundwood accounted for 79% of our consumption of fresh wood fibres in
2022. Sawmill chips, a by-product from the sawmill industry, accounted for the
remaining 21%.
CERTIFIED PROPORTION OF FRESH FIBRE (%)
Roundwood and chips
0
20
40
60
80
100
2022
2021
2020
2019
2018
ENVIRONMENT
/
SUSTAINABILITY REPORT
1
Annual report 2022
I
Norske Skog
I
31
80%
Biomass used as biofuel
9%
Agriculture
2%
Landfill
9%
Sold or delivered collectors
DISPOSAL PRODUCTION WASTE
278 079
tonnes
waste
SHARE OF RECOVERED PAPER IN PAPER PRODUCTION:
60%
Wood (roundwood and sawmill chips)
1%
Purchased pulp
29%
Recovered paper
10%
Inorganic fillers
CONSUMPTION OF RAW MATERIAL
2.9
mill m
3
wood
0.8
mill tonnes
other
SOURCES PRODUCTION WASTE
Total 278 079 tonnes
62%
Sludge
32%
Bark
6%
Other
278 079
tonnes
production
waste
Production waste performance:
The total quantity of production waste, such as sludge and bark, generated by
the group in 2022 was 278
079 dry tonnes. In 2022, 80% of the waste was
used as biofuel for the bio boilers at the mills generating thermal energy. In
Europe 87% of the waste was used for energy purposes, whereas in Australia
was 88% used for agricultural purposes.
In addition, 128
454 tonnes of ash, which may be used in concrete or brick
making, or in road construction, were generated from the combustion process.
Ash residues result from combustion processes involving solid fuels.
Agricultural re-use is also an option for some ash and organic materials.
However, about 45% of the ash are deposited in landfills. This was higher than
prior years mainly due to the new energy plant in Bruck. During 2023, Norske
Skog aim to identify new use applications for this ash. Different national
legislation put limitation on the use of ash. In Austria, Norske Skog Bruck sells
the ash under the product brand name Stabinor for construction purposes. In
2022, 382 tonnes of hazardous waste were disposed through authorised
collection systems according to national regulations.
Norske Skog Bruck, Austria
77%
Norske Skog Golbey, France
68%
Norske Skog Skogn, Norway
12%
SUSTAINABILITY REPORT
/
ENVIRONMENT
32
I
Norske Skog
I
Annual report 2022
ROUNDWOOD
SAW MILL
CHIPS
RAW MATERIALS
PRODUCTS
RECOVERED
PAPER
RAW MATERIALS
PAPER MILL
PAPER MACHINE
HEAT
CHEMICALS
WATER
PAPER
BIOGAS
BIO PRODUCT
ENERGY
Thermical
Electricity
ELECTRICITY
PULP
Paper production process
Explanation to the diagram:
The highly simplified diagram above illustrates the paper production process.
Main input materials are wood and/or recovered paper, as well as energy and
chemicals. Wood and recovered fibres are separated during pulp production in
two different processes.
Pulp production based on recovered paper consumes less energy than
production from fresh fibre because the fibres in recovered paper are more
easily separated than those within wood. In the paper machine, the pulp
passes along a web, firstly through a wet section, then a press section and
finally through a drying section. The paper is finally rolled up on reels, and
then cut to the sizes ordered by the customer. During this process, more than
90% of the wood fibres in trees are converted to paper products.
Photo: Carsten Dybevig
ENVIRONMENT
/
SUSTAINABILITY REPORT
1
Annual report 2022
I
Norske Skog
I
33
Biodiversity and
sustainable ecosystems
Norske Skog’s objective is to prevent and reduce pollution of all kinds. Our
direct impact on biodiversity is managed and controlled through strict laws
and regulations that we follow under construction and operations of our
production sites. Key indirect impact on biodiversity is mainly identified in
upstream activities through sourcing of fresh fiber, which we manage through
sourcing of certified and sustainable forests. We are committed to follow the
EU Water Framework Directive and the ambitious water permit goals given by
the local authorities. Our objective is to minimise our impact on the surrounding
ecosystems.
Water usage performance:
Water shall generally be used and recovered multiple times through the pulp
and papermaking processes before finally being discharged and treated in a
number of stages. These treatments remove solid particles as well as dissolved
organic material, making the water suitable for safe return to the natural
environment. A minimum of nutrients such as nitrogen and phosphorus are
added during this effluent treatment. Norske Skog is committed to follow the
ambitious water permit goals given by the local authorities.
The water usage in 2022 is shown in the illustration. 99% of the water taken
into the mills is returned to the waterways after treatment to fulfil the local
quality requirements for water discharges. Permit breaches are reported and
managed according to standard procedures. Any permit breaches will be
continuously monitored and discussed with supervisory authorities.
Norske Skog does not use bleaching chemicals containing chlorine in any
mills. Chlorinated organic compounds are therefore not created, and AOX
(adsorable organic halides) is not included in our emission reporting.
Some of our mills are located in areas where access to water and/or flooding
might become a risk with climate change. In 2022, Norske Skog reviewed
these climate risks related to our mills.
Wastewater treatment performance:
Norske Skog makes great efforts to ensure that the wastewater treatment
meet the highest standards. The majority of solid wastes occur from the
processing of fibre inputs (wood or recovered paper) and from the treatment
of effluent (fibre and biological solids). The increase in discharges of organic
substances (COD) and suspended solids (SS) are related to technical
challenges at the Golbey and Skogn wastewater treatment plant during 2022.
At the year end, the Skogn mill has resolved these issues, and the wastewater
treatment plant is operating as expected. At Skogn, a new termomechanical
pulp line will be built to substitute recovered paper with fresh fibre. The
reduction in the Australasian discharges of suspended solids (SS) is mainly
related to reduced environmental profile at Boyer.
Many of our mills participate in projects to find alternative or additional
methods of reusing the by-products from the production processes. Norske
Skog’s products are sold with an environmental product declaration for paper
(paper profile), which guide the paper buyer according to environmental
performance on standardised environmental parameters. All of Norske Skog’s
business units are certified in accordance with ISO 9001 and 14001.
Two mills (Norske Skog Boyer and Norske Skog Golbey) reported minor non-
compliance issues to the respective local authorities in 2022. None of the
instances have resulted in any further actions from the authorities.
The discharges of dissolved organic material and suspended matters per
tonne of paper were respectively up by 25% and 30% compared to 2021 due
to technical issues at the Golbey and Skogn treatment plant. The discharge of
nitrogen and phosphorus per tonne of paper was in line with the 2021 reported
figures. The difference in results from one year to the next is the result of
many factors, including process improvements, utilisation of equipment,
production-related issues and product changes.
DISCHARGES OF SUSPENDED
SOLIDS (SS)
Kg per tonne of paper
DISCHARGES OF WASTEWATER
m
3
per tonne of paper
Europe
Australasia
Total
DISCHARGES OF ORGANIC
SUBSTANCES (COD)
Kg per tonne of paper
Europe
Australasia
Total
Europe
Australasia
Total
0
2
4
6
8
10
12
14
2022
2020
2019
2018
2021
0
1
2
3
4
5
2022
2021
2020
2019
2018
0
10
20
30
40
50
60
2022
2021
2020
2019
2018
SUSTAINABILITY REPORT
/
ENVIRONMENT
34
I
Norske Skog
I
Annual report 2022
OTHER LOSSES
0.0
CHEMICALS
WATER IN
PRODUCTS
0.09
GROUND WATER
1.4
SURFACE WATER
56.1
MUNICIPAL WATER
0.06
RECYCLED PAPER
AND PURCHASED PULP
0.03
PRODUCTION
EVAPORATION
0.5
TO SURFACE WATER FROM
EFFLUENT TREATMENT
17.6
OTHER WATER
INPUTS
0.03
WATER IN WOOD
0.6
TO SURFACE WATER
FROM COOLING
40.0
The total water consumption in 2022 was 99
440 899
m
3
,
of which 96% derived from surface water. 99
.9% of the
water is returned as surface water after cooling and
effluent treatment.
Photo: Adobe Stock
Norske Skog global average
water use and discharge
m
3
/tonne of paper
1
ENVIRONMENT
/
SUSTAINABILITY REPORT
Annual report 2022
I
Norske Skog
I
35
Combat
climate change
The European Union and related national governments have set forth new
ambitious goals to reach carbon neutral societies by 2050. Norske Skog,
together with other European and Norwegian industries, has adopted these
ambitious goals and through our industrial organisations presented a
proposed industrial road map to reach this ambition by 2050.
Norske Skog has integrated reduction of greenhouse gas emissions as a key
part of the business strategy. The goal is to reduce energy consumption,
increase the share of renewable energy sources and to optimise the use of
process chemicals and transport. We are committed to contribute to combat
global climate change. Norske Skog has a long-term commitment to achieve
net zero GHG emission by 2050, and a 55% reduction within 2030 from a 2015
baseline. Norske Skog has a long-term commitment to achieve net zero GHG
emission (Scope 1 and 2) by 2050, and a 55% reduction within 2030 from a
2015 baseline.
Emissions to air occur primarily from energy generation processes. Our mills
have their own boilers or incinerators for producing thermal energy from
production waste and other residues. Fossil fuels in the form of natural gas, oil
and coal may also be used. The main emissions associated with these activities
include carbon dioxide, particulates, sulphur dioxide and nitrogen oxides.
To demonstrate Norske Skog’s commitment to combating climate change, and
to make critical information available to investors, customers and other
stakeholders, Norske Skog reported to the CDP (Carbon Disclosure Project) in
2022. Norske Skog achieved a favorable A– rating on CDP Climate Change.
During 2023, Norske Skog will also calculate effects of adopting science-
based targets.
Norske Skog’s carbon footprint covers emissions from several elements of the
value chain such as pulp and paper production, forest and recycling operations,
energy operations and transport. Carbon stored in forest products (biogenic
carbon) is separately reported to the Norwegian Environment Agency.
Scope 1 and 2 CO
2
emission performance:
In 2022, Norske Skog applied the location- and market based accounting for
Scope 2 emissions, according to the GHG protocol, which was applied to data
covering 2021 and 2022 to allow for comparison. The emission factors are
derived from AIB (Association of Issuing Bodies) reflecting the energy mix
delivered to the European markets and electricity purchased through the
physical grid. These emission factors have been applied to ensure the same
methodology across all markets. For Australia, we have applied emission
factors from local authorities. We do not source any Energy Attribute
Certificates / Guarantees of Origin as part of our Market-based accounting.
Norske Skog does not purchase these certificates due to the political position
of the Norwegian Trade and Industry associations. Therefore, our targets and
KPIs are measured against the location-based accounting method.
Using location-based methodology, Norske Skog reached a level of 276 kg
scope 1 and 2 CO
2
/tonne of paper in 2022 according to the GHG protocol
methodology, which is a 14% reduction from 2021. This is mainly due to
reduced gas consumption at Bruck after the start-up of a new energy plant in
2022, which is based on refused derived fuel.
Our Carbon Footprint according to the GHG protocol, is illustrated in table on
the next page and in section 4 under key figures.
The source of the emission factors and the global warming potential (GWP)
rates used is from the IPCC Fourth Assessment Report (AR4 - 100 year). 2015
was selected as the base year, after a comprehensive restructuring of the mill
portfolio, in the calculation of the 55% CO
2
reduction target within 2030, which
is congruent to evaluations done by the EU and the Norwegian Federation of
Trade and Industries. The reporting boundary and consolidation approach for
emissions are disclosed according to operational control.
With the performance in 2022, Norske Skog has achieved a 51 % reduction in
CO
2
equivalent/per ton paper compared to the 2015 baseline. Due to
investments in low-emission energy generation, Norske Skog expects to
reach the 55% reduction in CO
2
-emission by 2030 ahead of time.
In 2022, the Norske Skog Boyer mill accounted for 67% of the fossil CO
2
emissions in the Norske Skog group. The CO
2
emissions for the Norwegian
mills, Norske Skog Saugbrugs and Norske Skog Skogn, are very low due to a
long-term commitment and completed investments to reduce fossil-based
energy sources in the production of thermal energy.
With AUD 2 million in grant from the Australian federal government, Norske
Skog Boyer will in the first half of 2023 present a study to replace the mill’s
coal fired boiler, which is used to produce thermal energy (steam). A new
electrical or biomass boiler(s) will use alternate fuels when implemented. This
will reduce Boyer’s scope 1 carbon emissions by around 90% and group scope
1 carbon emissions by around 60%.
The two Norwegian mills accounted for about 3% of the total scope 1 and
2 CO
2
emission in the group. Norske Skog Skogn will invest around
NOK 230 million in a new thermomechanical pulp (TMP) production line
replacing expensive recycled paper with fresh fibre. This will from 2024
significantly reduce NOx and fossil CO
2
emissions, and this will also reduce
waste to landfill at the mill.
Through the partnerships with Ocean GeoLoop at Norske Skog Skogn and
Borg CO2 at Norske Skog Saugbrugs, Norske Skog aims to pursue the
opportunity to become CO
2
net negative, and to explore economically viable
models for utilisation of biogenic CO
2
. Norske Skog will through collaboration
with industry and environmental organisations seek to establish effective,
political and market designed mechanisms for carbon capture and usage.
Norske Skog mills are offering customers Product Carbon Footprint according
to two industry standards developed by European Paper Producers. This
include “CEPI Ten Toes, Carbon Footprints for Paper and Board Products” and
“Paper Profile”. Both are available upon request.
SUSTAINABILITY REPORT
/
ENVIRONMENT
36
I
Norske Skog
I
Annual report 2022
SCOPE 3
During 2022, Norske Skog has completed a first mapping of all Scope 3
categories, according to the GHG protocol, as shown in table above. The
largest sources of emissions in our value chain are related to transport and
distribution (~49%), processing of sold products (~30%) and purchased goods
and services (~20%). Other categories, represented by waste, business travel,
fuel and energy related activities, capital goods make up approximately 2%
combined. Emissions related to purchased goods and services as well as
upstream emissions are have been calculated based on purchased volumes
and the use of generic emission factors from trusted sources. Processing of
sold products cover emissions generated during the printing process and
downstream transportation cover distribution from the printing house to the
final customer for printed magazines and printed newspaper. These two
downstream categories have been estimated based on annual production
volume and emission factors from trusted research papers. Our total scope 3
footprint was ~752
000 tons in 2022, and represent 61% of our combined
Scope 1, 2 and 3 emissions. Going forward, Norske Skog is committed to
improve the quality of our scope 3 inventory, work with partners across our
value chain to reduce emissions and set reduction targets for scope 3.
EXPLANATIONS TO THE TABLE:
Scope 1
Direct emissions from owned or
controlled sources
Scope 2
Indirect emissions from the
generation of purchased energy
Scope 3
Result of activities from assets
not owned or controlled by the
reporting organisation, but that
the organisation indirectly affects
in its value chain
Emissions, GHG Protocol (metric tonne CO
2
equivalent)
Base year
2015
2018
2019
2020
2021
2022
% change
Scope 1
474 946
500 136
465 636
409 970
427 294
294 926
-31 %
Scope 2 location-based
865 236
734 033
692 672
195 762
186 703
177 808
-5 %
Scope 2 market-based
1 119 620
1 162 024
4 %
Total Scope 1 and 2 location-based
1 340 182
1 234 169
1 158 308
605 732
613 998
472 734
-23 %
kg CO
2
e/tonne paper (scope 1 and 2 location-based)
567
495
502
337
320
276
-14 %
% reduction vs 2015
-13 %
-11 %
-41 %
-44 %
-51 %
Biogenic CO
2
530 274
556 050
598 897
481 214
482 813
457 451
Scope 3
Purchased goods and services
148 000
Upstream transportation and distribution
167 000
Downstream transportation and distribution
201 000
Processing of sold products
224 000
Other
12 000
Total Scope 3
752 000
2022
2021
2020
2019
2018
2015
600
60%
50%
55%*
40%
30%
20%
10%
0%
500
400
300
200
100
0
Scope 1*
Scope 2 location-based
% reduction in CO
2
e achieved
EMISSIONS, GHG PROTOCOL
(kg CO
2
e / ton produced)
base year
Photo: Petra Ploner
* The dotted line depicts the Norske Skog’s 2030 CO
2
reduction target
ENVIRONMENT
/
SUSTAINABILITY REPORT
1
Annual report 2022
I
Norske Skog
I
37
SCOPE 2
INDIRECT EMISSIONS
SCOPE 3
INDIRECT EMISSIONS
SCOPE 1
DIRECT EMISSIONS
PURCHASED
ELECTRICITY AND HEAT
INTERNAL TRANSPORT
COMBUSTION OF
FOSSIL FUEL
IN OUR MILLS
PURCHASED GOODS
AND SERVICES
PROCESSING OF
SOLD PRODUCTS
TRANSPORT AND
DISTRIBUTION
EU taxonomy:
To meet the climate and energy targets and reach the objectives of the
European green deal, the EU has introduced the “EU Taxonomy”, a classifi-
cation system for sustainable economic activities.
The EU Taxonomy Regulation sets mandatory requirements on disclosure.
Norske Skog’s main activities, paper and containerboard production, do not
fall under the scope of the taxonomy activities that are published in the
Climate Delegated Act.
The European Commission has been explicit that economic activities that are
not recognised by the EU Taxonomy, are not necessarily environmentally
harmful or unsustainable. This is also true for the non-eligible activities in
Norske Skog. Norske Skog will closely follow the EU Taxonomy regulation to
assess the eligibility for new activities and products from Norske Skog under
development.
53%
Electricity, Renewable sources
4%
Electricity, Fossile sources
12%
Fossil
17%
Bio
15%
Recovered from TMP
85 % GREEN ENERGY IN 2022
(6,9 TWh Total Energy)
6.9 TWh
total energy
consumption
85%
green
energy
Sources of greenhouse gas emissions
SUSTAINABILITY REPORT
/
ENVIRONMENT
38
I
Norske Skog
I
Annual report 2022
Photo: Nicolas Michel
Photo: Carsten Dybevig
Ensure long term access
to sustainable energy
The production of publication and packaging paper is an energy-intensive
process. Energy is consumed mainly for two purposes:
•
To separate, process and transport fibre and water (electrical energy)
•
To provide process heat and to dry the paper (thermal energy)
The major use of electrical energy in mills, which process fresh fibre, is the
process to mechanically convert roundwood and wood chips into fibres, called
thermomechanical pulping (TMP) process. Paper production based on
recovered paper consumes less energy because the fibres from recovered
paper are more easily separated than those within wood.
Thermal energy is used for the heating and drying of paper. In contrast with
electrical energy, thermal energy is mostly generated within the mill. The
sources of this energy include recovered heat from the thermomechanical
pulping or effluent treatment processes, combustion of mill residues,
purchased biofuel, oil, gas or coal. In some cases, the thermal energy is
supplied by external third parties.
Norske Skog has comprehensive programmes to continuously reduce energy
consumption and become more environmentally friendly by changing the
sources of energy. Norske Skog is utilising the effluent to produce biogas with
its own biogas plants at Saugbrugs and Golbey for energy sales to external
customers. Effluent from Skogn is delivered to an external biogas plant
adjacent to the mill. The biogas plants employ biowaste from paper production
as fuel, contributing to a reduced carbon footprint and an improved
environmental profile for the group.
At Bruck in Austria, the group opened a new 50MW wide range energy boiler,
utilising refuse derived fuels and paper production residuals in April 2022.
The new energy plant at the Bruck mill is estimated to provide new revenue
from waste handling as well as cost savings in the publication paper production.
Bruck will deliver heat to the local district heating system to supply 1
500
households (30 GWh). In France, the Green Valley Energie (GVE) project,
supported by a partnership between Norske Skog Golbey, PEARL Infrastructure
Capital and Véolia Industries Global Solutions (Véolia), involves the design and
construction of a new biomass cogeneration plant, which will produce 200 GWh
of electricity and more than 500 GWh of steam.
In 2023, Norske Skog Skogn announced to explore opportunities to build a
biogas plant adjacent to the mill site processing livestock waste into large
quantities of biogas and farming fertilizer, thus substantially reducing
agricultural CO
2
emissions in the region. Norske Skog will continue to explore
projects within bioenergy that support and develop the business.
ACHIEVING LESS DEPENDENCY ON FOSSIL-BASED FUEL
Thermal energy, mostly heat recovery from the thermomechanical pulping
(TMP) or effluent treatment processes or from combustion of mill residues
(biofuel), is used for the heating and drying of paper. This accounts for in total
about 32%, in addition, electricity covers about 53% and fossil sources 16% of
the total energy consumption in 2022. In Norway, less than 1% of the energy
sources derives from fossil-based fuels. After the start-up of the new energy
plant at Bruck, the gas consumption went down by almost 70% from 2021 to
2022, and further reductions are expected in 2023 as the energy plant is
approaching normal capacity utilisation.
CONSUMPTION OF FOSSIL FUEL
PER TONNE PAPER
KWh/tonne
0
100
200
300
400
500
600
700
800
900
1 000
2022
2021
2020
2019
2018
CONSUMPTION OF RECOVERED HEAT FROM
THERMO-MECHANICAL PRODUCTION
MWh/tonne
0
100
200
300
400
500
600
700
2022
2021
2020
2019
2018
Coal
Gas
Oil
ENVIRONMENT
/
SUSTAINABILITY REPORT
1
Annual report 2022
I
Norske Skog
I
41
2
Social
Photo: Enzo Zadra
Ensure healthy lives and promote
well-being for all
HEALTH AND SAFETY:
Health and Safety has high priority for Norske Skog, twenty-four hours a day,
seven days a week. Norske Skog’s health and safety programme at the
business units, called “Take Care 24 hours”, is adapted to our different cultures
and local requirements where we operate, and shall always meet the
requirements of our health and safety standards for international activities.
Our goal is a safe working environment where health and safety receive equal
attention in planning and in the daily operations of the company.
All employees in Norske Skog shall take responsibility for improving the working
environment for themselves, their colleagues, visitors and sub-contractors.
Internal cooperation, involving sharing of experience and best practice, enables
us to adapt preventive activities to all our business units. Through the activities
in Take Care 24 hours, the group stimulates and encourages the same attitudes
and behaviour at work and during our spare time, for our own employees and
their families. At Norske Skog, we believe that issues relating to health, safety
and the environment must be fully integrated into all our activities at every level
and not managed as a separate and distinct function. That is why everyone
working in Norske Skog – whether an employee or contractor – is accountable
for the health, environmental and safety performance.
The Process for Safety Excellence (PSE) is an ongoing, structured process
integrated into the day-to-day business of the group to achieve the highest
level of health, safety and environmental performance. It applies to every unit
within Norske Skog and activity carried out by employees and contractors.
PSE focuses on three management components: people, assets and systems.
Each component includes nine elements (standards), providing the framework
for health, safety and loss prevention.
These standards are applicable to all operations, throughout Norske Skog,
which have the potential to adversely affect the health and safety of people,
including employees, contractors, visitors and the public.
THE OBJECTIVES OF THESE STANDARDS ARE:
• Define the minimum requirements for the health and safety systems at all
levels of operation
•
Provide a framework for health and safety systems measurement
•
Encourage a consistent approach to health and safety systems
•
Identify and share the best practice between business units
• Provide the business units the opportunity to assess themselves against
the standards and continually improve their systems
• Enable inter-mill/unit reviews to provide an external perspective and
recommendations for improvement
Where Norske Skog has no operational responsibility, but has an equity stake,
or where significant Norske Skog assets are involved in a subcontracting site,
arrangements shall be made to ensure that comparable standards of safety
are maintained. We strongly believe in behavioural based safety observations
and audits. These are observations of people’s workplace behaviour that
enables positive feedback for safe behaviour, recognition and correction of
unsafe acts.
Our Norwegian business units have signed an IA agreement regarding a more
inclusive workplace with the aim of reducing sickness absence rates and
increasing job attendance for all employees. Although the IA Agreement is a
distinctly Norwegian concept, our non-Norwegian business units operate
under similar conditions. The IA Agreement builds on a tripartite cooperation
between the national authorities, the trade unions and the company. The IA
Agreement and Norske Skog’s operational objective is to develop targets for
our work to prevent sickness and absence and to establish verifiable activity
9
Our identified
key elements
•
Leadership commitment
•
Employee participation and safe behaviour
•
Training and competence
•
Hazard and risk management
•
Management systems, reviews, audits, inspections
•
Performance measurement and reporting
•
Emergency preparation and response
•
Health
•
Contractors
SOCIAL
/
SUSTAINABILITY REPORT
2
Annual report 2022
I
Norske Skog
I
43
targets to achieve a professional attitude to both preventive and reactive
health care in the company.
All our business units also have local health, safety and environmental (HSE)
forums where the company and trade unions have regular meetings to address
local HSE issues. At these meetings, there should be an equal number of
representatives from the company and the employees, with as many different
groups as possible from within the organisation represented. If the organisation
has Occupational Health Services, it should also be represented on the
committee. Occupational Health Services should be an advisory and
independent body, and represent the interests of both the employer and the
employees.
Norske Skog has used Synergi Life for many years, which is an operational risk
management tool from DNV GL. We have a monthly Management Focus
Report (MFR), which is distributed to all business units for internal distribution
and includes type of injury and rates of injury, occupational disease rate, lost
working days due to accidents, absenteeism, total number of work-related
personal injuries and fatalities, by region and business unit. All business units
report their information into the Synergi, which is also a source for the transfer
of experience and sharing of best practices. Reports from Synergi are analysed
and form the basis for our internal HSE audits conducted by our HSE staff at
the group level.
Norske Skog is committed to provide a safe working environment for our
employees, contractors and visitors. Health and safety considerations are
integrated into the day-to-day business of Norske Skog and apply to every
organisation within Norske Skog and every activity carried out by its
employees and contractors.
Norske Skog aims to have zero injuries,
reduce sickness absence rates and
to increase focus on job attendance
for all employees.
HEALTH AND SAFETY PERFORMANCE:
Norske Skog had an absence rate due to illness of 4.7 per cent in 2022, which
is a 10% increase from last year. The total number of accidents at the mills are
almost at the same level in 2022 as in 2021, but it was a 58% decrease in lost
time injuries per million working hours (H1 or LTI) in 2022 compared to 2021.
The Norwegian inclusive working environment (IA) agreement directs the
operational objectives for the cooperation:
• Reduce sick leave
• Increase employee retention rate
•
Increase employment of people with functional impairments
• Increase the retirement age
Our work with the IA-agreement has been extended to apply to all of Norske
Skog’s business units and is intended to be an integral part of our targeted
health, safety and environmental (HSE) work.
H1 DEVELOPMENT
Lost time injuries per million working hours
0.0
0.5
1.0
1.5
2.0
2022
2021
2020
2019
2018
2018
2019
2020
2021
2022
LTI
1)
(H1)
0.9
0.5
0.8
1.9
0.8
TRI
2)
(H2)
7.4
9.8
6.6
5.9
7.1
Absence due to illness
3.8
3.7
4.2
4.2
4.7
1)
LTI = Lost Time Injuries per million working hours.
2)
TRI = Total Recordable Incident meaning total number of injuries with and without lost time per
million working hours.
SUSTAINABILITY REPORT
/
SOCIAL
44
I
Norske Skog
I
Annual report 2022
Promote lifelong learning opportunities for all
Norske Skog’s people and organisation strategy is to maintain a business-
oriented, international organisation that attracts and retains highly competent
and motivated employees on all levels around the world. We strive to give
people the opportunity to grow personally and professionally in a stimulating
working environment.
Our goal is to have a broad access to qualified personnel in a short and long-
term perspective. Norske Skog has a structured process for assessing people
performance and creating targeted professional development plan for human
resources. We believe in developing people through their entire employment
period in Norske Skog by providing training, job enrichment and career
opportunities. During 2023 the group is looking to establish an internal global
leadership development program.
We take pride in delivering advanced programs for apprentices. These
programs are the preferred source when recruiting to our business and a key
contribution from Norske Skog to society in terms of quality education. In
2022, 6.2% of our employees were apprentices and trainees
. In Norway, 44% of
new hired skilled workers are recruited from apprentice programs, whereas
the group achieved 32%.
A containerboard knowledge network group was established to prepare for
entering the packaging paper market. Most business units cooperate with
selected schools, colleges, and universities in their region. Our engagement
embraces activities such as mill visits, project work, diploma theses, trainee,
and apprentices’ programs. In our internal continuous improvement programs,
we aim to share knowledge and learnings. The group is working to further
improve the execution of annual performance reviews and development plans
by 2023.
Achieve gender equality
Norske Skog has an overall ambition to promote diversity and inclusion by
providing equal employment and career opportunities, in addition to treat all
employees fairly and with respect. We consider competence as the key for
both the company and the individual.
Norske Skog will conduct an analysis of certain aspects of equality and
diversity. Based on the outcome of this analysis, Norske Skog will further
develop its targets and initiatives.
The paper industry has traditionally attracted few female employees despite
several attempts to attract females to the industry. Shift work and unfavourable
working hours have been explanations for the low female share. In 2022, the
female share of the total workforce was 13%. Our female share in top
management positions is 17%, representing the top level in group management
at the headquarter, the management teams at the business units and the
Managing Directors at the sales offices. Our female share in other management
positions is 12%.
We are committed to search for female talents for a wider range of roles in our
company. Norske Skog recognises that further improvement is needed, and
we believe that our new strategic growth Initiatives will be instrumental in
terms of diversity.
NUMBER OF APPRENTICES AND
TEMPORARY EMPLOYEES
Temporary employees
Apprentices
0
30
60
90
120
150
2022
2021
2020
2019
2018
% female
% female in top management positions
PROPORTION OF FEMALE (%)
0
3
6
9
12
15
18
2022
2021
2020
2019
2018
SOCIAL
/
SUSTAINABILITY REPORT
2
Annual report 2022
I
Norske Skog
I
45
Promote inclusive and productive employment
Norske Skog’s ambitions are to promote decent and transparent working
conditions, which are necessary to nurture the productivity, growth, and
sustainability of our business. In addition, Norske Skog will comply with
employment legislation in the countries where we operate and have close
cooperation with unions.
Norske Skog is committed to promote diversity and inclusion by providing
equal employment opportunities and treating all employees fairly and with
respect. All employees and others acting on behalf of Norske Skog are
expected to conduct business in an ethical manner and must always comply
with applicable laws and regulations. In practice, we encourage the Norwegian
Discrimination Act’s objectives within our business. Norske Skog will commit
to an inclusive work culture, which appreciates and recognises that all people
are unique and valuable and should be respected for their individual abilities
and views. We will also prevent discrimination due to ethnicity, national origin,
descent, skin colour, language, religion and faith.
In 2022, Norske Skog Golbey and Norske Skog Saugbrugs had Platinum
Rating from EcoVadis for its performance on environmental and social impact,
human rights and responsible sourcing. Eco Vadis is a leading independent
organisation that evaluate supplier performance in terms of sustainability.
Platinum rating is the highest possible rating and place them in the top 1 % of
companies in the pulp and paper industry.
Labour associations:
Norske Skog fully complies with all laws regulating collective bargaining and
recognises freedom of association. Our commitment to respect the freedom of
association is embodied in the Global Framework Agreement on the
Development of Good Working Relations, concluded by Norske Skog and the
IndustriALL Global Union. Norske Skog respects and supports the human
rights of all individuals potentially affected by our operations and subscribes
to the United Nations Global Compact principles.
People performance analysis:
As of 31 December 2022, Norske Skog employed 2
140 people in Europe and
Australasia, which is an 2% increase from last year was mainly connected to
new employees to operate the energy plant and the packaging paper
production at Norske Skog Bruck. The turnover of people, including retirement,
was 14%. Our employment levels are not subject to seasonal variations, and
the share of temporary employment is around 5% of the total.
In 2022, unions represented 88% of our employees for collective bargaining
purposes. There have been no reported incidents of child labour, forced or
compulsory labour during the reporting period. Nor has there been any
reported incidents of discrimination in respect of employment or occupation.
The risk of such incidents in the supply chain is considered low, and a high-
level risk assessment of suppliers has not provided information or indications
of any violation by our suppliers.
Respecting Human Rights
Norske Skog is committed to respect and support fundamental human rights
and decent working conditions of all individuals potentially affected by our
operations and business relationships. We perform human rights due diligence
in accordance with the OECD Guidelines for Multinational Enterprises and
ensure compliance with relevant national legislations.
Norske Skog does not have operations in countries with high risk of human
rights violations. As a global company, with suppliers and customers in a
variety of countries, we do however recognize that Human Rights risk may be
present in our value chain.
To manage this responsibility, Norske Skog established new processes for
responsible business conduct into our management systems in 2022. A
Human Rights Policy was approved by the board of directors in December
2022. As part of this process, we have developed a Human Rights Manual for
internal use, describing roles, responsibilities and compliance activities at
group and business unit levels as including practical guidance.
In 2022 business units across Norske Skog Group have started the work of
systematically identifying and assessing actual and potential negative
consequences for basic human rights and decent working conditions. Results
from the high-level identification process highlight three areas of priority
across our value chain:
• Health and safety
• Fair labor conditions
• Natural resource related human rights
The risk of adverse impact from these areas are assumed to most significant
is our supply chain. Our business units have started the process of assessing
prioritized areas in selected purchasing categories. We will publish updated
information about these processes and related results in 2023. We will publish
information on our webpage annually by 1st of July regarding these processes
and related results.
Modern Slavery and Trafficking Statement in Australia:
Norske Skog Australia signed the first Modern Slavery and Trafficking
Statement, as required under the Australian Federal Modern Slavery Act of
2018. The purpose is to outline our approach and commitment to ensuring
that the group has robust frameworks and processes in place to establish zero
tolerance level for modern slavery and human trafficking in our business and
value chain. Norske Skog is obliged to operate responsibly and adhere to the
highest ethical standards across business units.
The Norwegian transparency act:
In June 2021, the Norwegian Parliament passed the Transparency Act (In
Norwegian: “Åpenhetsloven”) with the purpose to promote companies’ respect
for fundamental human rights and decent working conditions in connection
with the production of goods and services, and to ensure the general public
access to information on how companies handle negative consequences on
fundamental human rights and decent working conditions.
The act applies to large enterprises that are domiciled in Norway, which offer
goods and services inside or outside Norway. The act entered into force on 1 July
2022. Norske Skog will comply with the obligations under the scope of this act.
SUSTAINABILITY REPORT
/
SOCIAL
46
I
Norske Skog
I
Annual report 2022
Cooperation with local communities
Norske Skog seeks to understand the actual and potential impacts our
operations have on local communities, and to understand their expectations
and needs. We cooperate and report to the local communities about significant
infrastructure investments and services supported, both current or expected
impacts on communities and local economies.
Several business units are situated in immediate proximity to local towns.
Norske Skog aims to be a strong and solid contributor for these communities.
To manage this relationship, we have established a target to report the
significant social, environmental, safety and economic impacts our operations
have on these local communities. We achieve this by working closely with the
community in various aspects, both authorities and private partners and
though open and honest dialogue about environment, safety- and economic
issues on regularly.
Our activities affect employees, suppliers, customers and partners in many
countries, regions, towns, and villages. Our decisions and activities, production
and sales have an impact on a multitude of individuals, groups, and companies,
both financially and otherwise. We are aware of that Norske Skog’s decisions
may have great significance and impact on the local community. We believe
that an open dialogue and cooperation with the local community on strategies
and investment plans will benefit all parties in the long term. During the
process to establish new industrial facilities and machine conversions at
Norske Skog Bruck and Norske Skog Golbey, Norske Skog had and still have
positive experience with the comprehensive dialogue and communication
with stakeholders in the local communities.
To improve and maintain our role in society and as an important employer in
local communities, our business units are encouraged to be active and open in
their communication and contact with local stakeholders. Examples include
reports to neighbours and other local stakeholders, open days for the public to
inform about our business, engagement in nature protection projects, support
to local museums, involvement in sports and cultural initiatives, support to
charitable organisations, as well as integration of immigrants and disabled
persons through vocational training. We encourage employees to take part in
local community work as many of them do.
Laura Ness
HR trainee
Norske Skog Skogn
Hello, I am Laura Ness, and I am 24
years old. I have a Bachelor and
Masters
degree
(BSc
Business
Management with specialism in HR &
MSc
Occupational
and
Business
Psychology) from Kingston University
in London. I started working as an HR trainee in June 2022.
I decided to work for Norske Skog because I have always been
fascinated with industry, but I really do not have an engineering type
of brain. However, now I have the best of both worlds, HR at an
industrial company!
My main tasks include employer branding, social media, communi-
cation, recruitment and other HR-related tasks.
Outside of work, I enjoy cross-country skiing, working out, and
spending time with my niece. Besides that, I’m obsessed with podcasts,
documentaries and skincare.
Photo: Lézards Création
SOCIAL
/
SUSTAINABILITY REPORT
2
Annual report 2022
I
Norske Skog
I
47
3
Corporate
governance
Photo: Carsten Dybevig
Norske Skog ASA is a Norwegian based paper manufacturer with production
and sales operations in Europe and Australasia. Norske Skog’s goal is to
increase shareholder value, through profitable and sustainable production of
publication and packaging paper as well as other fibre and energy related
business. Norske Skog ASA is a Norwegian registered public limited liability
company listed on the Oslo Børs and is subject to Norwegian law, including
Norwegian and EU securities legislation and stock exchange regulations.
The board of directors of Norske Skog has a strong focus on ensuring
compliance with applicable corporate governance standards. Norske Skog is
subject to reporting requirements for corporate governance pursuant to
Section 3-3b the Norwegian Accounting Act, and complies with the Norwegian
Code of Practice for Corporate Governance (the “Code”, see www.nues.no,
English pages). The Code was last revised on 14 October 2021.
Corporate governance principles as referred to in this statement define roles
and responsibilities, powers and processes, between and within governing
bodies, such as the general meeting, the board of directors and the corporate
management. For further information on corporate bodies and corporate
governance matters, please visit Norske Skog’s website www.norskeskog.
com/sustainability/governance.
Corporate governance is continuously addressed by the board of directors,
and the board of directors has approved this corporate governance statement.
There are no material amendments to the corporate governance statement
compared to the corporate governance statement included in the annual
report for 2021.
1.
Implementation and reporting on corporate
governance
This corporate governance statement follows the structure of the Code
published on 14 October 2021. Deviations from the Code shall be explained
where relevant in this statement, together with a summary of all deviations in
this section 1.
There are currently no deviations from the Code.
The corporate governance principles adopted by Norske Skog are set out in
the company’s Corporate Governance Policy, and are fundamental for the
company’s corporate governance and value creation. Norske Skog’s Corporate
Governance Policy is based on the Code and, as such, it is designed to
establish a basis for good corporate governance and to support achievement
of the company’s core objectives on behalf of its shareholders, including the
achievement of profitability for the shareholders of Norske Skog in a
sustainable manner. The manner in which Norske Skog is governed is vital to
the development of its value over time.
Norske Skog believes that good corporate governance involves openness,
honesty and cooperation between all parties involved in and with the group:
the shareholders, the board of directors and executive management,
employees, customers, suppliers, public authorities and the society in general.
By pursuing the principles set out in the Corporate Governance Policy, the
board of directors and management shall contribute to achieving the following
objectives:
•
Openness and honesty. Communication with the interest groups of Norske
Skog shall be based on openness and honesty on issues relevant for the
evaluation of the development and position of the company.
• Independence. The relationship between the board of directors, the
management and the shareholders shall be based on independence.
Independence shall ensure that decisions are made on an unbiased and
neutral basis.
•
Equal treatment. One of Norske Skog’s primary objectives is equal treatment
and equal rights for all shareholders.
• Control and management. Good control and corporate governance
mechanisms shall contribute to predictability and reduce the level of risks
for shareholders and other interest groups.
The development of, and improvements in, the company’s Corporate
Governance Policy are ongoing and important processes that the board of
directors and management have continuous focus on.
Deviations from the Code: None.
2.
Business
Norske Skog’s business purpose is set out in the Articles of Association, article
2: “The company’s objective is to conduct wood processing industry, investing
activities and activities related to this, as well as providing headquarter
services for the group, including raise of external loans and conducting group
financing arrangements.” The Articles of Association are available on the
company’s website. The business of the company is conducted in accordance
with the targets, strategies and risk profile determined by the board of
directors, within the scope of the company’s business purpose, in order to
realise value creation for the shareholders in a sustainable manner. The board
of directors considers the targets, strategies and risk profile of the company
on a continuous basis.
The company has established guidelines and principles which are used to
integrate considerations to human rights, decent working conditions,
employee rights and social matters, the external environment and anti-
corruption and other compliance efforts in its business strategies, its day-to-
day operations and in relation to its stakeholders. This includes, but is not
limited to the Norske Skog Steering Guidelines and the Code of Conduct.
Compliance with the Steering Guidelines and the Code of Conduct is
mandatory for all employees in the group and others acting on the group’s
behalf, and similar conduct and ethical standards are expected from suppliers,
CORPORATE GOVERNANCE
/
SUSTAINABILITY REPORT
3
Annual report 2022
I
Norske Skog
I
49
customers, other business relations and in partnerships, joint ventures and
partially owned subsidiaries. The Steering Guidelines and the Code of Conduct
can be found on the company’s website.
Sustainability and corporate social responsibility are integrated parts of the
group’s business and are described in the sustainability report section of the
annual report.
Deviations from the Code: None.
3.
Equity and dividends
SHARE CAPITAL
The share capital of Norske Skog is set out in the Articles of Association, article 4.
The company’s share capital at year end 2022 was NOK 377
058 820,
divided
into 94
264 705
shares, each with a nominal value of NOK 4.00
.
EQUITY
The board of directors is responsible for ensuring that the group is adequately
capitalised relative to the risk and scope of operations and that the capital
requirements set forth in laws and regulations are met. The company shall
have an equity capital at a level appropriate to its objectives, strategy and risk
profile. The board of directors shall continuously monitor the group’s capital
situation and shall immediately take adequate steps if the company’s equity or
liquidity is less than adequate.
Norske Skog’s consolidated total equity as at 31 December 2022 was
NOK 5
909 million, which is equivalent to 43.4% of total assets (for Norske
Skog ASA, the total equity was NOK 4
115 million, which is equivalent to
53.6% of total assets)
.
DIVIDEND POLICY
It follows from Norske Skog’s Corporate Governance Policy that the company
shall, at all times, have a clear and predictable dividend policy established by
the board of directors. The dividend policy forms the basis for the board of
directors’ proposals on dividend payments to the company’s general meeting.
The company’s dividend policy has historically been to pay dividends
reflecting the underlying earnings and cash flow while ensuring efficient
capital allocation in the group. When deciding the dividend level, the board of
directors will among other things take into consideration capital expenditure
plans, financing requirements and maintaining the appropriate strategic
flexibility of the group. The group’s financing arrangements for the ongoing
projects to convert newsprint production capacity to recycled containerboard
production capacity include restrictions on dividend distribution in the period
up to July 2025. The company’s dividend policy has therefore been suspended
until such restrictions do no longer apply. For financial years with particularly
strong financial performance, however, the company may consider to request
consent from relevant financing providers to make dividend distributions.
On the basis of the results for the financial year 2022, the company will
request a consent from relevant financing providers to pay dividend of up to
NOK 5 per share, and the board of directors will accordingly propose that the
annual general meeting approves an authorisation to the board of directors for
payment of dividend in the equivalent amount, i.e. up to NOK 5 per share.
CAPITAL INCREASES AND ISSUANCE OF SHARES
The general meeting in 2022 authorised the board of directors to increase the
share capital one or several times with an aggregate amount of up to
NOK 37
705 882,
equivalent to 10% of the company’s share capital. The
authorisation may be used for general corporate purposes, including, but not
limited to, financing of the company’s strategic plans and in connection with
acquisitions of companies or other businesses. The authorisation was granted
for the period up to the annual general meeting in 2023. As of the date hereof,
the authorisation has not been used.
Deviations from the Code: None.
4.
Equal treatment of shareholders
The company has only one class of shares. Each share in the company carries
one vote, and all shares carry equal rights, including the right to participate in
general meetings. All shareholders shall be treated on an equal basis, unless
there is just cause for treating them differently.
In the event of an increase in share capital through issuance of new shares, a
decision to deviate from existing shareholders’ pre-emptive rights to subscribe
for shares shall be justified. Where the board of directors resolves to issue
shares and deviate from the pre-emptive rights of existing shareholders
pursuant to an authorisation granted to the board of directors by the general
meeting, the justification will be publicly disclosed in a stock exchange
announcement issued in connection with the share issuance.
Any transactions in treasury shares carried out by the company shall be carried
out on the Oslo Børs, and in any case at the prevailing stock exchange price. In
the event that there is limited liquidity in the company’s shares, the company will
consider other ways to ensure equal treatment of shareholders. Any transaction
in treasury shares by the company is subject to notification requirements, and
shall be publicly disclosed in a stock exchange announcement.
Deviations from the Code: None.
5.
Shares and negotiability
The shares of the company are freely negotiable and there are no limitations
on any party’s ability to own or vote for shares in the company.
Deviations from the Code: None.
6.
General meetings
The general meeting is the shareholders’ forum and the supreme governing
body of the company. The Articles of Association do not limit the shareholders’
rights as provided by the Public Limited Liability Companies Act. The board of
directors sets the agenda for the general meeting. The minutes from the
general meeting are published externally and on the company’s website, in
accordance with applicable laws and deadlines.
The board of directors shall ensure that as many of the company’s shareholders
as possible are able to exercise their voting rights at the company’s general
SUSTAINABILITY REPORT
/
CORPORATE GOVERNANCE
50
I
Norske Skog
I
Annual report 2022
meetings, and that the general meeting is an effective forum for shareholders
and the board of directors, which shall be facilitated through the following:
• the resolutions and any supporting documentation shall be sufficiently
detailed, comprehensive and specific allowing shareholders to understand
and form a view on all matters to be considered at the general meeting;
•
deadlines for shareholders to give notice of their attendance at the general
meeting shall be set as close to the date of the general meeting as practically
possible;
• the board of directors and the chair of the nomination committee shall be
present at general meetings, while other members of the nomination
committee as well as the auditor shall be present at general meetings where
matters of relevance for such committees/persons are on the agenda; and
• the board of directors shall ensure that the general meeting can elect an
independent chair for the general meeting.
The shareholders shall be able to vote on each of the matters on the agenda,
and shall be able to vote separately on each candidate at elections.
Shareholders who are unable to be present at the general meeting, or for other
reasons so desire, shall be given the opportunity to vote electronically through
VPS in advance of the general meeting, be represented by proxy and to vote
by proxy. The company shall in this respect:
•
provide information on the procedure for voting electronically in advance of
the general meeting;
•
provide information on the procedure for attending by proxy;
•
nominate a person who will be available to vote on behalf of shareholders as
their proxy; and
•
prepare a proxy form, which shall, to the extent this is possible, be set up so
that it is possible to vote on each of the items on the agenda and the
candidates nominated for election.
Deviations from the Code: None.
7.
Nomination committee
Pursuant to the Articles of Association, article 8, the company shall have a
nomination committee consisting of between one and three members. The
company’s general meeting elects the members and the chair of the nomination
committee and determines their remuneration. The majority of the members
of the nomination committee shall be independent from the company’s board
of directors and executive management. The members of the nomination
committee shall not be members of the board of directors or the executive
management, and not offer themselves for election to the board of directors.
The composition of the nomination committee should be such that the
interests of shareholders in general are represented. The nomination
committee currently consists of two members, Yngve Nygaard, who serves as
the chair of the committee, and Richard Timms.
The general meeting shall approve the instructions for the nomination
committee. These instructions set out the objectives, responsibilities and
functions of the nomination committee, and provide guidelines for rotation of
its members. The company shall provide information regarding the composition
of the nomination committee, the members of the nomination committee and
any deadlines for submitting proposals to the nomination committee as part of
its recommendations to the general meeting.
The nomination committee shall recommend candidates for the election of
members and chair of the board of directors, candidates for the election of
members and chair of the nomination committee, and remuneration of the
members of the board of directors, its board committees and the nomination
committee.
The nomination committee shall have contact with shareholders, the board of
directors on an individual basis and the company’s executive personnel as
part of its work on proposing candidates for election to the board.
The nomination committee’s recommendation of candidates to the nomination
committee shall ensure that they represent a broad group of the company’s
shareholders. The nomination committee’s recommendation of candidates to
the board of directors shall ensure that the board of directors is composed to
comply with legal requirements and principles of corporate governance. The
nomination committee shall justify why it is proposing each candidate
separately. The proposals from the nomination committee shall include a
reasoning for its proposal, as well as a statement on how it has carried out its
work. The nomination committee’s proposal shall include information about
the candidates, and shall be made available at the latest in accordance with
the 21 days’ notice rule to call for a general meeting. Shareholders shall be
given the opportunity to submit proposals to the nomination committee for
candidates for election to the board of directors and other appointments in a
simple and practical manner. Any date for when such proposals must be
submitted to be considered by the nomination committee shall be
communicated. The nomination committee of Norske Skog are, however,
generally available to receive proposals for candidates or other input from
shareholders at any time throughout the year.
Deviations from the Code: None.
8.
The board of directors’ composition and
independence
According to the Articles of Association, the board of directors of Norske Skog
shall have between three and eight board members. The current number of
board members is five, and in addition there are two observers to the board of
directors being union representatives from each of the two Norwegian mills.
The composition of the board of directors should ensure that the board of
directors has the expertise, capacity and diversity needed to achieve the
company’s goals, handle its main challenges and promote the common
interests of all shareholders. Each board member should have sufficient time
available to devote to his or her appointment as a board member. The number
of board members should be determined on this basis. Furthermore, individuals
of the board of directors shall be willing and able to work as a team, resulting
in the board of directors working effectively as a collegial body.
The board of directors shall be composed so that it can act independently of
any special interests. A majority of the shareholder-elected members of the
board of directors shall be independent of the executive management and
material business connections of the company. At least two of the members of
the board of directors shall be independent of shareholders that owns or
controls 10% or more of the company’s shares or votes, and meaning that
there are no circumstances or relations that may be expected to be able to
influence the independence of the board members’ assessments.
The members of the board of directors and the chair of the board of directors
CORPORATE GOVERNANCE
/
SUSTAINABILITY REPORT
3
Annual report 2022
I
Norske Skog
I
51
(*)
Please refer to the description in the board of directors section of the
annual report for further information on the expertise, experience and
independence of the members of the board of directors, as well as the
board members’ respective shareholdings in the company.
(**)
John Chiang served as chair of the board of directors until the extraordinary
general meeting held on 9 March 2023, at which Geir Drangsland was
elected as the new chair of the board of directors.
(***)
The board member was elected to the board of directors at the annual
general meeting in 2022, after which six board meetings were held in the
remainder of 2022.
The board members have a statistic attendance at board meetings of 100%.
Members of the board of directors are encouraged to own shares in the
company. However, caution should be taken not to let this encourage a short-
term approach, which is not in the best interests of the company and its
shareholders in the longer term.
The nomination committee’s proposal to the general meeting (as further
described in item 7 above) shall include detailed information on candidates
for the board of directors (both appointments and re-elections), and shall be
made available at the latest in accordance with the 21 days’ notice rule to call
for a general meeting.
Deviations from the Code: None.
9.
The work of the board of directors
The board of directors’ main tasks comprise the overall responsibility for the
management of the company, and overseeing the daily administration and
operations of the company. The work of the board of directors is carried out
in accordance with the rules and standards applicable to the group, as
described in the company’s Corporate Governance Policy’s instructions to
the board of directors. The instructions to the board of directors include
detailed description of duties and responsibilities of the board members, as
well as working and meeting procedures. The Corporate Governance Policy’s
instructions to the board of directors and the instructions to the CEO include
procedures for how the board of directors and executive management shall
handle agreements with related parties, including whether an independent
valuation must be obtained. Agreements with related parties are described in
Note 24 Related parties in the consolidated financial statements.
The board of directors prepares an annual plan for its work, clearly setting out
strategic, financial, operational and organisational matters for discussion and
resolution. In addition to addressing the matters on such plan, the board of
directors continuously addresses matters and processes which require the
board of directors’ involvement from time to time. Throughout 2022 and into
2023, the board of directors has in addition to recurring matters concentrated
a significant amount of time on the strategic development and projects of the
group. Among the most important strategic projects of the group worked on
by the board of directors during 2022 are the group’s conversion of newsprint
paper machines to recycled containerboard paper machines, with one
machine at the Golbey mill in France and one machine at the Bruck mill in
Austria, including the energy boiler projects at these mills that are being
constructed in tandem with the conversions. Furthermore, efforts and results
within the areas of health, environment and safety are annually reported
comprehensively to the board of directors, and the CEO reports on health,
environment and safety, operations and market developments in every board
meeting. The board of directors actively manages the resources of the board
of directors and its committees in accordance with the relative strategic and
commercial importance of matters.
The board of directors has two sub-committees, an audit committee, as
required by the Public Limited Liability Companies Act, and a remuneration
committee. The members of the audit committee during 2022 were Arvid
Grundekjøn (chair), John Chiang and Trine-Marie Hagen. The members of the
remuneration committee during 2022 were John Chiang (chair) and Arvid
Grundekjøn. The company’s Corporate Governance Policy includes a set of
instructions for each of the committees, describing defined areas of
responsibility. The committees undertake preparatory discussions and
submit their recommendations to the board of directors.
Name (*)
Residence
Role
Committee memberships
Board meetings
attended
Board member
since
End of term
John Chiang
(**)
London, UK
Chair
Audit committee and remuneration committee
8/8
2018
2023
Arvid Grundekjøn
Oslo, Norway
Board member
Audit committee and remuneration committee
8/8
2018
2023
Trine-Marie Hagen
Oslo, Norway
Board member
Audit committee
8/8
2019
2023
Nikolai Johns
Oslo, Norway
Board member
N/A
6/6
(***)
2022
2024
Johanna Lindén
Gothenburg,
Sweden
Board member
N/A
6/6
(***)
2022
2024
shall be elected by the company’s general meeting. No member of the
company’s executive management shall be members of the board of directors.
At least half of the members of the board of directors shall reside in Norway or
another EEA country. Both genders shall be represented on the board of
directors in compliance with the gender representation requirements set out
in section 6-11a of the Norwegian Public Limited Liability Companies Act. The
term of office for the board members shall not be longer than two years at a
time. Members of the board of directors may be re-elected. The election of the
members of the board of directors should be phased so that the entire board
of directors is not replaced at the same time.
The following table summarises the roles of the members of the board of
directors and meeting attendance at board meetings held in 2022:
SUSTAINABILITY REPORT
/
CORPORATE GOVERNANCE
52
I
Norske Skog
I
Annual report 2022
(*)
Please refer to the description in the board of directors section of the annual report for
further information on the expertise, experience and independence of the members of the
board of directors, as well as the board members’ respective shareholdings in the company.
(**)
John Chiang served as chair of the board of directors, member of the audit committee and
chair of the remuneration committee until the extraordinary general meeting held on 9 March
2023, at which Geir Drangsland was elected as the new chair of the board of directors.
The board members have a statistic attendance at board and committee
meetings of 100%.
In 2022, the board of directors held eight meetings and one matter was
resolved by written resolutions. The audit committee held eight meetings in
2022. The remuneration committee held two meetings in 2022 and one
matter was resolved by written resolutions. Due to the circumstances around
COVID-19, the meetings of the board of directors and its committees were to
a large extent held by video conference throughout 2021. At the end of 2021
and in the beginning of 2022, the meetings were increasingly held with
physical attendance and following Q1
2022, all meetings were held physically.
Representation at meetings of the board of directors and committee meetings
is at 100%.
The board of directors shall annually evaluate its performance and expertise
for the previous year. This evaluation shall include the composition of the
board of directors and the manner in which its members functions, both
individually and as a group, in relation to the objectives set out for its work.
The report shall be made available to the nomination committee. In the
beginning of 2023, ISCO Group assisted with completing the evaluation
process for the year 2022.
Deviations from the Code: None.
10.
Risk management and internal control
The board of directors is responsible for ensuring that the company has sound
and appropriate internal control systems and systems for risk management,
and that these systems are proportionate to and reflect the extent and nature
of the company’s activities. Having effective internal control systems and
systems for risk management in place are important to prevent the group from
situations that can damage its reputation and financial standing. Furthermore,
effective and proper internal control and risk management are important
factors when building and maintaining trust, to reach the company’s objectives,
and ultimately create value. Having in place an effective internal control
system means that the company is better suited to manage commercial risk,
operational risk, the risk of breaching legislation and regulations as well as
other forms of risk that may be material to the company. As such, there is a
correlation between the company’s internal control systems and effective risk
management. The internal control system shall also address the organisation
and execution of the company’s financial reporting, as well as cover the
company’s guidelines for how it integrates considerations related to
stakeholders into its creation of value. Norske Skog shall comply with all laws
and regulations that apply to the group’s business activities.
Norske Skog’s enterprise risk management processes are based on COSO’s
Enterprise Risk Management framework, and cover financial, operational,
market and organisational risks. By this delineation of risk control, all
sustainability and responsibility areas covered by Norske Skog’s Steering
Guidelines are also covered by its enterprise risk management processes and
is reported to the board of directors. The system is based on the management
teams in each business unit and in key corporate functions annually reporting
potential risk factors to the company’s risk management function, which in
turn provide a basis for the agenda of the corporate management meetings
and adequate follow-up measures. In addition, Norske Skog annually reviews
and reports on sustainability in accordance with GRI’s Sustainability Reporting
Standards. The annual review is carried out by an independent and
internationally recognised audit firm. Further information on the group’s
sustainability reporting is provided in the group’s sustainability report included
in the sustainability report section of the annual report.
The internal control systems within the finance organisation primarily cover
the financial reporting structure and processes. Routines for internal control
over financial reporting are defined in Norske Skog’s internal control
documentation (Financial Reporting Manual, Financial Closing Manual and
Financial Closing Checklist). Responsibilities are clearly defined in terms of
execution, documentation and control. As part of the continuous focus on
compliance, regular reviews of business processes, investments or other
issues are carried out. These compliance processes are carried out on the
basis of risk assessments, and support the business in improving internal
control and achieving the set goals. The group also has a power of attorney
structure which describes and regulates financial empowerment to individual
positions.
Name (*)
Committee memberships
Board meetings attended
Audit committee meetings
attended
Remuneration committee
meetings attended
John Chiang
(**)
Audit committee and remuneration committee
8/8
8/8
2/2
Arvid Grundekjøn
Audit committee and remuneration committee
8/8
8/8
2/2
Trine-Marie Hagen
Audit committee
8/8
8/8
N/A
The audit committee focused on the company’s financial reporting and
internal control function during 2022. In addition, the committee completed a
tender process for the role as new external auditor as part of a periodical
change of audit firm, and prepared a recommendation to the general meeting
in this respect. The committee furthermore focussed on improving the
reporting on salary and other remuneration to executive personnel in 2022.
The external auditor and the CFO attend the meetings of the audit committee.
The CEO attends the meetings of the remuneration committee, except if
excused for discussions on the CEO’s remuneration.
The following table summarises the meeting attendance of the board
members at board and committee meetings held in 2022:
CORPORATE GOVERNANCE
/
SUSTAINABILITY REPORT
3
Annual report 2022
I
Norske Skog
I
53
In addition, Norske Skog has implemented internal routines to ensure
continuous attention and efforts on maintaining high compliance standards
throughout the group. These internal routines are set out in Norske Skog’s
Continuous Compliance Program, and include a number of compliance related
activities that shall be carried out over the course of a calendar year.
Norske Skog has clearly established channels and procedures for reporting
and handling instances of possible serious misconduct (whistle blowing).
Such channels are described on our website, intranet and in the Steering
Guidelines.
It is the opinion of the board of directors that Norske Skog’s internal control
and systems for risk management are adequate and proportionate to the
nature and complexity of the company’s operations and financial situation.
Deviations from the Code: None.
11.
Remuneration of the board of directors
The remuneration of the board of directors is decided by the annual general
meeting on the basis of the nomination committee’s proposal. The committee
considers the level of responsibility, complexity and time consumption, as well
as the required expertise, for the board members. Proposals for annual
adjustments of the remuneration of the board of directors are based on
considerations to ensure that Norske Skog remains attractive and competitive
on the market for governing bodies’ competencies.
No board member has carried out specific tasks or commissions for the
company in addition to the directorship, and Norske Skog has not paid other
remuneration to any board member than the ordinary board remuneration.
Separate remuneration is set for the chair and members of the board of
directors and respective committees under the board of directors. The current
remuneration amounts are as follows:
1. The remuneration for the chair of the board is NOK 500
000 per year.
(*)
2. The remuneration for the other members of the board is NOK 300
000
per year.
4. The remuneration for the chair of the audit committee is NOK 130
000
per year.
5. The remuneration for other members of the audit committee is NOK 50
000
per year. (*)
4. The remuneration for the chair of the remuneration committee is NOK 30
000
per year. (*)
5. The remuneration for other members of the remuneration committee is
NOK 20
000 per year.
6. Travel expenses in connection with board and committee meetings are paid
in accordance with the Norwegian Government’s Travel Allowance Regulation.
(*)
John Chiang, who during 2022 served as the chair of the board, chair of the remuneration com-
mittee and member of the audit committee, is a partner of Oceanwood Capital Management LLP,
the investment manager of the company’s previously largest shareholder, NS Norway Holding
AS. Due to internal guidelines in Oceanwood Capital Management LLP, Mr Chiang did not receive
remuneration for his role as chair of the board, chair of the remuneration committee and member
of the audit committee.
The total remuneration for the board of directors in 2022, including committee
work, was NOK 1
369 745.
For further information, please refer to the report
on salary and other remuneration to leading personnel, which is available on
the company’s website, www.norskeskog.com.
Deviations from the Code: None.
12.
Remuneration of executive personnel
The board of directors has adopted guidelines for determining salary and
other remuneration to leading personnel in accordance with Section 6-16 a of
the Public Limited Liability Companies Act and the Regulation on guidelines
and reporting on remuneration for leading personnel. In the preparation of the
guidelines and in any subsequent amendments to these, the focus of the
board of directors is to provide for that the guidelines are clear and easily
understandable, and that they contribute to the company’s commercial
strategy, long-term interests and financial viability. Furthermore, the
company’s arrangements in respect of salary and other remuneration shall be
simple and contribute to aligning the interests of leading personnel and
shareholders, with an absolute limit on performance-related remuneration.
The guidelines are presented for approval by the general meeting if significant
changes are made, and at least every fourth year. The current version of the
guidelines was approved by annual general meeting in 2021 and are available
on the company’s website, www.norskeskog.com.
The CEO’s remuneration terms are reviewed and decided annually by the
board of directors following preparatory discussions in the board of directors’
remuneration committee. The remuneration consists of base salary, annual
performance bonus, pension and other benefits. The decision on the CEO’s
remuneration takes into consideration the overall performance of the CEO and
the company, and the market development for CEO remuneration in companies
of similar complexity, size and industries. The remuneration of other leading
personnel is determined by the CEO, and the performance related remuneration
consist of the same elements as for the CEO.
Performance based elements are calculated on the basis of quantifiable
objective targets as well as on quantifiable targets falling within areas over
which the respective executives have a reasonable influence.
In addition, Norske Skog has established a long-term incentive program based
on synthetic stock options. The program mirrors the financial outcome of an
actual stock option with an initial “exercise price” (which corresponds to the
price per share set at the time of award of the options) and a mechanic to fix
a “fair market value” in the future when the options are exercised (3-5 years
following award of the options). The long-term incentive program is described
in the guidelines for determining salary and other remuneration to leading
personnel, which are available on the company’s website, www.norskeskog.com.
The board of directors shall for each financial year provide for the preparation
of a report on salary and other remuneration to leading personnel in
accordance with Section 6-16 b of the Public Limited Liability Companies Act
and the Regulation on guidelines and reporting on remuneration for leading
personnel. The report is subject to an advisory vote by the annual general
meeting and is published on the company’s website, www.norskeskog.com,
following the annual general meeting. In addition, information about
remuneration of leading personnel is available in the financial statements, in
SUSTAINABILITY REPORT
/
CORPORATE GOVERNANCE
54
I
Norske Skog
I
Annual report 2022
Note 7 Employee benefit expenses in the consolidated financial statements.
Deviations from the Code: None.
13.
Information and communications
The company has established guidelines for its reporting of financial and
other information based on openness and taking into account the requirement
of equal treatment in the securities market. These guidelines are set out in the
company’s Communication Policy and the Investor Relations Policy.
The company provides, timely and on a continuous basis, precise information
about the company and its operations to its shareholders, the Oslo Børs and
the securities market and the financial market in general. Such information is
published through the Oslo Børs’ information system and the company’s
website. Information is typically given in the form of annual reports, half-year
reports, quarterly reports, press releases, stock exchange notices and through
published investor presentations in accordance with what is deemed
appropriate and required at any given time. Financial reporting follows
International Financial Reporting Standards, and through open and proactive
communication with investors and financial markets, including through regular
presentations, Norske Skog ensures transparency and equality to facilitate
our stakeholders’ assessment of the company. The company furthermore
regularly provides information on its long-term potential, including strategies,
value drivers and risk factors. Information to Norske Skog’s investors will also
be published simultaneously through the Oslo Børs’ information system and/
or the company’s website.
The company publishes an annual, electronic financial calendar with an
overview of dates for important events, such as the annual general meeting,
interim financial reports, public presentations and payment of dividends, if
applicable. The information is made available in English and Norwegian.
Unless there are applicable exemptions that is appropriate to utilise in the
specific situation, Norske Skog promptly discloses all inside information (as
defined in article 7 of the EU Market Abuse Regulation). In addition, Norske
Skog provides information about certain events, e.g. by the board of directors
and the general meeting concerning dividends, mergers/demergers or
changes to the share capital, the issuing of subscription rights, convertible
loans and all agreements of major importance that are entered into by Norske
Skog and related parties.
Separate guidelines have been implemented regarding handling of inside
information, and these follow from the instructions for handling of inside
information and the instructions for primary insiders. The rules of procedure
for the board of directors set out who in the board of directors is entitled to
publicly speak on behalf of the company, and the Communication Policy
defines the responsibility of communications on behalf of the company in
various matters.
Deviations from the Code: None.
14.
Take-overs
The board of directors has established clear principles in the Corporate
Governance Policy for how it will act in the event of a take-over bid, including
that it will act in accordance with the Code and Norwegian law. The principles
emphasise the importance of equal treatment of existing shareholders. They
further warrant that the board of directors will ensure sufficient information in
time and content for the shareholders to assess a possible bid, including
issuing a statement to the shareholders with the board of directors’ assessment
of such bid, together with a valuation prepared by an independent expert. A
sale of a significant part of the company will require approval by the general
meeting. The board of directors will not without decision by the general
meeting attempt to hinder a take-over bid for the company.
Deviations from the Code: None.
15.
Auditor
The auditor presents an annual audit plan, describing the auditor’s
understanding of the industry and significant risks, as well as the audit
approach to be applied. The auditor participates in audit committee meetings
when discussing the financial statements and other audit related matters. The
auditor furthermore attends board meetings at which the annual accounts are
on the agenda and as otherwise requested. At such meetings, the auditor are
requested to report on any material changes in the company’s accounting
principles and key aspects of the audit, comment on any material estimated
accounting figures and report all material matters on which there has been
disagreement between the auditor and the executive management of the
company. The auditor annually confirms its independence in writing. During
2022 and 2023, the auditor has participated in discussions with the audit
committee. Furthermore, the auditor has met with the board of directors
without the corporate management being present, and reviewed the
company’s internal control procedures. The company has effective guidelines
for the ability of the auditor to perform non-audit services for the company
upon approval by the audit committee. The company informs the general
meeting about the auditor’s fees for audit and non-audit services.
The board of directors regularly assesses the quality and efficiency of the
work of the auditor.
Deviations from the Code: None.
CORPORATE GOVERNANCE
/
SUSTAINABILITY REPORT
3
Annual report 2022
I
Norske Skog
I
55
4
Ambition and
performance
Photo: Carsten Dybevig
2017
2018
2019
2020
2021
2022
Health & Safety
H1
1)
1.0
0.9
0.5
0.8
1.9
0.8
H2
2)
7.3
7.4
9.8
6.6
5.9
7.1
Absence due to illness
%
3.5
3.8
3.7
4.2
4.2
4.7
People
Total employees
FTE
2 414
2 444
2 359
2 332
2 092
2 140
Temporary employees
FTE
66
77
73
56
77
97
Apprentices
FTE
130
135
137
146
134
132
Average age of employees
FTE
47.0
47.3
47.1
46.6
44.9
45.0
Female in top management position
%
8.5
13.7
15.1
10.9
12.0
17.0
Female in management position
%
8.5
10.1
10.2
12.1
12.7
12.0
Employees w/ collective agreements
%
84.3
84.1
83.3
86.5
86.9
88.0
1)
Number of personal injuries with absence x 1 000 000/number of worked hours.
2)
Number of personal injuries with medical treatment x 1 000 000/number of worked hours.
Age distribution employees
up to 34 years
35-54 years
55 and older
%
26
43
31
KEY FIGURES – EMPLOYEES
Female share in %
% of employees
covered by
collective
agreements
Business Unit
Number of employees (FTE)
31 December 2022
Top mngt
positions
Other mngt
positions
Ordinary
Temporary
Apprentices
Other
Total
End 2022
End 2022
End 2022
Norske Skog Saugbrugs
413.0
12.0
31.0
3.0
459.0
11.1
14.8
89.0
Norske Skog Skogn
367.0
29.0
19.0
2.0
417.0
11.1
8.0
92.0
Headquarter Oslo
31.0
0
0
0
31.0
0
25.0
9.6
Norway total
811.0
41.0
50.0
5.0
907.0
8.3
11.3
87.3
Norske Skog Bruck
388.0
35.0
36.0
3.0
462.0
0
4.0
100.0
Norske Skog Papier Recycling
19.0
0
0
0
19.0
0
0
100.0
Norske Skog Golbey
353.0
8.0
29.0
0
390.0
50.0
10.8
100.0
Sales offices in Europe
52.0
0
1.0
0
53.0
33.3
0
7.7
Europe total
812.0
43.0
66.0
3.0
924.0
28.6
9.3
94.1
Norske Skog Boyer
247.0
13.0
16.0
5.0
281.0
0
16.0
75.3
Norske Skog Tasman
0
0
0
6.0
6.0
0
0
0
Australasia Shared Services
22.0
0
0
0
22.0
33.3
50.0
0
Australasia total
269.0
13.0
16.0
11.0
309.0
12.5
20.7
69.1
Norske Skog group total
1 892.0
97.0
132.0
19.0
2 140.0
17.0
11.9
87.6
Key figures
Annual report 2022
I
Norske Skog
I
57
AMBITION AND PERFORMANCE
/
SUSTAINABILITY REPORT
4
KEY FIGURES OPERATIONS
2017
2018
2019
2020
2021
2022
Production
Paper
tonnes
2 495 000
2 494 000
2 308 000
1 799 020
1 919 574
1 713 016
Consumption of raw materials
Roundwood
m
3
2 810 000
2 785 000
2 586 000
1 930 000
2 241 800
2 257 360
Sawmill chips
m
3
1 018 000
1 031 000
1 093 000
917 000
870 324
607 585
Recovered paper
tonnes
814 000
871 000
777 000
608 000
645 686
565 783
Purchased pulp
tonnes
50 000
43 000
31 000
27 000
29 215
21 157
Inorganic fillers
tonnes
320 000
308 000
282 000
215 000
223 321
195 921
Energy consumption
Electricity
GWh
5 571
5 526
5 316
4 203
4 365
3 975
Heat
GWh
4 325
4 161
4 127
3 425
3 478
2 956
Discharges to water
Discharged process water
mill m
3
46
48
46
41
36
30
Discharges of organic substances
tonnes
12 831
10 623
9 226
8 283
8 958
9 989
Suspended Solid (SS)
tonnes
2 227
1 529
1 329
1 259
1 746
2 030
Phosphorus (Tot-P)
tonnes
41
31
37
29
30
27
Nitrogen (Tot-N)
tonnes
302
280
303
262
268
275
Emission to air
CO
2
-equivalents (direct)
tonnes
514 000
500 000
466 000
410 000
427 294
294 926
SO
2
tonnes
198
175
162
297
401
360
NOX
tonnes
908
772
786
701
879
709
Production waste
Sludge (dry)
tonnes
246 000
249 000
246 000
186 000
198 892
152 980
Bark
tonnes
98 000
128 000
133 000
93 700
106 958
102 714
Other
tonnes
14 000
25 500
18 000
17 400
19 992
20 834
PRODUCTION CAPACITY
in tonnes/year
Business unit
Newsprint (including
improved NP)
SC
(magazine paper)
LWC
(magazine paper)
Total capacity
business unit
Under construction
Packaging paper*
Norske Skog Bruck
-
-
257 000
257 000
210 000
Norske Skog Golbey
330 000
-
-
330 000
550 000
Norske Skog Saugbrugs
-
356 000
-
356 000
-
Norske Skog Skogn
500 000
-
-
500 000
-
Total Europe
830 000
356 000
257 000
1 443 000
760 000
Norske Skog Boyer
145 000
-
120 000
265 000
-
Total Australasia
145 000
-
120 000
265 000
-
Total Norske Skog group
975 000
356 000
377 000
1 708 000
760 000
* The listed capacity is when full production has been reached.
58
I
Norske Skog
I
Annual report 2022
SUSTAINABILITY REPORT
/
AMBITION AND PERFORMANCE
SCOPE 1 AND 2 EMISSION
in 2022
Scope 1
Scope 2*
Scope 2**
Biogenic CO
2
Total
Scope 1 & 2*
Share
Scope 1 & 2*
Paper
Production
Emission
Intensity
Scope 1 & 2*
Unit of measurement
t CO
2
e
t CO
2
e
t CO
2
e
t CO
2
e
t CO
2
e
%
tonnes
kg CO
2
e/
tonne
Norske Skog Bruck
67 458
20 817
86 100
66 571
88 275
19%
219 452
402
Norske Skog Golbey
25 324
30 496
36 144
186 174
55 820
12%
429 452
130
Norske Skog Saugbrugs
708
3 938
355 156
97 094
4 646
1%
313 613
15
Norske Skog Skogn
3 231
6 381
568 448
107 612
9 612
2%
501 426
19
Norske Skog Boyer
198 205
116 176
116 176
-
314 381
67%
249 073
1 262
Total Norske Skog Group
294 926
177 808
1 162 024
457 451
472 734
100%
1 713 016
276
* Location-based method
** Market-based method
tCO
2
e: tonnes CO
2
equivalent
Photo: Thomas Leirvik
Tore Hansesætre
SVP Strategic projects
Norske Skog Headquarter
Hello, I am Tore Hansesætre, and
I’m heading the transformation
projects
that
we
are
imple-
menting to become a supplier of
packaging paper. This is done in
close cooperation with my collea-
gues, especially in Norske Skog Bruck and Norske Skog Golbey.
It also includes realization of large-scale green energy plants at
these industrial sites.
I started working in Norske Skog in 2009, after finishing studies
at the university. My main motivation for starting in Norske Skog
back then was to learn as much as possible through exposure to
challenges across several areas and disciplines.
I like the fact that Norske Skog produces renewable products in
an environmental-friendly way. At the same time, both the
publication paper and the packaging paper industries are highly
competitive, which requires us to continuously improve the way
we operate.
I would like to see Norske Skog as a leading independent supplier
of recycled containerboard and publication paper in Europe in
the future.
4
Annual report 2022
I
Norske Skog
I
59
AMBITION AND PERFORMANCE
/
SUSTAINABILITY REPORT
1. Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
A.
Describe the board’s oversight of
climate-related risks and
opportunities.
• The highest level of responsibility on climate related issues sits with the board of directors, led by the chairman.
• Climate related issues are addressed by the board of directors on an ongoing basis, and environmental performance is part of all board meetings.
Recurring and specific issues are scheduled as appropriate and needed.
• The board reviews the climate risks and opportunities annually as part of the overall risk assessment for the group.
• Long-term climate-related targets and KPIs are reviewed annually by the board as an integral part of the business budget, strategy process and major
capital investment / divestment decisions.
B.
Describe management’s role in
assessing and managing
climate-related risks and
opportunities.
• The CEO reports to the board of directors and is the highest-level management position with responsibility for climate- related issues. The CEO has the
ultimate responsibility for the business strategy, herin the low carbon transition plan, and for assessing and managing climate related risks and
opportunities, including monitoring of performance on climate related targets. The CEO leads the corporate management team (CM) and report
climate-related issues to the board.
• The corporate management team assesses business risk and opportunities, strategies, corporate ambitions, and targets for environmental aspects,
including climate-related topics related to their respective areas of responsibility.
• The chief operating officer
is part of the CM and reports directly to the CEO. The COO is responsible for managing climate related issues related to
operations across the Norske Skog group including overall responsibility for the strategies targets and monitoring of KPIs. CM receive monthly summary
reports of the environmental performance data from the mills.
• The Head of Sustainability reports directly to the COO and is responsible for the development of climate related strategies, coordinate the practical
implementation across the group including monitoring.
• At each mill, the managing director is the main responsible for environmental issues. Each mill also has a responsible manager for environmental issues.
Environmental reporting is part of the agenda at mill management meetings. Specific environmental incidents receive specific attention.
2. Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
where such information is material.
A.
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium, and long term.
• Norske Skog assesses climate-related risks and opportunities based on likelihood of occurrence and impact on operations.
• The assessment is based on COSO’s Enterprise Risk Management framework applied for the overall risk assessment for the group including
recommendations from the TCFD framework.
• The time horizons applied for the overall assessment of risks and opportunities for the group is short term (1-5 years), medium term (5-10 years) and
long-term (10 -30 years).
• Based on the assessment, opportunities related to low-emission product development and risk related to regulatory changes in energy and carbon markets
were identified as the most material.
Opportunities:
o
Products: The transformation to a larger, more diversified product portfolio with new products will reduce the dependency on publication paper and thus
reduce the business and market risk. The planned packaging production will be based on renewable resources. One of the new legs in Norske Skog’s
main strategy is to exploit opportunities within the circular economy utilising fibre and energy to create new non-fossil products. Today, pilot plants
utilise fibre to produce nanocellulose-based products, biochemicals and bio composites. This will in the long run contribute to green growth when
commercialised.
o
Energy source: The goal is to reduce energy consumption in production, eliminate the use of fossil energy sources and to optimise the use of process
chemicals and transport. After the start-up of the new energy boiler at Bruck in 2022, all the European mills are among the top performers regarding
scope 1 and scope 2 emissions in the industry.
o
Resource efficiency: An opportunity to prioritize in- and outbound logistics in the long-term horizon to minimise transport distances and costs, and for
environmental considerations is identified.
Risks:
o
Regulatory: Norske Skog is subject to many regulatory requirements relating to energy and emissions including the EU Emissions Trading Scheme (ETS),
which include CO
2
compensation scheme, and CO
2
-allowances. Due to the financial impact such regulations have on our business we monitor associated
risks closely.
o
Acute Physical: Some of our mills are in areas where drought/access to water and/or flooding might become a risk in the future with a changing climate.
o
Chronic Physical: the availability of sustainable and affordable biomass for production of publication paper in Norway and Australia may be affected by
longer-term shifts in climate patterns in the future.
B.
Describe the impact of climate-
related risks and opportunities on
the organisation’s businesses,
strategy, and financial planning.
• Strategic development: In 2020, Norske Skog had an extensive revision of its business strategy, emphasising the need for a profitable, robust and
sustainable business plan. The climate goal for the new product portfolio is to attain a recyclable, low CO
2
footprint and be environmentally and
financially sustainable. This strategy has later been confirmed by the board and the corporate management in 2022.
• Products and Services:
Before the climate-related transition plan, Norske Skog was a pure publication paper company. With change in climate-related
goals, change in consumer patterns and customer demand, Norske Skog has expanded and diversified its business strategy from publication paper to
three more legs:
1) packaging paper, 2) sustainable energy and 3) biomaterials. All strategic legs are aligned with the environmental and climate action
targets.
• Investments in R&D: Norske Skog actively works to realise value from the industrial sites by developing existing infrastructure and industry competence.
Business opportunities include several early-phase research projects in biochemical and fibre products: A) CEBINA, a natural fibre product that adds
rheology control in fluids and armouring in solid materials. B) CEBICO, a bio-composite product developed at Saugbrugs. C) Cyrene, developed at a pilot
plant in partnership between Norske Skog Boyer and Circa Group, could represent the first biochemical solvent for use in the pharmaceutical industry to
replace petrochemical products.
• Operations: Our operations are impacted by unstable energy markets and increasing carbon prices. Norske Skog has included a reduction of greenhouse
gas emissions from fossil energy sources as a key part of our business strategy. The goal is to reduce energy consumption, change the sources of
energy, invest in on site green energy generation and to optimise the use of process chemicals and transport. It is important for Norske Skog to reuse
production waste, which has a significant impact on CO
2
emissions. The biogas plants tied to our production at Golbey, Skogn and Saugbrugs utilise
waste to produce energy. In addition, the energy plant at Bruck uses production process waste, waste from households, and fuels derived from refuse.
• Value Chain: Forestry and use of forest products play an important role in the combat of climate change. For the forest value chain to be a part of the
climate change solution, the forests must be managed sustainably. Forest certification is an important tool in this context and Norske Skog has
implemented systems and processes to make sure that all wood used in products comes from sustainably managed forests. Reduction of Scope 3
emissions, particularly from transport, is a forward-looking ambition for the group. The speed of implementing scope 3 initiatives will depend on the
ability of our suppliers to transform their business into low-carbon services and of authorities’ ability to design effective political tools.
Our response to the TCFD recommendations
(Task Force on Climate-related Financial Disclosures)
For further details, see our CDP Climate Change report 2022 (link)
60
I
Norske Skog
I
Annual report 2022
SUSTAINABILITY REPORT
/
AMBITION AND PERFORMANCE
3. Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks.
A.
Describe the organisation’s
processes for identifying and
assessing climate-related risks.
• Annually, the board, corporate and business unit management make an extensive and systematic risk and opportunity evaluation.
• Identification of climate-related risk and opportunities are done both in bottom-up and top-down processes.
• The bottom-up process is based on the management teams in each business unit annually performing a risk- and opportunity analysis using the framework
of Task Force on Climate-related Financial Disclosures (TCFD). The teams are made up by senior subject matter experts in different functional areas with
local knowledge on topics with strategic importance to the mills. The local management team identify different types of climate related risks and
opportunities assess the likelihood and impact that each of these will affect our mill within a short (1-5 years), medium (5-10 years) and long-term
(10 -30 years) perspective. The management teams in each business unit report the summary to the company’s risk management function and represents
the bottom-up process for identification of climate related risks.
• At group level, the corporate management team is also responsible for identifying climate-related risk and opportunities in their functional areas. The
corporate management team summaries the most material risks and present them to the board together with material risks identified in the bottom-up
process.
B.
Describe the organisation’s
processes for managing
climate-related risks.
• Climate-related risk and opportunities identified in the bottom-up and top-down process are reported to the groups corporate risk function which in turn
consolidates and assesses the related quantitative impact for the group. This provides the basis for the agenda of the corporate management meetings
and adequate follow up measures based on the threshold for financial and strategic impact, measured as EBIDTA effect.
• Risks and opportunities with lower impact are monitored and managed by local management teams whereas material risks are reported to the board.
• The business risks and opportunities are discussed and considered in defining the business plans.
• Capitalizing on identified opportunities typically require investment decisions in operations and R&D.
• In an annual risk review process for the entire group, the board set ambitious targets, especially for environmental and climate-related issues and reviews
the long-term climate-related targets as an integral part of the business budget and strategy process.
C.
Describe how processes for
identifying, assessing, and
managing climate-related risks are
integrated into the organisation’s
overall risk management.
• Norske Skog’s enterprise risk management processes are based on COSO’s Enterprise Risk Management framework, and cover financial, operational,
market and organisational risks. All sustainability areas covered by Norske Skog’s Steering Guidelines, including climate-related risks and opportunities,
are also covered by the group’s enterprise risk management processes, and is reported to the board of directors.
• This company-wide risk assessment process is integrated into multi-disciplinary management processes
• Annually, the board, corporate and business unit management make an extensive and systematic climate-related risk and opportunity evaluation.
• In addition, environmental and climate related issues are reported monthly and is part of the agenda on the monthly business review meetings between
the corporate management and business unit meetings.
4. Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
A.
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities in
line with its strategy and risk
management process.
• Key data including historical trends are reported in the back of the sustainability report and in the chapter “Environment”.
• (A) Ensure sustainable use of materials and energy in our operations, which includes (1) to achieve efficient use of biprocess streams in the production
process to create bio based-energy or biproducts for sale, and (2) to utilize bi-products from the entire production process.
• (B) Operate mills with high energy efficiency, which include (1) to measure the level of CAPEX used on energy efficiency/energy-source improvements; (2) to
establish specific activities and investments in energy efficiency and changes in energy source, i.e. activities from the CAPEX-lists and the continuous
improvement programs.
• (C) Reduce Chemical Oxygen Demand (COD) to recipient, which include (1) to install anaerobic wastewater treatment and biogas at all European mills
(75% installed) within 2030; (2) to invest in anaerobic waste water treatment and biogas production at all European mills.
• (D) Reduce emissions of Sulphur Dioxide (SO2) and Nitrogen Oxide (NOX) from our operations, which means (1) to ensure compliance with emission permits
and regulations; (2) to perform mill activities related to SO2 and NOX improvements.
• (E) Reduce waste from our operations, which relates to (1) deliver no ash to landfill in 2030; (2) establish procedures and/or ash product development
• (F) Ensure sustainable sourcing of raw material, which implies (1) to achieve 100% certification of all wood used for our products. (2) Review internal control
routines to measure and reach the certification target.
• (G) Ensure responsible supplier value chain handling, which result in (1) to ensure supplier adherence to Norske Skog code of conduct within 2023; (2) to
mature sustainable sourcing practices by updating code of conduct, questionnaire for suppliers on ESG-topics and routines for audit of suppliers.
B.
Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the
related risks
• Out absolute carbon footprint based on the GHG Protocol
o
Scope 1: 294 926 t CO
2
e (-31 % vs 2021)
o
Scope2 (location-based method): 177 808 t CO
2
e (-5 % vs 2021)
o
Scope 3: 752 000 t CO
2
e (first year of publication)
• Key data including historical trends are reported in the back of the sustainability report.
C.
Describe the targets used by the
organisation to manage
climate-related risks and
opportunities and performance
against targets.
• Norske Skog Environmental Index (E-Index) is an internally defined KPI for measuring environmental performance based on 6 key climate related
parameters critical to our operations.
• In 2020, through an extensive involvement and anchoring process throughout the entire organisation, new GHG-emission targets were set.
Norske Skog’s targets for CO
2
emissions with baseline 2015:
o
A 55% reduction in CO
2
emissions/ tonne product produced by 2030
o
A zero CO
2
emission target by 2050
C.
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-
related scenarios, including a 2°C or
lower scenario.
• Norske Skog has adopted a strategy and production process to develop existing and new products in congruence with the vision of a maximum 1.5C
temperature increase. Norske Skog is committed to the EU GHG targets of carbon neutrality by 2050 with an intermediate target of a 55% reduction in
GHG emissions/tonne product by 2030 based on 2015 figures.
• Norske Skog plans to conduct a Climate-Related Scenario Analysis during 2023, testing the business strategy against both low and high emission
scenarios.
Annual report 2022
I
Norske Skog
I
61
AMBITION AND PERFORMANCE
/
SUSTAINABILITY REPORT
Sustainability goals overview
E/S/G
& E*
Ambition/ Area
S
Inspire others to learn from our ‘best in class’ occupational health and safety standards.
Increase job attendance for all employees.
Ensure a healthy and safe working environment.
S
Attract and keep top talent.
Attract and keep top talent.
Invest in our people through training and development.
Invest in our people through training and development.
Invest in our people through training and development.
Prepare Norske Skog for entering the containerboard market in 2023.
Create shareholder value.
G & E
Create shareholder value.
Develop sustainable industrial clusters utilizing existing site infrastructure and contribute to economic growth.
Align innovation activities with the long term group strategy.
Perform R&DI (research, development and innovation) activities at all business units based on Norske Skog’s position in the fiber value chain.
Commercialize promising and profitable innovation results.
Increase the level of sustainability through knowledge sharing across business units to strengthen continuous improvement activities and
product development within the existing core business.
S
Understand the actual and potential impacts our operations have on local communities, and to understand their expectations and needs.
E
Report the extent of development of significant infrastructure investments and services supported, both current or expected impacts on
communities and local economies.
E
Ensure sustainable use of materials and energy in our operations.
Operate mills with high energy efficiency.
Reduce Chemical Oxygen Demand (COD) to recipient.
Reduce emissions of Sulphur Dioxide (SO2) and Nitrogen Oxide m(NOX) from our operations.
G
Reduce waste from our operations.
Ensure sustainable sourcing of raw material.
Ensure responsible supplier value chain handling.
E
Reduce greenhouse gas (GHG) emissions.
Reduce greenhouse gas (GHG) emissions.
Reduce greenhouse gas (GHG) emissions.
Use sustainable energy sources.
Handle climate risk and business opportunity understanding.
G
Abstain from financial and in-kind political contributions.
S
Ensure our customers healthy and safe working environment.
G
Abstain from anti-competitive behavoiur and adhere to relevant competive legislation.
S
Have zero tolerance for discrimination on grounds of race, color, sex, religion, political opinion, national extraction, or social origin as defined by
the ILO, or other relevant forms of discrimination involving internal and/or external stakeholders.
G
Have no tolerance for practices such as bribery, facilitation payments, fraud, extortion, collusion, and money laundering; the offer or receipt of
gifts, loans, fees, rewards, or other advantages as an inducement to do something that is dishonest, illegal, or represents a breach of trust. This
also include practices such as embezzlement, trading in influence, abuse of function, illicit enrichment, concealment, and obstructing justice.
Refrain from the use of child labor within our operations and the value chain.
* E/S/G&E: Environment / Social / Governance and Economy
SUSTAINABILITY REPORT
/
AMBITION AND PERFORMANCE
62
I
Norske Skog
I
Annual report 2022
Targets
Planned activities
Share knowledge through relevant professional forums and industry organisations.
- Participate in and share knowledge with membership association like Federation of Norwegian Industries and CEPI
(Confederation of European Paper Industry).
-
Define internal knowledge network vital to increase HESQ innovation across Norske Skog.
-
Review and develop internal e-Learning HESQ-material for local traning.
-
Focus on Contractor Management contracts.
Reduce absenteeism.
-
Develop local and community BU medical centres.
-
Provide medical assistance for injuries.
-
Provide extensive health and well-being programmes for employees.
Reach zero personal injuries (H1 and H2.
-
Develop HES Leadership Training program.
-
Perform regular self–assessments to identify focus areas for improvement.
-
Assess and improve standards and behaviour based on internal audits.
Achieve at least 75 % of new hired skilled workers to be recruited from apprentices programs by 2025.
Implement advanced apprentice programs and extended training programs at all mills
Offer ten trainee positions or internships for master degree students annually.
Cooperate with local schools and selected universities about relevant programs.
Establish three knowledge networks to capture critical competence and facilitate knowledge transfer throughout
the group.
Establish and operate three knowledge networks by the end of 2023.
Provide training modules for technical core skills, soft skills and compliance skills.
-
Offer training and supplementary education for all through their entire job career.
-
Reinvigorate the Norske Skog Academy.
-
Reinvigorate
NSPS-modules.
Achieve a 100 % completion rate for annual performance reviews and development plans.
Stimulate mid-level managers to carry out performance reviews and annual plans for training and development.
Establish three knowledge networks
and related commercial processes to capture critical competence and
facilitate knowledge transfer throughout the Group.
-
Operate the containerboard knowledge network.
-
Review the sales organisation.
-
Deliver a market knowledge program.
o
Publication paper:
-
Achieve an EBITDA margin of at least 10-15%.
-
Maintain an operating rate of at least 90%.
o
Packaging paper:
-
Achieve an EBITDA margin of at least 20%.
-
Maintain an operating rate of at least 95% from 2025.
Adhere to operational budget plans and implement necessary corrective actions.
Maintain net debt/EBITA ratio of 2 or less.
Finance activities adapted to operational profit capabilities.
Achieve 50 % of revenue from new business areas by 2030.
Invest in packaging, energy and fibre projects.
Achieve 50 % of revenue from new business areas by 2030.
Ensure alignment through Group annual strategy discussions in corporate management.
Achieve 50 % of revenue from new business areas by 2030.
Report R&DI activities in the mills to corporate management through the budget process.
Achieve 50 % of revenue from new business areas by 2030
Achieve at minimum an IRR of 10% on new investement projects.
Establish project Steering Committees at group level to ensure needed anchoring and allocation of necessary
resources to speed up and succeed with commercialisation of new business opportunities.
Reach a minimum of 20 annual continuous improvement activities across all mills.
Evaluate the continuous improvement activities and the impact they have on the SDG targets compared to planned
activity.
Report the significant social, environmental, safety and economic impacts our operations have on the local
communities.
Cooperate with local community organisation and being open and honest about environment, safety and economic
issues with relevant community bodies.
Report examples of significant identified indirect economic impacts of the organisation also in the context of
external benchmarks and stakeholder priorities, such as national and international standards, protocols, and
policy agendas.
Cooperate and communicate openly with the local community about company strategy and investment plans as early
as possible.
Achieve efficient use of biprocess streams in the production process to create biobased-energy or biproducts
for sale.
Utilise bi-products from the entire production process.
Measure the level of CAPEX used on energy efficiency / energy-source improvements.
Establish specific activities and investments in energy efficiency and changes in energy source, i.e. activities from the
CAPEX-lists and the continuous improvement programs.
Install anaerobic wastewater treatment and biogas at all European mills (% installed) within 2030.
Invest in anaerobic waste water treatment and biogas production at all European mills.
Ensure compliance with emission permits and regulations.
Perform mill activities related to SO
2
and NOX improvements.
Deliver no ash to landfill in 2030.
Establish procedures and/or ash product development.
Achieve 100% certification of all wood used for our products.
Review internal control routines to measure and reach the certification target.
Ensure supplier adherence to Norske Skog Code of Conduct within 2023.
Review sustainable sourcing practices by updating Code of Conduct, questionnaire for suppliers on ESG-topics and
routines for audit of suppliers.
Reduce GHG emission kg/ton paper (baseline 2015) by 55% in 2030 (Scope 1 & 2).
Invest in packaging and promising energy and fibre projects.
Net zero GHG emission kg/ton paper in 2050.
Participate in BECCS and BECCU activities at Skogn and Saugbrugs.
Reduce Scope 3 GHG emissions by collaborating with external parties.
Collaborate with transporters to utilize CO
2
-free vehicles such as train for truck programs at the mills.
Reduce dependency of fossile energy sources.
Invest in biomass-boilers to replace fossile energy sources at the mills.
Review the annual climate risk plan and business opportunity analysis.
Perform an annual climate risk and opportunity analysis for each business unit.
Report which political topics and influence channel the group has used.
Be involved in political tasks through the Norwegian Federation of Trade and Industry, the Norwegian Pulp and Paper
organisation, CEPI, and through other relevant partnerships.
Report percentage of significant product and service categories for which health and safety impacts are
assessed for improvement.
Perform reviews of relevant health and safety hazards our products expose to our customers.
Report the number of legal actions pending or completed during the reporting period regarding anti-competitive
behavior and violations of anti-trust and monopoly legislation in which the organisation has been identified as a
participant. Report the main outcomes of completed legal actions, including any decisions or judgments.
Perform annual reviews with relevant personnell and agents on relevant anti-competitive legislation and Norske Skog
Steering Guidelines.
Report the total number of incidents of discrimination during the reporting period.
Identify through formal process(es) instance(s) of non-compliance to relevant non-discriminatory Steering Document
procedures, including management system audits, formal monitoring programs or grievance mechanisms
(whistleblower channels).
Report the total number and percentage of operations assessed for risks related to corruption, and the
significant risks related to corruption identified through the risk assessment. Report the total number and nature
of confirmed incidents of corruption: in which employees were dismissed or disciplined, when contracts with
business partners were terminated or not renewed, public legal cases against the organisation or its employees.
-
Review the Steering Guidelines annually.
-
Perform mandatory compliance review and training for relevant personell and business partners and others
relevant to our business periodically or when needed.
Report operations and suppliers considered to have significant risk for incidents of:
- child labor and young workers exposed to hazardous work,
- child labor either in terms of type of operation (such as manufacturing plant) and supplier; or
- countries or geographic areas with operations and suppliers considered at risk.
-
Review the Steering Guidelines and Code of Conduct annually.
-
Perform mandatory compliance review and training for relevant personell and business partners and others
relevant to our business periodically or when needed.
Annual report 2022
I
Norske Skog
I
63
AMBITION AND PERFORMANCE
/
SUSTAINABILITY REPORT
4
GRI STANDARDS INDEX
2022
Norske Skog is reporting in accordance with the Global Reporting Initiative
GRI Standards: Core option.
Following the materiality analysis - the table below covers aspects that are
considered to be the most material ones to our stakeholders and/or the
company. For more information on GRI Standards and on the individual
disclosures, see GRI’s homepages, www.globalreporting.org
The index refers to where information about each GRI disclosure can be
found in the Norske Skog – Annual Report 2022, regardless of whether they
are fully or partly reported relative to GRI.
AR = Annual Report 2022
SR = Sustainability Report 2022, part of Annual Report 2022
General disclosures – The Organization and its reporting practices
Reference and/or response
2- 1
Organizational details
SR - 3 Corporate Governance
SR - About Norske Skog’s operations
SR – Key figures operations
2- 2
Entities Included in the organization’s sustainability reporting
AR – Consolidated financial statement – note 16
2- 3
Reporting period, frequency and contact point
2022
Annual reporting cycle
2- 4
Restatements of information
No significant restatements
2- 5
External assurance
SR - Independent auditor’s assurance report
General disclosures – Activities and workers
Reference and/or response
2- 6
Activities, value chain and other business relationships
SR - About Norske Skog’s operations
SR - Key figures operations
2- 7
Employees
SR – Key figures employees
2- 8
Workers who are not employees
Not applicable. Norske Skog’s business is mainly managed and carried out by its own
employees. For larger projects Norske Skog hires additional resources.
General disclosures – Governance
Reference and/or response
2- 9
Governance structure and composition
SR - 3 Corporate Governance
https://www.norskeskog.com/sustainability/governance
2-10
Nomination and selection of the highest governance body
SR – 3 Corporate Governance
2-11
Chair of the highest governance body
SR- 3 Corporate Governance
2-12
Role of the highest governance body in overseeing the management of impacts
SR – 3 Corporate Governance
https://www.norskeskog.com/sustainability/governance
2-13
Delegation of responsibility for managing impacts
SR – 3 Corporate Governance
https://www.norskeskog.com/sustainability/governance
2-14
Role of the highest governance body in sustainability reporting
SR – 3 Corporate Governance
2-15
Conflicts of interest
SR – 3 Corporate Governance
2-16
Communication of critical concerns
SR – 3 Corporate Governance
2-17
Collective knowledge of the highest governance body
SR – 3 Corporate Governance; 4 Ambition and performance
2-18
Evaluation of the performance of the highest governance body
SR – 3 Corporate Governance
2-19
Remuneration policies
SR – 3 Corporate Governance
https://www.norskeskog.com/sustainability/governance/remuneration-of-leading-personnel
2-20
Process to determine remuneration
SR – 3 Corporate Governance
https://www.norskeskog.com/sustainability/governance/remuneration-of-leading-personnel
2-21
Annual total compensation ratio
Annual compensation ratio: 26,4
Change in annual total compensation: 13,3
The large impacts in 2022, and the changes from 2021 to 2022, are due to the accounting
effects of valuing the synthetic options in the long-term incentive plan
General disclosure – Strategy, policies and practices
Reference and/or response
2-22
Statement on sustainable development strategy
SR - We create green value – CEO message
2-23
Policy commitments
SR – 3 Corporate Governance SR - About the sustainability report
2-24
Embedding policy commitments
SR – 3 Corporate Governance
2-25
Processes to remediate negative impacts
SR – 3 Corporate Governance
2-26
Mechanisms for seeking advice and raising concerns
SR – 3 Corporate Governance
2-27
Compliance with laws and regulations
No significant instances of non-compliance with laws and regulations during the reporting
period.
2-28
Membership associations
SR - Social - promote inclusive and productive employment
General disclosures – Stakeholder engagement
Reference and/or response
2-29
Approach to stakeholder engagement
SR – Stakeholder and materiality analysis
2-30
Collective bargaining agreements
SR – Key figures employees
Main category: Economy
Reference and/or response
103 1-3
Management approach for economic standards and disclosures
AR –Report of the Board of Directors
SR – 4 Ambition and compliance
SUSTAINABILITY REPORT
/
AMBITION AND PERFORMANCE
64
I
Norske Skog
I
Annual report 2022
GRI Standard: Economic performance
Reference and/or response
201-1
Direct economic value generated and distributed
SR – 4 Ambition and performance
AR - Key figures; Consolidated financial statements and notes
201-2
Financial implications and other risks and opportunities due to climate change
SR – Our business environment offers both business opportunities but also risks
SR – 4 Ambition and compliance
201-3
Defined benefit plan obligations and other retirement plans
AR – Consolidated financial statements, Note 20
GRI Standard: Anti-corruption
Reference and/or response
205-3
Confirmed incidents of corruption and actions taken
No confirmed incidents in 2022
GRI Standard: Anti-competitive behavior
Reference and/or response
206-1
Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices
No such legal actions in 2022
Main category: Environment
Reference and/or response
103 1-3
Management approach for environmental standards and disclosures
AR – Corporate governance; Report of the Board of Directors
SR – 1 Environment – Combat climate change;
Ensure long term access to sustainable energy
GRI Standard: Materials
Reference and/or response
301-1
Materials used by weight or volume
SR –1 Environment - Ensure sustainable resource management
301-2
Recycled input materials used
SR –1 Environment - Ensure sustainable resource management
GRI Standard: Energy
Reference and/or response
302-1
Energy consumption within the organisation
SR – 1 Environment - Ensure long term access to sustainable energy
302-3
Energy intensity
SR – 1 Environment - Ensure long term access to sustainable energy
302-4
Reduction of energy consumption
SR – 1 Environment - Ensure long term access to sustainable energy
GRI Standard: Water
Reference and/or response
303-3
Water withdrawal
SR – 1 Environment - Biodiversity and sustainable ecosystems
303-4
Water discharge
SR – 1 Environment - Biodiversity and sustainable ecosystems; 4 Ambition and performance
– Key figures operations
303-5
Water consumption
SR – 1 Environment - Biodiversity and sustainable ecosystems
GRI Standard: Biodiversity
Reference and/or response
304-2
Significant impacts of activities, products and services on biodiversity
SR – 1 Environment - Biodiversity and sustainable ecosystems
GRI Standard: Emissions
Reference and/or response
305-1
Direct (Scope 1) GHG emissions
SR – 1 Environment - Combat climate change
SR - 4 Ambitions and performance - Key figures operations
305-2
Energy indirect (Scope 2) GHG emissions
SR –1 Environment - Combat climate change
305-3
Other indirect (Scope 3) GHG emissions
SR –1 Environment - Combat climate change
305-4
GHG emissions intensity
SR –1 Environment - Combat climate change
305-5
Reduction of GHG emissions
SR –1 Environment - Combat climate change
305-7
Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions
SR –1 Environment - Combat climate change; SR - 4 Ambitions and performance, Key Figures
Operations
GRI Standard: Waste
Reference and/or response
306-3
Waste generated
SR – 1 Environment – Ensure sustainable resource management ; 4 Ambitions and performance
– Key
figures operations
306-4
Waste diverted from disposal
SR – 1 Environment – Ensure sustainable resource management
306-5
Waste directed to disposal
SR – 1 Environment – Ensure sustainable resource management
Main category: Social
Reference and/or response
103 1-3
Management approach for social standards and disclosures
AR – Corporate governance; Report of the Board of Directors
SR – Social – Ensure healthy lives and promote well-being for all at all ages
GRI Standard: Employment
Reference and/or response
401-1
New employee hires and employee turnover
SR – Key figures employees
GRI Standard: Labor/Management relations
Reference and/or response
402-1
Minimum notice periods regarding operational changes
Follow national laws and practice
GRI Standard: Occupational health and safety
Reference and/or response
403-8
Workers covered by an occupational health and safety management system
SR – 2 Social – Ensure healthy lives and promote well-being for all at all ages
403-9
Work-related injuries
SR –2
Social – Ensure healthy lives and promote well-being for all at all ages
GRI Standard: Diversity and equal opportunity
Reference and/or response
405-1
Diversity of governance bodies and employees
AR – Board of Directors; Corporate management
SR - Key figures employees
GRI Standard: Non-discrimination
Reference and/or response
406-1
Incidents of discrimination and corrective actions taken
SR – 2 Social – Achieve gender equality
SR – 2 Social – Promote inclusive and productive employment
GRI Standard: Freedom of associations and collective bargaining
Reference and/or response
407-1
Operations and suppliers in which the right to freedom of association and collective
bargaining may be at risk
SR – 2 Social – Respecting Human Rights
GRI Standard: Child labour
Reference and/or response
408-1
Operations and suppliers at significant risk for incidents of child labor
SR – 2 Social – Respecting Human Rights
GRI Standard: Forced or compulsory labour
Reference and/or response
409-1
Operations and suppliers at significant risk for incidents of forced or compulsory
labor
SR – 2 Social – Respecting Human Rights
GRI Standard: Local communities
Reference and/or response
413-2
Operations with significant actual and potential negative impacts on local
communities
SR – 2 Social – Cooperation with local communities
Annual report 2022
I
Norske Skog
I
65
AMBITION AND PERFORMANCE
/
SUSTAINABILITY REPORT
4
Gerhard Preisig
Shift supervisor
Norske Skog Bruck
Hello, my name is Gerhard Preisig,
and I am 52 years old. After school,
I started an apprenticeship as a
universal welder. After military ser-
vice, an employee of Norske Skog
informed me about vacancies, and
I applied. I started at paper machine (PM) 4.
As I was interested in energy and environmental technology, I
joined the energy department 10 years later. Currently, I work as
a shift supervisor, and our team consists of 5 people, including
me. We are responsible for safe and energy-efficient plant
operation as well as for the energy supply throughout the plant.
One thing I appreciate about Norske Skog is that training and
further education are always encouraged and supported.
In my spare time, I like to take part in sporting events as a cyclist
or mountain biker, for example. Very often, you can find me in the
gym.
Photo: Lezards Création
Munkedamsveien 45
Postboks 1704 Vika
0121 Oslo
www.bdo.no
Independent Auditor's Report 2022 – Norske Skog ASA
Page 1 of 2
Independent Auditor's Assurance Report
To the board of directors of Norske Skog ASA
We have been engaged by the Management of Norske Skog ASA to provide limited assurance in
respect of the information presented in the Sustainability Report section (“the Report”) included in
the Norske Skog – Annual Report 2022.
Conclusion
Based on our work, nothing has come to our attention causing us to believe that:
•
Norske Skog does not apply a reporting practice for its sustainability reporting aligned with
the Global Reporting Initiative (GRI) Standards reporting principles nor that the reporting
does not fulfil level Core according to the GRI Standards.
•
Norske Skog’s GRI index presented in the Report does not appropriately reflect where
information on each of the disclosures of the GRI Standards is to be found within the Norske
Skog – Annual Report 2022.
•
Sustainability information presented for 2022 is not consistent with data accumulated and
appropriately presented in the Report.
Management’s Responsibilities
Management of Norske Skog is responsible for the preparation and presentation of the Report and
that it has been prepared in accordance with the reporting criteria described in the Report,
including the GRI Standards. Management is also responsible for establishing such internal control
management determine is necessary to ensure that the information is free from material
misstatement, whether due to fraud or error.
Our independence and quality control
We are independent of the Company as required by laws and regulations and the International
Ethics Standards Board for Accountants’ Code of International Ethics for Professional Accountants
(including International Independence Standards – IESBA Code) and we have fulfilled our other
ethical responsibilities in accordance with these requirements. Our firm applies International
Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control
including documented policies and procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Auditor’s responsibilities
Our responsibility is to express a limited assurance conclusion on the information in the Report. We
have conducted our work in accordance with ISAE 3000 (Revised) Assurance Engagements other than
Audits or Reviews of Historical Financial Information, issued by the International Auditing and
Assurance Standards Board.
The procedures performed in a limited assurance engagement vary in nature and timing compared
to, and are less in extent than for a reasonable assurance engagement. Consequently, the level of
assurance obtained is substantially lower than the assurance that would have been obtained had a
reasonable assurance engagement been performed.
68
I
Norske Skog
I
Annual report 2022
SUSTAINABILITY REPORT
/
INDEPENDENT AUDITOR’S ASSURANCE REPORT
BDO AS, a Norwegian liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the
international BDO network of independent member firms. The Register of Business Enterprises: NO 993 606 650 VAT.
Page 2 of 2
Considering the risk of material misstatement, our procedures included, among others:
•
Meetings with central and local management (Norske Skog Golbey and Norske Skog Skogn) to
discuss issues, risks, important sustainability topics and procedures for collecting and
reporting relevant data
•
Analytical review of development and changes from prior reporting periods
•
Review of evidence supporting the information in the report on a sample basis
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for a
conclusion with a limited level of assurance on the subject matters.
Oslo, 24.03.2023
BDO AS
Terje Eggum Adolfsen
State Authorized Public Accountant
Annual report 2022
I
Norske Skog
I
69
4
INDEPENDENT AUDITOR’S ASSURANCE REPORT
/
SUSTAINABILITY REPORT
Report of the board
of directors
Norske Skog is one of the leading producers of publication paper in the world,
with an annual production capacity of 1.7 million tonnes
. The group has
production sites in Europe and Australasia. In Europe, the group has four
production sites, two in Norway, one in France and one in Austria. The
European segment is the largest with 1.4 million tonnes of capacity, of which
0.8 million tonnes is newsprint and 0.6 million tonnes is magazine paper
. In
Australasia, the group has one production site in Australia. The production
capacity in the Australasian segment is 0.2 million tonnes newsprint and
0.1 million tonnes magazine paper located in Tasmania at Norske Skog Boyer,
the only domestic producer of publication paper in Australia.
NORSKE SKOG IN 2022
2022 turned out to be another eventful year for Norske Skog and the world in
general. The COVID-19 pandemic impacted less than previous years but the
war in Ukraine created significant uncertainty and volatility in the markets
and in particular the energy markets in Europe.
While European publication paper operations experienced a very challenging
operating environment during 2021, things changed significantly in 2022.
The price increases experienced in the latter part of 2021 continued into
2022 and increased further throughout the year. The price increases were
driven by a combination of positive supply demand balance following the
many closures of capacity in the industry and the underlying increase in
variable costs. Prices for energy, our most important cost factor, increased to
record high levels and we faced additional cost pressure from increases in
cost for recovered paper and other raw materials.
In Australia, Norske Skog Boyer has during 2022 only served the local
markets in Australia and New Zealand with newsprint and magazine paper.
Australia and New Zealand where to a much lesser extent impacted by the
volatility experienced in Europe.
In February Norske Skog sold Nature’s Flame pellets company to Talley’s
Group, a New Zealand based dairy, fishing, produce and food company.
Following this Norske Skog has no operating activity in New Zealand.
In April the waste-to-energy plant at Norske Skog Bruck was officially opened.
Reliable access to affordable sources of green energy will be crucial for the
long-term competitiveness at Norske Skog Bruck. Our fossil carbon footprint
is reduced significantly by this new energy plant.
During 2022 Norske Skog continued with the conversions at Norske Skog
Bruck and Norske Skog Golbey. Norske Skog Bruck PM3 was stopped in July
and Norske Skog Golbey PM1 was stopped in November to facilitate the final
steps of the conversions. The conversions will add 760
000 tonnes of cost-
competitive and low-emission recycled containerboard capacity. The Western
European recycled containerboard market was in 2022 approximately
21 million tonnes. The containerboard production will be fully based on
recycled fibre and will utilise green energy generated from the new waste-to-
energy facility at the Bruck industrial site and a new biomass plant at the
Golbey industrial site. The projects have progressed during 2022 and Norske
Skog Bruck will start production of recycled containerboard in the first
quarter of 2023 and Norske Skog Golbey in the fourth quarter of 2023.
Norske Skog Saugbrugs and Ringstad Næringsutvikling have together,
through Porsnes Utvikling AS, developed and completed modern facilities for
high school education in Halden. These were sold to Viken county
municipality in December and net proceeds to Norske Skog were
approximately NOK 200 million.
Oceanwood reduced its ownership from 28.5% to 16.7% through a private
placement of shares of 11
100 000
shares in August 2022. During 2022
Byggma AS/Drangsland Kapital AS became the largest shareholder with a
combined ownership of 22.01% on 31 December 2022
.
INCOME STATEMENT AND CASH FLOW
Norske Skog’s operating income was NOK 15.2 billion in 2022 (NOK 10.3 billion)
.
The increase was mainly due to price increases realised throughout 2022,
which more than offset lower volumes due to machine closures in preparation
for conversions. In Australasia, volumes decreased following the cessation of
production at Norske Skog Tasman.
Distribution costs of NOK 1.2 billion (NOK 1.2 billion) were in line with the
previous year as increases in distribution more than offset the reduction in
deliveries. Cost of materials of NOK 7
.9 billion (NOK 6.1 billion) increased due
to higher energy prices which remained at high levels during 2022 combined
with higher recovered paper prices throughout the year.
Employee benefit expenses of NOK 2.0 billion (NOK 1.7 billion) increased year-
on-year because of general salary increases, increased bonuses and accrual for
our long-term incentive program. EBITDA increased to NOK 3
.1 billion in 2022
(NOK 662 million), mostly impacted by the positive operating environment in
Europe and Australasia during the year. Restructuring expenses in 2022
amounted to NOK 11 million (NOK 192 million) and is mainly related to
restructuring of the operations in Australia. Depreciation was NOK 546
million in 2022 (NOK 433 million) reflecting increased depreciation on
obsolete assets. Derivatives and other fair value adjustments in 2022 ended
at NOK 462 million (NOK -218 million) reflecting the impact of the change in
fair value of energy contracts in Norway.
An impairment of NOK 164 million was recognised in relation to Norske Skog
Bruck PM4 producing lightweight coated paper which has been negatively
impacted by the high energy prices in Austria.
Operating earnings ended at NOK 2
845 million in 2022 (NOK -160 million).
The change primarily reflects changed market conditions for publication
paper in Europe and the change in fair value of the energy contracts in
Norway.
Net financial items in 2022 were NOK -256 million (NOK -118 million). Net
interest expenses of NOK 100 million in 2022 (NOK 113 million) was in line with
the previous year. Currency loss of NOK 97 million (gain of NOK 78 million)
70
I
Norske Skog
I
Annual report 2022
REPORT OF THE BOARD OF DIRECTORS
is due to weaker NOK during 2022 as most debt is denominated in other
currencies, primarily EUR. Income taxes for 2022 amounted to NOK -206 million
(NOK - 68 million) reflecting higher tax expense due to improved results
offset by recognition of deferred tax assets. Profit for the period was
NOK 2
572 million in 2022 (loss of NOK -363 million).
Net cash flow from operating activities ended at NOK 2
040 million in
2022 (NOK 191 million). Cash from operations was NOK 2
291 million
(NOK 439 million) reflecting the significantly improved operating environment
in 2022. Interest payments were NOK 122 million (NOK 107 million), a slight
increase from previous years reflecting the increased interest rates as well an
increase from new loans drawn. Taxes paid was NOK 101 million in 2022
(NOK 106 million). Taxes paid in 2022 are related to Norske Skog Golbey,
Norske Skog Bruck and payment of tax for previous years in Italy.
Publication paper Europe
Operating income was NOK 13.1 billion (NOK 8.4 billion) a significant increase
from the previous year due to higher publication paper prices and sale of
excess energy, partly offset by lower deliveries following the closure for
conversion of Norske Skog Bruck PM3 and Norske Skog Golbey PM1.
Distribution costs of NOK 963 million (NOK 937 million) increased on an
absolute and per tonne basis, driven by higher freight rates despite lower
tonnage. Cost of materials of NOK 6
.9 billion (NOK 5.0 billion) also increased
significantly, due to higher energy costs as well as increases in recovered
paper and pulpwood prices. Employee benefit expenses of NOK 1
.5 billion
(NOK 1.3 billion) increased both on an absolute level and on a per tonne
basis, mainly driven by general cost inflation.
Operating earnings ended at NOK 2
769 million in 2022 (NOK 92 million). The
improvement primarily reflects favourable market conditions for publication
paper in Europe during 2022 and the change in fair value of the energy
contracts in Norway.
Net cash flow from operating activities ended at NOK 2
282 million in 2022
(NOK 589 million).
Demand for standard newsprint in Europe decreased by 6% as of December
2022 compared to the same period last year. Magazine paper demand
decreased by 18%, with super calendared paper decreasing 15% and
lightweight coated paper decreasing 20%. (Source: Eurograph).
Capacity utilisation was 86% in 2022, a decrease compared with the previous
year of 91%, mainly driven by down time due to high energy prices and earlier
closure of Golbey PM1 for conversion.
Publication paper Australasia
Operating income of NOK 1.9 billion (NOK 1.8 billion) increased compared to
previous year due higher prices, partly offset by lower deliveries.
Distribution costs of NOK 261 million (NOK 226 million) were higher
compared to the previous year on an absolute level and on a per tonne
basis
due to higher freight rates. Cost of materials of NOK 1
051 million
(NOK 1
045) million were similar on an absolute basis but increased on a per
tonne basis due to higher energy and fibre costs. Employee benefit expenses
of NOK 293 milllion (NOK 340 million) decreased on an absolute basis and on
a per tonne basis, partly impacted by the closure of Norske Skog Tasman.
Operating earnings ended at NOK 100 million in 2022 (NOK -225 million).
The improvement primarily reflects favourable market conditions in the
region and a restructuring charge of NOK 174 million recognised in relation to
the closure of Norske Skog Tasman in 2021.
Net cash flow from operating activities ended at NOK 53 million in 2022
(NOK -139 million).
Demand for newsprint in Australasia decreased by 8% as of December 2022,
compared to the same period last year. (Source: official statistics).
Capacity utilisation was 95% in 2022, an increase compared to the previous
year of 79%, mainly due to the closure of Norske Skog Tasman in 2021 and all
production being moved to Norske Skog Boyer.
BALANCE SHEET
Total assets were NOK 13.6 billion at 31 December 2022 (NOK 9.1 billion)
.
Total non-current assets were NOK 7.1 billion at 31 December 2022
(NOK 4.5 billion)
. The increase is mainly related to the completion of the
waste-to-energy boiler at Norske Skog Bruck and investments in connection
with the conversions to recycled containerboard at Norske Skog Bruck and
Norske Skog Golbey. Investments in maintenance of property, plant and
equipment amounted to NOK 221 million in 2022 (NOK 172 million). The
increase in associated companies and joint ventures reflects the gain from
sale of the high school developed by Porsnes Utvikling AS of which Norske
Skog Saugbrugs owns 50%. The group also recognised a deferred tax asset of
NOK 137 million due to the improved operating environment.
Total current assets were NOK 6.5 billion at 31 December 2022
(NOK 4.6 billion), with cash and cash equivalents of NOK 2
650 million at
31 December 2022 (NOK 1
489 million). In addition to the increase in cash
and cash equivalents, trade receivables increased due to higher sales while
higher input costs for produced goods increased inventory.
Total non-current liabilities were NOK 4.4 billion at 31 December 2022
(NOK 3.4 billion)
. Non-current liabilities increased due to draw down on loans
related to the conversion projects at Norske Skog Bruck and Norske Skog
Golbey. Total current liabilities were NOK 3
.3 billion (NOK 2.6 billion) an
increase driven by higher trade payables and higher tax payables.
Net interest-bearing debt at 31 December 2022 was NOK 1
092 million
(NOK 1
054 million). Equity was NOK 5
.9 billion at 31 December 2022
(NOK 3.1 billion)
. The increase reflects profit for 2022.
Annual report 2022
I
Norske Skog
I
71
REPORT OF THE BOARD OF DIRECTORS
RISK MANAGEMENT
The main exposures for the group are linked to demand development in key
sectors within publication paper and capacity management by the suppliers
and thereby impacting prices. Prices for publication paper relative to
production cost is the most important factor for the profitability in the
industry. Negative demand development and lack of or insufficient capacity
management in the industry could result in pressure on prices and profitability.
The group is also exposed to movements in the prices of key input factors
such as energy, recovered paper, wood and chemicals. During 2022 and into
2023 energy in particular has been volatile and high compared to previous
years. Thus, efforts to continue to improve efficiencies and develop
purchasing strategies and having a contract structure that matches
production are key to mitigate these risk factors and reduce the impact on
the group’s profitability.
Norske Skog is not vertically integrated into forest resources and therefore
must source wood from third parties. The supply of wood is to a certain extent
covered by medium to long-term contracts which reduce cost exposure and
increase supply certainty. For the remaining part the price development of
wood is linked to the activity in the pulp and paper sector with lower activity
and pricing giving lower cost and opposite when activity is high.
The group’s revenues and costs are partly hedged operationally from a
currency point of view; providing some risk reduction but significant
movements, particularly in the NOK, pose a financial risk for the group.
Norske Skog’s operations are predominantly production of publication paper
in Europe and Australasia. The demand for publication paper will likely
continue to decrease and the market balance is over time dependent on
future closures of production capacity either permanently or through
conversions to other paper grades. Exposure to both newsprint and magazine
paper grades give some product diversification, while business segments
located on opposite sides of the world provide some geographical
diversification. The conversion of one paper machine at Norske Skog Bruck
and on one paper machine at Norske Skog Golbey will provide further product
diversification into recycled containerboard, which is expected to continue to
be a growing market. New fibre based and bio-related products will provide
further diversification.
Financial risk management includes currency and liquidity planning. Currency
volatility is to a certain extent mitigated by natural hedging where income
and expenses are matched in the same currency. Norske Skog has loans
predominantly denominated in EUR, replicating cash flows from the EUR
based European market. Liquidity is ensured by maintaining sufficient cash
balances and open credit lines linked to trade receivables facilities and a
revolving credit facility. Norske Skog continuously assesses the most
competitive funding sources for the group. Norske Skog performs credit
evaluations of counterparties. The group’s insurance program covers
property damage, business interruption, product and environmental liability,
crime and cyber and is managed centrally through a well-established
insurance program.
Norske Skog ASA has a directors and officers liability insurance for the group
and its subsidiaries. The insurance covers defence costs and potential legal
liability for directors and officers arising out of claims made against them while
serving on a board of directors and or as an officer. The insurance renews
annually, and the sum insured was USD 50 million at 31 December 2022.
Risk factors are further discussed in Note 4 Financial Risk in the consolidated
financial statements.
CORPORATE GOVERNANCE
Norske Skog considers good corporate governance to be a prerequisite for
value creation, trustworthiness, and access to capital. Norske Skog believes
that good corporate governance involves openness, honesty and cooperation
between all parties involved in and with the group: the shareholders, the
board of directors and executive management, employees, customers,
suppliers, public authorities, and society in general.
To secure strong corporate governance and value creation in a sustainable
manner, it is important that Norske Skog ensures good and healthy business
practices, reliable financial reporting and an environment of compliance with
legislation and regulations across the group.
Norske Skog has governance documents setting out principles for how
business shall be conducted. These apply to all group entities. The Norske
Skog governance regime is approved by the board of directors of Norske
Skog. Further details are described in the corporate governance section in
the annual report and on www.norskeskog.com.
SUSTAINABILITY
Norske Skog is committed to contribute to sustainable development and
supports the ten principles in the UN Global Compact. Norske Skog is in line
with the Global Reporting Initiative’s (GRI) Standards for sustainability
reporting, which is established as an important tool to fulfill our environmental,
social and corporate responsibility. Norske Skog’s strategic goals and
business priorities will have a significant impact on several stakeholders, and
thus, reflected in the group sustainability report. The 17 UN Sustainable
Development Goals are now an integral part of Norske Skog’s strategy.
Norske Skog shall create value for people and society in a responsible way,
while promoting a sustainable environment and principles of circular
economy. The operations must be based on sustainable sourcing by using
certified wood and chips documented through the Chain of Custody
certifications and the use of recycled paper. Improved margins and reduced
environmental impacts from the value chain and the mills are achieved
through effective resource and energy management. The production process
is circular in nature. The finished publication and packaging paper products
are collected and reused to make new paper products. All residues from the
production processes are reused or disposed of either through energy
recovery, landfill, agricultural fertilizer or sale/delivery. In 2022, 80% of the
waste was used as biofuel for the bio boilers at the mills generating thermal
energy. In Europe 87% of the waste was used for energy purposes, whereas in
72
I
Norske Skog
I
Annual report 2022
REPORT OF THE BOARD OF DIRECTORS
Australia, 88% was used for agricultural purposes. Norske Skog is committed
to follow the EU Water Framework Directive and the ambitious water permit
goals given by the local authorities to minimise impact on the surrounding
ecosystems.
Norske Skog has set forth an ambitious goal to reach a 55% reduction in
greenhouse gas emissions within 2030 and zero carbon emission by 2050 as
a key part of the business strategy. The goal is to reduce energy consumption,
increase the share of renewable energy sources and to optimise the use of
process chemicals and transport. The group absolute emissions (Scope 1 and
2) were reduced by -23 % in 2022 compared to 2021, due to reduced gas
consumption at Norske Skog Bruck after the start-up of a new energy plant in
2022. Together with Ocean GeoLoop and Borg CO2, Norske Skog is pursuing
the opportunity to become CO
2
net negative, and to explore economically
viable models for utilisation of biogenic CO
2
in Norway. Going forward, Norske
Skog is committed to improve the quality of our scope 3 inventory, work with
partners across our value chain to reduce emissions and set reduction targets
for Scope 3.
To demonstrate Norske Skog’s commitment to combating climate change, and
to make critical information available to investors, customers and other
stakeholders, Norske Skog reported to the CDP (Carbon Disclosure Project) in
2022. Norske Skog achieved a favorable A– rating on CDP Climate Change.
Details of environmental impact of the operations, environmental responsibility
and corporate social responsibility are described in the Sustainability report
section in the annual report and on www.norskeskog.com.
TRANSPARENCY
In June 2021 the Norwegian Parliament passed the Transparency Act (In
Norwegian: “Åpenhetsloven”) with the purpose to promote companies’ respect
for fundamental human rights and decent working conditions in connection
with the production of goods and services, and to ensure the general public
access to information on how companies handle negative consequences on
fundamental human rights and decent working conditions.
The act applies to large enterprises that are domiciled in Norway, which offer
goods and services inside or outside Norway. The act entered into force on 1
July 2022. Norske Skog will comply with the obligations under the scope of
this act and will disclose further information on www.norskeskog.com by
30 June 2023.
HEALTH AND SAFETY
Health and safety have a high priority for Norske Skog and we aim to have
zero injuries among employees. Our goal is a safe working environment where
health and safety receive equal attention in planning and in the daily operations
of the group. All injuries and near misses are reported in our global health
safety and environment system, Synergy. Experience and learnings from every
single incident are shared within the organisation to management and those
responsible for health and safety. Lost-time injuries per million working hours,
was 0.8 in 2022 (1.9), while injuries with medical treatments per million
working hours was 7.15 in 2022 (5.9) Norske Skog had an absence rate due
to sickness of 4.7% in 2022 (4.2%)
.
EMPLOYEES, GENDER EQUALITY, GENDER BALANCE AND DIVERSITY
The Norske Skog group had 2
140 employees at year end 2022 (2
092). The
paper industry has traditionally had few female employees. At Norske Skog,
the share of female employees, around 13%, is a slight increase from the 12%
level persisting for many years. Our female share in top management positions,
representing group management at the headquarter, the management teams
at the business units and the managing directors at the sales offices is 17%,
which is an increase from 12% in previous year. Our female share in other
management positions is 12%, a slight decrease from 13% in 2021. The board
of directors consists of five members, two women and three men.
Given the low share of female employees, particularly at the mills, we aim to
recruit more female operators. Norske Skog is working to encourage the
Norwegian Discrimination Act’s objective within our business. This includes
activities to promote diversity and inclusion by providing equal employment
and career opportunities, gender equality, and to prevent discrimination due
to ethnicity, national origin, descent, skin color, language, religion and faith.
RESEARCH AND DEVELOPMENT
Norske Skog’s research and development work is performed at the individual
business units and in cooperation with other external companies and/or
external research institutions. There is a continued focus on evolution of
paper products and new innovative green alternatives to replace existing
materials and substances that often are based on petrochemical products.
Investments into projects for alternative use of fibre and development of bio-
chemicals are being made in the form of pilot or demonstration plants that, if
successful, can contribute to growth when commercialised.
Norske Skog has developed bio-based products at Saugbrugs, in Halden, with
particular focus on nanocellulose (CEBINA) and bio composites (CEBICO).
Significant progress has been made for both products over the last years and
Norske Skog have realised commercial sales and proof-of-concept for its
CEBINA products.
In February Norske Skog Saugbrugs, together with its research and industry
partners, was granted NOK 60 million in research funding from the Research
Council of Norway and Innovation Norway under the Green Platform
Programme. The portfolio of products to be developed aims to remove or
greatly reduce the use of petroleum-based raw materials and harmful
materials, as well as to contribute to increased recycling of plastics.
In May 2022 a new milestone at Norske Skog Saugbrugs was achieved with
the official opening of the CEBICO demonstration plant. Several years of
development work led to a grant support of 15 million NOK from Innovation
Norway for the investment in this new technology. With a capacity of 300
tonne per year, the demonstration plant has verified the up-scaled production
process and provides large product volumes for customer testing in new
applications.
Annual report 2022
I
Norske Skog
I
73
REPORT OF THE BOARD OF DIRECTORS
Circa Group, where Norske Skog is the largest shareholder, has for 15 years
developed Circa’s bio-based solvent Cyrene™, which is one of the few novel,
multipurpose solvents to be developed in over 40 years. The demand for
sustainable chemicals has been constrained only by supply and may
outperform the toxic petroleum-based materials that society demands to be
eliminated from use. With the support of the EU Horizon 2020 research and
innovation programme, the Circa’s ReSolute plant in France will scale-up
Cyrene™ production to 1
000 tonnes in 2024.
GOING CONCERN
In accordance with the provisions in the Norwegian Accounting Act, the
board of directors has assessed the going concern assumption as basis for
preparing and presenting the financial statements. At 31 December 2022,
the equity of the company is NOK 5.9 billion giving an equity ratio of
approximately 42%. Based on the results for the company and group for 2022,
the solidity and available liquidity, the board of directors confirms that the
assumption applies and that the financial statements have been prepared on
a going concern basis.
OUTLOOK FOR 2023
The development in the global economy, especially within the raw material
and energy markets, but also consumer spending, are of vital importance for
the publication paper and packaging industry, and thus for Norske Skog’s
operations. The general high level of uncertainty on how the global economy
will develop in 2023 remains. Raw material and energy prices have come
down from record highs but are still at significant levels. The volatility and
uncertainty will remain in 2023. These factors will influence the cost level,
and hence the prices for publication and packaging paper in Europe. However,
Norske Skog will actively manage its energy exposure through the coming
quarters.
Executed and planned capacity closures in the industry are expected to
maintain a balanced newsprint paper market, whereas the markets for super
calendared magazine grades and in particular lightweight-coated magazine
grades are softening. The turbulent operating environment, especially within
energy, may result in further temporary or permanent downtime and closures
in the industry.
The waste-to-energy facility at Bruck has been operating since second
quarter 2022 on approximately 80% of its design capacity. Together with the
main supplier Valmet, necessary modifications are done in the first quarter
2023 to bring the energy plant to its full design capacity. The facility has
already significantly reduced the gas consumption, and thus CO
2
emissions
for Norske Skog Bruck.
Norske Skog expects to commence production of recycled containerboard
during the first quarter of 2023 at Norske Skog Bruck PM3, and during the
fourth quarter of 2023 at Norske Skog Golbey PM1. From the first quarter of
2023, Norske Skog will establish packaging paper as a new operating
segment.
Norske Skog will continue its strategic review of the operations in Australia.
Norske Skog Boyer is the only publication paper producer in the region.
Further opportunities to realise values related to the Norske Skog Boyer
industrial site will be reviewed.
Norske Skog will continue working to develop other options based on the
current industrial platform and site-specific opportunities, which include
further machine conversions and other new renewable energy and bioproduct
initiatives.
NORSKE SKOG ASA (THE PARENT COMPANY)
The parent company, Norske Skog ASA, is incorporated in Norway and has its
head office at Skøyen in Oslo. The activities of Norske Skog ASA consist of
holding shares in the operating companies and conducting the head office
functions of the Norske Skog group. On 31 December 2022 the company had
31 employees.
Operating revenue NOK 97 million (NOK 95 million) is primarily from
the services provided within the group. Employee benefit expenses
NOK 218 million (NOK 82 million) an increase of NOK 136 million mainly due
to accrual of our long-term incentive programme. Other operating expenses
NOK 69 million (NOK 50 million) are related to the head office functions. Net
financial items amounted to NOK 904 million (NOK -11 million) reflecting a
reversal of impairment related to shares in subsidiaries of NOK 1
066 million
(NOK 0 million), net interest expense of NOK 64 million and (NOK 37 million)
and unrealised currency loss of NOK 91 million (gain NOK 81 million). The
profit for the year for Norske Skog ASA was NOK 708 million in 2022
(NOK -80 million).
Net
cash
flow
from
operating
activities
was
NOK
-119
million
(NOK -76 million). Total assets were NOK 7
.7 billion at 31 December 2022
(NOK 6.3 billion)
. The increase is mainly due to increase in cash and cash
equivalents and reversal of impairment on shares in subsidiaries.
Total non-current assets were NOK 4.9 billion at 31 December 2022
(NOK 4.8 billion)
. Total non-current liabilities were NOK 1
.4 billion at
31 December 2022 (NOK 1.5 billion) while current liabilities increased to NOK
2.1 billion from NOK 1.4 billion
. Equity was NOK 4
.1 billion at 31 December
2022 (NOK 3.4 billion)
. The increase is due to the profit for the year.
Lost-time injuries per million working hours, was 0 in 2022 (0) in Norske Skog
ASA. The company had an absence rate due to sickness of 2
.1% in 2022 (0.8%)
.
The risk factors described for the group are also relevant for the parent
company. Furthermore, Norske Skog ASA is also exposed to the risks of
funding from the cash generating operations not being available for the
company when required, whether by way of intragroup loans or other capital
transactions such as dividend payments.
The total number of shareholders was 9
677 at 31 December 2022 (7
615).
74
I
Norske Skog
I
Annual report 2022
REPORT OF THE BOARD OF DIRECTORS
SKØYEN, 28 MARCH 2023
THE BOARD OF DIRECTORS OF NORSKE SKOG ASA
Geir Drangsland
Arvid Grundekjøn
Trine-Marie Hagen
Chair
Board member
Board member
Nikolai Johns
Johanna Lindén
Sven Ombudstvedt
Board member
Board member
CEO
PROFIT/LOSS ALLOCATION
The profit for the year for Norske Skog ASA (the parent company) in 2022
was NOK 708 million (loss of NOK 80 million). The profit for the year was
allocated to retained earnings.
DIVIDEND PROPOSAL
The board of directors will propose to the annual general meeting the
authority to pay dividend up to NOK 5.00 per share
. Any shareholder
distribution is subject to waivers from certain lenders.
Annual report 2022
I
Norske Skog
I
75
REPORT OF THE BOARD OF DIRECTORS
Photo: Lézards Création
Johannes Moser
Production line manager
Norske Skog Bruck
My name is Johannes Moser, and I
am the production line manager at
PM3. I started working at Norske
Skog Bruck as a papermaker’s
apprentice, completing an appren-
ticeship in papermaking and one
in chemistry laboratory technologies. I also achieved a master
certificate in papermaking. I took on my current role during the
conversion to containerboard.
My two brothers also completed apprenticeships at our company
and told me about the working environment and development
opportunities.
At Norske Skog, I like the cooperation and creativity. Solutions are
always found. I also like the life-long training and development, mak-
ing career paths from apprenticeship to management positions.
By converting to containerboard, I hope we become a strong
partner in this segment. By developing in the “green energy sector”,
I expect a positive and sustainable commitment to the environment.
Through our investment programs, Norske Skog should strengthen
our image as a leading company and attractive employer.
Photo: Norske Skog
Consolidated financial statements
Consolidated income statement
80
Consolidated statement of comprehensive income
80
Consolidated balance sheet
81
Consolidated statement of cash flows
82
Consolidated statement of changes in group equity
83
Notes to the consolidated financial statements
1
General information
84
2
Accounting policies
84
3
Accounting estimates and assumptions
89
4
Financial risk
89
5
Operating segments
91
6
Other operating income
94
7
Employee benefit expenses
95
8
Other operating expenses and auditors fees
96
9
Derivatives and other fair value adjustment
96
10
Associated companies
97
11
Financial items
97
12
Income taxes
98
13
Earnings and dividend per share
99
14
Intangible assets and property, plant and equipment
100
15
Property, plant and equipment
100
16
Leases
103
17
Shares
104
18
Derivatives
106
19
Financial instruments
108
20
Receivables and other non-current assets
111
21
Pension and other employee obligations
112
22
Provisions
116
23
Interest-bearing liabilities
117
24
Specification of balance sheet items
119
25
Related parties
120
26
Consideration of climate risk for the financial statements
120
27
Events after the balance sheet date
121
Consolidated
financial
statements
Annual report 2022
I
Norske Skog
I
79
CONSOLIDATED INCOME STATEMENT
NOK MILLION
NOTE
2022
2021
Operating revenue
5
Other operating income
6
Total operating income
Distribution costs
-1 227
-1 187
Cost of materials
6
-7 937
-6 055
Employee benefit expenses
7
-2 024
-1 723
Other operating expenses
8
-921
-687
Restructuring expenses
22
-11
-192
Depreciation
14, 15
-546
-433
Impairments
15
-164
Derivatives and other fair value adjustments
9
-218
Total operating expenses
Operating earnings
5
-160
Share of profit in associated companies and joint ventures
10
-18
Financial income
11
Financial expense
11
-190
-200
Gains/(losses) on foreign currency
11
-97
Profit/(loss) before income taxes
-295
Income taxes
12
-206
-68
Profit/(loss) after taxes
-363
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NOK MILLION
NOTE
2022
2021
Profit/(loss) after taxes
-363
Items that may be reclassified subsequently to profit or loss
Currency translation differences
-122
Reclassified translation differences upon divestment of foreign operations
Tax expense on translation differences
Total
-122
Items that will not be reclassified subsequently to profit or loss
Remeasurements of post employment benefit obligations
Tax effect on remeasurements of post employment benefit obligations
-2
Total
Other comprehensive income
-110
Total comprehensive income
-473
Basic earnings per share (NOK)
13
-3.90
Diluted earnings per share (NOK)
13
-3.90
CONSOLIDATED FINANCIAL STATEMENTS
80
I
Norske Skog
I
Annual report 2022
CONSOLIDATED BALANCE SHEET
NOK MILLION
NOTE
31.12.2022
31.12.2021
Assets
Deferred tax assets
12
Intangible assets
14
Property, plant and equipment
5, 15
Investment in associated companies
10
Other non-current assets
20, 21
Total non-current assets
Inventories
5, 24
Trade and other receivables
5, 20
Other current assets
24
Cash and cash equivalents
4
Total current assets
Total assets
Equity and liabilities
Paid-in equity
Other equity
-2 989
-5 765
Total equity
Employee benefit obligations
21
Deferred tax liability
12
Interest-bearing non-current liabilities
23, 24
Other non-current liabilities
24
Total non-current liabilities
Trade and other payables
24
Tax payable
12
Interest-bearing current liabilities
23, 24
Other current liabilities
21, 24
Total current liabilities
Total liabilities
Total equity and liabilities
SKØYEN, 28 MARCH 2023
THE BOARD OF DIRECTORS OF NORSKE SKOG ASA
Geir Drangsland
Arvid Grundekjøn
Trine-Marie Hagen
Chair
Board member
Board member
Nikolai Johns
Johanna Lindén
Sven Ombudstvedt
Board member
Board member
CEO
CONSOLIDATED FINANCIAL STATEMENTS
Annual report 2022
I
Norske Skog
I
81
CONSOLIDATED STATEMENT OF CASH FLOWS
NOK MILLION
NOTE
2022
2021
Cash generated from operations
5
Cash used in operations
-12 333
-9 564
Cash flow from currency hedges and financial items
-59
-39
Interest payments received
11
Interest payments made
11
-122
-107
Taxes paid
-101
-106
Net cash flow from operating activities
1)
5
Purchases of property, plant and equipment and intangible assets
5, 14, 15
-2 228
-1 021
Sales of property, plant and equipment and intangible assets
15
Purchase of shares in companies and other financial payments
-30
-95
Sales of shares in companies and other financial instruments
Net cash flow from investing activities
-1 956
-891
New loans raised
23
Repayments of loans
23
-321
-383
New paid-in equity
Net cash flow from financing activities
Foreign currency effects on cash and cash equivalents
Total change in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
1)
Reconciliation of net cash flow from operating activities
Profit/(loss) before income taxes
-295
Change in working capital
-545
Change in restructuring provisions
22
-22
-28
Depreciation and impairments
15
Derivatives and other fair value adjustments
9
-462
Gain and losses from divestment of business activities and property, plant and equipment
-191
-16
Net financial items without cash effect
-82
-7
Taxes paid
-101
-106
Change in pension obligations and other employee benefits
-31
-13
Adjustment for other items
-14
-37
Net cash flow from operating activities
CONSOLIDATED FINANCIAL STATEMENTS
82
I
Norske Skog
I
Annual report 2022
CONSOLIDATED STATEMENT OF CHANGES IN GROUP EQUITY
NOK MILLION
PAID-IN-
EQUITY
1)
OTHER PAID-IN
EQUITY
2)
OTHER
EQUITY
TOTAL
EQUITY
Equity 1 January 2021
-5 292
Change in paid-in equity
3)
Profit/(loss) after tax
-363
-363
Other comprehensive income
-110
-110
Equity 31 December 2021
-5 765
Profit/(loss) after tax
Other comprehensive income
Equity 31 December 2022
-2 989
1)
Paid-in equity consist of share capital NOK 377 million (94 264 705 shares with a nominal value of NOK 4.00) and share premium of NOK 6 272 million.
2)
Other paid-in equity arises from a de-recognition of debt in 2018.
3)
Increase of paid-in-equity in February 2021 by issuing 11 764 705 new shares. The increase consisted of increase in share capital of NOK 47 million and increase in share premium of NOK 341 million.
Marleen van den Berg
VP containerboard sales/
MD Norske Skog Deutschland
Hello, I am Marleen van den Berg
and I actually have two jobs at
Norske Skog: VP Containerboard
Sales
and
MD
Norske
Skog
Deutschland.
I started working at Norske Skog
when the conversion projects started. Playing a role in the
transition of the company is very motivating.
I like the culture of the company: We are a resilient bunch, and
there is a can-do mentality throughout the company. And
wherever I go, I’m impressed by the professionalism and commit-
ment of my colleagues, no matter what position.
I would like to see Norske Skog execute its vision and become a
leading player in the three fields we are focusing on: publication
paper, packaging paper, fibres and energy. Mind you – leading
doesn’t always mean the biggest in volume. It can be leading from
a technological or operational point of view. It’s key, though, that
we generate the results needed to keep developing the company.
Photo: Norske Skog Golbey
CONSOLIDATED FINANCIAL STATEMENTS
Annual report 2022
I
Norske Skog
I
83
Notes to the consolidated financial
statements
General information
world leading producer of publication paper with strong market positions in
paper. Norske Skog operates five mills in four countries. Norske Skog has an
annual publication paper production capacity of 1.7 million tonnes
. Four of
the mills are in Europe and one in Australia. Newsprint and magazine paper
are sold through sales offices and agents to over 80 countries. At 31 December
2022 the group has 2
140 employees. Of the four mills in Europe two will also
produce recycled containerboard following conversion projects. In addition
to the traditional publication paper business, Norske Skog aims to further
diversify its operations and continue its transformation into a growing and
high margin business through a range of exciting bio products, fibre and
energy related projects.
The parent company, Norske Skog ASA , is incorporated in Norway
head office at Skøyen in Oslo. The company is listed on Oslo Stock Exchange
with the ticker NSKOG.
International Financial Reporting Standards (IFRS) and interpretations from
the IFRS Interpretations Committee (IFRIC), as adopted by the European
Union (EU). The consolidated financial statements are presented in English
only. All amounts are presented in NOK million unless otherwise stated. There
may be some small differences in the summation of columns and rows due to
rounding. The corresponding amounts for prior year in parenthesis. The
consolidated financial statements were authorised for issue by the board of
The table below shows the average monthly foreign exchange rates applied in
the income statement and the closing exchange rates applied in the balance
sheet for the most important currencies for the group.
Income statement
Balance sheet
2022
2021
31.12.2022
31.12.2021
AUD
6.66
6.45
6.70
6.40
EUR
10.10
10.16
10.51
9.99
GBP
11.85
11.82
11.85
11.89
NZD
6.09
6.08
6.26
6.03
USD
9.61
8.59
9.86
Accounting policies
financial statements of Norske Skog ASA are set out below. The consolidated
financial statements have been prepared under the historical cost convention,
as modified by the revaluation of biological assets, available-for-sale financial
assets and financial assets at fair value through profit or loss. The policies
have been consistently applied to all periods presented, unless otherwise
a) Basis of consolidation
The consolidated financial statements comprise the financial statements of
Norske Skog ASA and its subsidiaries as at 31 December 2022 . Control is
achieved when the group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, the group controls an
investee if, and only if, the group has:
•
Power over the investee (i.e., existing rights that give it the current ability to
direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the
investee
•
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in
control. To support this presumption and when the group has less than a
majority of the voting or similar rights of an investee, the group considers all
relevant facts and circumstances in assessing whether it has power over an
investee, including:
•
The contractual arrangement(s) with the other vote holders of the investee
•
Rights arising from other contractual arrangements
•
The group’s voting rights and potential voting rights
The group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the group
obtains control over the subsidiary and ceases when the group loses control of
the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the consolidated financial
statements from the date the group gains control until the date the group
ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the group’s
accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the
group are eliminated in full on consolidation.
I
Norske Skog
I
Annual report 2022
b) Associates
Associates are all entities over which the group exercises significant influence
but not control, generally accompanying a shareholding of 20% to 50% of the
voting rights. Investments in associates are accounted for using the equity
method of accounting. The investment is initially recognised at cost, and the
carrying amount is increased or decreased to recognise the investor’s share of
the profit or loss of the investee after the date of acquisition. Profits and losses
resulting from transactions between the group and its associates are
recognised in the consolidated financial statements only to the extent of
unrelated investors’ interests in the associates.
At each reporting date, the group determines whether there is any objective
evidence that the investment in the associate is impaired. If this is the case,
the group calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying value, and recognises the
Reportable segments
The activities in the group are divided into two operating segments: publication
paper Europe and publication paper Australasia. The segment structure is in
line with the group’s operating model. The operating segments are reported in
a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for
allocating resources, making strategic decisions and assessing performance
of the group’s mills, has been identified as corporate management. Activities
that are not part of the operating segments are included in other activities.
Accounting policies applied in the segment reporting
Recognition, measurement and classification applied in the segment reporting
are consistent with the accounting principles applied for the consolidated
income statement and balance sheet and the internal management reporting.
Performance measurement
The group assesses the performance of the operating segments based on a
measure of EBITDA. These items exclude the effects of expenditure not
deemed to be part of the regular operating activities of the segment, such as
restructuring expenses, impairments, changes in fair value of certain energy
contracts, embedded derivatives in energy contracts and value change of
biological assets. See Alternative Performance Measures (APM) for further
information related to performance measurement other than financial measure
defined or specific in the applicable financial reporting framework (IFRS).
Intercompany transactions
The revenue reported per operating segment includes both sales to external
parties and sales to other segments. Intra-segment sales are eliminated in the
consolidated financial statements. All sales transactions between operating
segments are carried out at arm’s length prices as if sold or transferred to
Items included in the financial statements of each of the group’s entities are
measured using the currency of the primary economic location in which the
entity operates (the “functional currency”). The consolidated financial state-
ments are presented in NOK, which is both the functional and presentational
b) Transactions and balances
Foreign currency transactions are translated into the entity’s functional
currency using the exchange rate prevailing on the date of the transaction.
Foreign exchange gains or losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year-end exchange rates are recognised
in the income statement.
Exchange differences arising from the settlement of accounts receivable/
payable and unrealised gains/losses on the same positions are recognised in
Operating revenue/Cost of materials respectively. Exchange differences
arising from the settlement of other items are recognised within Financial
income/Financial expenses.
Foreign exchange gains and losses that relate to borrowings and cash and
cash equivalents are presented in the income statement within Financial
income/Financial expenses.
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss.
c) Group companies
The results and financial position of all group entities which have a functional
currency different from the presentational currency are translated into the
presentational currency as follows:
i.
Assets and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance sheet,
ii. Income and expenses for each income statement are translated at average
exchange rates on monthly basis,
iii. All resulting exchange differences are booked to comprehensive income
On consolidation, exchange differences arising from the translation of the net
investment in foreign entities are booked as part of comprehensive income.
When a foreign operation is derecognised, such exchange differences are
booked out of comprehensive income and recognised in the income statement
Property, plant and equipment (PPE) is shown at historical cost less subsequent
depreciation and impairments. Historical cost includes expenditure directly
attributable to the acquisition of the items. The residual value of production
equipment is defined as the realisable value after deduction of the estimated
cost of dismantling and removal of the asset. If the estimated cost exceeds the
estimated value, the net liability is added to the cost of the related asset, and a
provision is recognised as a liability in the balance sheet.
Borrowing costs, which are directly related to qualifying assets, are recognised
as part of the acquisition cost for the qualifying asset.
Subsequent costs are included in the asset’s carrying amount or recognised
as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repair and maintenance costs are charged to the
income statement during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the
straight-line method to allocate their cost or revalued amounts to their residual
values over their estimated useful lives.
The residual value and useful life of property, plant and equipment are
reviewed and adjusted. Review of impairment indicators are performed
I
Norske Skog
I
85
regularly, and if impairment indicators are identified an impairment test of
property plant and equipment for the CGU in question is performed. An asset’s
carrying amount is written down to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount, and is included in the income statement line other
a) Patents and licences
Patents and licences have a finite useful life and are recognised at historical
cost less accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate the cost of patents and licences over their
estimated useful lives.
b) Computer software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire the specific software and bring it into use and amortised
over their estimated useful lives. Computer software development costs
recognised as assets are amortised over their estimated useful lives. Costs
associated with maintaining computer software are recognised as an expense
Assets that are subject to amortisation are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and its value in
use. For the purpose of assessing impairment, assets are grouped at the
lowest level for which cash flows are separately identifiable CGUs (cash-
The group classifies its financial assets in the following three categories: at
fair value through profit or loss, at amortised cost, and at fair value through
other comprehensive income. This classification depends on the purpose for
which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition and re-evaluates this
designation at every reporting date.
a) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and
those designated at fair value through profit or loss at inception. A financial
asset is classified in this category if it was acquired principally for the purpose
of short-term sale or if so designated by management. Derivatives are also
categorised as held for trading unless designated as hedges. Assets in this
category are classified as current assets if they either are held for trading or
are expected to be realised within 12 months of the balance sheet date.
Non-financial commodity contracts where the relevant commodity is readily
convertible to cash, and where the contracts are not for own use, fall within the
scope of IFRS 9 and such contracts are treated as derivatives. Embedded
derivatives are separated from the host contract and accounted for as a
derivative if the economic characteristics are not closely related to the
economic characteristics and risk of the host contract. See Notes 4, 17 and 18
for more information. Commodity contracts within the scope of IFRS 9 are
classified as current assets, unless they are expected to be realised more than
12 months after the balance sheet date. In that case, they are classified as
non-current assets.
b) Amortised cost
Amortised cost includes cash, loans and receivables, and are non-derivative
financial assets with fixed or determinable payments that are not quoted in an
active market. Items classified as amortised cost are current items maturing
less than 12 months after the balance sheet date and are presented as Trade
and other receivables or Cash and cash equivalents in the balance sheet.
Items maturing later than 12 months after the balance sheet date are
presented within Other non-current assets.
c) Fair value through other comprehensive income
Investments in other shares not held for trading purpose are classified as fair
contract is entered into and are subsequently remeasured at their fair value.
Changes in the fair value of any of these derivative instruments are recognised
in the income statement. The group has selected to not designate any financial
instruments for hedge accounting.
The fair value of quoted investments is based on the current market price. If
the market for a financial asset is not active, the group applies valuation
techniques to establish the fair value. These include the use of recent arm’s
length transactions, reference to other instruments which are substantially
the same, and discounted cash flow analyses defined to reflect the issuer’s
specific circumstances. Fair value includes the impact of credit risk and the
adjustment for credit risk is dependent on whether the derivative is in the
money (asset) or out of the money (liability). Credit value adjustment is
applied to assets positions based on credit risk associated with the
counterparty. Debit value adjustment is applied to liability positions, based on
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term, highly liquid investments with original maturities
of three months or less. Drawn bank overdrafts are shown as Interest-bearing
Trade receivables are amounts due from customers for merchandise sold or
services performed in the ordinary course of business. Trade receivables are
recognised at invoiced amount, less provision for impairment. The impairment
model for financial assets under IFRS 9 require recognition of doubtful
receivables allowances based on expected credit losses. The group has an
expected credit loss model for trade receivables, whereby expected credit
losses are recognised based on ageing categories of trade receivables that
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using weighted average cost. The cost of finished goods and work
in progress comprises raw materials, direct labour, other direct costs and
related production overheads (based on normal operating capacity). It
excludes borrowing costs. Net realisable value is the estimated selling price in
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Trade payables are
recognised initially at fair value and subsequently measured at amortised cost
86
I
Norske Skog
I
Annual report 2022
Provisions for environmental restoration, dismantling costs, restructuring
activities and legal claims are recognised when the group has a present legal
or constructive obligation as a result of past events, an outflow of resources is
more likely than not to be required to settle the obligation and the amount can
be reliably estimated.
Restructuring costs are costs which are not related to the ongoing operations.
Restructuring cost are recognised once there is a constructive obligation. This
includes for example severance (redundancy) payments, early retirement or
other arrangements for employees leaving the company, external costs to
lawyers and legal advisors in relation to the restructuring process, lease
termination costs and onerous contracts. Salary which is earned while the
employee contributes to the ongoing operations is not classified as
restructuring costs.
Where a number of similar obligations exist, the likelihood that an outflow will
be required in settlement is determined by considering the class of obligations
as a whole. A provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the best estimate of the
expenditure required to settle the present obligation using a pre-tax rate that
reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time
The group’s income tax expense includes current tax based on taxable profit
for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the countries where the
company’s subsidiaries and associates operate and generate taxable income.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the carrying amount of assets and liabilities in the
consolidated financial statements and their tax bases.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the deductible temporary
differences and unused tax losses can be utilised. Deferred tax assets are
offset against deferred tax liabilities when the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority and
there is a legally enforceable right to set-off current tax assets against current
EMPLOYEE BENEFITS
a) Pension obligations
Group companies operate various pension schemes. These are generally
funded through payments to insurance companies, as determined by periodic
actuarial calculations. The group has both defined benefit and defined
contribution plans.
The liability recognised in the balance sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the
balance sheet date less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using the projected
unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest
rates of high quality corporate bonds which are denominated in the currency
in which the benefits will be paid, and which have terms to maturity
approximating to the terms of the related pension liability, or alternatively a
government bond interest rate if such bonds do not exist.
Actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions are charged or credited to equity in other
comprehensive income in the period in which they arise. Past-service costs
are recognised immediately in income.
A defined contribution plan is a pension plan under which the group pays fixed
contributions into a separate entity. These contributions are made to publicly-
or privately administered pension insurance plans on a mandatory, contractual
or voluntary basis. The group has no further payment obligations once the
contributions have been made. These contributions are recognised as an
employee benefit expense in the period the contribution is related to. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available.
b) Other employee benefit obligations
Group companies operate various other employee benefit schemes. Other
employee benefits are future benefits that the employees have earned in
return for their service in current and prior periods.
Actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions are recognised in the income statement in the period
in which they arise.
The obligations are classified as non-current during the period they are being
earned, and are for some of the plans reclassified to current when the
employees have completed the required period of service and the group does
not have an unconditional right to defer settlement for these obligations.
Norske Skog has a long-term incentive programme which falls within the
scope of IFRS 2 Share-based payments. Norske Skog has a cash-settled
share-based programme in which the entity acquires services by incurring a
liability to transfer cash to the employee of those services for amounts that
are based on the price of the shares in the company. The ultimate cost of a
cash-settled share-based transaction is the actual cash paid to the
counterparty, which will be the fair value at settlement date.
The periodic determination of this liability is at each reporting date between
grant and settlement the fair value of the award. The fair value of the award is
determined in accordance with the specific requirements in IFRS 2. During the
vesting period, the liability recognised at each reporting date is the fair value
of the award at that date multiplied by the expired portion of the vesting
period. All changes in the liability are recognised in profit or loss for the period.
The fair value of the liability is determined by applying an option pricing
model, considering the terms and conditions on which the cash-settled
transaction was granted, and the extent to which the employees have rendered
d) Bonus arrangements
The group accrues for bonus arrangements when there exists a contractual
obligation, or past practice has created a constructive obligation.
Annual report 2022
I
Norske Skog
I
87
e) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and
accumulating sick leave that are expected to be settled wholly within 12
months after the end of the period in which the employees render and are
measured at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as current employee benefit obligations in the
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost. Any
difference between fair value of proceeds (net of transaction costs) and
redemption value is recognised in the income statement over the period of the
borrowing, using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or all of the facility
will be drawn down. In this case, the fee is deferred until the drawdown occurs.
To the extent there is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities, unless the group has an
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date. Interest costs are recognised in profit or loss in
A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original liability and the
recognition of a new liability. The difference in the respective carrying amounts
Ordinary shares are classified as equity. Incremental costs directly attributable
to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Where any group company purchases the company’s equity instruments, for
example as the result of a share buy-back or a share-based payment plan, the
consideration paid, including any directly attributable incremental costs (net
of income taxes) is deducted from equity attributable to the owners as
Revenue from contracts with customers is recognised when control of the
goods or services are transferred to the customer at an amount that reflects
the consideration to which the group expects to be entitled in exchange for
those goods or services.
Revenues in the group consists almost exclusively of the sale of goods. In
practical terms, the timing of revenue recognition is based on the delivery
terms for the different markets and customers, and where revenue is
recognised at point in time. It is important to make sure that all performance
obligations are fulfilled, and the customer can benefit on its own. If the
customer cannot obtain control of the good or service, the revenue cannot be
Dividend income is recognised when the right to receive payment is
Interest income is recognised using the effective interest method. This is the
interest rate that gives a net present value of the cash flows from the loan that
Government grants are recognised as income or as a cost reduction,
dependent on the basis for which the government grant has been awarded.
Recognition will be on a systematic basis over the period they have been
granted for, or on a systematic basis to the costs that they are intended to
compensate for. CO
2
compensation is recognised as a reduction of energy
cost as the element of energy cost it compensates is consumed and incurred.
Government grants in the form of compensation for losses which have already
been incurred, or in the form of direct financial support, which is not directly
related to future costs, are recognised as income in the same period as they
are awarded.
Government grants related to assets are presented in the balance sheet as
deferred income or as a reduction of the cost price of the assets the grant
relates to. The grant is then recognised in the income statement either through
future periodic income recognition or as a future reduction in the depreciation
Norske Skog recognises a liability to make lease payments and an asset
representing the right to use the underlying asset during the lease term
(“right-of-use asset”). Exceptions for short term leases and low value leases
have been adapted by the group. At initial recognition the right-of-use assets
is measured at an amount equal to the lease liability. Norske Skog separately
recognises the interest expense on the lease liability and the depreciation
expense on the right-of-use asset.
Lease liabilities are measured at the present value of the contractual payments
due to the lessor over the lease term, with the discount rate determined by
reference to the rate inherent in the lease, if available, or the group’s
incremental borrowing rate. Variable lease payments are only included in the
measurement of the lease liability if they depend on an index or rate. Other
BY THE GROUP
a) New standards effective from 1 January 2022
Changes in standards and interpretations during 2022 has not had any
material impact on Norske Skog’s financial reporting.
b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpre-
tations which have been issued by the IASB that are effective in future
accounting periods that the group has decided not to adopt early.
The group does not expect the standards issued, but not yet effective, to have
I
Norske Skog
I
Annual report 2022
Accounting estimates and assumptions
IMPORTANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of consolidated financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions for the future. It
also requires management to exercise its judgment in the process of applying
the group’s accounting policies. Estimates and assumptions, which represent
a significant risk of a material adjustment in the carrying amount of assets and
liabilities during the coming financial year, are discussed below.
a) Accounting treatment of physical energy contracts and other financial
instruments
Norske Skog’s portfolio of energy contracts consists mainly of physical energy
contracts of which some contain embedded derivatives. The fair value of
embedded derivatives in physical contracts is influenced by price index
fluctuations.
Norske Skog has energy contracts in Norway that does not fulfil the criteria
for use of the “own use exemption”. Therefore, the contracts in whole are
treated as financial derivatives in the scope of IFRS 9 and measured at fair
value through profit or loss The fair value of the contracts will vary dependent
on the market price for energy in Norway.
The fair value of financial instruments that are not traded in an active market is
determined by using valuation techniques. The group uses its judgment to select
methods and make assumptions that are mainly based on market conditions
existing at each balance sheet date. See Note 9 and Note 18 for more information.
b) Recoverable amount of intangible assets and property, plant and equip-
ment (PPE)
The group performs impairment tests to assess whether there has been a
decline in the value of intangible assets and PPE if there are impairment
indicators present. These are written down to their recoverable amount when
the recoverable amount is lower than the carrying value of the asset. The
recoverable amount from assets or cash-generating units is determined by
calculating the higher of fair value less costs to sell and value in use. Value in
use is the present value of the future cash flows expected to be derived from
an asset or cash-generating unit. Calculation of value in use requires use of
estimates. The group conducts annual reviews of the remaining economic life of
PPE. An increase or decrease in the remaining economic life will have an impact
on future depreciation, as well as affect the cash flow horizon for calculating value
Financial risk
FINANCIAL RISK MANAGEMENT
The main risk exposures for the group are linked to uncertainty to price and
volume developments for publication paper and the costs of key input factors
such as energy and fibre. Weaker demand than expected for the group’s
products can affect profitability and associated cash flows in a negative way.
The group operates in a multicurrency environment, where the main currencies
of importance for the business are EUR, GBP, USD and AUD. Currency
movements between these currencies, as well as against NOK, may influence
demand as well as prices and costs of key input factors. Liquidity is ensured
by maintaining sufficient cash balances and open credit lines linked to
accounts receivables facilities. Norske Skog continuously assess the most
competitive funding sources for the group.
Uncertainty about future changes in the broader economic climate development
and more adverse developments than expected may influence all of the above.
The aforementioned risks may all affect future results. The factors are an inherent
uncertainty when the board makes its assessments.
The group has one cash pool for the European entities and the cash pool is
legally placed in Norske Skog ASA.
FINANCIAL RISK FACTORS
The group is exposed to various financial risk factors through the group’s
operating activities, including market risk (interest rate risk, currency risk and
commodity risk), liquidity risk and credit risk. The group seeks to minimise
losses and volatility on the group’s earnings caused by adverse market
movements. Moreover, the group monitors and manages financial risk based
on internal policies and standards set forth by corporate management and
approved by the board of directors. These written policies provide principles
for the overall risk management as well as standards for managing currency
risk, interest rate risk, credit risk, liquidity risk and the use of financial
derivatives and non-derivative financial instruments.
a) Interest rate risk
Interest rate risk is related to the financial risk related to changes in market
interest rates. Interest rate risk management is carried out to secure the
lowest possible interest rate payments over time within acceptable risk limits.
This includes having a portfolio of loans in the group with both floating interest
and fixed interest rates. The group may also use derivatives to manage the
interest rate risk in the group.
31.12.2022
31.12.2021
INTEREST-
BEARING ASSETS
AND LIABILITIES
FLOATING
FIXED
TOTAL
FLOATING
FIXED
TOTAL
Interest-bearing
liabilities
2 892
850
3 742
1 671
872
2 543
Interest-bearing
assets
-2 650
0
-2 650
-1 489
0
-1 489
Net exposure
241
850
1 092
182
872
1 054
All amounts presented in the table are notional amounts. Total interest-
bearing liabilities will therefore differ from booked amounts due to bond
discounts/premiums. Floating rate exposure is calculated without accounting
for potential future refinancing.
Interest rate sensitivity analysis
In accordance with IFRS 7 Financial instruments - disclosures, an interest rate
sensitivity analysis is presented showing the effects of changes in market
interest rates on interest costs and interest income, as well as equity where
applicable. The analysis is based on the following assumptions:
Floating rate debt is exposed to changes in market interest rates, i.e. the
interest costs or interest income associated with such instruments will
fluctuate based on changes in market rates. The impact of changes is
presented in the sensitivity analysis. The analysis assumes that all other
factors are kept constant.
Changes in market rates on fixed rate debt will only affect the income
statement if they are measured at fair value. Thus, fixed rate instruments
recognised at amortised cost will not represent an interest rate risk as defined
by IFRS 7. Such instruments will therefore not have any impact on the
sensitivity analysis.
Results are presented net of tax, using the Norwegian statutory tax rate of 22%.
I
I
The interest rate sensitivity analysis is based on a parallel shift in the yield
curve for each relevant currency to which Norske Skog is exposed.
NET PROFIT AFTER TAX
INTEREST RATE
2022
2021
50 basis point downward parallel shift in the yield curve
4
-3
50 basis point upward parallel shift in the yield curve
-4
2
With a 50-basis point upward change in interest rate the interest payments
will increase with NOK 14 million. The upward change will have no effect on
the values of derivatives carried at fair value through profit or loss.
b) Currency risk
Transaction risk - economically hedge
The group has revenues and expenses in various currencies. The major
currencies are NOK, EUR, GBP, USD and AUD. Transaction risk arises because
the group has a different currency split on income and expenses. In 2022
Norske Skog has economically hedged some of its cash flows in foreign
currencies. The result of the hedging is included in Gains/(losses) on foreign
currency in the income statement. The cash flow hedges resulted in a realised
loss of NOK 6 million in 2022 (NOK -4 million). At year end 2022 we did not
have any hedging contracts (2021 NOK -1 million).
Translation risk - net investment hedge
The group does not have any net investment hedges.
The following foreign exchange sensitivity analysis calculates the sensitivity
of derivatives and non-derivative financial instruments on net profit and
equity, based on a defined appreciation/depreciation of NOK against relevant
currencies, keeping all other variables constant. The analysis is based on
several assumptions, including:
• Norske Skog as a group comprises entities with different functional
currencies. Derivative and non-derivative financial instruments of a
monetary nature, denominated in currencies different from the functional
currency of the entity, create foreign exchange rate exposure on the
consolidated income statement.
•
Financial instruments denominated in the functional currency of the entity
have no currency risk and will therefore not be applicable to this analysis.
Furthermore, the foreign currency exposure of translating financial accounts
of subsidiaries into the group’s presentational currency is not part of this
analysis.
•
Sensitivity on commodity contracts and embedded derivatives is presented
separately under “commodity risk”.
• Other currency derivatives that are recognised at fair value through profit
and loss will affect the income statement. These effects come mainly from
currency derivatives and financial liabilities managed as economic net
investment hedges which do not qualify for hedge accounting according to
IFRS 9.
• Other non-derivative financial instruments accounted for in the analysis
comprise cash and cash equivalents, accounts payable, accounts receivable
and borrowings denominated in currencies different from the functional
currency of the entity.
•
Correlation effects between currencies are not taken into account. Figures
are presented net of tax.
NOK GAIN/(LOSS) FROM 10%
APPRECIATION ON FOREIGN
CURRENCY EXCHANGE RATES
CURRENCIES AGAINST TO WHICH THE
GROUP HAS SIGNIFICANT EXPOSURE
31.12.2022
31.12.2021
EUR
-75
-82
GBP
13
17
USD
12
14
Other
8
0
Total
-41
-51
The effect of the sensitivity analysis on the income statement is mainly caused
by foreign exchange gains/losses on the translation of EUR denominated debt
c) Commodity risk
A part of the commodity demand is secured through long-term contracts
limiting the exposure to changes in commodity prices. Some of the group
purchases contracts are defined as financial instruments, or contain embedded
derivatives, which fall within the scope of IFRS 9. These financial instruments
and embedded derivatives are measured in the balance sheet at fair value with
value changes recognised through profit or loss. The embedded derivatives
are common in physical commodity contracts and comprise a wide variety of
derivative characteristics.
Changes in fair value of commodity contracts reflect unrealised gains or
losses and are calculated as the difference between market price and contract
price, discounted to present value. Some commodity contracts are bilateral
contracts or embedded derivatives in bilateral contracts, for which there
exists no active market. Therefore, valuation techniques are used as much as
possible, with the use of available market information. Techniques that reflect
how the market could be expected to price instruments are used in non-
observable markets. The fair value of embedded derivatives in physical
contracts depends on currency fluctuations.
Sensitivity analysis for commodity contracts
When calculating fair value of future and forward contracts, cash flows are by
principle assumed to occur in the middle of the period. Currency effects arise
when contract values nominated in foreign currencies are translated into the
reporting currency.
FAIR VALUE
31.12.2022
NET PROFIT
AFTER TAX
- INCREASE
NET PROFIT
AFTER TAX
- DECREASE
COMMODITY CONTRACTS
WITHIN THE SCOPE OF IFRS 9
Energy price
change 10%
446
323
-323
Currency
change 10%
446
-11
14
Price index
change 2.5%
446
1
-1
Sensitivity analysis for embedded derivatives
Embedded derivatives are common features in physical commodity contracts.
The most common embedded derivatives are currency.
FAIR VALUE
NET PROFIT
AFTER TAX
NET PROFIT
AFTER TAX
EMBEDDED DERIVATIVES
31.12.2022
- INCREASE
- DECREASE
Currency
change 10%
12
-56
90
I
Norske Skog
I
Annual report 2022
The group is exposed to liquidity risk in a scenario when the group’s cash flow
from operating activities is not sufficient to cover payments of financial
liabilities. To effectively mitigate liquidity risk, Norske Skog’s liquidity risk
management strategy focuses on maintaining sufficient cash, as well as
securing available financing through committed credit facilities. Managing
liquidity risk is centralised on a group level.
To uncover future liquidity risk, the group forecasts both short- and long-term
cash flows. Cash flow forecasts include cash flows from operations,
investments, financing activities and financial instruments. The group had
cash and cash equivalents of NOK 2
650 million on 31 December 2022
(NOK 1
489 million). Restricted bank deposits amounted to NOK 109 million
on 31 December 2022 (NOK 85 million).
Scheduled repayments in Note 23 shows a more specified contractual
maturities of non-derivative financial liabilities than the table below. All
amounts disclosed in the table are undiscounted cash flows. Furthermore,
amounts denominated in foreign currency are translated to NOK using closing
rates at 31 December 2022. These amounts consist of trade payables and
interest payments. Variable rate interest cash flows are calculated using the
forward yield curve. Projected interest payments are based on the maturity
schedule at 31 December 2022 without accounting for forecasted refinancing
and/or other changes in the liability portfolio. All other cash flows are based on
the group’s positions held at 31 December 2022.
SCHEDULED REPAYMENTS OF FINANCIAL DEBT
AND INTEREST
2022
2021
Not later than one year
551
404
Later than one year and not later than five years
3 632
2 321
Later than five years
387
146
Total
4 569
2 872
Trade payables
819
The group makes a credit evaluation of all financial trading counterparties.
Based on the evaluation, a limit on credit exposure is established for each
counterparty. These limits are monitored continuously in relation to unrealised
profit on financial instruments and placements. The maximum credit risk
arising from financial instruments is represented by the carrying amount of
financial assets in the balance sheet.
The group procedures for credit management of European trade receivables,
and the authority to approve credit lines to customers of European business
units, are regulated by a policy drafted and maintained by a centralised credit
management function at the head office. The operational responsibility to act
within the guidelines as set out by this policy lies with each business unit. For
Operating segments
REPORTABLE SEGMENTS
Norske Skog group is a producer of publication paper. Publication paper includes
newsprint and magazine paper. Newsprint encompasses standard newsprint
and other paper qualities used in newspapers, inserts, catalogues, etc. These
paper qualities, measured in grammes per square meter, will normally be in the
range 40-52 g/m2. Magazine paper encompasses the paper qualities super
calendared (SC) and lightweight coated (LWC). These paper qualities are used
in magazines, periodicals, catalogues and brochures.
The activities of the group are focused on two business systems, publication
paper Europe and publication paper Australasia. The segment structure is in line
with how the group is managed internally. Norske Skog’s chief operating decision
maker is corporate management, who distribute resources and assess
performance of the group’s operating segments. Norske Skog has an integrated
strategy in Europe and Australasia to maximize the profit in each region. The
optimisation is carried out through coordinated sales and operational planning.
The regional planning, in combination with structured sales and operational
processes, ensures maximisation of profit.
Publication paper Europe
The publication paper Europe segment encompasses production and sale of
newsprint and magazine paper in Europe. All the four European mills and the
regional sales organisation are included in the operating segment publication
paper Europe. One machine in Norske Skog Bruck and one machine in Norske
Skog Golbey ceased production during 2022 to prepare for conversion to
containerboard production.
Publication paper Australasia
The publication paper Australasia segment encompasses production and sale of
newsprint and magazine paper in Australasia. The mills in Australasia and the
regional sales organisation are included in the operating segment publication
paper Australasia. The Norske Skog Boyer mill is the only mill in the Australian
operating segment.
Other activities
Activities in the group that do not fall into the operating segments publication
paper Europe or publication paper Australasia are presented under other
activities. This includes corporate functions, green energy and other holding
company activities. The pellets operations of Nature’s Flame is included up to
first quarter 2022 when it was sold.
Total revenues, cash flows and balances from contracts with customers and
other operating activities has been disaggregated and presented in the segment
tables below. Contract with customers are recognised upon satisfaction of a
performance obligation by transferring the promised goods to a customer and
measured at point in time for the sale of products to the customer. Sale of
publication papers and other products are non-interest bearing receivables,
generally on terms of 20-60 days.
Norske Skog’s terms of delivery are based on Incoterms 2020, which are the
official rules for the interpretation of trade terms issued by the International
Chamber of Commerce. The timing of revenue recognition is largely dependent
on these delivery terms:
C-terms, where the group arranges and pays for the external transport of the
goods, but the group no longer bears any responsibility for the goods once they
have been handed over to the transporter in accordance with the terms of the
contract. The point of sale is when the goods are handed over to the transporter
contracted by the seller.
Annual report 2022
I
Norske Skog
I
91
D-terms, where the group delivers the goods to the purchaser at the agreed
destination, usually the purchaser’s premises. The point of sale is when the
goods are delivered to the purchaser. If the customer is invoiced before delivery
of the goods purchased, revenue is only recognised if the customer has taken
over a significant part of the gain and loss potential relating to the goods.
E-terms, where the responsibility is placed on the buyer. The seller assures the
delivery of the goods to the buyer or the agreed destination.
F-terms, where the purchaser arranges and pays for the transport. The point
of sale is when the goods are handed over to the transporter contracted by the
purchaser.
The sale of newsprint and magazine paper in Norske Skog is mainly based on
delivery terms C and D, with 20% and 74% respectively.
REVENUES AND EXPENSES NOT ALLOCATED TO OPERATING
SEGMENTS
Norske Skog manages non-current debt, taxes and cash positions on a group
basis. Consequently, financial items and tax expenses are presented only for
the group as a whole.
MAJOR CUSTOMERS
No customer represents 10% or more of the operating revenue.
Norske Skog had a total sales volume of newsprint and magazine paper of
1 714 000
tonnes in 2022, of which sales to the group’s largest customer
constituted approximately 169
000 tonnes. Total sales volume in 2022 of
newsprint and magazine paper to the five largest customers in Europe and
Australasia amounted to approximately 308
000 and 178
000 tonnes
respectively.
Cyrielle Nussbaum
Communication manager
Norske Skog Golbey
Hello, I am Cyrielle Nussbaum
and I am the Communication
Manager at Norske Skog Golbey.
I have a professional degree in
advertising and a certification in
webmarketing. I completed a CSR
Communication course last year.
I have worked as a brand manager for leading French brands
specialising in linen for 10 years.
I saw a video about Norske Skog Golbey’s ambitions, its CSR
approach and its strategy for the future. That prompted me to
send my application.
I manage internal and external communication of the business
unit, except products communication. It includes public and
press relations, community management (social media, website,
videos), writing and making layouts of print documents (flyers,
posters) and organizing events and trade shows.
Like all moms, I try to take care of my 2 sons (10 and 12 years
old). I have been practising kyokushinkai karate for several years.
I enjoy going to the restaurant with friends.
92
I
Norske Skog
I
Annual report 2022
OPERATING INCOME AND EXPENSES PER OPERATING SEGMENT
2022
PUBLICATION
PAPER EUROPE
PUBLICATION
PAPER
AUSTRALASIA
OTHER
ACTIVITIES
ELIMINATIONS
NORSKE SKOG
GROUP
Operating revenue
12 645
1 893
117
-119
14 537
Other operating income
477
28
177
-4
677
Total operating Income
13 122
1 920
294
-122
15 214
Distribution costs
-963
-261
-4
0
-1 227
Cost of materials
-6 889
-1 051
-13
16
-7 937
Employee benefit expenses
-1 515
-293
-220
3
-2 024
Other operating expenses
-791
-161
-71
102
-921
EBITDA
2 965
154
-14
0
3 105
Restructuring expenses
0
-11
0
0
-11
Depreciation
-493
-43
-10
0
-546
Impairments
-164
0
0
0
-164
Derivatives and other fair value adjustments
462
0
0
0
462
Operating earnings
2 769
100
-24
0
2 845
Share of operating revenue from external parties (%)
100
100
18
100
2021
PUBLICATION
PAPER EUROPE
PUBLICATION
PAPER
AUSTRALASIA
OTHER
ACTIVITIES
ELIMINATIONS
NORSKE SKOG
GROUP
Operating revenue
7 990
1 759
214
-115
9 848
Other operating income
422
33
13
-3
466
Total operating income
8 412
1 792
228
-117
10 315
Distribution costs
-937
-226
-24
0
-1 187
Cost of materials
-4 986
-1 045
-51
28
-6 055
Employee benefit expenses
-1 296
-340
-91
3
-1 723
Other operating expenses
-565
-137
-72
87
-687
EBITDA
628
44
-11
0
662
Restructuring expenses
-16
-174
-3
0
-192
Depreciation
-380
-40
-13
0
-433
Impairments
8
14
0
0
22
Derivatives and other fair value adjustments
-148
-69
0
0
-218
Operating earnings
92
-225
-26
0
-160
Share of operating revenue from external parties (%)
100
100
62
100
I
Norske Skog
I
93
OPERATING REVENUE PER GEOGRAPHICAL MARKET
The allocation of operating revenue by market is based on customer
location.
2022
2021
Norway
685
218
Rest of Europe
11 282
6 904
North America
349
316
Australasia
1 873
1 777
Asia
270
570
Africa
78
62
Total
14 537
PROPERTY, PLANT AND EQUIPMENT PER GEOGRAPHICAL REGION
The table below shows property, plant and equipment allocated to Norske
Skog’s country of domicile and other regions in which the group holds assets.
The allocation is based on the location of the production facilities.
31.12.2022
31.12.2021
Europe
5 603
3 776
Australasia
249
327
Total
5 852
4 103
CASH GENERATED FROM OPERATIONS
2022
2021
Publication paper Europe
12 813
8 047
Publication paper Australasia
1 819
1 854
Other activities
114
219
Eliminations
-122
-117
Total
14 624
10 003
NET CASH FLOW FROM OPERATING ACTIVITIES
2022
2021
Publication paper Europe
2 282
589
Publication paper Australasia
53
-139
Other activities
-44
-11
Total cash flow allocated to segments
2 291
439
Net financial items
-150
-142
Taxes paid
-101
-106
Net cash flow from operating activities
2 040
191
PURCHASES OF PROPERTY, PLANT AND EQUIPMENT AND
INTANGIBLE ASSETS
2022
2021
Publication paper Europe
2 207
990
Publication paper Australasia
19
26
Other activities
2
5
Total
2 228
1 021
INVENTORIES
Inventories include raw materials, work in progress, finished goods and
other production materials.
31.12.2022
31.12.2021
Publication paper Europe
1 252
966
Publication paper Australasia
211
208
Other activities
0
29
Total
1 464
1 203
TRADE RECEIVABLES
31.12.2022
31.12.2021
Publication paper Europe
530
526
Publication paper Australasia
266
153
Other activities
22
50
Total
818
729
Provison for bad debt
-44
-43
Total
774
Other operating income
2022
2021
Public subsidies and grants
37
74
Gain on sales of non-current assets
192
16
Gain from sale of CO
2
allowances
270
250
Other
179
126
Total
677
466
Public subsidies and grants in 2022 consist of energy support in Norske Skog
Bruck of NOK 20 million. 2021 includes COVID-19 financial support to Norske
Skog Bruck of NOK 63 million.
Gain on sale of non-current assets in 2022 consists of gain on sale of the
pellets business Nature’s Flame of NOK 171 million, and sale of land and other
assets of NOK 21 million. The land and other assets includes Norske Skog
Tasman and a sale of business in the sales office Norske Skog Italy.
EUs ETS system was established early 2000. Pulp & Paper is part of the
carbon leakage group (together other sectors) and are covered by special
regulations which includes allocation of free CO
2
quotas. Norske Skog
received 410
000 CO
2
quotas in 2022 (430
000) and were able to sell
approximately 300
000 quotas for 2022 (188
000) in the market as these
exceeds the quotas needed to be delivered. The number of quotas available
for sale is dependent on yearly production. ETS system currently covers the
period 2021 to 2025. It is expected that the EU ETS scheme will be adjusted
in 2026, the outcome of any adjustments is uncertain.
CO
2
compensation is an arrangement whereby sectors covered by carbon
leakage may compensated for the increased cost producers have to cover
their emissions. Any compensation is decided on country level and Norske
Skog receives CO
2
compensation in Norway and France. The compensation is
dependent on energy consumption and average CO
2
price in the previous
year. CO
2
compensation covers a defined period but may be changed at the
discretion of the government. The amount recognised for CO
2
compensation
for 2022 is NOK 433 million (NOK 286 milllion) and are recorded as a
reduction of energy costs in the line cost of materials.
94
I
Norske Skog
I
Annual report 2022
7. Employee benefit expenses
EMPLOYEE BENEFIT EXPENSES NOTE 2022 2021
Salaries including holiday pay 1 608 1 349
Social security contributions 333 293
Pension and other long term employee benefits 21 44 61
Other employee benefit expenses 39 21
Total 2 024 1 723
NUMBER OF EMPLOYEES 2022 2021
Europe 1 800 1 732
- Corporate functions 31 30
Australasia 309 330
Total 2 140 2 092
REMUNERATION FOR MEMBERS OF CORPORATE MANAGEMENT
Pursuant to 6-16 (b) in the Public Limited Liability Companies Act, and
associated regulations, Norske Skog publishes a separate management
remuneration report disclosing detailed information on remuneration to
corporate management and directors of the board. The remuneration report
will be published immediately after the annual general meeting on 20 April
2023 and will include detailed information on management remuneration
complementing the numbers presented below.
In accordance with the code of conduct for corporate governance recom-
mended by the Oslo Stock Exchange, salary, benefits in kind and bonus for
members of corporate management are specified below. In relation to the
long-term incentive program for corporate management NOK 68 million was
expensed in 2022 and at 31 December 2022 the corresponding liability was
NOK 88 million. In January 2023 2 006 000 of the synthetic options were
exercised, and 1 887 000 new were awarded.
The long-term incentive program is described in the guidelines for determining
salary and other remuneration to leading personnel, which are available on
the company’s website, www.norskeskog.com.
2022
(in NOK 1 000)
BASE SALARY
31.12
SALARY
PAID
BENEFITS IN
KIND ETC.
1)
CONTRIBUTION
TO PENSION
SCHEMES
ANNUAL
BONUS
EARNED
2)
LTI-PLAN
EARNED
3)
TOTAL
REMUNERA-
TION
RELATIVE
PROPORTION
FIXED/
VARIABLE
Sven Ombudstvedt (CEO) 4 975 4 985 212 794 2 240 15 725 23 956 25% / 75%
Lars P. S. Sperre (SVP) 3 670 3 706 215 539 1 560 8 405 14 425 31% / 69%
Rune Sollie (CFO) 2 280 2 277 206 266 929 8 405 12 084 23% / 77%
Amund Saxrud (COO) 2 280 2 287 323 265 1 026 8 405 12 306 23% / 77%
Tore Hansesætre (SVP) 2 205 2 216 212 252 937 8 405 12 023 22% / 78%
Robert A. Wood (SVP)
4)
2 135 2 077 42 249 801 8 405 11 575 21% / 79%
2021
(in NOK 1 000)
BASE SALARY
31.12
SALARY
PAID
BENEFITS IN
KIND ETC.
1)
CONTRIBUTION
TO PENSION
SCHEMES
ANNUAL
BONUS
EARNED
2)
LTI-PLAN
EARNED
3)
TOTAL
REMUNERA-
TION
RELATIVE
PROPORTION
FIXED/
VARIABLE
Sven Ombudstvedt (CEO) 4 750 4 778 137 781 1 544 1 927 9 167 62% / 38%
Lars P. S. Sperre (SVP) 3 500 3 590 221 531 1 138 1 030 6 510 67% / 33%
Rune Sollie (CFO) 2 170 2 193 201 265 705 1 030 4 394 61% / 39%
Amund Saxrud (COO) 2 150 2 166 270 261 753 1 030 4 479 60% / 40%
Tore Hansesætre (SVP) 2 100 2 138 196 251 735 1 030 4 350 59% / 41%
Robert A. Wood (SVP)
4)
2 028 1 913 18 242 761 1 030 3 964 55% / 45%
1)
Includes car allowance, insurance, free telephone, etc.
2)
Based on results achieved in the financial year, paid in 2022 and in 2023.
3)
LTI-Plan earned is based on the expensed change in accrual of the corresponding liability.
4)
Robert Wood is employed by Norske Skog (UK) Ltd. but works fully for Norske Skog ASA as SVP Commercial. 7.
Employee benefit expenses
EMPLOYEE BENEFIT EXPENSES
NOTE
2022
2021
Salaries including holiday pay
1 608
1 349
Social security contributions
333
293
Pension and other long term employee benefits
21
44
61
Other employee benefit expenses
39
21
Total
2 024
1 723
2022
2021
Europe
1 800
1 732
- Corporate functions
31
30
Australasia
309
330
Total
2 140
REMUNERATION FOR MEMBERS OF CORPORATE MANAGEMENT
Pursuant to 6-16 (b) in the Public Limited Liability Companies Act, and
associated regulations, Norske Skog publishes a separate management
remuneration report disclosing detailed information on remuneration to
corporate management and directors of the board. The remuneration report
will be published immediately after the annual general meeting on 20 April
2023 and will include detailed information on management remuneration
complementing the numbers presented below.
mended by the Oslo Stock Exchange, salary, benefits in kind and bonus for
members of corporate management are specified below. In relation to the
long-term incentive program for corporate management NOK 68 million was
expensed in 2022 and at 31 December 2022 the corresponding liability was
NOK 88 million. In January 2023
2 006 000
of the synthetic options were
exercised, and 1
887 000
The long-term incentive program is described in the guidelines for determining
salary and other remuneration to leading personnel, which are available on
the company’s website, www.norskeskog.com.
2022
(in NOK 1
000)
BASE SALARY
31.12
SALARY
PAID
BENEFITS IN
KIND ETC.
1)
CONTRIBUTION
TO PENSION
SCHEMES
ANNUAL
BONUS
EARNED
2)
LTI-PLAN
EARNED
3)
TOTAL
REMUNERA-
TION
RELATIVE
PROPORTION
FIXED/
VARIABLE
Sven Ombudstvedt (CEO)
4 975
4 985
212
794
2 240
15 725
23 956
25% / 75%
Lars P. S. Sperre (SVP)
3 670
3 706
215
539
1 560
8 405
14 425
31% / 69%
Rune Sollie (CFO)
2 280
2 277
206
266
929
8 405
12 084
23% / 77%
Amund Saxrud (COO)
2 280
2 287
323
265
1 026
8 405
12 306
23% / 77%
Tore Hansesætre (SVP)
2 205
2 216
212
252
937
8 405
12 023
22% / 78%
Robert A. Wood (SVP)
4)
2 135
2 077
42
249
801
8 405
11 575
21% / 79%
2021
(in NOK 1
000)
BASE SALARY
31.12
SALARY
PAID
BENEFITS IN
KIND ETC.
1)
CONTRIBUTION
TO PENSION
SCHEMES
ANNUAL
BONUS
EARNED
2)
LTI-PLAN
EARNED
3)
TOTAL
REMUNERA-
TION
RELATIVE
PROPORTION
FIXED/
VARIABLE
Sven Ombudstvedt (CEO)
4 750
4 778
137
781
1 544
1 927
9 167
62% / 38%
Lars P. S. Sperre (SVP)
3 500
3 590
221
531
1 138
1 030
6 510
67% / 33%
Rune Sollie (CFO)
2 170
2 193
201
265
705
1 030
4 394
61% / 39%
Amund Saxrud (COO)
2 150
2 166
270
261
753
1 030
4 479
60% / 40%
Tore Hansesætre (SVP)
2 100
2 138
196
251
735
1 030
4 350
59% / 41%
Robert A. Wood (SVP)
4)
2 028
1 913
18
242
761
1 030
3 964
55% / 45%
1)
Includes car allowance, insurance, free telephone, etc.
2)
Based on results achieved in the financial year, paid in 2022 and in 2023.
3)
LTI-Plan earned is based on the expensed change in accrual of the corresponding liability.
4)
Robert Wood is employed by Norske Skog (UK) Ltd. but works fully for Norske Skog ASA as SVP Commercial.
Annual report 2022
I
Norske Skog
I
95
Other operating expenses and auditors’ fee
NOTE
2022
2021
Maintenance materials and services
519
408
Marketing expenses
22
21
Variable lease, short term and low value lease expenses
16
25
14
Administration, insurance, travel expenses etc.
93
58
Losses from divestments of property, plant and equipment
1
0
Other expenses
261
186
Total
921
687
Specification of losses on accounts receivable included in other expenses
Receivables written off during the period
1
17
Change in provision for bad debt
-1
-16
Total
1
0
PARENT COMPANY
SUBSIDIARIES
(in NOK 1
000, excluding VAT)
GROUP AUDITORS
(PWC)
PREVIOUS
AUDITORS (BDO)
GROUP AUDITORS
(PWC)
PREVIOUS
AUDITORS (BDO)
OTHER AUDITORS
TOTAL
Audit fee
1 100
1 681
3 186
1 231
517
7 715
Audit-related assistance
1)
0
211
83
702
167
1 163
Tax assistance
0
0
0
0
31
31
Other fees
34
57
44
975
0
1 110
Total
1 134
1 949
3 313
2 908
716
10 019
1)
9.
Derivatives and other fair value adjustment
2022
2021
Changes in value – commodity contracts
1)
450
-223
Changes in value – embedded derivatives
12
0
Other realised gains/(losses)
0
5
Total
462
-218
1)
Long-term financial contracts and commodity contracts that no longer meet the requirement in IFRS 9 related to own use are measured at fair value.
Norske Skog’s portfolio of commodity contracts consists mainly of physical
energy contracts. The fair value of commodity contracts is especially sensitive
to future changes in energy prices. A sensitivity analysis of the impact on
profit after tax of fluctuations in energy prices, currency and price indices is
given in Note 4. The valuation techniques used are described in Note 18.
The gain in fair value of commodity contracts in 2022 is mainly due to the fact
that the forecasted energy prices in Norway have increased. The loss in 2021
was mainly due to forecasted energy prices in Norway decreasing from 2020
to 2021.
Other realised gains and losses in 2021 primarily relates to financial hedging
of energy.
96
I
Norske Skog
I
Annual report 2022
Associated companies
Net profit from associated companies are included in 2022 with NOK 188 million
(loss NOK 18 million).
equity method. The carrying value of associated companies and joint ventures
Circa Group AS
Circa Group AS is incorporated in Oslo, Norway, and is a holding company. Circa
Group operates within biotechnology with a vision to produce and sell unique
and highly valuable biochemicals at scale. At 31 December 2022 Norske Skog
ASA held a 26% (26%) share of Circa Group AS with a carrying value of
NOK 80 million. Norske Skog’s share of net loss for the year of NOK 60 million
is recognised in the income statement with NOK 14 million. Circa Group AS is
listed on Euronext Growth with a market value as of 31 December 2022 of
NOK 190 million.
Porsnes Utvikling AS
Porsnes Utvikling AS is incorporated in Halden, Norway, and is a real estate
company established to develop projects located at Norske Skog Saugbrugs
site in Halden. At 31 December Norske Skog Saugbrugs held a 50% (50%) share
of the company with a carrying value of NOK 212 million. Norske Skog’s share
of net profit for the year of NOK 399 million is recognised in the income
statement with NOK 199 million. The net profit is a gain from sales of shares in
Porsnes Utvikling 1 AS, which developed a high school, sold to Viken county
municipality in December 2022. Following this Norske Skog received a dividend
of NOK 200 million in January 2023 from Porsnes Utvikling AS.
Circa Group AS is incorporated into the consolidated financial statement based
on continuity and the carrying value will therefore deviate from the values
Financial items
FINANCIAL ITEMS
2022
2021
Financial income
Interest income
31
4
Other financial income
0
1
Total
31
5
Financial expenses
Interest expense
-131
-117
Other financial expenses
-60
-83
Total
-190
-200
Gains/(losses) on foreign currency
-97
78
Financial items
-256
-118
Other financial expenses mainly consist of commitments fee and other
financing expenses. Other financial expenses in 2021 also includes loss of
I
I
Income taxes
TAX EXPENSE
2022
2021
Current tax expense
-403
-104
Change in deferred tax
197
36
Total
-206
-68
RECONCILIATION OF THE GROUP TAX EXPENSE
2022
2021
Profit/(loss) before income taxes
2 778
-295
Computed tax at nominal tax group rate of 22%
-611
65
Differences due to different tax rates
-103
16
Non taxable income/non deductible expenses
65
-118
Adjustment previous years
-5
-5
Other items
1
-17
Change in tax rate
-1
0
Deferred tax asset not recognised
448
-9
Total tax (expense)/income
-206
-68
Effective tax rate
7%
-23%
CURRENT TAX LIABILITY
31.12.2022
31.12.2021
Norway
0
0
Rest of Europe
-358
-50
Australasia
0
0
Total
-358
-50
DEFERRED TAX - MOVEMENTS
2022
2021
Net deferred tax asset/(liability) 1 January
-260
-308
Change in deferred tax in the income statement
197
36
Tax on other comprehensive income
2
-2
Currency translation differences
-10
14
Net deferred tax asset/(liability) 31 December
-72
-260
DEFERRED TAX ASSET AND DEFERRED TAX LIABILITY
31.12.2022
31.12.2021
Norway
120
0
Rest of Europe
17
0
Australasia
0
0
Deferred tax assets
137
0
Norway
0
0
Rest of Europe
-208
-260
Australasia
0
0
Deferred tax liability
-208
-260
Net deferred tax assets/(liability)
-72
-260
DEFERRED TAX DETAILS
31.12.2022
31.12.2021
Fixed assets
185
147
Pension and other employee obligations
17
29
Other non-current items
85
73
Currency translation differences and financial instruments
-99
-14
Current items
35
-1
Tax losses to carry forward
801
1 016
Tax losses and other deferred tax assets not recognised
-1 096
-1 509
Net deferred tax assets/(liability)
-72
-260
98
I
Norske Skog
I
Annual report 2022
LOSSES TO CARRY FORWARD AND TEMPORARY DIFFERENCES 31.12.2022 BY REGION
NORWAY
REST OF EUROPE
AUSTRALASIA
TOTAL
Indefinite expiry
1 315
261
1 512
3 088
Tax losses to carry forward
1 315
261
1 512
3 088
Temporary differences
1 015
-167
831
1 679
Tax losses and temporary differences not recognised
-1 785
-27
-2 343
-4 156
Total tax losses and tax credits to carry forward (recognised)
545
67
0
612
Deferred tax asset
120
17
0
137
Tax rate
22%
19-32%
28-30%
LOSSES TO CARRY FORWARD AND TEMPORARY DIFFERENCS 31.12.2021 BY REGION
NORWAY
REST OF EUROPE
AUSTRALASIA
TOTAL
Indefinite expiry
2 484
169
1 425
4 077
Tax losses to carry forward
2 484
169
1 425
4 077
Temporary differences
1 168
-206
902
1 959
Tax losses and temporary differences not recognised
-3 652
0
-2 327
-6 036
Total tax losses and tax credits to carry forward (recognised)
0
0
0
0
Deferred tax asset
0
0
0
0
Tax rate
22%
19-32%
28-30%
Norske Skog has recognised deferred tax asset of NOK 18 million arising from
the carry forward of unused tax losses.
Tax payable relates mainly to Norske Skog Golbey, Norske Skog Bruck and
Norske Skog Italy and consist mainly of income taxes.
Current and deferred taxes are recognised as expense or income in the
consolidated income statement. Taxes on translation differences, other
reclassifications or remeasurements of post-employment benefit obligations
Earnings and dividend per share
2022
2021
Profit/(loss) for the year in NOK million attributable to owners of the parent
2 572
-363
Weighted average number of shares in million
94.3
93.1
Basic earnings/(loss) per share in NOK
27.28
-3.90
Diluted earnings/(loss) per share in NOK
27.28
-3.90
general meeting approves the authority to pay dividend up to NOK 5.00 per
share. Any shareholder distribution is subject to waivers from certain lenders.
No dividend was paid in 2022 for the financial year 2021.
On 5 February 2021 an extraordinary general meeting in Norske Skog ASA
resolved to issue 11
764 705
new shares increasing share number of shares
to 94
Annual report 2022
I
Norske Skog
I
99
Intangible assets
OTHER INTANGIBLE
ASSETS
LICENCES AND
PATENTS
TOTAL
Acquisition cost 1 January 2021
98
93
192
Additions
25
2
27
Disposals
-57
0
-57
Reclassified from plant under construction
0
6
6
Currency translation differences
-3
-3
-6
Acquisition cost 31 December 2021
63
99
162
Accumulated depreciation and impairments 1 January 2021
59
78
137
Depreciation
1
7
8
Currency translation difference
-2
-3
-5
Accumulated depreciation and impairments 31 December 2021
59
82
141
Carrying value 31 December 2021
4
16
21
Acquisition cost 1 January 2022
63
99
162
Additions
0
0
0
Disposals
-1
-12
-13
Reclassified from plant under construction
0
1
1
Currency translation differences
3
3
6
Acquisition cost 31 December 2022
65
91
157
Accumulated depreciation and impairments 1 January 2022
59
82
141
Depreciation
1
7
8
Disposals
-1
-12
-12
Currency translation difference
3
3
6
Accumulated depreciation and impairments 31 December 2022
62
81
143
Carrying value 31 December 2022
3
10
100
I
Norske Skog
I
Annual report 2022
15.
Property, plant and equipment
Norske Skog has no cash generating units (CGUs) with allocated goodwill or
assets with indefinite useful life that need to be tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired.
Except for CGU Europe lightweight coated (Norske Skog Bruck) there are no
indicators for impairment at 31 December 2022. CGU Europe lightweight
coated paper has experienced operating losses in 2022 due to high cost of input
factors, primarily energy from purchased gas. An impairment charge of
NOK 164 million has been recognised in relation to CGU Europe lightweight
Assumptions applied when calculating the recoverable amount
Intangible non-current assets and property, plant and equipment (PPE) are
written down to their recoverable amount when this is lower than the carrying
value of the asset. The recoverable amount of an asset or cash-generating unit
(CGU) is the higher of its fair value less costs to sell and its value in use. Value in
use is the present value of future cash flows expected to arise from an asset or
cash-generating unit. Norske Skog applies the value in use approach when
calculating recoverable amount for its cash-generating units. Europe newsprint
(Norske Skog Skogn and Norske Skog Golbey), Australia newsprint (Norske
Skog Boyer), Australia lightweight coated (Norske Skog Boyer), Europe super
calendared (Norske Skog Saugbrugs) and Europe lightweight coated (Norske
Skog Bruck) are assessed to generate independent cash inflows and to be
separate CGUs. These represent the five cash generating units that the group is
focusing on in its follow-up operationally and commercially as communication
with customers, suppliers, employees. The different mills within a CGU works
together to generate cash inflows.
The production machines have a long technical life, while useful lives are linked
to industry cost curves and the size of the market. The estimated remaining
useful life of the individual paper machines forms the basis for determining the
length of the cash flow period. Estimated useful life for the individual paper
machines in the group varies from 1 to 8 years. Sales volumes are reduced in
accordance with the estimated end of useful lives of the different paper
machines in the group. Norske Skog models the cash flows throughout the
useful life of the paper machines. The timing of capacity closures follows from
Fastmarkets RISI cost curve positioning and market demand projections.
Fastmarkets RISI is the leading global source for forest products information and
data (www.fastmarkets.com).
Nominal cash flow is estimated in the currency in which it will be generated. The
value is calculated by discounting based on a required rate of return on capital
that is relevant for the cash-generating unit. The required rate of return, or
weighted average cost of capital (WACC), is based on the interest rate on ten-
year government bonds in the currency of the cash flow estimate, an industry
debt yield premium, industry beta and an equity risk premium. A country-
specific risk premium relevant to the cash-generating unit is also included in the
required rate of return on capital.
The key drivers of profitability in the industry and thus asset values for the
group are product prices relative to production costs. The starting point for any
impairment test is the financial budget for 2023 approved by the board of
directors. Beyond 2023 sales prices are adjusted in 2024 based on expected
development and thereafter by inflation adjusted by a factor assuming that not
all cost increases are passed on to customers. Costs beyond 2023 is extrapolated
from historical figures relative to sales prices and adjusted by inflation. The
inflation rates applied in the period are estimated by country. Contracted prices/
costs are reflected when applicable.
At the end of 2022 the newsprint market remains balanced, while markets for
magazine grades were softer and in particular for lightweight coated. Input costs
have come down from record high levels but remain at high levels. For the
ongoing years, we have for lightweight coated assumed in the impairment model
that the market balance remains weak as no closures have been announced for
this paper grade leading to a low utilization rate and recognition of an impairment
of the remaining value of NOK 164 million.
Sensitivity to estimates of recoverable amount
The estimation of recoverable amount is based on assumptions regarding the
future development of several factors. These include price development for
finished goods, sales volumes, currency rates and interest rates. In relation to
the assumptions made in a calculation of the present value of future cash flows,
recoverable amount is most sensitive to changes in prices of finished goods,
sales volumes and the discount rate used. Norske Skog has performed testing of
CGUs with impairment indicators. At 31 December 2022 the assets of Europe
lightweight coated, PM4, has been impaired in full.
Property, plant and equipment allocated to cash-generating units
The table below shows machinery and equipment and land and buildings
allocated to Norske Skog’s cash-generating units as of 31 December 2022.
MACHINERY AND
EQUIPMENT
LAND AND
BUILDINGS
Europe newsprint
1 722
654
Australasia newsprint
0
14
Australasia lightweight coated
118
63
Europe super calendared
257
132
Europe lightweight coated
0
0
Carrying value 31 December 2022
2 097
863
Expected useful life
Norske Skog has conducted sensitivity analyses with respect to changes in
expected useful life of the group’s paper machines. If the expected useful life
of all the group’s paper machines is reduced by one year, the annual
depreciation charge will increase with approximately NOK 30-50 million.
In connection with the year-end closing process for 2022, Norske Skog
performed a review of the expected remaining useful lives of property, plant
and equipment. The useful life of most of the machines were reduced by one
years compared with last year assumptions while some machines increased
useful life by one to two years following the closure of competing machines.
Isabella Apoloner
Worker
Norske Skog Bruck
My name is Isabella Apoloner,
and I am 42 years old. After 20
years in the restaurant business,
I wanted a career change. A
friend of mine recommended
Norske Skog. I applied and quick-
ly received a positive response.
I have now worked 5 years for the company. I started as a second
helper at the winder at the finishing department and was
promoted to first helper. I then had the opportunity to start an
apprenticeship as a paper technician.
My main tasks include cutting the finished paper reels to the
correct size and ensuring good flatness, good reel construction
and optimum winding hardness during rewinding.
Thanks to Norske Skog, I was able to go through a career change,
and I am very happy about my decision! My next goal is to
improve my IT knowledge.
In my spare time, I like to do sports and spend time with my family,
friends and my cats.
PROPERTY, PLANT AND EQUIPMENT
BIOLOGICAL
ASSETS
MACHINERY
AND
EQUIPMENT
LAND AND
BUILDINGS
FIXTURES
AND
FITTINGS
PLANT UNDER
CONSTRUCTION
RIGHT-OF-
USE ASSETS
TOTAL
Acquisition cost 1 January 2021
2
28 312
6 695
538
744
188
36 480
Additions
0
64
12
4
945
29
1 055
Disposals
0
-120
-2
-1
0
-11
-135
Reclassified from plant under construction
0
262
27
10
-307
0
-7
Currency translation differences
0
-693
-153
-21
-36
6
-908
Acquisition cost 31 December 2021
2
27 826
6 579
530
1 347
201
36 485
Accumulated depreciation and impairments
1 January 2021
0
26 317
5 944
478
84
72
32 894
Depreciation
0
292
78
17
0
38
425
Impairment
0
0
-22
0
0
0
-22
Disposals
0
-120
-2
-1
0
-12
-135
Reclassified to assets held for sale
0
-5
0
4
0
0
0
Currency translation difference
0
-628
-130
-19
-1
-2
-781
Accumulated depreciation and impairments
31 December 2021
0
25 856
5 868
478
83
96
32 381
Carrying value 31 December 2021
2
1 970
711
52
1 264
104
4 103
Acquisition cost 1 January 2022
2
27 826
6 579
530
1 347
201
36 485
Additions
0
39
4
1
2 320
16
2 379
Disposals
0
-209
-17
-15
-74
-33
-348
Reclassified from plant under construction
0
635
217
9
-861
0
-1
Currency translation differences
0
870
180
23
129
7
1 210
Acquisition cost 31 December 2022
2
29 162
6 962
549
2 860
191
39 725
Accumulated depreciation and impairments
1 January 2022
0
25 856
5 868
478
83
96
32 381
Depreciation
0
402
80
15
0
40
537
Impairment
0
164
0
0
0
0
164
Disposals
0
-164
-5
-13
0
-17
-199
Reclassified to assets held for sale
0
0
0
0
0
0
0
Currency translation difference
0
807
156
22
1
4
990
Accumulated depreciation and impairments
31 December 2022
0
27 066
6 099
502
85
123
33 874
Carrying value 31 December 2022
2
2 097
863
47
2 775
68
5 852
102
I
Norske Skog
I
Annual report 2022
Land and buildings comprise mainly mills, machinery and office premises.
Buildings and other property are depreciated over a period from ten to 40
years. Fixtures and fittings are depreciated over a period from three to ten
Right-of-use assets is further described in Note 16.
The difference between total additions in the table above and purchases of
property, plant, equipment and intangible assets in the consolidated statement
of cash flows is due to leases, capitalised borrowing costs and accruals for
payments. Norske Skog has capitalised borrowing costs of NOK 9 million in
2022 and NOK 8 million in 2021.
Disposals in 2022 and 2021 were primarily related to scrapping of fully
depreciated assets that no longer have any technical values.
At year end 2022 the group has contractual commitments for acquisition of
property, plant and equipment of NOK 1
600 million. Total payments to last
year commitments amounted to NOK 2
100 million.
Norske Skog did not have any non-current assets held for sale at
Leases
The group contracts includes several assets such as machinery and equipment,
land and buildings and fixture and fittings. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified assets for a
period of time in exchange for consideration. Right-of-use assets are initially
measured at cost. Non-lease components will be separated if these are
identifiable. Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The right-of-use assets is
depreciated on a linear basis over the contract period, currently mainly less than
five years. The group’s right-of-use assets are categorized and presented in the
table below:
Annual report 2022
I
Norske Skog
I
103
LEASES
MACHINERY
AND
EQUIPMENT
LAND AND
BUILDINGS
FITURES AND
FITTINGS
TOTAL
Carrying value 1 January 2021
72
39
6
117
Additions
25
4
0
29
Depreciations
-25
-12
-1
-38
Currency translation differences
-3
0
0
-3
Carrying value 31 December 2021
68
30
6
104
Additions
9
5
2
16
Disposals
-10
-6
0
-16
Depreciations
-26
-13
-1
-40
Currency translation differences
2
1
0
3
Carrying value 31 December 2022
44
16
7
68
LEASE PAYMENTS MATURITY ANALYSIS
NOTE
31.12.2022
31.12.2021
Not later than one year
37
42
Later than one year and not later than five years
39
75
Later than five years
5
12
Total
82
129
Future finance charges
8
17
Present value of liabilities
24
74
112
Interest expense on lease liabilities in the period amounts to NOK 5 million (NOK 8 million).
CASH PAYMENT MADE FROM LEASES
2022
2021
Principal payments on recognised lease liabilities
44
56
Interest payments on recognised lease liabilities
5
8
Payments on leases expensed in the period
25
15
Total
74
79
The group has decided not to recognise a lease liability for short term leases or for leases of low value assets. Payments made under such leases
are included
in operating expenses. Certain variable lease payments are not permitted to be recognised as leases liabilities and are expensed as incurred.
VARIABLE LEASE, SHORT TERM AND LOW VALUE LEASE EXPENSES
NOTE
2022
2021
Expense relating to variable lease payments not included in the measurement of lease liabilities
16
5
Short term leases exemption
3
7
Low-value leases exemption
6
2
Reduced lease
0
-1
Total
8
25
Shares
THE PARENT COMPANY
CONSOLIDATED COMPANIES
CURRENCY
SHARE CAPITAL
(IN 1
000)
OWNERSHIP %
Norske Skog Bruck GmbH, Bruck, Austria
EUR
10 000
100%
Norske Skog Papier Recycling GmbH, Bruck, Austria
EUR
291
100%
Norske Skog Golbey SAS, Golbey, France
EUR
62 365
100%
GV Bois SAS, Golbey, France
EUR
100
90%
Green Valley Energy SASU, France
EUR
2 301
64%
Norske Skog Skogn AS, Levanger, Norway
NOK
115 230
100%
Norske Skog Saugbrugs AS, Halden, Norway
NOK
115 230
100%
Saugbrugs Bioenergi AS, Halden, Norway
NOK
3 000
100%
Norske Skog Industries Australia Ltd., Sydney,
Australia
AUD
340 000
100%
Norske Skog (Australasia) Pty Ltd., Sydney, Australia
AUD
21 000
100%
Norske Skog (Australia) No. 2 Pty Ltd., Sydney, Australia
AUD
0
100%
Norske Skog Capital (Australia) Pty Ltd., Sydney, Australia
AUD
4
100%
Norske Skog Holdings (No.1) Ltd., Auckland, New Zealand
NZD
0
100%
Norske Skog Paper Mills (Albury)
Pty Limited, Sydney, Australia
AUD
5 230
100%
Norske Skog Paper Mills (Australia) Ltd., Tasmania, Australia
AUD
7 539
100%
Norske Skog Tasman Ltd., Auckland, New Zealand
NZD
725 000
100%
Norske Skog Capital (New Zealand) Ltd., Auckland, New Zealand
NZD
1
100%
Topp1 Energy Limited, Auckland, New Zealand
NZD
16 391
100%
Nornews AS, Oslo, Norway
NOK
300
100%
Norske Skog Deutschland GmbH, Augsburg, Germany
EUR
520
100%
Norske Skog France SARL, Paris, France
EUR
135
100%
Norske Skog Italia SrL, Milan, Italy
EUR
20
100%
Norske Skog (Österreich) GmbH, Graz, Austria
EUR
35
100%
Norske Skog (Schweiz) AG, Zürich, Switzerland
CHF
50
100%
Norske Skog (UK) Ltd., London, United Kingdom
GBP
100
100%
Cebina AS, Oslo, Norway
NOK
30
100%
Cebico AS, Oslo, Norway
NOK
30
100%
104
I
Norske Skog
I
Annual report 2022
SHARES IN ASSOCIATED COMPANIES AND JOINT VENTURES
CURRENCY
SHARE CAPITAL
(in 1
000)
OWNERSHIP%
CARRYING
VALUE (NOK)
Owned by the parent company
Circa Group AS, Oslo, Norway
NOK
122 113
26%
80
Owned by consolidated companies
Porsnes Utvikling AS, Halden, Norway
NOK
300
50%
212
Green Valley Energie, France
EUR
300
10%
3
Nor Fibre Logistics, France
EUR
500
20%
1
SEM, France
EUR
879
10%
1
Austria Papier Recycling GmbH, Austria
EUR
182
33%
1
Other
1
Total shares in associated companies and joint ventures
299
OTHER SHARES
CURRENCY
SHARE CAPITAL
(in 1
000)
OWNERSHIP%
CARRYING
VALUE (NOK)
Owned by the parent company
Ocean GeoLoop AS, Skogn, Norway
NOK
527
2%
25
Shelterwood AS, Oslo, Norway
NOK
4 800
3%
2
Owned by consolidated companies
Exeltium SAS, Paris, France
EUR
12 358
5%
88
Other
1
Total other shares
Annual report 2022
I
Norske Skog
I
105
18.
Derivatives
The table below classifies financial instruments within the scope of IFRS 9
measured in the balance sheet at fair value, by valuation method. The different
valuation methods are described as levels and are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: Inputs for the asset or liability are not based on observable market
data (i.e. unobservable inputs).
106
I
Norske Skog
I
Annual report 2022
31.12.2022
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Financial assets at fair value through profit or loss
Trading derivatives
0
0
0
0
Derivatives used for hedging
0
0
0
0
Commodity contracts and embedded derivatives
0
0
983
983
Total
0
0
983
983
Financial liabilities at fair value through profit or loss
Trading derivatives
0
0
0
0
Derivatives used for hedging
0
0
0
0
Commodity contracts and embedded derivatives
0
0
-523
-523
Total
0
0
-523
-523
31.12.2021
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Financial assets at fair value through profit or loss
Trading derivatives
0
0
0
0
Derivatives used for hedging
0
0
0
0
Commodity contracts and embedded derivatives
0
0
484
484
Total
0
0
484
484
Financial liabilities at fair value through profit or loss
Trading derivatives
0
0
0
0
Derivatives used for hedging
0
-1
0
-1
Commodity contracts and embedded derivatives
0
0
-485
-485
Total
0
-1
-485
-487
The following table shows the changes in level 3 instruments in 2022.
ASSETS
LIABILITIES
Balance 1 January
484
-485
Gain and losses recognised in profit or loss
499
-37
Balance 31 December
983
-523
Norske Skog’s portfolio of commodity contracts consist mainly of physical
energy contracts. The commodity contracts and embedded derivatives
classified as financial instruments within the scope of IFRS 9 contracts are
related to energy contracts in Norway. Fair value of commodity contracts is
sensitive to estimates of future energy prices. For further details about gains
and losses relating to level 3 instruments see Note 9.
The fair value of derivatives that are not traded in an active market (over-the-
counter derivatives) is determined using various valuation techniques. Interest
rate swaps, cross-currency swaps, forward rate agreements and foreign
currency forward contracts are all valued by estimating the present value of
future cash flows. Quoted cash and swap rates are used as input for calculating
zero coupon curves used for discounting.
The fair value of commodity contracts recognised in the balance sheet is
calculated by using quotes from actively traded markets when available.
Otherwise, price forecasts from acknowledged external sources are used.
Commodity contracts that fail to meet the own-use exemption criteria in IFRS
9 are recognised in the balance sheet and valued on the same principle as
financial contracts. Some of these are long-term energy contracts. In
calculating the fair value of embedded derivatives, valuation techniques are
used in the absence of observable market inputs.
The following table is presented in accordance with IFRS 13.94, showing the
fair value of all commodity contracts in level 3 within the scope of IFRS 9 given
a change in assumptions to a reasonably possible alternative.
FAIR VALUE OF DERIVATIVES IN LEVEL 3 GIVEN A REASONABLY POSSIBLE
ALTERNATIVE
31.12.2022
31.12.2021
Assets
Commodity contracts
Energy price -20%
472
93
Embedded derivatives
Energy price -20%
13
0
Total
485
93
Liabilities
Commodity contracts
Energy price -20%
-855
-735
Embedded derivatives
Energy price -20%
-1
0
Total
-856
Sara Schofield
Mechanical tradesperson
Norske Skog Boyer
Hello, I am Sara Schofield, and I
have worked for Norske Skog at the
Boyer mill in Tasmania, Australia,
for 4 years. I recently completed
my apprenticeship as a fitter and
turner and was then offered a
position to then continue on as a mechanical tradesperson doing
mechanical maintenance in PM3.
I chose to work for Norske Skog because of the variety of equip-
ment and tasks.
My main work task is general mechanical maintenance in PM3,
which includes breakdown work, shutdowns, and preventative
maintenance.
Outside of work, I enjoy camping, horse-riding and shooting.
Annual report 2022
I
Norske Skog
I
107
Financial instruments
CATEGORIES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
31.12.2022
NOTE
FAIR VALUE THROUGH
OTHER COMPREHENSIVE
INCOME
FAIR VALUE
THROUGH
PROFIT OR
LOSS
AMORTISED
COST
TOTAL
FINANCIAL
ASSETS
NON-
FINANCIAL
ASSETS
TOTAL
Other non-current assets
24
0
707
53
760
8
768
Trade and other receivables
20
0
0
1 205
1 205
739
1 944
Cash and cash equivalents
0
0
2 650
2 650
0
2 650
Other current assets
24
0
392
0
392
90
481
31.12.2022
NOTE
FAIR VALUE
THROUGH
PROFIT OR
LOSS
AMORTISED
COST
TOTAL
FINANCIAL
LIABILITIES
NON-
FINANCIAL
LIABILITIES
TOTAL
Interest-bearing non-current liabilities
23, 24
0
3 432
3 432
0
3 432
Interest-bearing current liabilities
23, 24
0
310
310
0
310
Other non-current liabilities
24
313
0
313
191
504
Trade and other payables
24
0
1 688
1 688
557
2 245
Other current liabilities
24
219
0
219
145
364
31.12.2021
NOTE
FAIR VALUE THROUGH
OTHER COMPREHENSIVE
INCOME
FAIR VALUE
THROUGH
PROFIT OR
LOSS
AMORTISED
COST
TOTAL
FINANCIAL
ASSETS
NON-
FINANCIAL
ASSETS
TOTAL
Other non-current assets
24
0
287
5
292
13
305
Trade and other receivables
20
0
0
1 082
1 082
329
1 411
Cash and cash equivalents
0
0
1 489
1 489
0
1 489
Other current assets
24
0
308
0
308
176
484
31.12.2021
NOTE
FAIR VALUE
THROUGH
PROFIT OR
LOSS
AMORTISED
COST
TOTAL
FINANCIAL
LIABILITIES
NON-
FINANCIAL
LIABILITIES
TOTAL
Interest-bearing non-current liabilities
23, 24
0
2 356
2 356
0
2 356
Interest-bearing current liabilities
23, 24
0
187
187
0
187
Other non-current liabilities
24
270
0
270
192
463
Trade and other payables
24
0
1 586
1 586
324
1 910
Other current liabilities
24
223
0
223
231
454
See Note 24 for further specification of financial assets and financial liabilities.
108
I
Norske Skog
I
Annual report 2022
Annual report 2022
I
Norske Skog
I
109
FAIR VALUE MEASUREMENT HIERARCHY FOR FINANCIAL ASSETS
AND LIABILITIES
The table below classifies financial assets and liabilities instruments measured
in the balance sheet at fair value, by valuation method. The different valuation
methods are described as levels and are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: Inputs for the asset or liability are not based on observable market
data (i.e. unobservable inputs).
31.12.2022
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
Derivatives
13
13
0
0
13
Commodity contracts
578
578
0
0
578
Miscellaneous other non-current assets
168
168
0
0
168
Other non-current assets
760
760
0
0
760
Trade receivable
818
818
0
0
818
VAT receivables
173
173
0
0
173
Other receivables
214
214
0
0
214
Trade and other receivables
1 205
1 205
0
0
1 205
Derivatives
0
0
0
0
0
Commodity contracts
392
392
0
0
392
Current investments
0
0
0
0
0
Other current assets
392
392
0
0
392
Cash and cash equivalents
2 650
2 650
0
0
2 650
Interest-bearing non-current liabilities
3 432
3 481
0
1 491
1 989
Interest-bearing current liabilities
310
310
0
0
310
Total interest-bearing liabilities
3 742
3 791
0
1 491
2 300
Derivatives
0
0
0
0
0
Commodity contracts
313
313
0
0
313
Other non-current liabilities
313
313
0
0
313
Trade payables
819
819
0
0
819
Other payables
869
869
0
0
869
Trade and other payables
1 688
1 688
0
0
1 688
Derivatives
1
1
0
0
1
Commodity contracts
209
209
0
0
209
Financial current liabilities
9
9
0
0
9
Other current liabilities
219
219
0
0
219
31.12.2021
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
Derivatives
0
0
0
0
0
Commodity contracts
176
176
0
0
176
Miscellaneous other non-current assets
116
116
0
0
116
Other non-current assets
292
292
0
0
292
Trade receivable
727
727
0
0
727
VAT receivables
122
122
0
0
122
Other receivables
233
233
0
0
233
Trade and other receivables
1 082
1 082
0
0
1 082
Derivatives
0
0
0
0
0
Commodity contracts
308
308
0
0
308
Current investments
0
0
0
0
0
Other current assets
308
308
0
0
308
Cash and cash equivalents
1 489
1 489
0
0
1 489
Interest-bearing non-current liabilities
2 356
2 434
0
1 552
882
Interest-bearing current liabilities
187
187
0
0
187
Total interest-bearing liabilities
2 543
2 621
0
1 552
1 069
Derivatives
0
0
0
0
0
Commodity contracts
270
270
0
0
270
Other non-current liabilities
270
270
0
0
270
Trade payables
1 018
1 018
0
0
1 018
Other payables
568
568
0
0
568
Trade and other payables
1 586
1 586
0
0
1 586
Derivatives
1
1
0
0
1
Commodity contracts
215
215
0
0
215
Financial current liabilities
7
7
0
0
7
Other current liabilities
223
223
0
0
223
110
I
Norske Skog
I
Annual report 2022
The fair value of bonds (interest-bearing non-current liabilities) (Level 2) is
assessed by using price indications from banks at the reporting date. There is
some uncertainty associated with the calculated fair value of Level 3 interest-
bearing liabilities. The fair value calculation on other interest-bearing liabilities
(Level 3) is based on acknowledged valuation principles according to IFRS but
is not necessarily an estimate of the amount the group would have to cover if
it were to repay all its debt to all lenders.
The fair values of cash and cash equivalents, trade receivables and other
receivables, other assets, trade payables and other payables and other current
liabilities remain largely consistent with the book value due to the short
maturities of such positions. The fair value of derivatives and commodity
20.
Receivables and other non-current assets
NOTE
31.12.2022
31.12.2021
Trade and other receivables
Trade receivables
818
729
Provision for bad debt
-44
-43
VAT receivables
173
122
Prepaid expenses
52
44
Other receivables
945
558
Total
1 944
1 411
Other non-current assets
Long-term shareholdings
17
116
111
Derivatives
13
0
Commodity contracts
578
176
Pension plan assets
21
8
13
Other non-current receivables
53
5
Total
768
305
Annual report 2022
I
Norske Skog
I
Norske Skog Bruck, Norske Skog Golbey, Norske Skog Skogn and Norske
Skog Saugbrugs have factoring facility agreements where the future cash flow
on certain trade receivables are sold. The facility has a limit of EUR 25 million
for Norske Skog Bruck, a limit of EUR 40 million for Norske Skog Golbey and a
combined limit of NOK 400 million for Norske Skog Skogn and Norske Skog
Saugbrugs. There are no financial covenants in these factoring facility
agreements. Trade receivables that have been sold are deducted from trade
receivables in the balance sheet. The utilisation at 31 December 2022 was
NOK 605 million (NOK 594 million).
At 31 December 2022 advances received from contracts with customers
amounted to NOK 0 million and other revenue accruals for invoice not sent
amounted to NOK 0 million (NOK 0 million and NOK 0 million). In addition,
received advances from customers not invoiced NOK 0 million at 31 December
2022 (NOK 0 million).
The credit risk on trade and other receivables is continuously monitored,
independent of due date. The group’s sales are mainly to large customers with
a historically low degree of default. Collateral as security is not normally
requested. Further information regarding the group’s credit policy for sales is
provided in Note 4.
AGEING OF THE GROUP’S CURRENT RECEIVABLES
31.12.2022
31.12.2021
Not due
1 812
1 259
0 to 3 months
139
157
3 to 6 months
0
0
Over 6 months
38
37
Total
1)
1 988
1 454
1)
Does not include provision for bad debt.
The maximum credit risk exposure at the year-end is the fair value of each class of receivable mentioned above.
21.
Pension and other employee obligations
EMPLOYEE BENEFIT OBLIGATIONS
2022
2021
Pension obligations
112
89
Other long-term employee benefit obligations
167
223
Total employee benefit obligations
278
312
I
Norske Skog
I
Annual report 2022
A) PENSION OBLIGATIONS
Norske Skog has various pension schemes in accordance with local conditions
and practices in the countries in which the group operates. A total of 2
088
active and former employees are covered by such schemes. Of these, 502
people are covered by defined benefit plans and 1
586 people by defined
contribution plans.
DESCRIPTION OF THE DEFINED BENEFIT PLANS
The key terms in Norske Skog’s major defined benefit plans are shown in the
table below.
BENEFIT IN % OF
PENSIONABLE
EARNINGS
YEARS OF SERVICE
PENSIONABLE AGE
EARLY RETIREMENT
AGE
ACTIVE MEMBERS
Norske Skog ASA
65
30
70
62
1
Norske Skog Saugbrugs AS
65
30
70
62
39
Norske Skog Skogn AS
65
30
70
62
46
Norske Skog Golbey SAS
0
42
62
60
354
The defined benefit plan in Norske Skog Bruck GmbH and Norske Skog
Deutschland GmbH is closed.
The defined benefit schemes in Norway cover people between 64 and 67
years of age, born before 1 January 1959 and who were employed before 1
January 2011 when the plan was closed. The defined benefit obligations in
Norway only encompass active members since they leave the defined benefit
scheme (having a paid-up policy) when they retire.
Plan assets of the pension schemes in Norske Skog ASA, Norske Skog
Saugbrugs AS and Norske Skog Skogn AS are managed by a life insurance
company and invested in accordance with the general guidelines governing
investments by life insurance companies in Norway.
When evaluating plan assets, it is based on the assumptions as at 31 December.
This estimated value is adjusted every year in accordance with the figures for
the market value of the assets provided by the insurance company.
When measuring the incurred obligations, it is based on the assumptions as at
31 December. This estimated obligation is adjusted every year in accordance
with the figures for incurred pension obligations provided by the actuary.
In addition to the benefit obligation funded through insurance plans, the group
has unfunded benefit obligations. The unfunded obligations include estimated
future obligations relating to the former Norwegian early retirement scheme,
pensions to former owners of subsidiaries as well as pensions for senior
management and directors. Obligations relating to senior management
pensions are partly funded through a supplementary retirement plan with a
life insurance company.
In addition to defined benefit plans, there are also various defined contribution
plans. Norwegian entities have a defined contribution scheme with a
contribution of 4% for earnings up to 7.1 G and 10% between 7.1 and 12 G
.
With effect from 1 January 2023 the contribution has increased to 5% for
earnings up to 7.1 G and 17% between 7.1 and 12 G
. In Australia and New
Zealand contribution are made for employees to local plans that provide
retirement, death and disability benefits for employees and their dependants.
ASSUMPTIONS MADE WHEN CALCULATING FUTURE BENEFIT OBLIGATIONS
2022
2021
Discount rate
3.14%
1.50%
Expected return on plan assets
3.20%
1.50%
Salary adjustment
2.00%
1.50%
Inflation rate
2.15%
1.50%
Pension adjustment
3.63%
0.75%
Annual report 2022
I
Norske Skog
I
113
The discount rate applied for the pension schemes in Norway for 2022 is
based on the interest rate for covered bonds. Subsidiaries can deviate from
these assumptions if local conditions require this. The discount rates applied
vary from 3.15% to 4.21% and pension adjustments vary from 1.7% to 11.1%
.
Norske Skog has used the mortality table K2013BE in Norway, Richttafeln
2018G in Germany and AVO 2018-P in Austria.
NET PERIODIC PENSION EXPENSE
2022
2021
Pension expense, defined benefit plan
4
4
Pension expense, defined contribution plan
56
52
Net periodic pension expense
59
55
Net periodic interest expense
1
1
Estimated payments to the group’s defined benefit pension schemes in 2023 amounts to NOK 8 million.
PENSION PLANS IN THE BALANCE SHEET
SPECIFICATION OF PENSION PLANS IN THE BALANCE SHEET
2022
2021
Pension assets in the balance sheet
8
13
Pension liabilities in the balance sheet
-112
-89
Net pension obligations
-104
-75
Net unfunded pension plans
-110
-75
Net partly or fully funded pension plans
7
13
Pension assets is included in line other non-current assets and pension
liabilities is included in the line employee benefit obligations.
UNFUNDED PENSION PLANS
CHANGES IN PENSION OBLIGATIONS FOR UNFUNDED PENSION PLANS, PROJECTED BENEFIT OBLIGATIONS
INCLUDING NATIONAL INSURANCE CONTRIBUTIONS
2022
2021
Balance 1 January
-75
-88
Adjustment to opening balance, due to reclassification
-55
0
Current year's service cost
-5
0
Current year's interest cost
1
-1
Pensions benefits paid
4
5
Remeasurements (loss)/gain OCI
26
5
Currency translation differences
-7
4
Balance 31 December
-110
-75
PARTLY OR FULLY FUNDED PENSION PLANS
CHANGES IN PENSION OBLIGATIONS FOR PARTLY OR FULLY FUNDED PENSION PLANS, PROJECTED BENEFIT
OBLIGATIONS INCLUDING NATIONAL INSURANCE CONTRIBUTIONS
2022
2021
Balance 1 January
-141
-150
Current year's service cost
-2
-2
Current year's interest cost
-2
-2
Payroll tax of employer contribution
1
1
Pension benefits paid
6
5
Remeasurements (loss)/gain OCI
36
7
Balance 31 December
-104
-141
114
I
Norske Skog
I
Annual report 2022
CHANGES IN PLAN ASSETS FOR PARTLY OR FULLY FUNDED PENSION PLANS, PLAN ASSETS AT FAIR VALUE
2022
2021
Balance 1 January
156
156
Adjustment to opening balance
0
7
Return on plan assets (interest income)
2
2
Employer contribution including payroll tax
5
5
Payroll tax of employer contribution
-1
-1
Pension benefits paid
-6
-5
Remeasurements (loss)/gain OCI
-44
-8
Other changes
-1
0
Balance 31 December
111
156
Net assets/obligations (-) partly or fully funded pension plans
7
13
SPESIFICATION OF REMEASUREMENT GAINS/LOSSES IN OTHER COMPREHENSIVE INCOME (OCI)
2022
2021
Actuarial loss/(gain) - change in discount rate
-17
-1
Actuarial loss/(gain) - change in other financial assumptions
7
0
Actuarial loss/(gain) - change in other demographic assumptions
0
-4
Actuarial loss/(gain) - experience obligation
-51
1
Actuarial loss/(gain) - experience assets
42
-2
Investment management cost
1
2
Asset ceiling - asset adjustment
1
0
Remeasurements loss/(gain) in OCI
-16
-4
2022
2021
INVESTMENT PROFILE FOR PENSION FUNDS
FUNDS
DISTRIBUTION
FUNDS
DISTRIBUTION
Shares
6
5%
19
12%
Bonds
74
67%
101
65%
Properties and real estate
15
14%
20
13%
Money market
14
13%
10
6%
Other
1
1%
6
4%
Total
111
100%
156
100%
SENSITIVITY ANALYSIS
Norske Skog has performed sensitivity analyses of material group companies
for the most important assumptions related to defined benefit schemes to
predict how fluctuations will impact pension liabilities in the consolidated
balance sheet. In relation to the assumptions made in the calculation of
pension obligations the amount is most sensitive to changes in discount rate,
salary adjustment and pension growth rate. The sensitivity of the pension
obligation is shown in the table below:
Annual report 2022
I
Norske Skog
I
115
SENSITIVITY
INCREASE
DECREASE
Discount rate - 0.5%
-6
6
Future national security - 1.0%
-3
3
Future pension - 0.5%
5
0
The above sensitivity analyses are based on a change in an assumption while
holding all other assumptions constant. In practice, this is unlikely to occur,
and changes in some of the assumptions may be correlated. No data is
available for decrease of future pension adjustment. The sensitivity analysis is
based on actuarial calculations for the Norwegian schemes.
B) OTHER EMPLOYEE OBLIGATIONS
The groups other employee benefits are future benefits that the employees
have earned in return for their service in current and prior periods.
The leave obligations cover the groups liabilities for long service leave and
annual leave which are classified as either other non-current liabilities or
short-term liabilities.
NET PERIODIC EXPENSE
2022
2021
Net periodic expense/remeasurement
-15
5
Net periodic interest expense
2
2
CHANGES IN OTHER EMPLOYEE BENEFITS
2022
2021
Balance 1 January
-255
-287
Adjustments to opening balance, due to reclassification
42
0
Current year's service cost
-12
-14
Current year's interest cost
-2
-2
Remeasurements loss/(gain)
20
9
Payments made
20
29
Other changes
-5
-2
Currency translation differences
-11
12
Balance 31 December
-203
-255
OTHER EMPLOYEE BENEFITS IN THE BALANCE SHEET
31.12.2022
31.12.2021
Other non-current employee benefit obligations
-167
-223
Other current employee benefit obligations
-37
-32
Total other employee benefits 31 December
-203
-255
The obligation classified as current relates to employees that have completed
the required period of service and the group does not have an unconditional
right to defer settlement for these obligations. Based on previous experience,
the group does not expect all employees to take the full amount of accrued
leave or require payment within the next 12 months.
The current part is included in the balance sheet line other current liabilities.
The non-current employee benefit obligations is included in the balance sheet
line employee benefit obligations.
Provisions
RESTRUCTURING
PROVISION
DISMANTLING
PROVISION
ENVIRONMENTAL
PROVISION
Balance 1 January 2021
70
19
208
Changes and new provisions
214
-19
-39
Utilised during the year
-220
0
-1
Periodic unwinding of discount
0
0
2
Currency translation differences
0
0
-5
Balance 31 December 2021
63
0
165
Changes and new provisions
11
0
5
Utilised during the year
-33
0
-12
Periodic unwinding of discount
0
0
3
Currency translation differences
2
0
7
Balance 31 December 2022
43
0
168
116
I
Norske Skog
I
Annual report 2022
RESTRUCTURING PROVISION
Restructuring provision is included in the balance sheet line other current
liabilities. The restructuring provision of NOK 43 million at 31 December 2022
includes various restructuring activities included provision for severance
payments and other costs (Publication paper Europe NOK 6 million and
Publication paper Australasia NOK 18 million). The amount expensed in 2022
in relation to restructuring activities amounted to NOK 11 million (Publication
paper Australasia NOK 11 million).
The restructuring provision of NOK 63 million at 31 December 2021 includes
various restructuring activities included provision for severance payments
and other costs (Publication paper Europe NOK 18 million and Publication
paper Australasia NOK 43 million). The amount expensed in 2021 in relation
to restructuring activities amounted to NOK 192 million (Publication paper
Europe NOK 16 million and Publication paper Australasia NOK 174 million).
NOK 19 million of the increase in provision during 2021 is due to a reclassifi-
cation from long term dismantling provision to short term as part of the
closure of the production at Norske Skog Tasman.
DISMANTLING PROVISION
Provisions related to future dismantling costs arising from a future closing
down of production facilities amounted to NOK 0 million at 31 December 2022,
compared to NOK 0 million at 31 December 2021.
The total amount is normally classified as non-current and will only be realised
at the time of a future shut down of any of the Norske Skog production units.
The provision is the net present value of the future estimated costs, calculated
using a long-term risk-free interest rate. The periodic unwinding of the
discount is recognised in the income statement line financial expenses. The
opposite entry for dismantling provision and change in provision estimates
is property, plant and equipment. In 2021 the remaining amount of
NOK 19 million was reclassified from long term to short term as part of the
closure of the production at the Norske Skog Tasman. This is included in the
balance sheet line other current liabilities.
ENVIRONMENTAL PROVISION
The group’s provision for environmental obligations is presented in the
balance sheet as other non-current liabilities. The provision is related to
estimated future costs for cleaning up any environmental pollution caused by
Norske Skog production units. The provision will mainly be realised in a future
period upon a potential shut down of the production activities of any of the
Norske Skog production units. Increased environmental requirements from
local governments may also lead to realisation of this provision at an earlier
point in time.
Provisions for future environmental obligations amounted to NOK 167 million
at 31 December 2022 compared to NOK 165 million at 31 December 2021.
Resources spent on environmental activities during 2022 amounted to
NOK 12 million.
The carrying value of the provision is the best estimate made by measuring
the expected value of the specific obligations, discounted to present value
using a long-term risk-free interest rate when the time value of money is
material. Changes in factors included in the expected value will impact the
carrying value of the obligation. To illustrate the sensitivity, a reduction in the
future discount rate by one percentage point would increase the provision by
approximately NOK 12 million. Changes in accounting estimates not related to
assets are classified as operating items in the income statement, and the
periodic unwinding of the discount is recognised within the income statement
line financial expenses.
Norske Skog is an international company that, through its ongoing business
operations, will be exposed to litigation and claims from public authorities and
contracting parties as well as assessments from public authorities in each
Interest-bearing liabilities
INTEREST-BEARING DEBT, OUTSTANDING AMOUNTS
31.12.2022
31.12.2021
Bonds
1 460
1 498
Debt to financial institutions
2 171
875
Factoring facilities
56
82
Total
3 687
2 456
Annual report 2022
I
Norske Skog
I
117
INTEREST-BEARING DEBT, OUTSTANDING AMOUNTS
CURRENCY AMOUNT
31.12.2022
NOK
31.12.2022
NOK
31.12.2021
EUR
342
3 593
2 352
AUD
3
21
25
Total interest-bearing debt in foreign currencies
3 614
2 377
NOK
73
79
Total interest-bearing debt
3 687
2 456
In the first quarter of 2021 Norske Skog issued a EUR 150 million senior
secured bond. The bond matures in March 2026 and has an interest rate of
EURIBOR (zero floor) + 5.5% with quarterly interest payments
. The proceeds
were mainly used to refinance the EUR 125 million bond and for general
corporate purposes. During 2022 Norske Skog bought back a nominal amount
of EUR 11.6 million
. At 31 December 2022, the outstanding amount, net of
bought back bonds was EUR 138.4 million
.
Norske Skog has a EUR 31 million Revolving Credit Facility with maturity in
March 2026. At 31 December 2022, the facility was undrawn.
In the fourth quarter of 2021 Norske Skog announced that it had entered into
credit facility agreements in an aggregate amount of EUR 265 million to
finance its EUR 350 million investment to convert two paper machines into
producing packaging paper. EUR 193 million relates to Norske Skog Golbey
and EUR 72 million relates to Norske Skog Bruck. The borrowing entities are
Norske Skog Golbey SAS and Norske Skog Bruck GmbH, and the facilities are
fully guaranteed by Norske Skog ASA. During 2022 the facilities has been
drawn upon as capital expenditures have incurred, and on 31 December 2022
the credit facilities had been drawn by approximately EUR 136 million.
Repayment is scheduled to commence approximately upon completion of
each respective project with average maturity in end of 2030.
In 2022 Norske Skog Bruck completed the construction of an incineration
boiler. The construction costs have been partly financed by a EUR 54 million
credit facility. During 2022 the credit facility was fully drawn and in fourth
quarter 2022 the first scheduled repayment was made. The facility will be
repaid in quarterly instalments up until the final maturity date in 2028. The
borrower under the facility is Norske Skog Bruck GmbH and Norske Skog ASA
has provided a guarantee of EUR 20 million. At 31 December 2022, the outstanding
amount under the credit facility was approximately EUR 51.8 million
.
The financial covenants applicable to Norske Skog on a consolidated basis are
(i) freely available and unrestricted cash and cash equivalents of minimum
NOK 100 million, (ii) EBITDA to net interest costs of minimum 2.0:1, and (iii)
book equity to total assets of minimum 25% and (iv) minimum last twelve
months (LTM) EBITDA of NOK 400 million. In addition, there are various
company specific financial covenants applicable to the subsidiaries acting as
borrowers under the respective credit facilities.
The EBITDA used in the calculation of financial covenants may differ from the
EBITDA shown in the financial reporting due to adjustment requirements in
the facility agreements.
The remaining financing arrangements for the group includes leasing,
factoring, and other credit facilities in the mill owning entities.
Norske Skog Skogn AS and Norske Skog Saugbrugs AS have pledged its trade
receivables in favour of its factoring providers. In addition, Norske Skog Skogn
AS and Norske Skog Saugbrugs AS have pledged certain parts of its property
and assets in favour of the EUR 31 million RCF and the EUR 150 million senior
secured bond. Saugbrugs Bioenergi AS, a wholly owned subsidiary of Norske
Skog Saugbrugs AS, has pledged certain parts of its property and assets in
favour of the lenders under a credit facility financing its biogas facility. Norske
Skog Golbey SAS has pledged certain parts of its property, in an amount of up
to EUR 13 million, in favour of a bank guarantor under a guarantee to one of its
energy suppliers. In addition, Norske Skog Golbey SAS has pledged certain
parts of its property and assets and Norske Skog ASA has pledged the shares
in Norske Skog Golbey SAS in favour of the lenders under the packaging
conversion facilities. Norske Skog Bruck GmbH has pledged certain parts of
its property and assets in favour of the lenders under the EUR 54 million credit
facility and the packaging conversion facilities.
The average interest rate at 31 December 2022 was 5.2% (4.4%)
.
SCHEDULED REPAYMENTS OF THE GROUP’S FINANCIAL
DEBT AND INTEREST AT 31.12.2022
INTEREST
OTHER LOANS
1)
BONDS
TOTAL
2023
273
277
0
551
2024
210
379
0
589
2025
194
520
0
714
2026
89
391
1 460
1 940
2027
42
346
0
389
2028
30
210
0
240
2029
20
70
0
90
2030
13
13
0
26
2031
8
13
0
21
2032 ->
3
7
0
10
Total
883
2 226
1 460
4 569
118
I
Norske Skog
I
Annual report 2022
SCHEDULED REPAYMENTS OF THE GROUP’S FINANCIAL
DEBT AND INTEREST AT 31.12.2021
INTEREST
OTHER LOANS
1)
BONDS
TOTAL
2022
104
300
0
404
2023
99
143
0
242
2024
94
134
0
228
2025
91
133
0
223
2026
25
105
1 498
1 628
2027
2
104
0
106
2028
1
13
0
14
2029
0
7
0
7
2030
0
7
0
7
2031 ->
0
13
0
13
Total
416
958
1 498
2 872
1)
including full instalments for the EUR 54 million credit facility
The debt amounts set out above may differ from the carrying value in the
balance sheet due to the amortised cost principle and exclusion of debt items
related to leases. At 31 December 2022, the financial statements included
amortised cos in an amount of NOK 18 million (NOK 24 million), and the
amount of interest-bearing debt related to leases was NOK 74 million. See
Note 16.
Trade payables amounted to NOK 819 million at 31 December 2022
(NOK 1
018 million).
Drawn amounts from securitization arrangements is classified as interest-
bearing current liabilities. This amounts to NOK 56 million in scheduled
repayments in 2023. The financed amount represents a group of individual
loans, which are settled individually at maturity of the accounts receivable.
New loans are initiated on a consecutive basis based on new accounts
receivable included under the securitization agreement. The liability is in its
nature current and Norske Skog does not have an unconditional right to defer
settlement beyond twelve months. The liabilities are liabilities that are settled
through its normal operating cycle. The corresponding accounts receivable is
derecognised when the customer pays it.
At 31 December 2022, Norske Skog ASA and its subsidiaries had issued bank
guarantees on its behalf in an amount of NOK 165 million (NOK 169 million).
Norske Skog Skogn AS and Norske Skog Saugbrugs AS have pledged certain
parts of its assets and machinery, in an amount of up to NOK 200 million,
to its energy suppliers under long term energy supply agreements. The
security has priority behind the EUR 31 million revolving credit facility and
the EUR 150 million senior secured bond.
2022
2021
Balance 1 January
2 543
1 705
New loans raised
1 354
1 202
Repayments
-321
-383
New leasing debt
16
29
Loss early repayment of bond and amortisaton of transaction costs debt issuance
7
52
Currency translation differences
-143
-62
Balance 31 December
3 742
2 543
Current
310
187
Non-current
3 432
Annual report 2022
I
Norske Skog
I
119
24.
Specification of balance sheet items
2022
2021
Inventories
Raw materials and other production goods
795
742
Semi-manufactured materials
16
7
Finished goods
652
454
Total
5
1 464
1 203
Other current assets
Commodity contracts
392
308
Other current assets
90
176
Total
481
484
Trade and other payables
Trade payables
819
1 018
Accrued labour costs and taxes
664
419
Accrued expenses
728
419
Other interest-free liabilities
31
55
Total
19
2 245
1 910
Other current liabilities
Derivatives
1
1
Commodity contracts
209
215
Accrued emission rights
65
136
Accrued financial costs
9
7
Other current employee benefits
37
32
Restructuring provision
22
43
63
Total
19
364
454
Note
2022
2021
Other non-current liabilities
Commodity contracts
313
270
Environmental provision
22
168
165
Deferred recognition of government grants
23
21
Other non-interest-bearing debt
0
6
Total
19
504
463
Interest-bearing non-current liabilities
Bond (amortised cost)
1 442
1 474
Debt to financial institutions
1 949
814
Leasing liabilities
16
40
68
Total
19
3 432
2 356
Interest-bearing current liabilities
Debt to financial institutions and bond (amortised cost)
277
143
Leasing liabilities
16
33
43
Total
19
310
120
I
Norske Skog
I
Annual report 2022
Related parties
Oceanwood Special Situations Malta Limited has during 2022 been a related
party to Norske Skog through the ownership in NS Norway Holding AS (largest
shareholder).
There have been no transactions with Oceanwood Special Situations Malta
Limited in 2022.
On 8 February 2023 NS Norway Holding AS sold 15
896 681
shares in
Norske Skog ASA. Following this sale NS Norway Holding AS holds no shares
in Norske Skog ASA.
Balances and transactions between the group and subsidiaries listed in Note
17, have been eliminated on consolidation and are not disclosed in this note.
Remuneration for corporate management is presented in Note 7. Remuneration
for leading personnel is presented in the remuneration report available at
www.norskeskog.com.
All transactions with related parties are conducted on normal commercial
26.
Consideration of climate risk for the financial statements
In preparing the financial statements, the board of directors have assessed
and considered the impact of climate change, particularly in the context of the
risks and opportunities identified in the Task Force on Climate-related
Financial Disclosures (TFCD) on pages 60-61. The time horizons applied for
the overall assessment of risks and opportunities for the group is short term
(1-5 years), medium term (5-10 years) and long-term (10 -30 years).
The transformation to a larger, more diversified product portfolio with new
products will reduce the dependency on publication paper and thus reduce
the business and market risk. The planned packaging production will be based
on renewable resources.
The goal is to reduce energy consumption in production, eliminate the use of
fossil energy sources and to optimise the use of process chemicals and
transport. Our operations are impacted by unstable energy markets and
increasing carbon prices. Norske Skog has included a reduction of greenhouse
gas emissions from fossil energy sources as a key part of our business strategy.
The goal is to reduce energy consumption, change the sources of energy,
invest in on site green energy generation and to optimise the use of process
chemicals and transport.
We have identified the following risks as the most significant:
o Regulatory: Norske Skog is subject to several regulatory requirements
relating to energy and emissions including the EU Emissions Trading
Scheme (ETS), which include both a CO
2
compensation scheme, and CO
2
-
allowances. Due to the financial impact such regulations may have on our
business we monitor associated risks closely.
o Acute Physical: Some of our mills are in areas where drought/access to
water and/or flooding might become a risk in the future with a changing
climate.
o Chronic Physical: The availability of sustainable and affordable biomass for
the production of publication paper in Norway and Australia may be affected
by longer-term shifts in climate patterns in the future.
The financial statements may be impacted by climate related risk in the future,
but not considered to be key areas of judgement or sources of estimation
uncertainty in the current financial year. The effects may be related to:
• EU ETS and CO2 allowances may be cut back and increase our cost of
production. This may affect the value of our main assets in Europe if the
increase in cost cannot be recovered in the prices of our products.
Implementation of the EU Carbon Border Adjustment Mechanism (CBAM)
coming into effect may, if effective, increase the probability of recovery of
any increased cost of carbon emissions.
• Impairment of our property, plant and equipment due to a change in the
profitability of cost increases for carbon emissions and price of energy or
due to shortened useful life due to physical risks that reduce the appetite
for reinvestment, thereby reducing the time horizon for certain plants.
Whilst there is currently no short-term impact expected from changes in
climate, the board of directors are aware of the risk changes in climate could
pose to the operations and the judgement and estimates made in preparation
of the financial statements.
Events after the balance sheet date
On 9 March 2023, following a request from Byggma ASA and Drangsland
Kapital AS which are under common control by Investor AS, Norske Skog ASA
held an extraordinary general meeting pursuant to Section 5-7 (2) of the
Norwegian
Public
Limited
Liability
Companies
Act.
Based
on
the
recommendation from the nomination committee the extraordinary general
meeting resolved that Geir Drangsland was elected as the new chair of the
board of directors replacing John Chiang and that Asbjørn André Dypdahl
(employee and main union representative of Norske Skog Skogn AS) is elected
as an observer to replace Svein Erik Veie.
There have been no events after the balance sheet date with significant
Katrin Eisenberger
HR and resources manager
Norske Skog Bruck
My name is Katrin Eisenberger,
and since 2019 I have been the
Human Relations and Resources
Manager at Norske Skog Bruck.
I received a Master’s degree
in International Business/Human
Resources Management and have about 17 years of work
experience. My team and I are mainly focused on recruiting,
employee/leadership development and organisational develop-
ment related to company culture.
I liked the complex production process, the company’s long
tradition, its products and the highly skilled workforce.
Most of all, I like being part of a team that continuously seeks to
improve performance, find efficient ways to solve problems and is
willing to continuously learn and adapt.
I believe Norske Skog will develop into a key player in the “Green
Energy” sector while still keeping its core competence as an
excellent paper producer. I’d like to see Norske Skog as a main
player in the field of biomass, fibres and energy, continuously
exploring new, innovative fields, thus driving business in the right
Photo: Thomas Leirvik
Annual report 2022
I
Norske Skog
I
121
Henriette Ulsund
Winder operator
Norske Skog Saugbrugs
Hello, my name is Henriette Ulsund
and I am 35. I have a certificate of
apprenticeship in chemistry and
process and have worked for
Norske Skog Saugbrugs since
September 2009.
I decided to work for Norske Skog Saugbrugs when I was offered
a permanent position after ending my apprenticeship. I was very
satisfied working at Saugbrugs and could see myself staying here
for a long time.
I am a Winder operator on PM4 and my work tasks include
running the machine in an efficient and safe way.
In my free time, I play football and indoor bandy.
Photo: Nicolas Michel
Financial statements
Income statement
124
Statement of comprehensive income
124
Balance sheet
125
Statement of cash flows
126
Statement of changes in equity
126
Notes to the financial statements
1
General information
127
2
Accounting policies
127
3
Operating revenue by geographical market
127
4
Payroll expenses, pension expenses and obligations
127
5
Associated companies
128
6
Financial items
128
7
Income taxes
128
8
Intangible assets and property, plant and equipment
129
9
Shares in subsidiaries
130
10
Equity
131
11
Maturity of interest-bearing liabilities
132
12
Intercompany receivables and liabilities
132
13
Guarantees
133
14
Related parties
133
15
Events after the balance sheet date
133
Financial
statements
Norske Skog ASA
Annual report 2022
I
Norske Skog
I
123
FINANCIAL STATEMENTS NORSKE SKOG ASA
INCOME STATEMENT
NOK MILLION
Note
2022
2021
Total operating Income
3
97
95
Employee benefit expenses
4
-218
-82
Other operating expenses
-69
-50
Restructuring expenses
0
-3
Depreciation
8
-9
-9
Total operating expenses
-297
-145
Operating earnings
-199
-49
Share of profit in associated companies
5
-14
-18
Financial income
6
1 130
71
Financial expense
6
-136
-164
Gains/(losses) on foreign currency
6
-91
81
Profit/(loss) before income taxes
691
-78
Income taxes
7
17
-2
Profit/(loss) after income tax
708
-80
124
I
Norske Skog
I
Annual report 2022
STATEMENT OF COMPREHENSIVE INCOME
NOK MILLION
2022
2021
Profit/(loss) after tax
708
-80
Items that will not be reclassified subsequently to profit or loss
Remeasurements of post employment benefit obligations
-1
-1
Tax effect on remeasurements of post employment benefit obligations
0
0
Other comprehensive income
-1
-1
Total comprehensive income
707
-81
FINANCIAL STATEMENTS NORSKE SKOG ASA
BALANCE SHEET
NOK MILLION
NOTE
2022
2021
Deferred tax assets
7
18
0
Intangible assets
8
7
13
Property, plant and equipment
8
6
8
Shares in subsidiaries
9
4 550
3 341
Investment in associated companies
5
89
102
Other non-current assets
12
208
1 310
Total non-current assets
4 878
4 775
Trade and other receivables
12
649
227
Other current assets
142
25
Cash and cash equivalents
2 011
1 271
Total current assets
2 801
1 523
Total assets
7 679
6 298
Paid-in-equity
4 039
4 039
Retained earnings
77
-631
Total equity
10
4 115
3 408
Interest-bearing non-current liabilities
11, 12
1 444
1 479
Total non-current liabilities
1 444
1 479
Interest-bearing current liabilities
11, 12
1 909
1 344
Other current liabilities
211
67
Total current liabilities
2 120
1 412
Total liabilities
3 564
2 891
Total equity and liabilities
7 679
6 299
Annual report 2022
I
Norske Skog
I
125
SKØYEN, 28 MARCH 2023
THE BOARD OF DIRECTORS OF NORSKE SKOG ASA
Geir Drangsland
Arvid Grundekjøn
Trine-Marie Hagen
Chair
Board member
Board member
Nikolai Johns
Johanna Lindén
Sven Ombudstvedt
Board member
Board member
CEO
FINANCIAL STATEMENTS NORSKE SKOG ASA
STATEMENT OF CASH FLOWS
NOK MILLION
NOTE
2022
2021
Cash generated from operations
91
88
Cash used in operations
-142
-120
Cash flow from currency hedges and financial items
-12
-35
Interest payments received
64
70
Interest payments made
-120
-79
Taxes paid
7
0
-2
Net cash flow from operating activities
-119
-76
Purchases equipment and intangible assets
8
-1
-3
Other financial payments
-142
-243
Net cash flow from investing activities
-143
-246
New loans raised
0
442
Repayments of loans
-117
-255
New paid-in equity
0
388
Change in intercompany balance with group
1 091
220
Net cash flow from financing activities
973
796
Foreign currency effects on cash and cash equivalents
29
16
Total change in cash and cash equivalents
739
490
Cash and cash equivalents 1 January
1 271
783
Cash and cash equivalents 31 December
1)
2 011
1 271
1)
Whereof restricted cash
78
40
126
I
Norske Skog
I
Annual report 2022
STATEMENT OF CHANGES IN EQUITY
NOK MILLION
NOTE
SHARE CAPITAL
SHARE PREMIUM
OTHER PAID-IN
CAPITAL
RETAINED
EARNINGS
TOTAL EQUITY
Equity 1 January 2021
330
1 072
2 249
-549
3 101
Change in paid-in capital
47
341
0
0
388
Profit after tax
0
0
0
-80
-80
Other comprehensive income
0
0
0
-1
-1
Equity 31 December 2021
377
1 412
2 249
-631
3 408
Profit after tax
0
0
0
708
708
Other comprehensive income
0
0
0
-1
-1
Equity 31 December 2022
10
377
1 412
2 249
77
4 115
FINANCIAL STATEMENTS NORSKE SKOG ASA
Notes to the
financial statements
Annual report 2022
I
Norske Skog
I
127
1.
General information
All amounts are presented in NOK million unless otherwise stated. There may
be some small differences in the summation of columns due to rounding.
The financial statements were authorised for issue by the board of directors
on 28 March 2023.
2.
Accounting policies
The financial statements for Norske Skog ASA have been prepared and
presented in accordance with simplified IFRS pursuant to section 3-9 of the
Norwegian Accounting Act.
Requirements related to recognition and measurement applied to the
company financial statements of Norske Skog ASA are identical to the ones
described in Note 2 Accounting policies in the consolidated financial
statements, with the exception of shares in subsidiaries which are recognised
at lower of cost and net-realizable value in the company financial statements.
Shares in subsidiaries are reviewed for impairment if changes in circumstances
indicate that the carrying amount is higher than the fair value of the
investment, and impairment loss is reversed if the impairment situation no
longer exists. Dividends from subsidiaries is recognised in the year for which
it is proposed by the subsidiary.
For accounting estimates and assumptions see Note 3 Accounting estimates
and assumptions in the consolidated financial statements.
3.
Operating revenue by geographical market
The company’s operating revenue consists mainly of the sale of services to
other entities in the group. Operating revenue arising from sales of internal
services to other entities in the group amounted to NOK 96 million in 2022.
The corresponding figure for 2021 were NOK 82 million.
OPERATING REVENUE BY GEOGRAPHICAL MARKET
2022
2021
Norway
38
47
Europe excluding Norway
52
39
Australasia
8
9
Total
97
95
4.
Payroll expenses, pension expenses and
obligations
EMPLOYEE BENEFIT EXPENSES
2022
2021
Salaries including holiday pay
183
66
Social security contributions
31
9
Pension expenses
2
2
Other employee benefit expenses
2
4
Total
218
82
The company is required by law to have a pension scheme for all employees.
The company’s pension plan is compliant with the requirements in the
Norwegian Act relating to mandatory occupational pension. See also
Note 21 Pension and other employee obligations in the consolidated financial
statements for further information.
NUMBER OF EMPLOYEES
31.12.2022
31.12.2021
Employees
31
30
NET PERIODIC PENSION EXPENSES
2022
2021
Pension expenses, defined benefit plan
0
0
Pension expenses, defined contribution plan
2
2
Net periodic pension expenses
2
2
Net periodic interest expenses
0
0
PENSION ASSETS IN THE BALANCE SHEET
31.12.2022
31.12.2021
Net pension assets in the balance sheet
0
1
PENSION OBLIGATION IN THE BALANCE SHEET
31.12.2022
31.12.2021
Projected benefit obligation
-8
-23
Plan assets at fair value
9
24
Net pension obligations in the balance sheet
0
1
SENSITIVITY ANALYSIS AT 31 DECEMBER 2022
Increase
Decrease
Discount rate -0.5%
0
0
Salary adjustment -0.5%
0
0
FINANCIAL STATEMENTS NORSKE SKOG ASA
5.
Associated companies
Investment in associated companies are accounted for in accordance with
the equity method.
Circa Group AS is incorporated in Oslo, Norway, and is a holding company.
Circa Group operates within biotechnology with a vision to produce and sell
unique and highly valuable biochemicals at scale.
At 31 December 2022 Norske Skog ASA held a 26% (26%) share of Circa
Group AS with a carrying value of NOK 89 million (NOK 102 million). Norske
Skog’s share of net loss for the year of NOK 60 million is recognised in the
income statement with NOK 14 million (NOK 18 million). Circa Group AS is
listed on Euronext Growth with a market value as of 31 December 2022 of
NOK 190 million.
Due to later reporting dates than Norske Skog ASA, the share of results from
Circa Group is included with a three months lag.
6.
Financial items
FINANCIAL ITEMS
2022
2021
Interest income
29
2
Interest income from group companies
35
69
Other financial income
0
1
Reversal of impairment of investments in subsidiaries
1 066
0
Total
1 130
71
Interest expense
-95
-92
Interest expense group companies
-33
-16
Other financial expenses
-7
-56
Total
-136
-164
Gains/(losses) on foreign currency
-91
81
Total financial items
904
-11
No dividends have been received from subsidiaries in 2022 or 2021.
7.
Income taxes
TAX EXPENSE
2022
2021
Current tax expense
0
-2
Change in deferred tax
18
0
Total
17
-2
INCOME TAX RECONCILIATION
2022
2021
Profit/(loss) before income taxes
691
-78
Computed tax at nominal tax rate 22%
-152
17
Non taxable income/non deductible expenses
-7
-5
Impairment of investments in subsidiaries
235
0
Adjustment previous years
-7
1
Other items
-3
-4
Deferred tax assets not recognised
-47
-10
Withholding tax
0
-2
Total tax (expense)/income
17
-2
TEMPORARY DIFFERENCES AND TAX LOSSES
- DETAILS
31.12.2022
31.12.2021
Other non-current items
0
2
Pensions
0
-1
Translation differences and financial instruments
21
-57
Current items
247
-4
Tax losses to carry forward
1 100
1 134
Tax losses and other deferred tax assets not
recognised
1)
-1 288
-1 073
Basis for deferred tax
81
0
DEFERRED TAX
31.12.2022
31.12.2021
Net deferred tax asset/(liability)
18
0
1)
The value of tax losses and other tax credits are partly written down, subsequently the tax losses
are lower than total tax benefits not recognised.
128
I
Norske Skog
I
Annual report 2022
Vidar Kenneth Arvola
Industrial mechanic
Norske Skog Skogn
Hello, I am Vidar Kenneth Arvola,
and I am 52 years old. I started at
Norske Skog Skogn in Norway as
a trainee and qualified as an
Industrial
Mechanic
in
1992.
After a few years outside Norske
Skog, I returned in 2007 and am now Teamleader Mechanics for
the area PM 3 and finishing treatment. My goal was to get at job
at Norske Skog Skogn, being a cornerstone workplace offering a
secure job with interesting work tasks.
My main task is to plan and execute maintenance of PM3. I am
responsible for the team and encourage good teamwork.
My interests outside of work are American motorcycles and cars,
and I am the happy owner of both a Harley Davidson and a
Pontiac Firebird 68.
FINANCIAL STATEMENTS NORSKE SKOG ASA
8.
Intangible assets and property, plant and
equipment
INTANGIBLE ASSETS
LICENCES AND
PATENTS
Acquisition cost 1 January 2021
29
Addition
2
Reclassified from plant under construction
3
Acquisition cost 31 December 2021
34
Accumulated depreciation and impairments 1 January 2021
15
Depreciation
6
Accumulated depreciation and impairments 31 December 2021
21
Carrying value 31 December 2021
13
Acquisition cost 1 January 2022
34
Addition
0
Acquisition cost 31 December 2022
34
Accumulated depreciation and impairments 1 January 2022
21
Depreciation
6
Accumulated depreciation and impairments 31 December 2022
27
Carrying value 31 December 2022
7
Annual report 2022
I
Norske Skog
I
129
Licences, patents and other intangible assets are depreciated on a straight-
line basis over a period from three to five years.
Other intangible assets consist mainly of capitalised development costs
relating to customising of software.
PROPERTY, PLANT AND EQUIPMENT
FIXTURES AND
FITTINGS
PLANT UNDER
CONSTRUCTION
RIGHT-OF-USE
ASSETS
TOTAL
Acquisition cost 1 January 2021
1
2
14
18
Addition
0
1
0
1
Reclassified from plant under construction
0
-3
0
-3
Acquisition cost 31 December 2021
1
0
14
16
Accumulated depreciation and impairments 1 January 2021
1
0
4
4
Depreciation
0
0
3
3
Accumulated depreciation and impairments 31 December 2021
1
0
7
8
Carrying value 31 December 2021
1
0
7
8
Acquisition cost 1 January 2022
1
0
14
16
Addition
0
1
0
1
Acquisition cost 31 December 2022
1
1
14
17
Accumulated depreciation and impairments 1 January 2022
1
0
7
8
Depreciation
0
0
3
3
Accumulated depreciation and impairments 31 December 2022
1
0
9
11
Carrying value 31 December 2022
0
1
5
6
Fixtures and fittings and right of use assets are depreciated on a linear basis over a period from three to five years.
FINANCIAL STATEMENTS NORSKE SKOG ASA
9.
Shares in subsidiaries
SHARE IN SUBSIDIARIES
CURRENCY
SHARE CAPITAL
(IN 1
000)
OWNERSHIP %
CARRYING VALUE
(IN NOK MILLION)
Norske Skog Bruck GmbH, Bruck, Austria
EUR
10 000
99.9%
617
Norske Skog Golbey SAS, Golbey, France
EUR
62 365
100.0%
1 715
Norske Skog Skogn AS, Levanger, Norway
NOK
115 230
100.0%
615
Norske Skog Saugbrugs AS, Halden, Norway
NOK
115 230
100.0%
1 301
Norske Skog Industries Australia Ltd., Sydney, Australia
AUD
340 000
100.0%
276
Nornews AS, Oslo, Norway
NOK
300
100.0%
26
Cebina AS, Oslo, Norway
NOK
30
100.0%
0
Cebico AS, Oslo, Norway
NOK
30
100.0%
0
Total
4 550
Investments in subsidiaries are tested for impairment in accordance with IAS
36 Impairment of assets. Shares in subsidiaries are written down to their
recoverable amount when the recoverable amount is lower than the carrying
value of the investment. For impairment testing purposes, investments in
subsidiaries are grouped in the same manner as the cash-generating units for
the group. The carrying amount of investments in subsidiaries within each
cash-generating unit is measured against the recoverable amount of
investments in subsidiaries within this cash-generating unit.
The investment in subsidiaries have increased from NOK 3
341 million to
NOK 4
550 million during 2022. The increase is due to new paid-in capital of
EUR 15 million and impairment of NOK 294 million in Norske Skog Bruck
GmbH, and reversal of impairment in Norske Skog Skogn AS of NOK 324 million,
Norske Skog Saugbrugs AS of NOK 997 million, Nornews AS of NOK 23 million
and Norske Skog Industries Australia Ltd. of NOK 46 million.
See Note 6. For further information with respect to impairment testing see
Note 15 Property, plant and equipment in the consolidated financial statements.
Lukas Adler
Operator
Norske Skog Saugbrugs
Hello, my name is Lukas Adler. I
am 21 years old and born in
Germany. I moved to Norway 13
years ago. I have a college degree
within chemistry process and a
certificate
of
apprenticeship
within the same. I have worked at Norske Skog Saugbrugs for
four years as an Operator.
I decided to work for Norske Skog Saugbrugs primarily due to my
big brother, who also worked at Saugbrugs, and because of my
interest in chemistry.
My main task is to follow up on routines, which includes everything
from cleaning work areas, supervision of the process and much
more.
Outside of work, I am interested in weight training, cars and being
social.
Photo: Tom Mathisen
130
I
Norske Skog
I
Annual report 2022
FINANCIAL STATEMENTS NORSKE SKOG ASA
10.
Equity
The share capital of Norske Skog ASA on 31 December 2022 was NOK 377 million
(NOK 377 million) and consisted of 94
264 705
shares each with a nominal
value of NOK 4.00
. All shares have been created under the Norwegian Public
Limited Companies Act and are validly issued and fully paid.
During 2022 Byggma AS/Drangsland Kapital AS became the largest share-
holder with a combined ownership of 22.01% on 31 December 2022
.
NS Norway Holding AS has through sales of shares reduced its ownership
share to 16.86%
1)
at 31 December 2022.
See note 25 Events after the balance sheet date in the consolidated finacial
statements for changes in shareholders after 31 December 2022.
The 20 largest shareholders at 31 December 2022 are as follows:
Annual report 2022
I
Norske Skog
I
131
20 LARGEST SHAREHOLDERS AT 31 DECEMBER 2022
NUMBER OF
SHARES
OWNERSHIP %
Byggma ASA
16 030 431
17.01
NS Norway Holding AS
15 896 681
16.86
Drangsland Kapital AS
4 716 148
5.00
UBS Europe SE
4 000 000
4.24
Verdipapirfondet Alfred Berg Gamba
2 501 411
2.65
The Bank Of New York Mellon SA/NV
2 154 407
2.29
Intertrade Shipping AS
2 100 000
2.23
Verdipapirfondet Holberg Norge
1 400 000
1.49
UBS Europe SE
1 267 141
1.34
MP Pensjon PK
1 198 015
1.27
J.P. Morgan SE
1 102 660
1.17
The Bank Of New York Mellon SA/NV
1 072 781
1.14
The Bank Of New York Mellon SA/NV
1 031 504
1.09
RBC Investor Services Bank S.A.
1 009 617
1.07
Skandinaviska Enskilda Banken AB
1 000 000
1.06
Clearstream Banking S.A.
992 465
1.05
Verdipapirfondet Nordea Avkastning
868 340
0.92
Carucel Finance AS
837 124
0.89
RBC Investor Services Bank S.A.
713 343
0.76
Verdipapirfondet Fondsfinans Norge
700 000
0.74
Other shareholders
33 672 637
35.72
Total
94 264 705
100.00
The shareholder list is extracted from VPS. Whilst every reasonable effort is made to verify all data VPS cannot guarantee the accuracy of the analysis.
SHARES OWNED BY MEMBERS OF THE BOARD OF DIRECTORS AT 9 MARCH 2023
NUMBER OF SHARES
Geir Drangsland (chair from 9 March 2023)
27 500
Arvid Grundekjøn
21 617
Trine-Marie Hagen
0
Nicolai Johns
2 500
Johanna Lindén
2 500
SHARES OWNED BY MEMBERS OF CORPORATE MANAGEMENT AT 9 MARCH 2023
NUMBER OF SHARES
Sven Ombudstvedt
62 631
Lars P. S. Sperre
42 947
Rune Sollie
31 315
Robert Wood
5 263
Tore Hansesætre
14 263
Amund Saxrud
0
1)
See Note 25 Related parties in the consolidated financial statements.
2
Geir Drangsland and the company’s largest shareholders, Byggma ASA and Drangsland Kapital AS holds 22
274 079
shares combined. Byggma ASA and Drangsland Kapital are under common
control of Investor AS, where Geir Drangsland is controlling shareholder.
3)
John Chiang represented NS Norway Holding and served as chair of the board of directors until the extraordinary general meeting held on 9 March 2023, at which Geir Drangsland was elected as
the new chair of the board of directors. John Chiang held 116
839 shares through a nominee account in UBS at 31 December 2022.
FINANCIAL STATEMENTS NORSKE SKOG ASA
11.
Maturity of interest-bearing liabilities
MATURITY OF THE COMPANY'S DEBT AT 31.12.2022
INTEREST
BOND
TOTAL
2023
111
0
111
2024
111
0
111
2025
111
0
111
2026
27
1 460
1 488
Total
360
1 460
1 820
MATURITY OF THE COMPANY'S DEBT AT 31.12.2021
INTEREST
BOND
TOTAL
2022
84
0
84
2023
84
0
84
2024
84
0
84
2025
84
0
84
2026
21
1 498
1 519
Total
355
1 498
1 853
The table above shows contractual scheduled repayments. Foreign currency
debt is presented using exchange rate at 31 December 2022.
For more information, see Note 23 Interest-bearing liabilities in the consolidated
financial statements.
132
I
Norske Skog
I
Annual report 2022
12.
Intercompany receivables and liabilities
31.12.2022
31.12.2021
Non-current intercompany receivables
Norske Skog Saugbrugs AS
181
403
Norske Skog Skogn AS
0
607
Norske Skog Industries Australia Ltd.
0
273
Total
181
1 282
Current intercompany receivables
Nornews AS
7
7
Norske Skog Bruck GmbH
549
0
Norske Skog Golbey SAS
1
0
Norske Skog Italia s.r.l.
18
6
Norske Skog (UK) Ltd.
0
1
Saugbrugs Bioenergi AS
17
12
Norske Skog (Australasia) Pty Ltd.
78
83
Norske Skog Tasman Ltd.
64
91
Total
734
202
Current intercompany liabilities
Norske Skog (Österreich) GmbH
12
1
Norske Skog (Schweiz) AG
1
0
Norske Skog Bruck GmbH
0
77
Norske Skog Deutschland GmbH
60
35
Norske Skog France SARL
34
12
Norske Skog Golbey SAS
1 586
731
Norske Skog Saugbrugs AS
103
150
Norske Skog Skogn AS
96
304
Norske Skog (UK) Ltd.
12
0
Norske Skog Tasman Ltd.
0
32
Total
1 904
1 342
All non-current intercompany debt falls due for repayment at least 12 months after the balance sheet date.
The majority of this debt has a considerably longer term to maturity.
FINANCIAL STATEMENTS NORSKE SKOG ASA
13.
Guarantees
The company has issued bank guarantees in an amount of NOK 4 million at
31 December 2022 (NOK 4 million at 31 December 2021). In addition, the
company has issued corporate guarantees with an outstanding amount of
NOK 1
664 million at 31 December 2022 (NOK 622 million at 31 December 2021)
on behalf of Norske Skog Saugbrugs AS, Norske Skog Skogn AS, Norske Skog
Bruck GmbH, Norske Skog Golbey SAS and Norske Skog Paper Mills (Australia) Ltd.
14.
Related parties
A description of transactions with related parties is given in Note 25 Related
parties in the consolidated financial statements.
15.
Events after the balance sheet date
There have been no events after the balance sheet date with significant
impact on the financial statements for 2022.
See Note 27 Events after the balance sheet date in the consolidated financial
statements.
Philippe Bertrand
Newsprint line manager
Norske Skog Golbey
Bon jour, I am Philippe Betrand
and I have been working at the
paper mill in Golbey in France for
almost two years. I have a degree
in general engineering and have
worked as a production manager
in the industry for 20 years.
After many years in industry, I got the opportunity to work at
Norske Skog and to have a job that met my expectations and
ambitions.
My main tasks is to manage the newsprint production line from
the pulp production to the finished. With the conversion of PM1,
it also includes the definition and the implementation of the new
organisation, the selection and the training of the new recruits. I
manage a production team of around 75 people. As part of the
management team, I coordinate actions with the other depart-
ments.
In my free time, I like to have dinner with friends, meet people, do
manual works. When the weather is nice, I enjoy driving my
convertible car (MG Midget).
Photo: Tom Mathisen
Annual report 2022
I
Norske Skog
I
133
STATEMENT FROM THE BOARD OF DIRECTORS AND THE CEO
Statement from the
Board of Directors and the CEO
IN COMPLIANCE WITH SECTION 5-5 IN THE SECURITIES TRADING ACT
We declare that to the best of our knowledge, the financial statements for the
company and the consolidated financial statements for the group, for the
period 1 January to 31 December 2022 have been prepared in accordance
with applicable accounting standards, and that the information in the financial
statements give a true and fair view of the company’s and the group’s assets,
liabilities, financial position and result as a whole.
We confirm that the board of directors report provides a true and fair view of
the development and performance of the business and the position of the
company and the group, as well as a description of the key risks and
uncertainty factors which the company and the group is facing.
134
I
Norske Skog
I
Annual report 2022
SKØYEN, 28 MARCH 2023
THE BOARD OF DIRECTORS OF NORSKE SKOG ASA
Geir Drangsland
Arvid Grundekjøn
Trine-Marie Hagen
Chair
Board member
Board member
Nikolai Johns
Johanna Lindén
Sven Ombudstvedt
Board member
Board member
CEO
INDEPENDENT AUDITOR’S REPORT
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Norske Skog ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Norske Skog ASA, which comprise:
●
the financial statements of the parent company Norske Skog ASA (the Company), which
comprise the balance sheet as at 31 December 2022, the income statement, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
●
the consolidated financial statements of Norske Skog ASA and its subsidiaries (the Group),
which comprise the balance sheet as at 31 December 2022, the income statement, statement
of comprehensive income, statement of changes in group equity and statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion
●
the financial statements comply with applicable statutory requirements,
●
the financial statements give a true and fair view of the financial position of the Company as at
31 December 2022, and its financial performance and its cash flows for the year then ended in
accordance with simplified application of international accounting standards according to
section 3-9 of the Norwegian Accounting Act, and
●
the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2022, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the
EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the
Auditor’s Responsibilities for the
Audit of the Financial Statements
section of our report. We are independent of the Company and the
Group as required by relevant laws and regulations in Norway and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 1 year from the election by the general meeting of the
shareholders on 21 April 2022 for the accounting year 2022.
INDEPENDENT AUDITOR’S REPORT
2 / 5
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.
Key Audit Matters
How our audit addressed the Key Audit
Matter
Valuation of commodity contracts to fair value
Being a paper producer with significant electricity
consumption, the Group is exposed to
uncertainty related to changes in electricity
market prices. Thus, the price of electricity has a
significant impact on the Group's results. Norske
Skog ASA price protects part of its future electric
power consu
mption using physical energy
commodity contracts. The Group has
established policies to manage the risks arising
from these contracts.
The commodity contracts classified as financial
instruments within the scope of IFRS 9 contracts
are related to energy co
ntracts in Norway. To
calculate the fair value of the commodity
contracts, management uses a complex model
with several input factors. The fair value of
commodity contracts recognised in the balance
sheet is calculated by using quotes from actively
traded
markets when available. Otherwise, price
forecasts from acknowledged external sources
are used. The fair value of the commodity
contracts is especially sensitive to future
changes in energy prices.
Accounting for financial instruments used to
hedge electri
city expenses is a key matter in our
audit due to the complexity of management's
calculations, and the significant impact on the
Group's results from changes in fair value.
Management explains the accounting of
electricity contracts in note 9 and 18.
Du
ring our audit, we mapped and assessed the
design of the Group's internal controls related to
trading, monitoring, and accounting of electricity
commodity contracts. We also assessed the
Group's accounting principles for financial
instruments against the r
equirements in IFRS, in
particular IFRS 9.
We interviewed management to understand how
they calculated the fair value of the commodity
contracts, including how judgment was applied.
Further, we evaluated the appropriateness of the
model used by comparing
to models generally
used for valuation of commodity contracts, and
performed a technical recalculation of the
valuation.
We tested the completeness, existence, and
valuation of the commodity contracts by
obtaining and understanding the underlying
agreement
s. Further, we tested the accuracy of
the input factors including future electricity
prices, Electricity Price Area Differentials,
discount rates, paper prices, pulpwood prices,
and currency assumptions by comparing to
forecasts from external sources such as Nasdaq,
Reuters, Fastmarkets Risi, Nord Pool, Statistics
Norway, and the International Monetary Fund.
We discussed and challenged management’s
assumptions and use of judgment by evaluating
whether these were used neutrally and
consistently in the valua
tion and in comparison
to valuations performed in prior periods.
We also assessed and
found
that the information
in the notes was sufficient and comprehensive.
136
I
Norske Skog
I
Annual report 2022
INDEPENDENT AUDITOR’S REPORT
3 / 5
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
stateme
nts and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the
other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appear to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained i
n the audit, it is our opinion that the Board of Directors’ report
●
is consistent with the financial statements and
●
contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with simplified application of international accounting standards according to the
Norwegian Accounting Act section 3-9, and for the preparation and true and fair view of the
consolidated financial statements of the Group in accordance with International Financial Reporting
Standards as adopted by the EU, and for such internal control as management determines 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, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about 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 ISAs 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
these financial statements.
Annual report 2022
I
Norske Skog
I
137
INDEPENDENT AUDITOR’S REPORT
4 / 5
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
●
identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient 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,
misrepresentations, 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 effectiveness of the Company's and 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 management’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 Company's and 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 evidenc
e obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and 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 in a manner that achieves a true and fair view.
●
obtain sufficient 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 the Board of Directors 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 the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to 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 the Board of Directors, 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.
138
I
Norske Skog
I
Annual report 2022
INDEPENDENT AUDITOR’S REPORT
5 / 5
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Norske Skog ASA, we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name Norske_Skog_Annual_Report_2022_ESEF.zip, have been prepared,
in all material respects, in compliance with the requirements of the Commission Delegated Regulation
(EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant
to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when pe
rforming an assurance engagement of the
ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninge
r
Oslo, 28 March 2023
PricewaterhouseCoopers AS
Herman Skibrek
State Authorised Public Accountant
Annual report 2022
I
Norske Skog
I
139
Photo: Carsten Dybevig
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance
measures
Alternative performance measures (APM) is defined as a financial measure of
historical or future financial performance, financial position, or cash flows, other
than a financial measure defined or specific in the applicable financial reporting
framework (IFRS). The company uses EBITDA, EBITDA margin and return on
capital employed (annualized) to measure operating performance on group level.
It is the company’s view that the APMs provides the investors relevant and specific
operating figures that may enhance their understanding of the performance.
EBITDA, EBITDA margin, variable costs, fixed costs, return on capital employed
and net interest-bearing debt are defined by the company below.
EBITDA:
Operating earnings for the period, before restructuring expenses,
depreciation and amortization and impairment charges, derivatives and other
fair value adjustments, determined on an entity, combined or consolidated
basis. EBITDA is used for providing consisting information of operating
performance and cash generating which is relative to other companies and
frequently used by other stakeholders.
Annual report 2022
I
Norske Skog
I
141
NOK MILLION
2022
2021
Operating earnings
2 845
-160
Restructuring expenses
11
192
Depreciation
546
433
Impairments
164
-22
Derivatives and other fair value adjustments
-462
218
EBITDA
3 105
662
EBITDA margin:
EBITDA/total operating income. EBITDA margin assist in providing a more comprehensive analysis of operating performance relative to
other companies.
NOK MILLION
2022
2021
EBITDA
3 105
662
Total operating income
15 214
10 315
EBITDA margin
20.4%
6.4%
Variable costs:
Distribution costs + cost of materials.
NOK MILLION
2022
2021
Distribution costs
1 227
1 187
Cost of materials
7 937
6 055
Variable costs
9 164
7 242
Fixed costs:
Employee benefit expenses + other operating expenses.
NOK MILLION
2022
2021
Employee benefit expenses
2 024
1 723
Other operating expenses
921
687
Fixed costs
2 945
2 410
ALTERNATIVE PERFORMANCE MEASURES
Return on capital employed (annualised):
(Annualised EBITDA – Annualised Capital expenditure)/Capital employed (average).
NOK MILLION
2022
2021
EBITDA
3 105
662
Capital expenditure
2 228
1 021
Average capital employed
5 928
4 611
Return on capital employed (annualised)
14.8%
-7.8%
NOK MILLION
2022
2021
Intangible assets
14
21
Tangible assets
5 852
4 103
Inventory
1 464
1 203
Trade and other receivables
1 944
1 411
Trade and other payables
-2 245
-1 910
Capital employed
7 028
4 828
Net interest-bearing debt:
Net interest-bearing debt consist of bond issued and other interest-bearing liabilities (current and non-current) reduced by cash
and cash equivalent.
2022
2021
Interest-bearing non-current liabilities
3 432
2 356
Interest-bearing current liabilities
310
187
Cash and cash equivalents
-2 650
-1 489
Net interest-bearing debt
1 092
1 054
Capital expenditure (Capex):
Purchases of property, plant and equipment and intangible assets.
Maintenance capex:
Capex required to maintain the group’s current business.
Photo: Carsten Dybevig
142
I
Norske Skog
I
Annual report 2022
