Metsä Board Oyj — Audit Report / Information 2013

Feb 6, 2014

Metsä Board Corporation Financial Statements 1 January – 31 December 2013 6 February 2014 at 12:00 noon

Metsä Board Corporation's operating result excluding non-recurring items was EUR 104.4 million in 2013

Full year result for 2013

• Sales were EUR 2,019.3 million (Q1–Q4/2012: 2,107.6).
• The operating result excluding non-recurring items was EUR 104.4 million (74.9). The operating result including non-recurring items was EUR 113.6 million (221.1).
• The result before taxes excluding non-recurring items was EUR 48.6 million (27.7). Result before taxes including non-recurring items was EUR 57.8 million (173.9).
• Earnings per share excluding non-recurring items were EUR 0.17 (0.13) and including nonrecurring items EUR 0.19 (0.52).
• The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.09 per share will be paid for the 2013 financial period.

Result for the last quarter of 2013

• Sales were EUR 479.2 million (Q3/2013: 502.3).
• The operating result excluding non-recurring items was EUR 29.3 million (18.9). The operating result including non-recurring items was EUR 30.6 million (19.3).
• The result before taxes excluding non-recurring items was EUR 17.8 million (8.5). Result before taxes including non-recurring items was EUR 19.0 million (9.0).
• Earnings per share excluding non-recurring items were EUR 0.09 (0.02) and including nonrecurring items EUR 0.09 (0.02).

Events during the last quarter of 2013

• Paperboard delivery volumes decreased from the previous quarter mainly due to seasonal reasons. The delivery volume of paper was approximately at the previous quarter's level.
• Folding boxboard price increase negotiations in Europe were completed and contract prices will increase slightly in 2014. During the last quarter of the 2013, there were no significant changes in the average prices of Metsä Board's main products.
• Metsä Board announced it would renew its management and reporting structure. As of the first quarter of 2014, the company's reporting segments will be Cartonboard, and Linerboard and Paper.
• Metsä Board prepaid the EUR 150 million term loan of its syndicated credit facility that took effect on 1 April 2013.
• Standard & Poor's Ratings Services upgraded Metsä Board's credit rating from level B to B+. The outlook of the rating is stable. Moody's upgraded the outlook of its B2 rating to positive.

Metsä Board is Europe's leading producer of folding boxboard, the world's leading manufacturer of coated white-top kraftliners and a major paper supplier. It offers premium solutions for consumer and retail packaging, graphics and office end-uses. The company's sales network serves brand owners, carton printers, corrugated packaging manufacturers, printers, merchants and office suppliers. Metsä Board is part of Metsä Group and its shares are listed on the NASDAQ OMX Helsinki. In 2013, the company's sales totalled approximately EUR 2.0 billion. The company has approximately 3,100 employees.

Unaudited Metsä Board Corporation Financial Statements 1 January – 31 December 2013 2 6 February 2014 at 12:00 noon

"The operating result of the last quarter of 2013 excluding non-recurring items improved from the previous quarter, as expected. The market situation did not change materially from the previous quarter. Paperboard delivery volumes decreased from the previous quarter, as expected, mainly due to seasonal reasons. We increased the prices of folding boxboard in Europe, resulting in slightly higher annual contract prices for 2014 than last year. Demand for kraftliner was at a good level, and prices remained stable. Paper market situation continued to be weak, and no improvement is expected in paper demand or prices.

Overall, 2013 was a challenging year due to the economic recession in Europe. Despite this, our paperboard deliveries grew by over 7 per cent and we managed to increase the contract prices of folding boxboard at the end of the year. This shows that the demand for Metsä Board's new generation ecological paperboards is strong and they are replacing other packaging materials. In order to grow our kraftliner business, we started the production of fully-bleached uncoated kraftliner at the Husum mill in Sweden in the spring 2013. Husum's new kraftliner products have had an excellent market reception. In December, a new coated paper delivery agreement was signed with Sappi. Through the new agreement, we will be able to increase kraftliner production, since the agreement also makes the production of coated kraftliner grades possible. Sales volumes of kraftliners produced in Kemi also increased as planned in 2013.

Our most important targets for 2014 include growing the folding boxboard sales further in both Europe and outside Europe, particularly in North America, increasing kraftliner production in Husum considerably, and developing new products to replace Husum's weakest profitable paper production. At the beginning of 2014, we started the production of coated light-weight fullybleached kraftliner at the Husum mill, in order to complement the current kraftliner product portfolio of both Husum and Kemi mills. Positive price development of our main products is one of our primary objectives in 2014, too. Productivity improvement at Metsä Board's paperboard, paper and pulp mills continued in 2013. The development measures that are under way will further improve Metsä Board's cost competitiveness also in 2014."

Mikko Helander, CEO

Adoption of the amended IAS 19 standard

Metsä Board adopted the amended IAS 19 Employee Benefits standard retroactively on 1 January 2013. The most significant changes included the following: all actuarial profits and losses are recognised immediately, and the financial cost of retirement plans is determined on the basis of net funding.

The Group's equity decreased by approximately EUR 10.6 million due to the amendment on 31 December 2012. The 2012 operating result improved by EUR 1.4 million and financial expenses increased by EUR 3.2 million.

The impacts of amendment to IAS 19 Employee Benefits on the comparative data of balance sheet and the statement of comprehensive income as of January 1, 2012 and as of December 31, 2012 have been presented in Metsä Board Interim Report 1 January – 31 March 2013.

The amended key figures are presented in the Key Figures table (Key Figures, restated).

KEY FIGURES, restate	2013	2013	2013	2013	2012	2013	2012
	Q4	Q3	Q2	Q1	Q4	Q1-Q4	Q1-Q4
Sales, EUR million	479.2	502.3	502.8	535.0	508.5		2,019.3 2,107.6
EBITDA, EUR million	56.7	44.0	52.7	61.4	53.8	214.8	321.4
excl. non-recurring items, EUR million	55.5	43.6	52.1	56.8	49.0	208.0	186.0
EBITDA, %	11.8	8.8	10.5	11.5	10.6	10.6	15.3
excl. non-recurring items, %	11.6	8.7	10.4	10.6	9.6	10.3	8.8
Operating result, EUR million	30.6	19.3	28.9	34.8	39.3	113.6	221.1
excl. non-recurring items, EUR million	29.3	18.9	26.0	30.2	23.5	104.4	74.9
EBIT, %	6.4	3.8	5.7	6.5	7.7	5.6	10.5
excl. non-recurring items, %	6.1	3.8	5.2	5.6	4.6	5.2	3.6
Result before taxes, EUR million	19.0	9.0	21.3	8.5	25.2	57.8	173.9
excl. non-recurring items, EUR million	17.8	8.5	18.5	3.9	9.4	48.6	27.7
Result for the period, EUR million	31.2	7.3	17.6	8.0	38.2	64.1	171.3
excl. non-recurring items, EUR million	29.9	6.8	15.3	3.4	24.2	55.4	42.4
Result per share, EUR	0.09	0.02	0.06	0.02	0.11	0.19	0.52
excl. non-recurring items, EUR	0.09	0.02	0.05	0.01	0.08	0.17	0.13
Return on equity, %	14.9	3.6	8.5	3.8	18.1	7.5	21.5
excl. non-recurring items, %	14.3	3.3	7.4	1.6	11.5	6.5	5.3
Return on capital employed, %	8.2	5.1	6.7	7.7	8.7	7.0	12.4
excl. non-recurring items, %	7.9	4.9	6.1	6.8	5.5	6.4	4.8
Equity ratio at end of period, %	40.7	38.7	32.4	33.3	33.2	40.7	33.2
Gearing ratio at end of period, %	83	91	130	122	130	83	130
Net gearing ratio at end of period, %	70	75	74	69	73	70	73
Shareholders' equity per share
at end of period, EUR	2.59	2.51	2.48	2.54	2.59	2.59	2.59
Interest-bearing net liabilities, EUR million	597.2	622.1	605.9	577.6	625.2	597.2	625.2
Gross investments, EUR million	20.2	16.0	21.5	9.2	28.2	66.9	66.1
Deliveries, 1 000 tonnes
Paperboard	289	313	311	311	298	1,224	1,188
Paper	171	159	158	186	162	674	681
Personnel at the end of period	3,116	3,178	3,401	3,239	3,279	3,116	3,279

Deliveries are not comparable due to restructuring.

EBITDA = Earnings before interest, taxes, depreciation and impairment charges

The divestment of the holding in Metsä Group Treasury Oy improved Metsä Board's equity ratio by approximately 5 percentage points and return on capital employed by nearly 1 percentage point, as well as decreased the company's gross debt by more than EUR 300 million, compared to the actual figures of the second quarter of 2013. More information on the divestment is provided in the section 'Structural changes' in this document.

Result for October–December compared with the previous quarter

Metsä Board's sales amounted to EUR 479.2 million (Q3/2013: 502.3). Comparable sales decreased by 4.7 per cent. The operating result was EUR 30.6 million (19.3), and the operating result excluding non-recurring items was EUR 29.3 million (18.9).

A net total of EUR +1.2 million (+0.4) was recognised as non-recurring items in the operating result for October–December, the most significant of them being:

• A EUR 6.6 million cost provision in the Paper and Pulp business area related to the landscaping of a decommissioned landfill in Husum.
• A EUR 5.3 million sales gain from a property transaction in Tampere under Other operations.
• Cancellation of a EUR 1.7 million cost provision in the Paperboard business area related to the 2011 restructuring provisions in Gohrsmühle and at the Äänekoski paper mill, and
• Cancellation of a EUR 0.8 million cost provision in the Paper and Pulp business area related to the 2011 restructuring provision in Alizay.

The operating result excluding non-recurring items improved from the previous quarter. The result of the previous quarter was burdened by the extensive maintenance shutdowns in Husum and Kemi. Delivery volumes of folding boxboard and kraftliner declined seasonally from the previous quarter, including also Husum's increased kraftliner deliveries. Delivery volumes of market pulp and coated papers decreased too. However, the delivery volume of uncoated fine paper increased. There were no material changes in the average sales prices of paperboard, market pulp and coated paper. The average sales price of uncoated paper decreased slightly. The annual contract compensations, income related to emissions trading and the change in the Finnish corporate tax rate, which impacted the net profit share of Metsä Fibre in turn, had a positive impact on the operating result excluding non-recurring items, compared to the previous quarter.

The total delivery volume of the Paperboard business area in October–December was 298,000 tonnes (Q3/2013: 313,000). The deliveries in the Paper and Pulp business area, including the kraftliner volumes produced at the Husum mill, totalled 171,000 tonnes (159,000). Metsä Board's combined delivery volume of folding boxboard and kraftliner, including the kraftliner production in Husum, was 274,000 tonnes (292,000) in October–December, in other words, the seasonal reduction was approximately 6 per cent.

Financial income and expenses in the period under review totalled EUR -11.6 million (-10.4). Foreign exchange rate differences from trade receivables, trade payables, financial items and the valuation of currency hedging were EUR -0.9 million (+1.4). Net interest and other financial income and expenses amounted to EUR -10.7 million (-11.8). Other financial income and expenses include EUR 0.0 million of valuation gains on interest rate hedges (a valuation gain of 0.0).

The result before taxes for the period under review was EUR 19.0 million (9.0). The result before taxes excluding non-recurring items totalled EUR 17.8 million (8.5). Income taxes amounted to +12.2 million (-1.7). The change in the Finnish corporate tax rate from 24.5 per cent to 20 per cent reduced deferred tax liabilities by EUR 0.8 million. In addition, approximately EUR 7.1 million was recognised as deferred tax receivables from earlier tax losses and provisions.

Earnings per share were EUR 0.09 (0.02). Earnings per share excluding non-recurring items were EUR 0.09 (0.02). The return on equity was 14.9 per cent (3.6), and 14.3 per cent (3.3) excluding non-recurring items. The return on capital employed was 8.2 per cent (5.1); 7.9 per cent (4.9) excluding non-recurring items.

Result for 2013 compared to 2012

Metsä Board's sales were EUR 2,019.3 million (Q1–Q4/2012: 2,107.6). Comparable sales were down 4.0 per cent. Sales were also reduced by the closures of unprofitable paper business operations and restructurings.

Operating result was EUR 113.6 million (221.1), and operating result excluding non-recurring items was EUR 104.4 million (74.9).

The non-recurring items of the operating result stood at EUR +9.2 million.

• A EUR 6.6 million cost provision in the Paper and Pulp business area related to the landscaping of a decommissioned landfill in Husum.
• A EUR 5.3 million gain from a sale of property in Tampere under Other operations.
• A EUR 4.6 million sales gain and cancellation of a cost provision in the Paper and Pulp business area related to the divestment of Alizay mill site in France.
• EUR 2.5 million related to the cancellation of depreciation of the old, wrotedown paper machine at Äänekoski mill due to the divestment of the machine
• Cancellation of a EUR 2.3 million cost provision in the Paperboard business area related to restructuring provisions made at Gohrsmühle and Äänekoski paper mill.
• Cancellation of a EUR 0.8 million cost provision in Paper and Pulp business area related to restructuring provision made at Alizay in 2011.

The non-recurring items in the corresponding period in the previous year recognised in the operating result were EUR +146 million net.

The operating result excluding non-recurring items compared to the previous year was improved by the considerable increase in the delivery volumes of folding boxboard and white-top kraftliner, reduced losses from closed and restructured units, as well as the increase in the prices of chemical pulp and high-yield pulp. The operating result was in turn weakened by the lower average prices of, in particular, coated and uncoated papers and folding boxboard, as well as the British pound and US dollar which were weaker than the euro, and the Swedish krona which was stronger.

In 2013, the total delivery volume of the Paperboard business area was 1,224,000 tonnes (1,188,000). The deliveries in the Paper and Pulp business area, including the kraftliner volumes produced at the Husum mill, totalled 674,000 tonnes (681,000). The delivery volumes are not comparable due to the restructuring measures. The combined delivery volume of Metsä Board's folding boxboard and kraftliner, including the kraftliner volumes produced at the Husum mill, was 1,136,000 tonnes (1,058,000) in 2013.

Financial income and expenses totalled EUR -55.9 million (-47.2). The higher financing expenses, compared to last year, were mainly due to approximately EUR 8 million in additional interest caused by the early repayment of the USD-denominated private note issue. Foreign exchange rate differences from trade receivables, trade payables, financial items and the valuation of currency hedging were EUR -1.1 million (5). Net interest and other financial income and expenses amounted to EUR 54.8 million (-52.2). Pohjolan Voima Oy paid a dividend of EUR 6 million in the comparison period. Other financial income and expenses included EUR 4.6 million of valuation gains on interest rate hedges (a valuation gain of 11.6).

The result before taxes for the period under review was EUR 57.8 million (173.9). The result before taxes excluding non-recurring items was EUR 48.6 million (27.7). The impact of income taxes was EUR +6.3 million (-2.6). The change in the Finnish corporate tax rate from 24.5 per cent to 20 per cent reduced the deferred tax liabilities by EUR 0.8 million. In addition, approximately EUR 7.1 million was recognised as deferred tax receivables from earlier tax losses and provisions.

Earnings per share were EUR 0.19 (0.52). Earnings per share excluding non-recurring items were EUR 0.17 (0.13). The return on equity was 7.5 per cent (21.5), and 6.5 per cent (5.3) excluding non-recurring items. The return on capital employed was 7.0 per cent (12.4); and 6.4 per cent (4.8) excluding non-recurring items.

Personnel

At the end of the year, the number of personnel was 3,116 (31 December 2012: 3,279), of whom 1,465 (1,536) people worked in Finland. In 2013, Metsä Board employed 3,245 (3,552) people on average.

Investments

Gross investments in 2013 totalled EUR 66.9 million (Q1–Q4/2012: 66), which includes Metsä Board's commitment to purchase Pohjolan Voima Oy's shares for approximately EUR 6 million in the upcoming years. Investments in 2013 were mainly maintenance investments and small development investments. The most significant investment was focused on Lean SCM project.

Structural changes

In January 2013, Metsä Board divested the Alizay mill site in France, including all equipment and buildings, to Conseil Général de l'Eure, representing the French government, for EUR 22 million.

The market situation in the paper industry is difficult, and a programme aiming at annual cost savings of approximately EUR 15 million is under way to improve profitability at the Husum mill. New, more profitable products are being sought both in parallel to and as replacements for the mill's current products. An example of such products is the new light-weight uncoated kraftliners, production of which started at Husum in April 2013. In December, a new coated paper delivery agreement was signed with Sappi. Through the new agreement, Metsä Board is able to increase its kraftliner production, since the agreement also makes the production of coated grades possible. At the beginning of 2014, the production of coated light-weight kraftliner also started at the Husum mill in order to complement the kraftliner product range of the Kemi and Husum mills. In all, Husum's kraftliner production amounted to approximately 20,000 tonnes in 2013. The targeted production in 2014 is at least 100,000 tonnes, including the new, coated products. The total positive estimated impact of the aforementioned measures on Husum's annual operating result is estimated to be over EUR 25 million, compared to the actual figures of 2013. It is estimated that the result improvement will for the most part take effect in 2014 and in full as of 2015.

On 30 September 2013, Metsä Board and the Group's parent company Metsäliitto Cooperative agreed on an ownership arrangement in which the Group's internal financing unit Metsä Group Treasury Oy (formerly Metsä Group Financial Services Oy), was transferred under the ownership of Metsäliitto Cooperative in its entirety. After the implementation of the ownership arrangement, Metsä Group Treasury will remain a separate company and continue to provide financial services to Metsä Board as before. Metsä Board sold its 51 per cent shareholding in Metsä Group Treasury to Metsäliitto Cooperative for approximately EUR 5 million. The ownership arrangement does not have an impact on Metsä Board's sales or operating result. The arrangement improved Metsä Board's equity ratio by approximately 5 percentage points and return on capital employed by

Unaudited Metsä Board Corporation Financial Statements 1 January – 31 December 2013 7 6 February 2014 at 12:00 noon

almost 1 percentage point as well as reduced the company's gross debt by more than EUR 300 million, compared to the actual figures of the second quarter of 2013.

In November 2013, Metsä Board announced it would reform its management and reporting structure to better reflect the company's strategy and to create better opportunities for growing the folding boxboard and kraftliner businesses. Metsä Board's business operations are divided into two business areas: Cartonboard, and Linerboard and Paper. These will also be Metsä Board's reporting segments as of the first quarter of 2014. Cartonboard business area includes Kyro, Simpele, Tako and Äänekoski board mills, Kyro wallpaper machine and Joutseno high yield pulp mill located in Finland, and the Gohrsmühle mill in Germany. Linerboard and Paper business area includes Husum mill in Sweden as well as Kemi kraftliner mill and Kaskinen BCTMP mill in Finland. The restated historical figures will be released during February 2014.

Pending disputes

In November 2012, UPM-Kymmene Corporation initiated arbitration proceedings against Metsä Board. In the arbitration proceedings, UPM is primarily claiming EUR 58.5 million in damages and secondarily the reimbursement of an alleged unjustified benefit of EUR 58.5 million jointly from Metsäliitto Cooperative and Metsä Board. The claim is based on an alleged breach of the co-sale clause of the Metsä Fibre shareholder agreement signed in 2009.

Metsä Board denies UPM's claim as unfounded in its entirety and is not making any provisions because of it. The claim has no impact on the transaction with Itochu or cooperation between the parties, and is not associated with commercial agreements entered into with Itochu.

The end result of the dispute initiated by UPM will be communicated after the Arbitration Court has issued its resolution on the matter, which is expected to take place in the first quarter of 2014.

Financing

Metsä Board's equity ratio at the end of the year was 40.7 per cent (31 December 2012: 33.2) and the gearing ratio was 83 per cent (2012: 130). The net gearing ratio was 70 per cent (2012: 73).

The change in the fair value of investments available for sale during the period under review was approximately EUR -41.5 million, related primarily to the decline in the fair value of Pohjolan Voima Oy's shares due to the change in the market price of electricity.

Net interest-bearing liabilities amounted to EUR 597.2 million at the end of the year (625.2). Foreign-currency-denominated loans accounted for 0.4 per cent; 55 per cent were floating-rate, and the rest were fixed-rate. At the end of the year, the average interest rate on loans was 4.8 per cent and the average maturity of long-term loans 2.7 years. The interest rate maturity of loans was 18.3 months at the end of the year. During the period, the interest rate maturity has varied between 8 and 19 months.

In September, the change in the ownership of Metsä Group Treasury Oy (formerly Metsä Group Financial Services Oy) considerably decreased the amount of Metsä Board's interest-bearing liabilities and liquid assets. The change in ownership improved the equity ratio by approximately five percentage points, but the impact on interest-bearing net liabilities was minimal.

Cash flow from operations amounted to EUR 127.1 million (Q1–Q4/2012: 42.4). Improvement in the cash flow was mainly due to significantly lower restructuring costs. Working capital increased by EUR 10.8 million (a decrease of 17.9). In the cash flow statement, the net financial expenses for the period include a dividend of EUR 24.9 million (33.4) paid by Metsä Fibre.

Unaudited Metsä Board Corporation Financial Statements 1 January – 31 December 2013 8 6 February 2014 at 12:00 noon

At the end of the period under review, an average of 5.9 months of the net foreign currency exposure was hedged. The degree of hedging varied between 4 and 6 months during the period. Non-euro-denominated shareholders' equity was not hedged at the end of the review period.

In April, Metsä Board drew EUR 500 million of the syndicated credit agreement signed in 2012 and paid off the EUR 500 million eurobond on its due date. In December, Metsä Board prepaid the EUR 150 million term loan of the syndicated credit facility agreement that took effect in April. The original due date would have been 30 June 2014. Metsä Board also drew a EUR 75 million employment pension loan to be repaid in equal instalments and with maturity of seven years, as well as a bank loan of EUR 50 million, which consists of a EUR 18 million loan maturing in 2017 and a EUR 32 million loan maturing in 2015, which contains an option to extend the loan period until 2017.

The financing agreement includes financial covenants concerning the Group's financial performance and capital structure. Other covenants related to the loan are regular conditions which, among other things, limit the issue of collateral, relinquishment and sale of property, subsidiaries' level of debt, material changes in the business operations, as well as changes in the statutory majority in shareholding. Metsä Board has considerable headroom in relation to covenants set in the credit agreements.

Metsä Board's liquidity has remained strong. At the end of the period under review, the available liquidity was EUR 208.6 million, of which EUR 100 million consisted of revolving credit, EUR 14.4 million consisted of undrawn pension premium (TyEL) funds and EUR 94.2 million of liquid assets and investments. Of the liquid funds, EUR 12.9 million consisted of cash funds and investments and EUR 81.3 million were interest-bearing receivables comparable to cash funds and available immediately from Metsä Group's internal bank Metsä Group Treasury Oy. In addition, Metsä Board had other interest-bearing receivables totalling EUR 10.0 million. Metsä Board's liquidity reserve is complemented by Metsä Group's internal undrawn short-term credit facility of EUR 150.0 million.

In May, Moody's Investors Service upgraded Metsä Board's credit rating from level B3 to B2. The rating outlook was upgraded from stable to positive in December. In August, Standard & Poor's Rating Services upgraded Metsä Board's credit rating from level B- to B and in December, from level B to B+. The outlook of the rating is stable. The upgraded credit ratings did not have an impact on Metsä Board's current financial costs.

Shares

In 2013, the highest price for Metsä Board's A share on the NASDAQ OMX Helsinki Ltd. was EUR 3.20, the lowest was EUR 2.20, and the average price was EUR 2.59. At the end of the year, the price of the A share was EUR 3.08. At the end of 2012, the price of the A share was EUR 2.21, while the average price in 2012 was EUR 2.34.

In 2013, the highest price of Metsä Board's B share was EUR 3.15, the lowest EUR 2.18, and the average price EUR 2.58. At the end of the year, the price of the B share was EUR 3.15. At the end of 2012, the price of the B share was EUR 2.22, while the average price in 2012 was EUR 2.00.

The trading volume of the A share was EUR 2 million, or 2 per cent of the share capital, in 2013. The trading volume of the B share was EUR 136 million, or 18 per cent of the share capital. The market value of the A and B shares totalled EUR 1,031 million at the end of the year.

At the end of 2013, Metsäliitto Cooperative owned 41 per cent of the shares, and the voting rights conferred by these shares was 62 per cent. International investors held 11 per cent of the shares.

The company does not hold any treasury shares.

Dividend

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.09 per share, or a total of EUR 30 million, will be paid for the 2013 financial period. The distributable funds of the parent company as of 31 December 2013 were EUR 349,931,980.08 of which the result for the financial year is EUR 22,889,255.18. The dividend will be paid to shareholders who are registered in the company's shareholders register held by Euroclear Finland Oy on the dividend payment record date of 7 April 2014. The Board of Directors proposes 15 April 2014 as the dividend payment date.

Changes in management

Markus Holm, M.Sc. (Econ.), (46) was appointed Metsä Board's CFO and member of the Management Team as of 1 January 2014. Holm joins Metsä Board from Metsä Tissue, where he held the position of CFO since 2008. Metsä Board's current CFO Matti Mörsky (61) will retire on 28 February 2015. Mörsky continues to work at Metsä Board in projects assigned by the CEO until his retirement.

Ari Kiviranta, D.Sc. (Tech.), (50), was appointed as Senior Vice President, Head of Cartonboard business area as of 1 January 2014, and Seppo Puotinen, Lic.Sc. (Tech.) (58) as Senior Vice President, Head of Linerboard and Paper business area.

As of 1 January 2014, Metsä Board's Corporate Management Team consists of Mikko Helander, CEO; Markus Holm CFO; Ari Kiviranta, Senior Vice President, Head of Cartonboard business area; Seppo Puotinen, Senior Vice President, Head of Linerboard and Paper business area; Sari Pajari, Senior Vice President, Business Services and Development; and Jani Suomalainen, Senior Vice President, Purchasing.

Events after the period

Metsä Board announced on 30 January 2014 that it is in negotiations to divest its property in Lielahti, Tampere to the City of Tampere for EUR 26 million. The Lielahti property consists of 90 hectares of land, incl. buildings on site, and 1,071 hectares of water area on Näsijärvi lake.

Closing of the transaction is subject to approvals by the City Council and City Government of Tampere City, the approval by Metsä Board's Board of Directors as well as the finalization of the trade documentation. If the necessary approvals are received as currently planned the divestment would take effect by the end of the first quarter of 2014.

Metsä Board closed down the BCTMP pulp mill at the Lielahti site in 2008 and has not had any production operations at the site since.

Near-term outlook

Metsä Board's paperboard deliveries increased by over 7 per cent in 2013 compared to the previous year, although growth in the demand for consumer goods has been very slow in the main markets.

The delivery volumes of folding boxboard and white-top kraftliner are expected to increase slightly in the first quarter of 2014. In the last quarter of 2013, Metsä Board increased the prices of folding boxboard in Europe. The annual contracts of folding boxboard cover nearly 60 per cent of the entire year's delivery volume, and higher delivery volumes compared to last year and moderately increasing price level have been agreed with customers for 2014. The average price of folding

boxboard in the first quarter of 2014 is expected to increase slightly from the last quarter of 2013. No material changes are in sight in the average price level of white-top kraftliner in the near future.

Delivery volumes of uncoated fine paper and coated papers are expected to be approximately at the previous quarter's level in the first quarter of 2014. No material paper price changes are in sight. Delivery volumes and the average price of Metsä Board's market pulp are expected to be approximately at the previous quarter's level in the first quarter of 2014.

Production costs are in the first quarter of 2014 expected to be approximately at the previous quarter's level.

Metsä Board's operating result, excluding non-recurring items, is in the first quarter of 2014 expected to improve slightly from the last quarter of 2013.

Near-term business risks

The world and euro area economies continue to be burdened with considerable uncertainties which, if materialised, may weaken the demand for pulp and paper products, in particular, and reduce prices.

Because the forward-looking estimates and statements in this financial statements release are based on current plans and estimates, they contain risks and other uncertain factors that may cause the results to differ from these statements. In the short term, Metsä Board's result will be particularly affected by the price of, and demand for, finished products, raw material costs, the price of energy, and the exchange rate development of the euro in relation to the Swedish krona, US dollar and British pound. More information on longer-term risk factors can be found on pages 31 and 32 of Metsä Board's 2012 Annual Report.

METSÄ BOARD CORPORATION

Further information:

Markus Holm, CFO, tel. +358 (0)10 465 4913 Juha Laine, Vice President, Investor Relations and Communications, tel. +358 (0)10 465 4335

More information will be available starting from 1 p.m. on 6 February 2014. A conference call held in English for investors and analysts starts at 3 p.m. (EET). Conference call participants are requested to dial in and register a few minutes prior to the start of the conference call on the following numbers:

Europe: +44 (0)20 7162 0025

US: +1 334 323 6201

The conference ID is 940872.

BUSINESS AREAS AND MARKET TRENDS

Paperboard business area

	2013	2013	2013	2013	2012	2012	2013	2012
Paperboard	Q4	Q3	Q2	Q1	Q4	Q3	Q1-Q4	Q1-Q4
Sales, EUR million		268.9 288.9	289.1	293.3	279.2	289.1		1,140.2 1,122.6
EBITDA, EUR million	36.1	36.0	36.8	43.9	47.0	40.7	152.8	164.2
excl. non-recurring items	34.4	36.0	36.2	43.9	40.4	41.0	150.5	158.8
Operating result, EUR million	23.9	23.8	27.9	32.3	34.0	28.6	108.0	112.8
excl. non-recurring items	22.2	23.8	24.8	32.3	27.4	28.8	103.1	107.5
excl. non-recurring items, %	8.3	8.2	8.6	11.0	9.8	10.0	9.0	9.6
Return on capital employed, %	14.1	14.0	17.0	20.1	21.2	17.8	16.7	17.2
excl. non-recurring items, %	13.1	14.0	15.1	20.1	17.1	18.0	15.9	16.4
Deliveries, 1,000 tonnes	289	313	311	311	298	306	1,224	1,188
Production, 1,000 tonnes	313	325	318	335	325	308	1,291	1,201
Personnel at the end of period		1,647 1,686	1,862	1,715	1,722	1,806	1,647	1,722

Delivery and production amounts are not completely comparable due to structural change.

Result for October–December compared with the previous quarter

The operating result excluding non-recurring items for the Paperboard business area weakened slightly from the previous quarter and was EUR 22.2 million (Q3/2013: 23.8). The result was weakened primarily by seasonally lower delivery volumes. There were no material changes in the price levels of folding boxboard and white-top kraftliner.

The result included EUR +1.7 million of non-recurring items related to the cancellation of restructuring provisions in Gohrsmühle and at the Äänekoski paper mill. The result for the previous quarter did not include non-recurring items.

The deliveries of European folding boxboard producers decreased by approximately 4 per cent compared to the previous quarter. Paperboard's folding boxboard deliveries decreased by 7 per cent.

Result for 2013 compared to 2012

The operating result excluding non-recurring items for the Paperboard business area weakened slightly from the previous year and was EUR 103.1 million (Q1–Q4/2012: 107.5). The average sales price of folding boxboard was slightly lower than in the previous year, but the price of whitetop kraftliner was slightly higher. The operating result was also weakened by the British pound and US dollar, which were weaker than the euro. The result was improved by the considerable increase in the delivery volumes of folding boxboard and kraftliner, as well as reduced losses in the units closed and restructured.

The result included non-recurring items of EUR +4.8 million net. The result for the corresponding period in the previous year included non-recurring items of EUR +5.3 million.

The deliveries of European folding boxboard producers increased by 6 per cent compared to the level of the corresponding period in the previous year. Paperboard's folding boxboard deliveries increased by 7 per cent.

Paper and Pulp business area

	2013	2013	2013	2013	2012	2012	2013	2012
Paper and Pulp	Q4	Q3	Q2	Q1	Q4	Q3		Q1-Q4 Q1-Q4
Sales, EUR million	188.9 198.6		198.4	216.5	209.5	223.3	802.3	907.0
EBITDA, EUR million	15.9	9.7	17.7	16.7	8.6	14.7	60.0	40.4
excl. non-recurring items	21.7	9.7	17.7	12.1	11.4	16.8	61.2	48.4
Operating result, EUR million	2.5	-2.0	3.8	2.6	8.2	-0.3	6.9	-3.3
excl. non-recurring items	8.3	-2.0	3.8	-2.0	0.3	1.7	8.1	-5.8
excl. non-recurring items, %	4.4	-1.0	1.9	-0.9	0.1	0.8	1.0	-0.6
Return on capital employed, %	1.6	-1.3	2.4	1.6	5.0	-0.2	1.1	-0.5
excl. non-recurring items, %	5.3	-1.3	2.4	-1.2	0.2	1.1	1.3	-0.9
Deliveries, Paper 1,000 tonnes	171	159	158	186	162	169	674	681
Deliveries, Pulp 1,000 tonnes	146	163	155	171	184	192	635	804
Production, Paper 1,000 tonnes	172	159	169	174	171	164	674	685
Production, Metsä Board Pulp
1,000 tonnes	331	296	308	314	332	292	1,249	1,234
Personnel at the end of period	944	962	979	956	982	989	944	982

Delivery and production amounts are not completely comparable due to structural change. Paper delivery and production amounts include Husum mill kraftliner volumes.

Result for October–December compared with the previous quarter

Operating result excluding non-recurring items for the Paper and Pulp business area improved from the previous quarter and was EUR 8.3 million (Q3/2013: -2.0). The result for the previous quarter was weakened by the extensive maintenance shutdown at the Husum mill. The delivery volume of uncoated fine paper increased clearly, but the average price decreased compared to the previous quarter. The delivery volume of coated papers declined and the price remained at the previous quarter's level. The delivery volume of market pulp decreased and the average sales price remained at the previous quarter's level. Husum's kraftliner deliveries continued to increase as planned. The annual contract compensation had a slightly positive impact on the operating result excluding non-recurring items, compared with the previous quarter.

The result included EUR -5.8 million of non-recurring items, of which the most significant were the EUR 6.6 million cost provision related to the landscaping of the decommissioned landfill at the Husum mill and the cancellation of the EUR 0.8 million cost provision related to the restructuring provision made in Alizay in 2011. The result for the previous quarter did not include non-recurring items.

Total deliveries by European uncoated fine paper producers increased by 3 per cent. Paper and Pulp's delivery volume of uncoated fine paper increased by 18 per cent.

Result for 2013 compared to 2012

The operating result excluding non-recurring items for Paper and Pulp improved, compared to the corresponding period last year, and totalled EUR 8.1 million (Q1–Q4/2011: -5.8). The result was improved by the considerable reduction in the losses of the units closed and restructured, as well as the increased prices of pulp and high-yield pulp. The profitability of the Kaskinen mill improved clearly as a result of the increased high-yield pulp price, increased delivery volumes and cost savings. The result was weakened by the lower prices of coated papers, in particular, and the stronger Swedish krona.

The result includes a total of EUR -1.2 million in non-recurring items. The result for the corresponding period last year included non-recurring items of a total of EUR +2.5 million. Total deliveries by European uncoated fine paper producers were down by 3 per cent compared to the previous year. Paper and Pulp's delivery volume of uncoated fine paper decreased by 10 per cent.

Sales and result by segment

	2013	2013	2013	2013	2012	2012	2013	2012
EUR million	Q4	Q3	Q2	Q1	Q4	Q3	Q1-Q4	Q1-Q4
Paperboard	268.9	288.9	289.1	293.3			279.2 289.1 1,140.2	1,122.6
Paper and Pulp	188.9	198.6	198.4	216.5		209.5 223.3	802.3	907.0
Other operations	76.2	72.3	76.2	76.2	93.8	90.7	300.8	363.6
Internal sales	-54.8	-57.5	-60.9	-50.9	-74.0	-70.9	-224.1	-285.6
Sales	479.2	502.3	502.8	535.0			508.5 532.2 2,019.3	2,107.5
Paperboard	36.1	36.0	36.8	43.9	47.0	40.7	152.8	164.2
Paper and Pulp	15.9	9.7	17.7	16.7	8.6	14.7	60.0	40.4
Other operations	4.7	-1.7	-1.8	0.8	-1.8	-3.4	2.1	116.8
EBITDA	56.7	44.0	52.7	61.4	53.8	52.0	214.8	321.4
% of sales	11.8	8.8	10.5	11.5	10.6	9.8	10.6	15.3
Paperboard	23.9	23.8	27.9	32.3	34.0	28.6	108.0	112.8
Paper and Pulp	2.5	-2.0	3.8	2.6	8.2	-0.3	6.9	-3.3
Other operations	4.1	-2.5	-2.7	-0.1	-2.8	-4.9	-1.0	111.6
Operating result	30.6	19.3	28.9	34.8	39.3	23.4	113.6	221.1
% of sales	6.4	3.8	5.7	6.5	7.7	4.4	5.6	10.5
Non-recurring items in operating result
Paperboard	1.7	0.0	3.1	0.0	6.6	-0.2	4.8	5.3
Paper and Pulp	-5.8	0.0	0.0	4.6	7.9	-2.0	-1.2	2.5
Other operations	5.3	0.5	-0.2	0.0	1.3	0.1	5.5	138.3
Group	1.2	0.5	2.9	4.6	15.8	-2.1	9.2	146.1
Paperboard	34.4	36.0	36.2	43.9	40.4	41.0	150.5	158.8
Paper and Pulp	21.7	9.7	17.7	12.1	11.4	16.8	61.2	48.6
Other operations	-0.5	-2.1	-1.8	0.8	-2.8	-3.8	-3.4	-21.3
EBITDA, excl. non-recurring items	55.5	43.5	52.1	56.8	49.0	54.0	208.0	186.0
% of sales	11.6	8.7	10.4	10.6	9.6	10.1	10.3	8.8
Paperboard	22.2	23.8	24.8	32.3	27.4	28.8	103.1	107.5
Paper and Pulp	8.3	-2.0	3.8	-2.0	0.3	1.7	8.1	-5.8
Other operations	-1.2	-2.9	-2.6	-0.2	-4.1	-5.0	-6.8	-26.7
Operating result, excl. non-recurring items	29.3	18.9	26.0	30.2	23.6	25.5	104.4	75.0
% of sales	6.1	3.8	5.2	5.6	4.6	4.8	5.2	3.6
Operating result, excl. non-recurring
items,
% of sales
Paperboard	8.3	8.2	8.6	11.0	9.8	10.0	9.0	9.6
Paper and Pulp	4.4	-1.0	1.9	-0.9	0.1	0.8	1.0	-0.6
Group	6.1	3.8	5.2	5.6	4.6	4.8	5.2	3.6

Metsä Fibre's net result is included in operating result at row "Share of results in associated companies" from 8.12.2009 on, before that Metsä Fibre was consolidated on proportionate basis line by line.

Return on capital employed %
Paperboard	14.1	14.0	17.0	20.1	21.2	17.8	16.7	17.2
Paper and Pulp	1.6	-1.3	2.4	1.6	5.0	-0.2	1.1	-0.5
Group	8.1	5.1	6.7	7.7	8.7	5.4	7.0	12.4
Capital employed, EUR million
Paperboard	658	700	663	650	639	647	658	639
Paper and Pulp	612	630	639	641	654	643	612	654
Unallocated and eliminations	281	243	577	573	674	685	281	674
Group	1,551	1,573	1,878	1,864	1,966	1,975	1,551	1,966

The capital employed for a segment includes its assets: goodwill, other intangible assets, tangible assets, biological assets, investments in associates, inventories, accounts receivables, prepayments and accrued income (excluding interest and taxes), less the segment's liabilities (accounts payable, advance payments, accruals and deferred income (excluding interest and taxes).

Deliveries	2013	2013	2013	2013	2012	2012	2013	2012
1,000 tonnes	Q4	Q3	Q2	Q1	Q4	Q3	Q1-Q4	Q1-Q4
Paperboard	289	313	311	311	298	306	1,224	1,188
Paper	171	159	158	186	162	169	674	681
Market Pulp	146	163	155	171	184	192	635	804
Production	2013	2013	2013	2013	2012	2012	2013	2012
1,000 tonnes	Q4	Q3	Q2	Q1	Q4	Q3	Q1-Q4	Q1-Q4
Paperboard	313	325	318	335	325	308	1,291	1,201
Paper	172	159	169	174	171	164	674	685
Metsä Fibre pulp 1)	146	141	141	143	140	144	572	610
Metsä Board pulp	331	296	308	314	332	292	1,249	1,234

Delivery and production amounts are not completely comparable due to structural changes.

Paper delivery and production amounts include Husum mill kraftliner volumes.

1) Corresponds to Metsä Board's ownership share of 32.0% in Metsä Fibre until 30 April 2012 and starting 1 May 2012 corresponds to Metsä Board's ownership share of 24.9% in Metsä Fibre.

Calculation of key ratios

Return on equity (%)	=	(Result before tax - direct taxes) per (Shareholders' equity (average))
Return on capital employed (%)	=	(Result before tax + interest expenses, net exchange gains/losses and other financial expenses) per (Shareholders' equity + interest-bearing borrowings (average))
Equity ratio (%)	=	(Shareholders' equity) per (Total assets - advance payments received)
Gearing ratio (%)	=	(Interest-bearing borrowings) per (Shareholders' equity)
Net gearing ratio (%)	=	(Interest-bearing borrowings - liquid funds - interest-bearing receivables) per (Shareholders' equity)
Earnings per share	=	(Profit attributable to shareholders of parent company) per (Adjusted number of shares (average))
Shareholders´equity per share	=	(Equity attributable to shareholders of parent company) per (Adjusted number of shares at the end of period)

FINANCIAL STATEMENTS

Unaudited interim condensed consolidated statement of comprehensive income

		Three months ended			Year ended
			December 31		December 31
			restate		restate
EUR million	Note	2013	2012	2013	2012
Sales	2,6	479.2	508.5	2,019.3	2,107.6
Change in stocks of finished goods and
work in progress		27.7	21.2	31.9	-5.1
Other operating income	2,6	18.6	17.0	53.0	194.4
Material and services	6	-373.4	-400.7		-1,513.6 -1,560.9
Employee costs	1	-56.8	-58.2	-241.0	-249.0
Share of profits from associated companies	6	11.6	5.5	37.1	29.2
Depreciation, amortization and impairment losses	2	-26.2	-14.4	-101.3	-100.3
Other operating expenses		-50.1	-39.6	-171.8	-194.8
Operating result	2	30.6	39.3	113.6	221.1
Share of profits from associated companies		0.0	-0.3	0.1	0.0
Net exchange gains and losses		-0.9	1.1	-1.1	5.0
Other net financial items	2,6	-10.7	-14.9	-54.8	-52.2
Result before income tax		19.0	25.2	57.8	173.9
Income taxes	3	12.2	13.0	6.3	-2.6
Result for the period		31.2	38.2	64.1	171.3

			Three months ended December 31 restate	Year ended December 31 restate
EUR million	Note	2013	2012	2013	2012
Other comprehensive income
Items that will not be reclassified to profit or loss	1
Actuarial gains/losses on defined pension plans		2.1	-14.9	-4.8	-14.9
Income tax relating to items that will not be
reclassified		-0.6	4.5	1.5	4.5
Total		1.5	-10.4	-3.3	-10.4
Items that may be reclassified to profit or loss
Cash flow hedges		-7.7	0.4	-7.6	3.2
Available for sale financial assets	8	-3.1	4.5	-41.5	-72.3
Translation differences		-6.4	-4.4	-9.0	10.1
Share of profits from associated companies		-0.7	0.1	-3.8	-1.1
Income tax relating to components of other
comprehensive income		10.5	-1.3	19.9	17.0
Total		-7.4	-0.7	-42.0	-43.1
Other comprehensive income, net of tax		-5.9	-11.1	-45.3	-53.5
Total comprehensive income for the period		25.3	27.1	18.8	117.8
Result for the period attributable to
Shareholders of parent company		31.1	38.2	63.9	171.1
Non-controlling interests		0.1	0.0	0.2	0.2
Total comprehensive income for the period attributable to
Shareholders of parent company		25.2	27.1	18.6	117.6
Non-controlling interests		0.1	0.0	0.2	0.2
Total		25.3	27.1	18.8	117.8
Earnings per share for result attributable
to shareholders of parent company
(EUR/share)		0.09	0.11	0.19	0.52

The accompanying notes are an integral part of these unaudited interim condensed financial statements.

Unaudited condensed consolidated balance

sheet			As of December 31
				January 1
			restate	restate
EUR million	Note	2013	2012	2012
ASSETS
Non-current assets
Goodwill		12.7	12.7	12.7
Other intangible assets		22.6	13.9	14.3
Tangible assets	4	833.8	894.4	941.1
Investments in associated companies		208.7	200.3	261.7
Available for sale investments	8	233.8	269.6	341.3
Other non-current financial assets	6,8	15.3	30.5	22.3
Deferred tax receivables	3	10.5	9.2	3.5
		1,337.4	1,430.6	1,596.9
Current assets
Inventories		332.9	303.3	334.7
Accounts receivables and other receivables	6	413.8	398.2	444.2
Cash and cash equivalents		12.9	428.5	305.0
		759.6	1,130.0	1,083.9
Assets classified as held for sale			20.6	6.8
Total assets		2,097.0	2,581.2	2,687.6
SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Equity attributable to shareholders of parent company		849.6	850.7	733.2
Non-controlling interests		0.0	5.5	5.1
Total equity		849.6	856.2	738.3
Non-current liabilities
Deferred tax liabilities		84.5	117.0	154.0
Post-employment benefit obligations	1	92.6	88.2	78.4
Provisions	5	8.6	20.2	31.5
Borrowings		647.9	302.3	857.9
Other liabilities	8	11.0	29.1	27.8
		844.6	556.8	1,149.6
Current liabilities
Provisions	5	28.4	45.2	139.5
Current borrowings	6	53.4	807.7	278.8
Accounts payable and other liabilities	6,8	321.0	315.3	381.4
		402.8	1,168.2	799.7
Total liabilities		1,247.4	1,725.0	1,949.3
Total shareholders' equity and liabilities		2,097.0	2,581.2	2,687.6

The accompanying notes are an integral part of these unaudited interim condensed financial statements.

Unaudited consolidated statement of changes in shareholders' equity
					Equity attributable to shareholders of parent company
		Share	Trans lation differ	Fair value and other	Reserve for invested unrestricted	Retained		Non control ling inter
EUR million	Note	capital	ences	reserves	equity	earnings	Total	ests	Total
Shareholders' equity, 1 January 2012		557.9	25.4	227.7	284.8		-364.1 731.7	5.1	736.8
Effect of IAS 19						1.5	1.5		1.5
Shareholders' equity, 1 January 2012, restate		557.9	25.4	227.7	284.8		-362.6 733.2	5.1	738.3
Comprehensive income for the period
Result for the period							171.1 171.1	0.2	171.3
Other comprehensive income net of tax total			10.5	-53.6		-10.4	-53.5	0.0	-53.5
Comprehensive income total Share based payments			10.5	-53.6		0.2	160.7 117.6 0.2	0.2	117.8 0.2
Related party transactions
Aquisition of interest in a subsidiary from non controlling interest						-0.3	-0.3	0.2	-0.1
Shareholders' equity, 31 December 2012		557.9	35.9	174.1	284.8		-201.7 850.7	5.5	856.2

					Equity attributable to shareholders of parent company
		Share	Trans lation differ	Fair value and other	Reserve for invested unrestricted	Retained		Non control ling inter
EUR million	Note	capital	ences	reserves	equity	earnings	Total	ests	Total
Shareholders' equity, 1 January 2013		557.9	35.9	174.0	284.8		-191.3 861.3	5.5	866.8
Effect of IAS 19						-10.6	-10.6		-10.6
Shareholders' equity, 1 January 2013, restate		557.9	35.9	174.0	284.8		-201.9 850.7	5.5	856.2
Comprehensive income for the period
Result for the period						63.9	63.9	0.2	64.1
Other comprehensive income net of tax total			-10.0	-32.0		-3.3	-45.3		-45.3
Comprehensive income total Share based payments			-10.0	-32.0		60.6 0.1	18.6 0.1	0.2	18.8 0.1
Related party transactions
Dividends paid Disposal of						-19.7	-19.7	-0.5	-20.2
subsidiary	6					0.0	0.0	-5.2	-5.2
Aquisition of interest in a subsidiary from non controlling interest						-0.1	-0.1	0.0	-0.1
Shareholders' equity, 31 December 2013		557.9	25.9	142.0	284.8		-161.0 849.6	0.0	849.6

The accompanying notes are an integral part of these unaudited condensed financial statements.

Unaudited condensed consolidated cash flow statement
------------------------------------------------------	--	--	--	--	--

		Year ended		Three months ended
		December 31		December 31
		2013	2012	2013
EUR million	Note
Result for the period		64.1	171.3	31.2
Total adjustments	7	73.8	-146.8	7.5
Change in working capital		-10.8	17.9	8.2
Cash flow from operations		127.1	42.4	46.9
Net financial items	7	-45.6	-42.1	-14.2
Income taxes paid		0.7	-1.8	0.3
Net cash flow from operating activities		82.2	-1.5	33.0
Acquisition of other shares		-1.5	-5,4
Investments in intangible and tangible assets		-60.5	-58.2	-22.7
Disposals and other items	7	-333.5	223.3	6.3
Net cash flow from investing activities		-395.5	159.7	-16.4
Aquisition of interest in a subsidiary from non-controlling interest		-0.1	-0.2	-0.1
Changes in non-current loans and in other financial items		-81.7	-34.6	-16.4
Dividends paid		-20.2
Net cash flow from financing activities		-102.0	-34.8	-16.5
Changes in cash and cash equivalents		-415.3	123.4	0.1
Cash and cash equivalents at beginning of period		428.5	305.0	12.9
Translation difference in cash and cash
equivalents		-0.3	0.1	-0.1
Changes in cash and cash equivalents		-415.3	123.4	0.1
Cash and cash equivalents at end of period		12.9	428.5	12.9

The accompanying notes are an integral part of these unaudited condensed financial statements.

NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS

Note 1 – Background and basis of preparation

Metsä Board Corporation and its subsidiaries comprise a forest industry group whose main product areas are fresh forest fiber cartonboards, office papers and special papers. Metsä Board Corporation, the parent company, is domiciled in Helsinki and the registered address of the company is Revontulenpuisto 2, 02100 Espoo, Finland. Metsä Board's ultimate parent company is Metsäliitto Cooperative.

This unaudited interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, and it should be read in conjunction with the 2012 IFRS financial statements. The same accounting policies have been applied as in the 2012 IFRS financial statements with the following exception:

Depreciation of machinery and equipment during the financial year has been specified further between the quarters where applicable in order to correspond with the allocation of the use of the economic benefit of the asset.

The Group has adopted the following new standards, amendments to existing standards and interpretations on 1 January 2013:

Amendments to IAS 1 Presentation of Financial Statements (effective for financial years beginning on or after 1 July 2012): The major change is the requirement to group items of other comprehensive income as to whether or not they will be reclassified subsequently to profit or loss when specific conditions are met. The amendments only have an impact on the presentation of Group's other comprehensive income.

Amendment to IAS 19 Employee Benefits: The major changes are as follows: in future all actuarial gains and losses are immediately recognized in other comprehensive income, i.e. the corridor approach is eliminated, and finance costs are calculated on a net funding basis. The comparative data has been restated due to amendment.

IFRS 13 Fair Value Measurement: IFRS 13 establishes a single source for all fair value measurements and disclosure requirements for use across IFRSs. The new standard also provides a precise definition of fair value. IFRS 13 does not extend the use of fair value accounting, but it provides guidance on how to measure fair value under IFRSs when fair value is required or permitted. IFRS 13 will expand the disclosures to be provided for non-financial assets measured at fair value.

Annual Improvements to IFRSs 2009-2011 (May 2012): The annual improvements process provides a mechanism for minor and non-urgent amendments to IFRSs to be grouped together and issued in one package annually. The amendments cover in total five standards.

Amendments to IFRS 7 Financial Instruments: Disclosures: The amendments clarify disclosure requirements for financial assets and liabilities that are offset in the statement of financial position or subject to master netting arrangements or similar agreements. The disclosures required by those amendments are to be provided retrospectively.

All amounts are presented in millions of euros, unless otherwise stated.

This interim report was authorized for issue by the Board of Directors of Metsä Board on 6 February 2014.

The impacts of amendment to IAS 19 Employee Benefits on the comparative data of balance sheet and the statement of comprehensive income as of January 1, 2012 and as of December 31, 2012 have been presented in Metsä Board Interim Report 1 January – 31 March 2013.

Note 2 – Segment information

The Corporate Management Team is the chief operational decision-maker, which monitors the business operations based on the operating segments. The company operates through two business areas that are also the company's reporting segments: Paperboard and Paper and Pulp.

The Paperboard business area includes the Kemi, Kyro, Simpele, Tako and Äänekoski board mills, Kyro wallpaper base machine and Joutseno BCTMP mill located in Finland as well as the Gohrsmühle mill in Germany. The Paper and Pulp business area includes Husum paper and pulp mill in Sweden, Alizay mill in France. Alizay mill was disposed in January 2013.

The associated company result of Metsä Fibre has been allocated to business segments based on their respective pulp consumption and is reported in EBITDA. Approximately 80 per cent of the result impact of Metsä Fibre ownership is included in the Paperboard business area and the rest in the Paper and Pulp business area.

The sales of the reporting segments are mainly generated by sales of board and paper, but the sales of the Paper and Pulp operating segment includes sales of pulp to external customers.

The accounting principles for the segment information are equal to those of the Group and all intersegment sales are based on market prices.

Segment sales

	Year ended December 31, 2013			Year ended December 31, 2012
EUR million
	External	Internal	Total	External	Internal	Total
Paperboard	1,140.1	0.1	1,140.2	1,122.5	0.1	1,122.6
Paper and Pulp	792.9	9.4	802.3	907.0	0.0	907.0
Other operations	86.3	214.6	300.9	78.1	285.5	363.6
Elimination of intersegment sales		-224.1	-224.1		-285.6	-285.6
Total sales	2,019.3	0.0	2,019.3	2,107.6	0.0	2,107.6

Operating result by operating segments

	Year ended
		December 31
EUR million	2013	2012
Paperboard	108.0	112.8
Paper and Pulp	6.9	-3.3
Other operations	-1.3	111.6
Operating result total	113.6	221.1
Share of profit from associated
companies	0.1	0.0
Finance costs, net	-55.9	-47.2
Income taxes	6.3	-2.6
Result for the period	64.1	171.3

The non-recurring items of the operating result for year ended 31 December 2013 stood at EUR +9.2 million.

Paperboard business area included EUR +4.8 million non-recurring items, the most significant of them being a reverse of impairment charge of EUR 2.5 million due to sale of old impaired paper machine at Äänekoski mill and cancellation of a EUR 2.3 million cost provision related to restructuring provisions made at Gohrsmühle and Äänekoski paper mill.

Paper and Pulp business area included EUR -1.2 million non-recurring items. A EUR 6.6 million cost provision in the Paper and Pulp business area related to the landscaping of a decommissioned landfill in Husum and a EUR 4.7 million sales gain and cancellation of a cost provision in the Paper and Pulp business area related to the divestment of Alizay mill site in France. Cancellation of a EUR 0.8 million cost provision in Paper and Pulp business area related to restructuring provision made at Alizay in 2011.

In addition Other operations included EUR 5.5 million non-recurring items, of which the most significant was EUR 5.3 gain from a sale of property in Tampere and additional selling price, EUR 0.5 million, related to the associated company Plastiroll Oy, which was disposed in 2012.

Assets by operating segments

		Year ended
EUR million	December 31
	2013	2012
Paperboard	959.5	919.8
Paper and Pulp	722.7	803.5
Other operations	366.1	446.8
Elimination	-66.7	-93.7
Unallocated	115.4	504.8
Total	2,097.0	2,581.2

Segment assets include goodwill, other intangible assets, tangible assets, investments in associated companies, inventories, accounts receivables and prepayments and accrued income (excl. interest and income tax items).

Due to the disposal of the holding in Metsä Group Treasury Oy to Metsäliitto Cooperative in September 2013 have Other operations' and unallocated assets decreased significantly.

Note 3 – Income taxes

Tax expense in the interim condensed combined income statement is comprised of the current tax and deferred taxes. Income taxes for the year ended 31 December 2013 and 2012 are as follows:

		Year ended
		December 31
EUR million	2013	2012
Taxes for the current period	5.3	27.7
Taxes for the prior periods	-2.1	0.0
Change in deferred taxes	-9.5	-25.1
Total income taxes	-6.3	2.6

The change in the Finnish corporate tax rate from 24.5 per cent to 20 per cent reduced the deferred tax liabilities by EUR 0.8 million. In addition, approximately EUR 7.1 million was recognised as deferred tax receivables from earlier tax losses and provisions.

Note 4 – Changes in property, plant and equipment

The following shows the components of changes in property, plant and equipment for the year ended 31 December 2013 and 2012:

	Year ended
	December 31
EUR million	2013	2012
Carrying value at beginning of period	894.4	941.1
Capital expenditure	52.9	61.0
Decreases	-5.9	-2.3
Asset classified as held for sale	0.0	-21.2
Depreciation, amortization and impairment losses	-98.4	-96.3
Translation difference	-9.2	12.1
Carrying value at end of period	833.8	894.4

Depreciation, amortization and impairment losses include in Paperboard business area a reverse of impairment charges of EUR 2.5 million due to sale of old impaired paper machine at Äänekoski mill. In addition Other operations includes an impairment charge of EUR 0.2 million related to canceled disposal of old paper machine in Simpele mill in Finland. The paper machine was classified in December 2012 as asset held for sale according to IFRS5, Non-current assets as held for sale and discontinued operations.

Note 5 – Provisions

The following is a summary of changes Metsä Board's provisions during the year ended 31 December 2013.

EUR million	Restructuring	Environmental obligations	Other provisions	Total
At 1 January 2013	33.8	18.2	13.4	65.4
Translation differences	-0.2	0.0	-0.2	-0.4
Increases	0.0	6.5	0.1	6.6
Utilized during the year	-24.6	-3.7	-2.6	-30.9
Unused amounts reversed	-2.3	-1.0	-0.4	-3.7
At 31 December, 2013	6.7	20.0	10.3	37.0

In Paper and Pulp there was a EUR 2.4 million reversal of provision related to disposal of Alizay mill site. A cancellation of a EUR 1.3 million cost provision related to restructuring provisions made at Gohrsmühle. A EUR 6.5 million cost provision in the Paper and Pulp business area related to the landscaping of a decommissioned landfill in Husum

The non-current portion of provisions was some EUR 8.6 million and the current portion some EUR 28.4 million, total provisions being EUR 37.0 million. The non-current portion is estimated to be paid by the end of the year 2017.

Note 6 – Related party transactions

Metsä Board's Board of Directors, the Corporate Management Team, Metsäliitto Cooperative and its subsidiaries and Metsä Board's associated companies are considered related parties. Metsä Board enters into a significant number of transactions with related parties for the purchases of inventory, sale of goods, corporate services as well as financial transactions. Product and service transfers and interest between Metsä Board and the related parties have been made at arm's length prices.

Transactions between Metsä Board and related parties for the year ended 31 December 2013 and 2012 are as follows:

Transactions and balances with parent and sister companies

	Year ended
	December 31
EUR million	2013	2012
Sales	76.2	60.9
Other operating income	5.6	66.2
Purchases	714.3	698.0
Share of profit from associated companies	37.1	29.2
Interest income	4.7	5.7
Interest expenses	1.8	1.1
Non-current receivables	3.8	3.8
Current receivables	101.3	81.9
Non-current liabilities	0.0	0.0
Current liabilities	81.2	343.2

Metsä Fibre's net result is included within operating result line item "Share of profits from associated companies" and transactions with Metsä Fibre are included in transactions with sister companies.

Metsä Fibre paid a dividend of EUR 24.9 million to Metsä Board during the year ended 31 December 2013.

Due to the disposal of the holding in Metsä Group Treasury Oy to Metsäliitto Cooperative in September 2013 current receivables and liabilities have decreased. The disposal of the holding in Metsä Group Treasury Oy decreased also the level of non-controlling interests by some EUR 5.2 million.

Transaction with joint ventures

Joint ventures have been consolidated using line-by-line method proportionate to the Metsä Board Group's holding. Metsä Board's joint ventures are Äänevoima Oy (56.25%) and Ääneverkko Oy (56.25%).

Group's consolidated Income statement and Balance sheet included assets, liabilities, income and costs as follows:

	Year ended
		December 31
EUR million	2013	2012
Sales	13.3	12.2
Expenses	13.8	12.3
Non-current assets	14.5	17.1
Current assets	4.1	4.3
Non-current liabilities	19.7	21.2
Current liabilities	2.7	3.2

Transactions with associated companies

	Year ended December 31
EUR million	2013	2012
Sales	0.2	0.1
Purchases	7.0	6.4
Non-current receivables	0.3	0.3
Current receivables	0.2	0.1
Current liabilities	0.9	2.1

Note 7 – Notes to condensed consolidated cash flow statement

Adjustments to the result for the period

	Year ended		Three months ended
	December 31		December 31
EUR million	2013	2012	2013
Taxes	-6.3	2.6	-12.1
Depreciation, amortization and
impairment charges	101.3	100.3	26.2
Share of results from associated companies	-37.2	-29.2	-11.6
Gains and losses on sale of fixed assets	-10.6	-158.4	-6.6
Finance costs, net	55.9	47.2	11.5
Provisions	-29.3	-109.3	0.1
Total	73.8	-146.8	7.5

Net financial items

Net financial items in consolidated cash flow statement for the year ended 31 December 2013 include a dividend of EUR 24.9 million paid by Metsä Fibre.

Disposals and other items

Year ended December 2013 Disposals and other items, EUR -333.5 million, include EUR -332.7 million disposals. The most significant disposal were the sale of property, plant and equipment in Alizay mill site in January, EUR 22.2 million and the disposals of old papermachine in Äänekoski, EUR 2.5 million. Also Disposals and other items include EUR 6.3 million disposals of property in Tampere Finland and additional selling price, EUR 0.5 million, related to the associated company Plastiroll Oy, which was disposed in 2012 and the disposal of the holding in Metsä Group Treasury Oy to Metsäliitto Cooperative in September 2013. The selling price was EUR 5.2 million and cash and cash equivalents of disposed subsidiary, EUR 372.3 million, net of cash was EUR -367.1 million.

Note 8 – Financial instruments

Financial assets 31 December 2013

Eur million	Fair value through profit&loss		Available for sale financial assets	Loans and other receivables	Derivatives at hedge accounting	Amortised cost	Total carrying amount	Fair value
Available for sale financial
assets			233.8				233.8	233.8
Other non-current financial
assets				15.4			15.4	15.4
Accounts receivables and
other receivables				412.3			412.3	412.3
Cash and cash equivalent Derivative financial		0.0		12.9			12.9	12.9
instruments		0.6			0.0		0.6	0.6
Total financial assets		0.6	233.8	440.6	0.0		675.0	675.0

Financial liabilities 31 December 2013

Eur million	Fair value through profit&loss	Derivatives at hedge accounting	Amortised cost	Total carrying amount	Fair value
Non-current interest-bearing financial
liabilities			647.9	647.9	664.0
Other non-current financial
liabilities			2.9	2.9	2.9
Current interest-bearing financial
liabilities			53.4	53.4	54.9
Accounts payable and other financial
liabilities Derivative financial			279.7	279.7	279.7
instruments	2.0	13.5		15.5	15.5
Total financial liabilities	2.0	13.5	983.9	999.4	1,017.0

Fair value hierarchy of financial assets and liabilities year ended December 31 2013

Eur million	Level 1	Level 2	Level 3	Total
Financial assets at fair value through
profit or loss, non-current				0,0
Available for sale financial assets Financial assets at fair value through profit	0.3		233.5	233.8
or loss, current				0.0
Derivative financial assets		0.6		0.6
Financial liabilities at fair value through
profit or loss, current				0.0
Derivative financial liabilities	10.8	4.7		15.5
Financial assets not measured at fair value
Cash and cash equivalent Financial liabilities not measured at fair value		12.9		12.9
Non-current interest-bearing
financial liabilities Current interest-bearing		664.0		664.0
financial liabilities		54.9		54.9

	Year ended
	December 30
EUR million	2013
Opening balance	269.3
Total gains and losses in profit or loss	0.0
Total gains and losses in other comprehensive income	-41.5
Purchases	5.8
Settlements	0.0
Closing balance	233.5

Financial assets and liabilities measured at fair value based on Level 3

Financial assets and liabilities measured at fair value have been categorized according to IFRS 7

• Level 1 Fair value is based on quoted prices in active markets
• Level 2 Fair value is determined by using valuation techniques that use observable price information from market
• Level 3 Fair value are not based on observable market data, but company's own assumptions

The fair values of electricity and natural gas derivatives are determined by using public price quotations in an active market (Level 1). The fair values of currency forwards and options are determined by using the market prices of the closing date of the reporting period The fair values of interest rate swaps are determined by using the present value of expected payments, discounted using a risk adjusted discount rate, supported by market interest rates and other market data of the closing date of the reporting period (Level 2).

For financial instruments not traded on an open market, the fair value is determined by valuation techniques. Consideration is used when choosing the different techniques and making assumptions, which are mainly based on circumstances prevailing in the markets on each closing date of the reporting period (Level 3).

The valuation techniques are described in more detail in the Annual report.

The greatest item at fair value not traded on an open market is the investment in Pohjolan Voima shares, reported under available-for-sale financial assets. The valuation techniques are described in more detail in the Annual report. The WACC used on 31 December 2013 was 3.9 percentage and 6.9 percentage for the Olkiluoto 3 under construction. The acquisition cost of shares in Pohjolan Voima Oy is EUR 39.1 million and the fair value EUR 229.3 million.

The carrying amount of available-for-sale financial assets would be estimated to be EUR 2.5 million lower or EUR 2.0 million higher should the rate used for discounting the cash flows differ by 10% from the rate estimated by the management. The carrying amount of available-for-sale financial assets would be estimated to be EUR 28.5 million higher or EUR 28.5 million lower should, if energy prices used for calculating the fair value differ by 10% from prices estimated by the management.

Derivatives 31 December 2013

			Fair
	Nominal		value			Fair value
EUR million	value
		Assets	Liabilities	Total	Fair	Cash	Derivatives/hedge
					value	flow	accounting
					hedges	hedges	not applied
Interest forward agreements Interest rate options
Interest rate
swaps	277.2		2.7	-2.7	2.5	-5.3
Interest rate derivatives	277.2		2.7	-2.7	2.5	-5.3
Currency forward agreements	411.9	0.6		0.6		0.0	0.6
Currency option agreements	52.6	0.0		0.0			0.0
Currency swap agreements	43.5		2.0	-2.0			-2.0
Currency derivatives	508.0	0.6	2.0	-1.4		0.0	-1.4
Electricity derivatives	76.5		10.8	-10.8		-10.8	0.0
Pulp derivatives
Other commodity derivatives							0.0
Commodity derivatives	76.5		10.8	-10.8		-10.8	-0.0
Derivatives total	861.7	0.6	15.5	-14.9	2.5	-16.0	-1.4

Note 9 – Commitments and guarantees

The following shows securities and guarantees for the year ended 31 December 2013 and 2012:

Securities and guarantees

	Year ended December 30
EUR million	2013	2012
Liabilities secured by pledges, real
mortgages and Chattels mortgage	582.3	188.5
Pledges granted	535.3	178.6
Corporate mortgages	603.0	3.0
Real estate mortgages	832.8	152.8
Total pledges and mortgages	1,971.1	334.4
As security for other own commitments	31.3	28.3
On behalf of associated companies	0.3	0.1
On behalf of others	0.1	3.2
Total	2,002.8	366.0

Securities and guarantees include pledges, real estate mortgages, chattels mortgage and guarantee liabilities. Metsä Board holds operating leases for certain vehicles and equipment. Leasing liabilities are part of the table above.

The increase of commitments is related to EUR 600 million syndicated credit agreement signed in May 2012, of which EUR 500 million was drawn in April 2013. Share pledges, real estate mortgages and a corporate mortgage were used as collateral. Shares in Metsä Board Sverige AB, Metsä Board Kemi Oy, two series of Pohjolan Voima Oy and shares in Metsä Fibre Oy were included in contingent liabilities as well as real estate mortgages in four mill areas and corporate mortgages of EUR 600 million.

Open derivative contracts

	Year ended
	December 31
EUR million	2013	2012
Interest rate derivatives	277.2	1,866.0
Currency derivatives	508.0	1,310.1
Other derivatives	76.5	79.3
Total	861.7	3,255.4

The fair value of open derivative contracts calculated at market value at the end of the review period was EUR -14.9 million (EUR -19.0 million 31 December 2012). The disposal of the holding in Metsä Group Treasury Oy in September 2013 also decreased substantially the amount of derivative contracts.

Note 10 – Events after the period

Metsä Board announced on 30 January 2014 that it is in negotiations to divest its property in Lielahti, Tampere to the City of Tampere for EUR 26 million. The Lielahti property consists of 90 hectares of land, incl. buildings on site, and 1,071 hectares of water area on Näsijärvi lake.

Closing of the transaction is subject to approvals by the City Council and City Government of Tampere City, the approval by Metsä Board's Board of Directors as well as the finalization of the trade documentation. If the necessary approvals are received as currently planned the divestment would take effect by the end of the first quarter of 2014.

Metsä Board closed down the BCTMP pulp mill at the Lielahti site in 2008 and has not had any production operations at the site since.