Board of Directors´ Report

Operations During the Financial Period 15 April-31 December 2016

On 25 October, the Ministerial Committee on Economic Policy confirmed the ownership policy guidelines (prepared by the Ministry of Agriculture and Forestry and the Ministry of the Environment) for Metsähallitus for the period 2016-2020.

The guidelines emphasise Metsähallitus’ role in managing the land and water property it administers as a single entity in line with the Government’s real-estate strategy. The use of areas is planned in accordance with the natural resource plans, aiming for the highest possible social benefit and cost efficiency. Metsähallitus’ common processes and systems are managed and developed as cost-effective systems.

The profit target for operations remains ambitious. The intention is to raise the return on investment to 4.6 per cent by 2020. This corresponds to a new balance sheet structure, with a level of income of around EUR 120 million. This will require a profitability improvement in Metsähallitus' business operations and the utilisation of sustainable felling potential.

Biodiversity and the recreational use of nature are an important part of Metsähallitus’ operations. The level of social obligations will remain high in Metsähallitus business operations. Various degrees of use restrictions currently apply to approximately 530,000 hectares of Metsähallitus’ forests in commercial use, due to biodiversity, recreational use and reindeer husbandry requirements. The overall social benefit is even taken into account in Metsähallitus’ property business, creating the preconditions for the related business activities.

The unit managing public administrative duties is responsible for the use and management of Finland’s network of protected areas on state-owned land and water areas in Metsähallitus’ possession, and in private Nature Reserves in cooperation with the owners and Centres for Economic Development, Transport and the Environment. The same unit is responsible for hunting, fishing and off-road traffic, collecting fishing management fees, providing social nature and hiking services, and managing species protection duties in all state-owned land and water areas.

The ownership policy guidelines aim to improve the productivity of Parks & Wildlife Finland and to increase its impact. The conservation status of habitats will be improved in areas used by Parks & Wildlife Finland. Use for the purposes of tourism, recreation, hunting and fishing will be developed on the basis of demand, in order to enhance the well-being effects of various areas and create business opportunities for entrepreneurs.

The Board of Directors confirmed Metsähallitus’ strategy for 2017-2020, on the basis of the ownership policy guidelines.

The main strategic guidelines describe Metsähallitus’ new intent: We guarantee the best possible return on state-owned land across generations; We enhance the vitality of regions; We lead the way in responsible operations and halt the loss of biodiversity on state-owned lands; We operate uniformly and efficiently, making use of the opportunities afforded by digitalisation.

During the financial period, demand for services provided by Metsähallitus was strengthened by the general economic situation, which showed signs of recovery in the fourth quarter of the year. Growth in tourism and interest in outdoor activities were reflected both in the higher demand for services provided by Parks & Wildlife Finland and Game and Fisheries, and in property development.

The legal reform and its implementation did not affect demand for Metsähallitus’ services and the provision of such services.

The group turnover totalled EUR 246.4 million and the group profit EUR 55.9 million. Other operating income amounted to EUR 13.3 million and fixed asset transfer profits to EUR 10.3 million. Funding received from State budget funds for public administrative duties totalled EUR 33.8 million. During the financial period, the total number of person-years was 1,027, of which the enterprise accounted for 497.

The enterprise’s balance sheet includes one item in other equity, EUR 224.8 million in total, which is not used for public administrative duties. The annual dividend payment target does not apply to this balance sheet item. This asset item was not subject to income or expenses during the financial period.