Economic data

Report of the Board of Directors, 1 January – 31 December 2023 

Westenergy Ltd was entered in the Finnish Trade Register on 1 January 2008. The company’s trade register number is 2165379-9 and its domicile is Mustasaari. The company is owned by Oy Botniarosk Ab, Ab Ekorosk Oy, Lakeuden Etappi Oy, Loimi-Hämeen Jätehuolto Oy, Millespakka Oy, Ab Stormossen Oy and Vestia Oy. The past financial year was the 15th in the company’s history. Westenergy’s main line of business is operating a waste-to-energy plant. The company operates on a cost basis and does not pay dividends.  

The company has built a plant specialising in the energy production from and conversion of non-recyclable municipal waste on a plot that it owns in Koivulahti in Mustasaari, and it sells services to its shareholders on a cost basis. The plant was completed and commissioned in August 2012. The energy produced by the plant is converted into electricity and district heat in a system owned by the company’s partner Vaasan Sähkö Oy.  

Despite various difficulties, the operating rate of Westenergy’s plant remained good in 2023. The volume of waste supplied to the plant was still very high and some of it had to be baled, which resulted in significant additional costs. The quality of the waste varied more than before, resulting in production difficulties that even affected plant utilisation. The poor quality of the waste also had a negative impact on the chemical costs of the plant. The annual maintenance shutdown was once again successfully completed. During the shutdown, major maintenance and repair work was carried out and investments were realised. The schedule was adhered to, and a considerable amount of work was completed as planned. On the whole, it was a good year and the amount of waste incinerated was close to the planned volume with a decent plant utilisation rate. 

Uncertainty in the energy market continued in 2023, causing high price fluctuations in the electricity market in particular. Electricity prices were significantly lower year-over-year on average. Fluctuations in electricity prices also contributed to delivery volumes being lower than estimated. Technical difficulties also had an impact on energy delivery volumes. In addition to the above, deliveries of district heat fell short of the previous year due to the warm summer, but the average price was higher than estimated. The value of energy deliveries exceeded estimates, but fell significantly short of the previous year. Due to the above-mentioned reasons, Westenergy Ltd’s turnover fell short of the turnover for the previous year. 

 

Chemical prices have increased in recent years. The good and reliable operation of the plant in part offset the chemical costs. However, the deterioration of waste quality over the past year has increased the consumption of chemicals. As a result, chemical costs exceeded estimates during the period under review. 

Bottom slag was generated and processed as in previous years. The work we have done together with our partners Lakeuden Etappi Oy and Suomen Erityisjäte Oy in the further processing of slag has yielded results over the years. The treatment of bottom slag and the related operating models and activities have become more stable, cost-efficient and predictable. Suomen Erityisjäte Oy was responsible for the treatment of bottom slag during the financial period.  

The value of the investments made by the company during the 2023 financial year totalled EUR 678,846. The most significant investments were the replacement of the LabLoop, which will be completed in the annual maintenance shutdown of 2024, and a modification of the boiler grate. Other investments made during the financial year included the purchase of a forklift truck and a van, IT investments and the procurement of a maintenance crane. 

Westenergy’s investments during the financial year in part increased depreciation and amortisation. However, total depreciation and amortisation decreased compared to the previous year, as machinery and equipment depreciated over ten years has now been fully depreciated.  

The company’s cash position was sufficient during the financial year and the company was able to fulfil its financial obligations. It was not necessary for the company to take out further loans for operations or investments in 2023. The increase in interest rates was also reflected at Westenergy in the form of increased financial expenses. 

Westenergy further refined its strategy work during the period. The company’s long-term strategy is largely defined by the climate and circular economy objectives of the EU and Finland. Westenergy creates and pursues future solutions together with its owners and other potential partners. Westenergy provides strong support to research and development projects on the circular economy and climate matters. The company has worked closely with numerous cooperation partners in the areas mentioned above. Based on the strategy work, the financial period saw progress in development projects associated with areas such as carbon dioxide recovery and the processing of green hydrogen.  

During 2023, Westenergy’s carbon dioxide recovery and further processing took a major leap forward. Westenergy Ltd, CPC Finland Ltd and Prime Capital AG signed an agreement on the development, construction and operation of a carbon dioxide recovery plant at the Westenergy plant. This plant will recover carbon dioxide from the flue gases of Westenergy’s plant. The recovered carbon dioxide will be liquefied, and a significant part of it will be sent to Kristiinankaupunki for use in the power-to-x plant of Prime Capital and CPC. Westenergy will operate the carbon dioxide recovery process. The plant investment totals approximately EUR 138 million, and the Finnish Ministry of Economic Affairs and Employment has decided to grant an energy investment subsidy of EUR 20 million to the project. The project supports Finland’s path to a carbon-neutral future in line with the EU targets. The project promotes decoupling from fossil fuels and is part of the carbon-neutral district heating solution for the Vaasa region. The project is a truly significant phase in Westenergy’s strategy towards carbon neutrality. 

Westenergy is committed to following the quality, environmental and occupational health and safety policies that the company has defined. Through certified systems, Westenergy aims to continuously improve the overall quality and cost–efficiency of its operations. An occupational health and safety system is used to manage known risks, maintain the health and working ability of employees and improve occupational health and safety. Westenergy aims to manage environmental risks with actions and programmes defined in the environmental system. Westenergy reports new developments concerning quality, the environment and occupational health and safety to stakeholders, primarily in the form of an annual report. Westenergy’s management system complies with the standards of quality (ISO 9001:2015), the environment (ISO 14001:2015) and occupational health and safety (ISO 45001:2018). The systems were evaluated both internally and by an independent external auditor in 2023. During 2023, IT and cyber security were also systematically and purposefully developed with partners. Also, employees were trained and drilled in IT and cyber security. During 2024, Westenergy will assess the standard and management system needs with regard to IT and cyber security. 

The company employed 36 people at the beginning of the financial period and 37 people at the end of the financial period. The average number of employees during the year was 40. The salaries and remuneration paid in 2023 totalled EUR 2,834,788. The following table includes some key figures related to the personnel. 

There was a slight increase in absences due to sickness during the period under review, which was due to a few long-term sick leaves. Seasonal diseases also resulted in absence and temporary challenges to some extent. 

The Extraordinary General Meeting of 25 November 2022 authorised the Board of Directors to decide on a share issue of a maximum of 1,100,000 new shares directed at Ab Ekorosk Oy. On 15 December 2022, Westenergy Ltd’s Board of Directors decided on the directed share issue, in which 1,062,819 new shares in the company were offered to Ab Ekorosk Oy, in deviation from the shareholders’ pre-emptive rights, for a subscription price of EUR 2.48774 per share, or a total of EUR 2,644,018. There was a serious financial reason for the company to direct the share issue as referred to in chapter 9, section 4, subsection 1 of the Finnish Limited Liability Companies Act, because its purpose was to strengthen the company’s financial position and guarantee the sufficient availability of raw materials. The subscription period was 1–31 January 2023. All of the shares were subscribed for and fully paid by 17 January 2023. Of the share subscription price, EUR 1,062,819 was recognised in share capital and EUR 1,581,199 was recognised in the reserve for invested unrestricted equity. The table below shows the number of shares and share of ownership by owner after the share issue arrangements. 

An Extraordinary General Meeting convened on 31 January 2023, at which a new member was elected to Westenergy Ltd’s Board, Stefan Storholm. The General Meeting also made a few changes to the company’s Articles of Association. 

The ownership arrangements strengthened the ownership base of Westenergy Ltd, guaranteeing a sufficient waste supply well into the future and enabling Westenergy to provide cost-effective services to its shareholders. Until now, the current shareholders of Westenergy have acquired non-recyclable waste for energy production, including outside their own operating areas, through contractual arrangements. Following the ownership arrangements, the shareholders’ agreements and the supply agreements, which determine the relationship and operations between the shareholders and the company, were updated accordingly. The share of ownership still directly correlates with the supply quotas of each shareholder.  

The company’s Annual General Meeting convened on 8 June 2023. The Annual General Meeting elected the members, Chair and Vice-Chair of the Board of Directors. Furthermore, the Annual General Meeting resolved to amend Section 9 of the Articles of Association with an addendum concerning the Board of Directors being able to resolve on organising a general meeting of shareholders as a hybrid meeting at its discretion. Moreover, organising a general meeting of shareholders as a remote meeting without any physical meeting place was made possible. 

In the past financial period, the Board of Directors consisted of Paavo Eloniemi (Chair), Ragnvald Blomfeldt (Vice-Chair until 8 June 2023), Paavo Hankonen, Jouko Huumarkangas, Stefan Storholm, Teuvo Suominen (Vice-Chair as of 8 June 2023) and Harri Virtanen.  

The Board of Directors convened a total of 13 times during the past financial year. 

Olli Alhoniemi acted as the Managing Director of the company. The company’s regular auditor was the audit firm Ernst & Young Oy with Kristian Berg, Authorised Public Accountant (KHT), as the principal auditor.  

There have been no other significant events after the end of the financial period. 

The company’s registered share capital was EUR 16,966,692 and there were 16,966,692 shares in the company at the end of the financial period. The shares are subject to a redemption clause set in the Articles of Association, according to which other shareholders have the primary right to redeem shares, and the company itself has the secondary right if the shares are to be transferred to a third party.  

Due to the cost basis, it is not appropriate to compare the key figures to profit-making companies when analysing Westenergy’s operations, financial position and results. 

In accordance with Section 3 of the Articles of Association, the company does not distribute dividends. The Board of Directors proposes that the result for the period, EUR -5,528.34, be transferred to the profit and loss account under the company’s equity.  

Vaasa, 20 February 2024  

Board of Directors of Westenergy Ltd 

Profit and loss statement

 

Balance sheet

 

Financial statement

 

 

Accounting principles

Applied provisions
The financial statements are prepared in accordance with the valid Accounting Act.

Derivatives
The company has signed a derivate contract in order to manage the volatility of interest rates. Hedge accounting is applied to the derivates. Hedge instruments’ impact on profit is recognised together with the hedged item. Unrealised changes in value are recognised in the fair value reserve of equity. The fair value is calculated taking into account the deferred tax receivables.  

Valuation and matching principles and methodology

Tangible and intangible assets recorded in the fixed assets of the company are valued at the historical cost of acquisition.  

The acquisition costs of reproducible assets are written off in accordance with the established plan. The depreciation plan is determined on the basis of economic life. 

 

The estimated basis of planned depreciation and the changes thereof: 

 

Valuation of inventories
Inventories are valued at the historical cost of acquisition in accordance with the FIFO principle.  

Pensions
The pension cover of the company’s employees is managed by an external pension insurance company. Pension costs are recognised as expenses in the year of accrual.  

Comparability of the result
The results for this and the previous period are comparable.  

 

 

DETAILS ON THE DERIVATIVE CONTRACTS THAT HEDGE AGAINST THE INTEREST RATE RISK

The notional amount of the interest rate swap contract is EUR 12 000 000, 8 from 8 December 2017 to 8 December 2027, with the interest rate being 3-month Euribor. The company receives 3-month Euribor and pays fixed interest.  

This interest rate swap contract hedges Westenergy Ltd’s loan of MEUR 12. 

The interest rate swap cash flows are recognised in profit or loss for the same periods as the interest flows of the hedged loan until 8 December 2027. 

 

The fair value of the contract at the date of closure of the accounts:  

THE BOARD OF DIRECTORS’ PROPOSAL ON THE USE OF THE NON-RESTRICTED EQUITY

The Board proposes that no dividends will be paid.

Signing of the financial statements

(signed electronically) 

Vaasa 22.3.2024 

AUDITOR’S NOTE

Based on the audit I performed, I have issued an audit report today.  

 

Ernst & Young Oy 

Audit firm 

Kristian Berg, CPA 

AUDITOR’S REPORT

To the Annual General Meeting of Westenergy Oy Ab

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Westenergy Oy Ab (business identity code 2165379-9) for the year ended 31 December, 2023. The financial statements comprise the balance sheet, income statement, cash flow statement and notes.  

In our opinion, the financial statements give a true and fair view of the company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. 

Basis for Opinion

We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of Financial Statements section of our report. We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.  

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements  

The Board of Directors and the Managing Director are responsible for the preparation of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  

In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the company’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the company or cease operations, or there is no realistic alternative but to do so.  

Auditor’s Responsibilities for the Audit of the Financial Statements  

Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.  

As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is 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 internal control.  
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.  
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.   

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 

Other reporting requirements  

Other information 

The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report but does not include the financial statements or our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report and the Annual Report is expected to be made available to us after that date. 

Our opinion on the financial statements does not cover the other information. 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. 

In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. 

If, based on the work we have performed, we conclude that there is a material misstatement of the report of the Board of Directors, we are required to report that fact. We have nothing to report in this regard. 

 

Vaasa 26.3.2024 

Ernst & Young Oy 

Authorized Public Accountant Firm 

 

Kristian Berg 

Authorized Public Accountant