Metsä Board Annual and sustainability report 2022

BUSINESS OPERATIONS AND VALUE CREATION

SUSTAINABILITY REPORT

FINANCIAL DEVELOPMENT

GOVERNANCE

Market risk sensitivity 2022

31 Dec 2022

Impact on equity exposure and annual transaction exposure

Impact on annual transaction expo- sure (cash flow) incl. hedging

Impact on financial assets and liabilities

Impact on net equity of foreign entities

Impact on annual transaction expo- sure (cash flow)

MEUR

Interest rate risk (100 bp rise in interest rates) Effect on profit

2.3

3.1

Effect on other change in equity

0.9

Commodity risk (electricity price + 20%) Effect on profit

-17.6

-7.4

Effect on other change in equity

10.2

FX risk (USD - 10%) Effect on profit

0.1

-100.3

-30.4

Effect on other change in equity

64.9

-10.3

FX risk (GBP - 10%) Effect on profit

0.1

-10.8

-3.8

Effect on other change in equity

5.3

-0.4

FX risk (SEK - 10%) Effect on profit

-10.0

53.4

7.3

Effect on other change in equity

-38.6

-69.9

Market risk sensitivity 2021

31 Dec 2021

Impact on equity exposure and annual transaction exposure

Impact on annual transaction expo- sure (cash flow) incl. hedging

Impact on financial assets and liabilities

Impact on net equity of foreign entities

Impact on annual transaction expo- sure (cash flow)

MEUR

Interest rate risk (100 bp rise in interest rates) Effect on profit

5.0

7.0

Effect on other change in equity

2.0

Commodity risk (electricity price + 20%) Effect on profit

-5.5

-3.7

Effect on other change in equity

1.9

FX risk (USD - 10%) Effect on profit

0.0

-81.2

-29.2

Effect on other change in equity

46.5

-9.9

FX risk (GBP - 10%) Effect on profit

0.1

-9.5

-3.6

Effect on other change in equity

4.7

-1.0

FX risk (SEK - 10%) Effect on profit

0.8

51.7

11.7

Effect on other change in equity

-36.1

-57.5

Items with + sign = positive effect = increase of assets / decrease of liabilities / increase of cash flow Items with - sign = negative effect = decrease of assets / increase of liabilities / decrease of cash flow

IFRS 7 requires an entity to disclose a sensitivity analysis for each type of market risk to which the entity is exposed at the reporting date, showing how profit or loss and equity would have been affected by changes in the relevant risk variable that were reasonably possible at that date. The Group has recognised interest rates, electricity prices and foreign exchange rates as its key market risks and has set 1 per cent interest rate rise, 20 per cent rise in electricity price and 10 per cent weakening of USD, GBP and SEK as reasonably possible risk variables. These currencies represent over 98 per cent of Group´s annual transaction exposure. The nature of the market price risk is relatively linear so that the size of effects of opposite market price changes do not essentially differ from the presented figures. The scenarios have been calculated by using regular principles of calculating market values of financial instruments described in the Group Accounting policies. Figures at the reporting date reflect quite well the average market risk conditions throughout the reporting period.

Additionally the Group is presenting figures describing the effects of the risk variables to its equity exposure and annual transaction exposure (cash flow) to present a broader picture about market risks of interest rates, electricity prices and foreign exchange rates. Annual cash flows are based on estimates, and not not existing commercial contracts. The weakening of USD and GBP has a negative impact on annual cash flow and the weakening of SEK has a positive impact. Hedges reduce this impact depending on hedging strategy. The impact on net equity of foreign entities is arising from the consolidation of subsidiaries to the Group consolidated accounts. The rise of electricity price has a negative impact on cash flow. As according to hedging policy the electricity price risk of the nearest year has mostly been hedged, the impact including hedges remains minor.

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