Metsä Board Annual and sustainability report 2022

BUSINESS OPERATIONS AND VALUE CREATION

SUSTAINABILITY REPORT

FINANCIAL DEVELOPMENT

GOVERNANCE

Notes to the consolidated financial statements 1. Accounting principles

■ Metsä Board Group Metsä Board Corporation and its subsidiaries comprise a forest industry group (”Metsä Board” or ”the Group”). Metsä Board’s business operations consist solely of folding boxboard, fresh fibre linerboard and market pulp businesses. Metsä Board reports on its financial performance in one reporting segment. Metsä Board Corporation is Group’s parent company, which is domiciled in Helsinki. The registered address of the company is Revontulenpuisto 2, 02100 Espoo Finland. The parent company is listed on Nasdaq Helsinki Ltd. At the end of 2022 Metsäliitto Cooperative owned 50.2 per cent of the shares, and the voting rights conferred by these shares were 68.2 per cent. A copy of the annual report can be obtained from Metsä Board’s website www.metsaboard.com or parent company’s head office at Revontulen puisto 2, 02100 Espoo Finland. The Group consolidated financial statements were authorised for issue by the Board of Directors on 8 February 2023. According to Finnish Companies Act shareholders can accept or reject the financial statements in General Meeting of shareholders after date of publication. General Meeting of shareholders also have possibility to decide to change financial statements. ■ Accounting principles Metsä Board Corporation’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Stand- ards (IFRS) effective and approved by the EU at the date of the financial statements 31 December 2022. The notes to the consolidated financial statements also comply with the requirements of Finnish accounting and company legislation supplementing the IFRS regulations. The consolidated financial statements are presented in millions of euros, unless otherwise noted. The consolidated financial statements have been prepared based on original acquisition costs, excluding financial assets recognised at fair value, hedged items in fair value hedging, assets and obligations related to defined benefit plans and share-based payments measured at fair value.

■ The impact of Russia’s military aggression The impact of Russia’s military aggression on business operations is discussed in the Board of Directors’ report. Due to the discontinuation of Russian business operations, the Group recognised an impairment of EUR 0.3 million for owned and leased property. The Group also recognised a loss of EUR 0.7 million in other operating expenses mostly related to accumulated Russian ruble-denominated translation differences. Further information can be found in the notes: 2.4. Operating expenses, 4.2. Property, plant and equipment, 5.1. Equity, translation differences, and 5.2. Financial income and expenses.

■ Amendments to standards applied during the 2022 financial period

Amendments to IAS 16, Property, Plant and Equipment - Proceeds before Intended Use. According to the amendments, the revenue accumulated from the sales of products created by the use of an unfinished tangible asset must be recognised through profit and loss. The amendments have an impact on the determination of the acquisition cost of the Group’s tangible assets. In the years 2022 and 2021, there were no material sales revenues of products arising from the use of a work-in-progress tangible asset. Other standard changes do not have a significant impact on the group’s financial statements. ■ New and amended standards to be applied during future financial periods Amendments to IAS 12 Income taxes – Deferred tax related to assets and liabilities arising from a single transaction. The amendments narrow the scope of the initial recognition exemption (IRE) and specify that the exemption does not apply to, for example, leases and decommissioning obligations that give rise to equal and opposite temporary differences. The amendments have an impact on the notes presented. Other standard changes do not have a significant impact on the group’s financial statements.