Stora Enso Oyj

Annual Report (ESEF) • Feb 13, 2024

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Box 309 FI-00101 Helsinki, Finland Tel: + 358 20 46 111 www.storaenso.com Business ID 1039050-8 VAT No FI 10390508 Contents Report of the Board of Directors (unaudited) Stora Enso introduction Markets and deliveries Financial results – Group Financial results – Segments Investments and capital expenditure Changes in the Group structure Innovation, research and development Non-financial information Environmental liabilities EU taxonomy Risks and risk management Climate-related financial disclosures (TCFD) Nature-related financial disclosures (TNFD) Corporate governance Legal proceedings Changes in Group management Share capital Outlook and short-term risks Annual General Meeting Proposal for the distribution of dividend Alternative performance measures Consolidated financial statements (audited) Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated cash flow statement Supplemental cash flow information Statement of changes in equity Notes to the consolidated financial statements (audited) 1 Basis for reporting 1.1 Accounting principles 1.2 Critical accounting estimates and judgements 2 Financial performance 2.1 Segment information 2.2 Other operating income and expense 2.3 Depreciation, amortisation and impairment charges 2.4 Net financial items 2.5 Income taxes 2.6 Earnings per share 3 Employee remuneration 3.1 Personnel expenses 3.2 Board and executive remuneration 3.3 Post-employment benefit obligations 3.4 Employee variable compensation and equity incentive schemes 4 Operating capital 4.1 Intangible assets, property, plant and equipment and right-of-use assets 4.2 Forest assets 4.3 Associates 4.4 Equity instruments 4.5 Emission rights and other non-current assets 4.6 Inventories 4.7 Operative receivables 4.8 Operative liabilities 4.9 Provisions 5 Capital structure and financing 5.1 Financial risk management 5.2 Fair values 5.3 Interest-bearing assets and liabilities 5.4 Derivatives 5.5 Shareholders' equity 5.6 Cumulative translation adjustment and equity hedging 5.7 Non-controlling interests 6 Group structure 6.1 Acquisitions, disposals and assets held for sale 6.2 Group companies 6.3 Related party transactions 7 Other 7.1 Commitments and contingencies 7.2 Events after the reporting period Notes to the parent company financial statements (audited) Signatures for the financial statements Auditor's Report The official audited financial statements in Finnish are available at storaenso.com/download-centre The audit firm PricewaterhouseCoopers Oy has provided an independent auditor’s reasonable assurance report only on Stora Enso’s ESEF Financial Statements in Finnish in accordance with ISAE 3000 (Revised). Unaudited 2 Report of the Board of Directors Introduction to Stora Enso Part of the global bioeconomy, Stora Enso is a business-to-business company and a leading provider of renewable products in packaging, biomaterials, and wooden construction, and one of the largest private forest owners in the world. Sustainability is integral in Stora Enso’s business strategy, it is at the core of what we do. Stora Enso contributes to the transition towards a biobased circular economy in three areas where it has the biggest impact and opportunities: climate change, biodiversity, and circularity. We create value with our low-carbon and recyclable fiber-based products, through which we support our customers in meeting the demand for renewable sustainable products. Stora Enso had 20,822 employees on average during 2023. The Group sales in 2023 were EUR 9.4 billion, with an operational EBIT of EUR 342 million. Stora Enso shares are listed at the Helsinki (STEAV, STERV) and Stockholm (STE A, STE R) stock exchanges. In addition, the shares are traded on OTC Markets (OTCQX) in the USA as ADRs and ordinary shares (SEOAY, SEOFF, SEOJF). Markets and deliveries Demand for cartonboard declined during 2023, with some regional exceptions. Market conditions took a negative turn as excess inventories from the 2022 boom were destocked in combination with weak underlying consumption due to the economic headwinds. Demand, though muted, in the Asian region was stronger than in the more mature European and North American markets. Containerboard demand remained weak in 2023. The economy-wide destocking cycle continued longer than anticipated, retail sales remained stagnant and global manufacturing weakness burdened the packaging sector. Containerboard demand declined in all regions excluding Asia, driven by China and India. In Europe, the demand contracted to pre-pandemic levels. The European paper demand continued to decline significantly, driven by structural demand erosion and destocking of inventories in the whole value chain. The European corrugated market faced challenges partly driven by weak retail demand, especially in food, beverage, and E-commerce segments. The weakness of the European manufacturing sector continued to drag down corrugated box demand. Overall, the European corrugated demand is estimated to have declined by 5% in 2023. Global demand for chemical market pulp rebounded to 3% in 2023. Demand for hardwood pulp grew 5%, whereas softwood pulp demand increased 0.5%. Demand for unbleached kraft pulp (UKP) dropped, whereas demand for fluff pulp continued strong. The majority of the growth was concentrated in Asia, especially China, where pulp buyers restocked their market pulp inventories with low priced pulp. However, the real pulp consumption in downstream markets did not necessarily reflect the boost in demand. Demand in North America and Europe was subdued due to a slow economy and high inflation. The global chemical market pulp capacity increased by 2% in 2023. The hardwood capacity increased by 5%, thanks to new capacity ramping up in South America. Due to temporary and permanent capacity closures, softwood capacity declined by 1.5% and UKP by 9%. The overall shipment-to-capacity balance stood at 91%, 2 percent-points up from 2022. Global pulp inventories were elevated for the first half of the year but were considered balanced towards the end of year. Softwood pulp inventories reached their all-time high reading before balancing by the end of the year. Hardwood pulp inventories declined strongly in the spring following a demand boost from China. After the strong markets during 2021–2022, the global sawn wood consumption decreased in 2023 by 3% according to FEA (Forest Economic Advisors), with above average declines experienced in Europe and the USA. Throughout 2023, market supply exceeded demand, which added pressure on prices in all markets. High inflation and interest rates caused market uncertainties and lowered customer confidence, which resulted in reduced volumes of building permits and housing starts. Curtailments of supply started to improve the market balance during the second half of 2023, supported by lower inventory levels. Estimated consumption of board, pulp, sawn softwood, and paper in 2023 Tonnes, million Europe North America Asia and Oceania Consumer board 9.1 8.8 32.7 Containerboard 33.9 31.8 94.9 Corrugated board (billion m2 )1 10.5 n/a n/a Chemical market pulp 15.3 7.5 40.2 Sawn softwood (million m3) 82.0 97.0 74.9 Newsprint 2.7 1.1 5.2 Uncoated magazine paper 1.5 0.7 0.1 1 European focus markets (Baltics, Benelux, FI, PL, SE) Source: Afry, CEPI, Numera, PPPC, Stora Enso, Forest Economic Advisors (FEA) Production and external deliveries 2023 2022 Change % 2023–2022 Board deliveries1, 1,000 tonnes 3,927 4,294 -8.6% Board production1, 1,000 tonnes 4,185 4,682 -10.6% Corrugated packaging European deliveries, million m2 1,167 741 57.5% Corrugated packaging European production, million m2 1,094 771 41.9% Market pulp deliveries, 1,000 tonnes 2,220 2,374 -6.5% Wood products deliveries, 1,000 m3 3,897 4,397 -11.4% Wood deliveries, 1,000 m3 13,667 13,304 2.7% Paper deliveries, 1,000 tonnes 761 1,924 -60.5% Paper production, 1,000 tonnes 752 1,926 -60.9% 1 Includes consumer board and containerboard volumes. The Group’s board deliveries totalled 3,927,000 tonnes, which was 368,000 tonnes, or 8.6% lower compared to a year ago. Corrugated packaging European deliveries increased by 426 million m2 or 57.5% to 1,167 million m2 due to acquisition of De Jong Packaging Group. Market pulp deliveries decreased by 153,000 tonnes, or 6.5%, to 2,220,000 tonnes. Wood product deliveries decreased by 499,000 m3 or 11.4% to 3,897,000 m3. Wood deliveries increased by 363,000 m3 or 2.7% to 13,667,000 m3. Paper deliveries totalled 761,000 tonnes, down 1,163,000 tonnes, or 60.5%, from 2022, driven by the structural changes. Alternative performance measures The alternative performance measures used by Stora Enso are explained in the chapter Alternative performance measures. Unaudited 3 Financial results – Group Group sales decreased by 20% year-on-year to EUR 9,396 (11,680) million mainly due to lower sales prices and volumes as well as divestments partly offset by acquisition of De Jong Packaging Group. Operational EBIT was EUR 342 (1,891 ) million, and the operational EBIT margin was 3.6%. Operational EBIT decreased mainly due to decreased sales prices and volumes as well as increased variable costs especially wood costs. Earnings per share decreased by 123% to EUR -0.45 ( 1.97) and earnings per share excluding fair valuations decreased by 147% to EUR -0.73 (1.55). The IFRS operating result includes a positive net effect of EUR 194 (positive 195) million from biological asset valuation from subsidiaries and joint operations. The positive impact comes mainly from the increase in fair valuation in Stora Enso owned forests in Sweden, mostly driven by higher market prices. There is also a positive net effect of EUR 56 (positive 168) million from Stora Enso’s share of net financial items, taxes and biological asset valuation of associated companies. The positive impact comes mainly from increase in fair valuation in Finnish forests, through Stora Enso's 41% investment in Tornator. Tangible and intangible asset (including goodwill) impairments amounted to EUR 776 (114) million. The items affecting comparability (IAC) had a negative impact of EUR 895 (245) million on IFRS operating result. The main IACs in 2023 relate to the impairments in Packaging Materials, Biomaterials, Wood Products and segment Other, restructurings related to Sunila, De Hoop, Anjala and Kvarnsveden sites and Group functions and Packaging Materials division as well as disposal of Nymölla, Maxau, Hylte and Wood Products DIY sites and biocomposite business. The IACs in 2022 mainly relate to the disposal of Russian operations as well as impairments and other costs related to upcoming paper site disposals. Fair valuations and non-operational items (FV) had a positive net impact on the IFRS operating result of EUR 231 (363) million. The main IAC and FV items are presented in the chapter Alternative Performance Measures. The IFRS operating result was EUR -322 (2,009) million. Key figures 2023 2022 2021 Sales, EUR million 9,396 11,680 10,164 Operational EBIT, EUR million 342 1,891 1,528 Operational EBIT margin 3.6% 16.2% 15.0% Operating result (IFRS), EUR million -322 2,009 1,568 Operating result margin (IFRS) -3.4% 17.2% 15.4% Return on equity (ROE) -3.8% 13.3% 13.0% Operational ROCE 2.4% 13.7% 12.5% Operational ROCE excl. Forest division 1.0% 20.4% 17.7% Net debt/equity ratio 0.29 0.15 0.22 EPS (basic), EUR -0.45 1.97 1.61 EPS excluding FV, EUR -0.73 1.55 1.19 Dividend and distribution per share1, EUR 0.10 0.60 0.55 Payout ratio, excluding FV -13.7% 38.6% 46.3% Payout ratio (IFRS) -22.1% 30.5% 34.3% Dividend and distribution yield, (R share) 0.8% 4.6% 3.4% Price/earnings (R share), excluding FV -17.17 8.46 13.60 Equity per share, EUR 13.93 15.89 13.55 Market capitalisation 31 Dec, EUR million 9,864 10,503 12,809 Closing price 31 Dec, A share, EUR 12.45 13.90 16.60 Closing price 31 Dec, R share, EUR 12.53 13.15 16.14 Average price, A share, EUR 12.82 16.58 16.68 Average price, R share, EUR 11.93 16.12 15.70 Number of shares 31 Dec (thousands) 788,620 788,620 788,620 Trading volume A shares (thousands) 968 1,174 1,750 % of total number of A shares 0,5 % 0.7% 1.0% Trading volume R shares (thousands) 476,654 455,952 422,493 % of total number of R shares 77,8 % 74.5% 69.0% Average number of shares, basic (thousands) 788,620 788,620 788,620 Average number of shares, diluted (thousands) 789,714 789,391 789,126 1 It is proposed that the Board would be authorised to decide on an additional dividend payment of a maximum of EUR 0.20.The authorisation would be valid until 31 December 2024. See the Board of Directors' proposal for dividend distribution. Sales and operational EBIT margin Net debt to operational EBITDA Operational ROCE excl. Forest Unaudited 4 Net financial expenses at EUR 173 (151) million were EUR 23 million higher than a year ago. Net interest expenses, at EUR 113 million, increased by EUR 8 million as a result of higher interest rates on borrowings and higher amount of gross debt. Other net financial expenses, at EUR 38 million, were EUR 6 million lower, mainly due to the higher write-down of Russia related loan receivables and loss allowance included in the comparison period figures. The net foreign exchange impact in respect of cash equivalents, interest-bearing assets and liabilities and related foreign-currency hedges amounted to a loss of EUR 22 (loss of EUR 1) million, mainly due to revaluation of foreign currency net debt in subsidiaries located in China. The net tax totalled EUR 64 (-322) million, equivalent to an effective tax rate of 13.0% (17.3%), as described in more detail in note 2.5 Income taxes. The loss attributable to non-controlling interests was EUR 74 (loss of EUR 13) million, leaving a loss of EUR 357 (gain of EUR 1,550) million attributable to Company shareholders. Earnings per share excluding fair valuations were EUR -0.73 (1.55). Operational return on capital employed was 2.4% (13.7%). The Group capital employed was EUR 14,056 million on 31 December 2023, an decrease of EUR 300 million, mainly due to impairments and change in the fair valuation of energy assets (PVO) partly offset by acquisition of De Jong Packaging, investment projects and increase of the fair valuation of forest assets. Breakdown of capital employed change EUR million Capital Employed 31 December 2022 14,356 Capital expenditure excluding investments in biological assets less depreciation 521 Investments in biological assets less depletion of capitalised silviculture costs -5 Impairments and reversal of impairments -770 Fair valuation of forest assets 241 Unlisted securities (mainly PVO) -627 Associated companies 94 Net liabilities in defined benefit plans -31 Operative working capital and other interest-free items, net -344 Emission rights -85 Net tax liabilities 170 Acquisition of subsidiary companies 818 Disposal of subsidiary companies -227 Translation difference -60 Other changes 4 31 December 2023 14,056 Financing Cash flow from operations was EUR 954 (1,873) million and cash flow after investing activities was EUR -40 (1,162) million. Working capital decreased by EUR 300 (increased 461) million, inventories decreased by EUR 328 million and trade receivables by EUR 389 million. Trade payables decreased by EUR 352 million and thus had a negative impact on working capital. Payments related to the previously recognised provisions were EUR 53 million. Operative cash flow EUR million 2023 2022 Operational EBITDA 989 2,529 IAC on operational EBITDA -126 -133 Other adjustments -210 -62 Change in working capital 300 -461 Cash flow from operations 954 1,873 Cash spent on fixed and biological assets -989 -705 Acquisitions of associated companies -5 -7 Cash flow after investing activities -40 1,162 As at 31 December 2023, Group net interest-bearing liabilities were EUR 3,167 (1,853) million. The increase in net interest-bearing liabilities was mainly driven by the acquisition of the De Jong Packaging Group and other significant investments such as the consumer board investment at the Oulu site in Finland. Cash and cash equivalents net of bank overdrafts increased to EUR 2,464 (1,917) million. The net debt/equity ratio at 31 December 2023 increased to 0.29 (0.15). The ratio of net debt to the last 12 months' operational EBITDA increased to 3.2 (0.7) due to higher net debt and lower operational EBITDA. The average interest rate on borrowings for the full year 2023 increased to 3.7% (3.3%) with a run-rate of 4.0% as per the end of the fourth quarter. In May 2023, Stora Enso issued two EUR 500 million green bonds with 3- and 6.25-year maturities. In November 2023, Stora Enso issued new SEK green bonds with nominal value of SEK 6,100 million, equal to EUR proceeds of 524 million at the transaction date FX rate. The SEK green bonds feature several tranches with the maturities ranging from 2025 to 2028. Later in December 2023 the Company also completed a private placement of SEK 425 million with maturity in 2033. This was equal to EUR proceeds of 38 million at the transaction date FX rate. In addition, during the year, the Company re-financed altogether EUR 550 million of its bilateral loans and committed credit facility, and also drew bilateral loans of EUR 200 million in total that were arranged but undrawn at the end of 2022. The existing loans were extended by one to two years and new terms also include extension options. The Company also arranged a new EUR 100 million bilateral loan with a 1.5-year maturity and a 1-year extension option during the second quarter. In the fourth quarter a one-year extension was signed to the revolving credit facility of EUR 700 million to extend its maturity to 2028. Stora Enso had in total EUR 800 million committed undrawn credit facilities as per 31 December 2023. Additionally, the Company has access to EUR 1,100 million statutory pension premium loans in Finland. The fair valuation of cash flow hedges and equity investments fair valued through other comprehensive income decreased equity by EUR 647 (increased by EUR 563) million. The decrease is mainly due to a lower fair valuation of the Group’s shareholding in Pohjolan Voima Oy (PVO), explained especially by lower electricity price forecasts. At the end of the year, the ratings for Stora Enso’s rated bonds were as follows: Rating agency Long/short-term rating Valid from Fitch Ratings BBB- (stable) 4 August 2023 Moody’s Baa3 (stable) / P-3 17 November 2023 Unaudited 5 Financial results – Segments Packaging Materials division The Packaging Materials division is a global leader and expert in circular packaging providing premium packaging materials based on virgin and recycled fiber. Stora Enso helps customers replace fossil-based materials with low-carbon, renewable and recyclable alternatives for their food, beverage and transport packaging with a wide selection of base boards and barrier coatings. EUR million 2023 2022 Sales 4,557 5,496 Operational EBITDA 267 993 Operational EBITDA margin 5.9% 18.1% Operational EBIT -57 655 Operational EBIT margin -1.3% 11.9% Fair valuations and non-operational items (FV)1 12 7 Items affecting comparability (IAC)1 -597 -9 Operating result (IFRS) -642 653 Operating capital, average 3,580 3,512 Operational ROOC -1.6% 18.6% Cash flow from operations 370 823 Cash flow after investing activities -235 488 Board deliveries, 1,000 tonnes 4,963 5,425 Board production, 1,000 tonnes 4,843 5,502 1 The IAC for 2023 included impairments of fixed assets of EUR -228 million for the Oulu containerboard unit, EUR -202 million for China operations, EUR -12 million for the Anjala site's paper assets, EUR -26 million of goodwill impairments related to the Anjala and De Hoop sites, restructuring costs related to De Hoop site closure of EUR -79 million, closing down one paper line at Anjala site of EUR -26 million, restructuring program in division management and support functions of EU -12 million and other restructuring costs of EUR -9 million, and other IAC cases of -3 million. The IAC for 2022 included EUR -4 million expenses from disposal of Russian operations, EUR -5 million of restructuring expenses and EUR -1 million other cases. The fair valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 12 (7) million. Comparative figures have been restated as described in the release from 29 March 2023. The Packaging Materials division was hit by unprecedented market conditions and sales declined by 17%, to 4,557 (5,496) million. This was driven by lower prices and volumes for containerboard and paper, and lower volumes for consumer board. The containerboard market remained weak throughout the year, while the consumer board market started to soften during Q1 and stabilised at a low level in Q4. Operational EBIT dropped from all time high level to EUR -57 (655) million, driven by lower volumes and prices. Variable costs in many categories declined compared to a year ago, but overall remained higher year-on-year driven by increased wood costs. Packaging Solutions division The Packaging Solutions division is a packaging converter that provides premium fiber-based packaging products and services used by leading brands across multiple market areas, including retail, e-commerce, fresh produce, and industrial applications. The division also provides design and sustainability services for customers to optimise material use, logistics and to reduce CO2 emissions. EUR million 2023 2022 Sales 1,077 727 Operational EBITDA 111 42 Operational EBITDA margin 10.3% 5.7% Operational EBIT 43 16 Operational EBIT margin 4.0% 2.2% Items affecting comparability (IAC)1 -26 -98 Operating result (IFRS) 17 -81 Operating capital, average 874 204 Operational ROOC 4.9% 7.9% Cash flow from operations 145 11 Cash flow after investing activities 62 -14 Corrugated packaging European deliveries, million m2 1,178 767 Corrugated packaging European production, million m2 1,094 771 1 The IAC for 2023 included EUR -19 million restructuring costs in China and EUR -16 million related to the acquisition of De Jong Packaging Group, and EUR -1 million other cases. The IAC for 2022 included EUR -93 million related to the disposal of Russian operations, EUR -4 million restructuring costs, EUR -2 million fixed asset impairments and EUR -1 million other cases. Comparative figures have been restated as described in the release from 29 March 2023. Packaging Solutions division sales were at an all-time high of EUR 1,077 (727) million, up 48%, driven by the acquisition of De Jong Packaging Group Operational EBIT was EUR 43 (16) million. Lower raw material prices had a positive impact on the margins. The integration of De Jong Packaging Group proceeded well and contributed positively to the result. Sales and operational EBIT Packaging Materials Operational ROOC Packaging Materials Sales and operational EBIT Packaging Solutions Operational ROOC Packaging Solutions Unaudited 6 Biomaterials division The Biomaterials division’s business opportunities are strongly driven by the need to replace fossil-based and other non-renewable materials. Stora Enso uses all fractions of a tree to develop new biobased solutions for various applications. The division’s long-term growth is driven by new products and innovations, while pulp continues to be the foundation. EUR million 2023 2022 Sales 1,587 2,180 Operational EBITDA 256 822 Operational EBITDA margin 16.1% 37.7% Operational EBIT 118 687 Operational EBIT margin 7.4% 31.5% Fair valuations and non-operational items (FV)1 25 -17 Items affecting comparability (IAC)1 -224 -2 Operating result (IFRS) -81 668 Operating capital, average 2,625 2,715 Operational ROOC 4.5% 25.3% Cash flow from operations 431 682 Cash flow after investing activities 234 536 Pulp deliveries, 1,000 tonnes 2,277 2,554 1 The IAC for 2023 included restructuring expenses from the closure of the Sunila pulp production of EUR -116 million, impairments of fixed assets of EUR -59 million for the Uimaharju site, impairment of goodwill of EUR -44 million for the Nordic Mills CGU, EUR -4 million of other cases. The fair valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 25 (-17) million. Biomaterials division sales were EUR 1,587 (2,180) million, down 27% from all-time high sales in 2022, due to significantly lower pulp sales prices in all grades and lower sales volumes, due to market-related curtailments and the closure of the Sunila site in Finland announced in September 2023. Market conditions were challenging with lower demand. Operational EBIT at EUR 118 (687) million decreased by 83%, mainly due to significantly lower sales prices and volumes. Operational EBIT was negatively impacted by significantly higher variable costs, mainly for wood. Wood Products division The Wood Products division is Europe’s largest sawn timber producer and a leading provider of sustainable wood-based solutions for the global construction industry. Additionally, it offers window and door components, and co-products such as pellets made from wood residuals. EUR million 2023 2022 Sales 1,580 2,195 Operational EBITDA -17 356 Operational EBITDA margin -1.0% 16.2% Operational EBIT -64 309 Operational EBIT margin -4.1% 14.1% Items affecting comparability (IAC)1 -22 -56 Operating result (IFRS) -86 253 Operating capital, average 687 714 Operational ROOC -9.3% 43.2% Cash flow from operations 43 346 Cash flow after investing activities 3 264 Wood products deliveries, 1,000 m3 3,727 4,235 1 The IAC for 2023 included impairments of fixed assets of EUR -7 million for the Veitsiluoto site, EUR -4 million for the Launkalne site, EUR -5 million for the Honkalahti site, EUR -4 million impact from disposal of Näpi site and EUR -3 million from disposal of Wood Products DIY unit, EUR 1 million other cases. The IAC for 2022 was related to disposal of Russian operations. Wood Products division sales were EUR 1,580 (2,195) million, down 28%, due to the weakened market demand and clearly lower sales prices. Weakness in construction industry resulted in decline in building permits and project starts, and reduced the demand of the division's products through the year. To balance the lower demand, production curtailments were implemented. Operational EBIT was weak, at EUR -64 (309) million, a decrease of 121%. The negative impact of sales prices and volumes could not be compensated by the division's actions to lower the fixed costs. Sales and operational EBIT Biomaterials Operational ROOC Biomaterials Sales and operational EBIT Wood Products Operational ROOC Wood Products Unaudited 7 Forest division The Forest division is responsible for wood sourcing for Stora Enso’s Nordic and Baltic operations and B2B customers. It manages the Group’s forest assets in Sweden and a 41% share of Tornator, whose forests are mainly located in Finland. The division’s operations are based on sustainable forest management from planning and logistics to harvesting and forest regeneration. EUR million 2023 2022 Sales 2,490 2,519 Operational EBITDA 305 256 Operational EBITDA margin 12.2% 10.2% Operational EBIT 253 204 Operational EBIT margin 10.2% 8.1% Fair valuations and non-operational items (FV)1 206 367 Items affecting comparability (IAC)1 2 -48 Operating result (IFRS) 461 523 Capital employed, average 5,740 5,518 Operational ROCE 4.4% 3.7% Cash flow from operations 70 146 Cash flow after investing activities 19 91 Wood deliveries, 1,000 m3 32,401 38,217 Operational fair value change of biological assets 120 87 1 The IAC for 2023 included a reversal of land related impairment of EUR 5 million and other provision updates of EUR -3 million. The IAC for 2022 included land related impairment of EUR -5 million and EUR -43 million related disposal of Russian operations. The fair valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 156 (201) million, non-operational items of associated companies of EUR 56 (169) million, and EUR -5 (-3) million impact from adjustments for differences between fair value and acquisition cost of forest assets upon disposal. Forest division sales were EUR 2,490 (2,519) million, down 1%. Higher sales prices were offset by lower demand. Operational EBIT at EUR 253 (204) million increased by 24%. The increase was due to the strong operational performance and higher sales prices in the Group’s own forest assets. Other The segment Other includes the divested paper sites until the completion of the divestments, the reporting of the emerging businesses (including Formed Fiber and Selfly Stores), as well as Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s shared services and administration. EUR million 2023 2022 Sales 964 2,150 Operational EBITDA 18 102 Operational EBITDA margin 1.9% 4.7% Operational EBIT 1 63 Operational EBIT margin 0.1% 2.9% Fair valuations and non-operational items (FV)1 -13 6 Items affecting comparability (IAC)1 -28 -33 Operating result (IFRS) -41 36 Cash flow from operations -105 -136 Cash flow after investing activities -123 -203 1 The IAC for 2023 included EUR 29 million related to restructuring of Kvarnsveden, EUR 9 million to restructuring of Veitsiluoto, and EUR -15 million to restructuring of Group Functions, EUR 52 million related to disposal of Maxau, EUR -30 million to disposal of Nymölla, EUR -45 million to disposal of Hylte, EUR -14 million to disposal of biocomposite business, and EUR -6 million on disposal transactions costs, EUR -14 million related to fixed asset impairments in Group Operations unit and EUR 6 million related to environmental provision updates. The IAC for 2022 included EUR 13 million related to restructuring of Kvarnsveden, EUR -10 million to restructuring of Veitsiluoto, EUR -28 million on impairments, transaction cost and other items related to paper site disposals of Nymölla, Hylte and Maxau, EUR -13 million related updates in environmental provisions, EUR 8 million on Kvarnsveden site disposal, EUR -1 million related to disposal of Russian operations and EUR -1 million other cases. The fair valuations for 2023 included non-cash income and expenses related to CO2 emission rights and liabilities of EUR -13 (6) million. Comparative figures have been restated as described in our release from 29 March 2023. Sales for the segment Other were at EUR 964 (2,150) million and operational EBIT EUR 1 (63) million. The reduction from the previous year was mainly driven by the sale of the paper production units in Sweden and Germany. Sales and operational EBIT Forest Operational ROCE Forest Unaudited 8 Investments and capital expenditure Additions to fixed and biological assets including internal costs capitalised in 2023 totalled EUR 1,125 (778) million. The total amount includes additions in biological assets of EUR 71 (77 ) million. In February, Stora Enso announced approximately EUR 30 million investment in its Heinola Fluting site in Finland to renew the energy set-up and process equipment. After the investment, the site can replace also the remaining fossil-based fuels with renewable bioenergy. This will reduce the site’s fossil-based greenhouse gas emissions by more than 90%. In June, Stora Enso and Tetra Pak completed the investment in increasing the recycling capacity of beverage cartons in Poland. The total investment was EUR 29 million, of which Stora Enso’s share was EUR 17 million. A new repulping line was built at the Ostrołęka site recovering the carton fibers. The EUR 21 million investment, announced in June 2021, to improve the competitiveness and environmental performance of the Anjalankoski production sites was completed during the third quarter of 2023. The expansion of board production capacity, announced in 2021, at the Skoghall site in Sweden was completed in November. Following the investment, the annual packaging board production increased by approximately 100,000 tonnes to over 900,000 tonnes. The site started to deliver commercial quality in liquid packaging board (LPB) and coated unbleached kraft (CUK) according to plan. The EUR 10 million investment, decided in April 2022, at the Enocell site, Finland, was completed during the fourth quarter of 2023. The investment reduced annual operational CO2 emissions replacing fossil-based fuel oil with renewable pitch oil made from trees. This complements the main energy source, sawdust powder, utilising 100% bio energy. The EUR 1 billion investment at the Oulu site in Finland to convert the remaining idle paper machine into a high-volume consumer board line is moving ahead according to schedule. Production is expected to start during 2025. The investment supports the Group’s growth strategy in renewable packaging by providing new volume for growing packaging segments. The targeted end-use segments are food and beverage packaging, especially frozen and chilled, and dry and fast food, mainly in Europe and North America. During the year, Stora Enso completed a feasibility study regarding the conversion of one of the two paper line at its Langerbrugge site in Belgium into a high-volume recycled containerboard line, and decided to postpone the decision regarding the possible future conversion, until there are more favourable market conditions for containerboard. The other main projects ongoing at the end of 2023 were were De Lier site expansion in the Netherlands and improvements of fluff pulp production at the Skutskär site in Sweden. Changes in the Group structure The acquisition of De Jong Packaging Group, based in the Netherlands, for an enterprise value of EUR 1,020 million was completed in January 2023. Stora Enso finalised the divestment of its paper assets in 2023. The divestment of the Nymölla paper site in Sweden to Sylvamo was completed in January, the divestment of the Maxau site in Germany to Schwarz Produktion was completed in March and the divestment of the Hylte site in Sweden to Sweden Timber was completed in April. The Anjala paper mill in Finland and the Langerbrugge paper mill in the Netherlands were retained in the Group. During the year, Stora Enso closed down its Sunila pulp production and lignin extraction unit in Finland, the De Hoop containerboard site in the Netherlands, one containerboard line at its Ostrołęka site in Poland, and the Näpi sawmill in Estonia. Stora Enso is in the process of divesting its consumer packaging site and forestry operations in Guangxi, China. Innovation, research and development Stora Enso’s total spend on innovation, research and development in 2023 was EUR 114 (112) million, equivalent to 1.2% (1.0%) of total sales. Research and development work is a basic element for staying relevant and competitive towards customers. In 2023, Stora Enso employed approximately 330 people in research and development. The responsibility of product innovations and development of services is with the business divisions. Stora Enso's growth focus is on the development of sustainable packaging applications to replace plastic-based materials; bio-based barriers solutions for packaging; innovative biomaterials or high-end applications; and the development of sustainable wooden-based materials and components which store carbon and improve energy efficiency of buildings. Stora Enso’s long-term science and research priority is to address the early research at universities and institutes for enabling breakthroughs and competence build-up to meet the needs of the divisions. The Group Innovation and R&D is working closely with the strategic partner universities, research institutes and excellence centers to get answers to central scientific questions related to renewable materials. Intellectual property (IP) is an important tool to support Stora Enso's development of innovative products and processes and safeguarding the Group's intellectual assets. During 2023, Stora Enso continued to strengthen its patent portfolio by applying for patents for 83 new innovations. The focus of the new patent filings was within the Biomaterials, Packaging Materials and Packaging Solutions divisions. The Biomaterials division has new patent filings related to Lignode, biobinders, biofoam, and circular chemicals. The Packaging Materials division continues to strengthen the patent portfolio with filings related to barriers, board technology and circular packaging. The Packaging Solutions division has new patent filings related to, for example, formed fiber and packaging design. Stora Enso’s patent portfolio amounts to over 3,500 applications and granted patents. Non-financial information Requirements of non-financial information reporting according to the Finnish Accounting Act are reported below. The scope of the reporting includes those non-financial topics that relate to the Group’s key risks. Risks and policy principles related to these topics are additionally described in the chapters Risks and Risk Management, Task Force on Climate-related Financial Disclosures (TCFD), and Task Force on Nature-related Financial Disclosures (TNFD). Business model Stora Enso is one of the leading providers of renewable products in packaging, biomaterials, and wooden construction, and one of the largest private forest owners in the world. Sustainability is embedded in the Group's strategy and responsible business practices. Stora Enso contributes to the transition towards a circular bioeconomy in the three areas where it has the biggest impact and opportunities: climate change, biodiversity, and circularity. A description of Stora Enso's business model is presented at the beginning of the Report of the Board of Directors. Stora Enso acknowledges the importance of the United Nations Sustainable Development Goals (SDGs) and supports all seventeen SDGs. The SDGs ‘Responsible consumption and production’ (goal 12), ‘Climate action’ (goal 13), and ‘Life on land’ (goal 15) have been identified as the most relevant, where the Group has the largest impact through its own operations and products. Unaudited 9 Sustainability governance Sustainability is a key element of Stora Enso’s corporate governance owned by the Board of Directors, the President and Chief Executive Officer (CEO), and the Group Leadership Team (GLT). The CEO carries the ultimate responsibility for the implementation of the sustainability agenda. Sustainability work is led by the Executive Vice President, Sustainability, who reports directly to the CEO and is part of the Group Leadership Team (GLT). The Board of Directors’ Sustainability and Ethics Committee oversees the implementation of Stora Enso’s sustainability agenda, and Ethics and Compliance Strategy. The Committee met four times in 2023. Stora Enso’s Sustainability Policy describes the Group's overall approach to sustainability and the governance model. The Code of Conduct and other policies, guidelines, and statements on specific sustainability topics further elaborate the approach, while also guiding the Group’s employees in their everyday work. These documents are available at storaenso.com/ sustainability. More information about Stora Enso’s approach to sustainability is available in the sections Our strategy, Our people, and Sustainability reporting. Environmental matters Climate change Key policy: Policy for Energy and Climate change Stora Enso's science-based target is to reduce absolute Scope 1 and 2 CO2e emissions from operations by 50% by 2030 from the 2019 baseline, in line with the 1.5-degree scenario. Stora Enso is also committed to reducing absolute Scope 3 CO2e emissions by 50% by 2030 from the 2019 baseline. In 2023, Stora Enso’s absolute CO2e emissions (Scope 1 and 2) were 41% lower than the baseline level (27% 1 lower in 2022). The Group's CO2e emissions elsewhere along the value chain (Scope 3) were 34% lower than the baseline level (24%1 lower in 2022). During 2023, the emissions in all three Scope categories decreased mainly as a consequence of lower production volumes as well as site and production line closures. Sustainable forestry and biodiversity Key policy: Wood and Fiber Sourcing and Land Management Policy Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and plantations by 2050 through active biodiversity management. The Group steers its biodiversity actions through a Biodiversity Leadership Programme to improve biodiversity at species, habitat, and landscape levels. Progress is monitored with science-based impact indicators reported in the chapter Sustainable forestry and biodiversity of the Sustainability reporting section. Stora Enso uses its own forest in Sweden as a platform for continuously developing new biodiversity management practices to be adapted to local conditions and implemented in different geographical areas when feasible. Measures to be developed, tested, and used in the Group's own forests in Sweden include: application of digital tools to improve accuracy of planning and operations; increasing amount of deadwood and broad-leaved trees, especially birch; continuous cover forestry in suitable areas; and increasing use of controlled burning in forest regeneration. Currently, Stora Enso follows its progress on sustainable forestry with a key performance indicator that measures the proportion of land in wood production and harvesting owned or leased by Stora Enso covered by forest certification schemes. At the end of 2023, Stora Enso's owned or leased lands covered a total area of 2.02 million hectares (2.01 million hectares in 2022). The majority of Stora Enso’s owned or leased lands are located in Sweden. For more details, see note 4.2 Forest assets. The Group’s target is to maintain the high level of 96%, and in 2023, the certification coverage amounted to 99% (99% 2 in 2022). Certain purchased areas in Stora Enso’s joint operations in Brazil and Uruguay were in the certification process but not yet certified by the end of 2023. In 2023, the total amount of wood (including roundwood and wood chips) delivered to Stora Enso's production sites was 28.1 million m3 (solid under bark) (35.1 million m3 in 2022). The proportion of third-party certified wood in the Group's total wood supply was 81% (80%). Circularity Key policy: Circular Design Guidelines Stora Enso is committed to circular material flows that help to minimise waste and combat climate change. The target is to achieve 100% technically recyclable products by 2030. By the end of 2023, 94% (94% in 2022) of the Group's products were recyclable. 3 Water Key policy: Environmental Guidelines Stora Enso constantly strives to improve its water performance through targeted investments. As of 2023, a new Group goal was set to reduce specific process water discharges per saleable tonne (m3 tonne) by 17% from the 2019 baseline (36 m3/tonne) by 2030. In 2023, the process water discharges were 35 m3/tonne (34 m3 in 2022), with a 3% decrease from the baseline. For total water withdrawal, the target is to maintain a decreasing trend from the 2016 baseline (60m3/tonne). In 2023, total water withdrawal was 61 m3 per saleable tonne (57 m3 in 2022). Lower production volumes are currently adversely affecting the performance per saleable tonne, as a regular water flow needs to be maintained, particularly in wastewater treatment. Social and employee matters Employees Key policies: Minimum Human Resources Requirements for labour conditions On 31 December 2023, there were 19,842 (20,879) employees in the Group. The average number of employees in 2023 was 20,822, which is 969 less than the average number in 2022. The figures include 50% of the employees at Veracel in Brazil and Montes del Plata in Uruguay. Read more in the chapter Employees in the Sustainability reporting section. Personnel expenses totalled EUR 1,275 (1,315) million or 13.6% of sales. Wages and salaries were EUR 962 (996) million, pension costs EUR 147 (152) million, and other employer costs amounted to EUR 162 (160) million. Unaudited 10 1 Comparative figures are restated due to structural changes or additional data after previous annual report. 2 Reporting on total land area and its forest certification coverage aligned with financial reporting on forests assets. For more information, see note 4.2 3 Based on the technical recyclability of products and their production volumes consolidated as tonnes. Technical recyclability is defined by international standards and tests, when available, and in absence of these, by Stora Enso’s own tests that prove recyclability. The reporting scope includes Stora Enso’s packaging, pulp, paper, and solid wood products as well as biochemical by-products. At the end of 2023, the Group's top four countries in respect to the number of employees were Finland, Sweden, China, and Poland. 25% (25%) of all employees were women. Stora Enso's target is to increase the share of female managers among all managers to 25% by the end of 2024. By the end of 2023, 24% of managers were female (23%). Personnel turnover in 2023 was 11% (14%). Illness-related absenteeism amounted to 3.7% (4.1%) of total theoretical working hours. The Group's wages in relation to local minimum wages are presented in the chapter Consolidated sustainability figures in the Sustainability reporting section. Remuneration to the Board of Directors and executive management is described in note 3.2 Board and executive remuneration. Safety Key policy: Health and Safety Policy In 2023, the Total Recordable Incident (TRI) rate was 4.7 (5.9). The milestone of 4.9 for 2023 was achieved by prioritising preventive safety measures and reinforcing divisions’ accountability on improving performance. In 2023, Stora Enso introduced a new leading safety indicator, the ‘Safety Engagement Rate’, focused on preventive safety management. In 2023, no fatal injuries occurred at Stora Enso’s sites. Sustainable sourcing Key policy: Supplier Code of Conduct (SCoC) Stora Enso’s key performance indicator for responsible sourcing measures the proportion of Group's total supplier spend covered by the Supplier Code of Conduct (SCoC), including all categories and regions. Stora Enso's target is to maintain a minimum coverage level of 95% of supplier spend covered by the SCoC. By the end of 2023, 95% of Stora Enso’s total spend on materials, goods, and services was duly covered (96% at the end of 2022). Respect for human rights Key policy: Human Rights Policy and Guidelines Stora Enso’s commitment to respect human rights covers all the Group's operations, including employees, contractors, suppliers, and neighbouring communities. In addition to the Group's commitment to the UN Guiding Principles on Business and Human Rights, Stora Enso’s annual Slavery and Human Trafficking Statement is available at storaenso.com/sustainability. While Stora Enso considers all human rights to be important and respects them, the human rights identified as most salient remain the primary focus. This includes the following topics: • Health and safety • Fair labour (fair employment conditions, freedom from forced labour, freedom of association, non-discrimination, and non-harassment) • Land and natural resource rights acquisition and management • Grievance mechanisms • Children’s rights (relevant to the forest sector) In 2023, Stora Enso shared best practices and adapted existing processes to embed the outcomes of the three human rights due diligence deep-dive projects initiated in 2022. The projects were carried out together with a third-party consultancy, with the aim of improving risk identification and controls for two high-risk supply chains, as well as the due diligence processes in the Group’s own operations. Read more in chapter Human Rights in the Sustainability reporting section. During 2023, Stora Enso continued to address land and natural resource rights in Guangxi, China and Bahia, Brazil. Guangxi, China Stora Enso leases 69,700 (73,100) hectares of land in Guangxi province China, of which 53,400 (53,400) hectares is leased from state-owned forest farms. The remaining 16,300 (19,700) hectares, or 23% (27%) of the total area, is social land leased from village collectives, individual households, and local forest farms. Parts of the land leased by Stora Enso have been occupied for up to ten years for the purpose of growing crops and trees on a small scale. In some cases, the occupiers are claiming rights to the land based on historical land ownership documents that have been superseded by state ownership in successive land reform processes. Recovery of occupied land continued in 2023, with 7,132 (6,124) hectares of land still under occupation at the end of the year. As announced in December 2022, Stora Enso has initiated a sales process for a divestment of its consumer board production site and forestry operations in Beihai, China. Bahia, Brazil In Bahia, Brazil, work continued on the Sustainable Settlement Initiative launched in 2012 to provide farming land and educational support for local families in the landless people’s social movements. In 2018, Veracel signed a new agreement with the social landless movements to complement the earlier agreed Sustainable Settlement Initiative. At the end of 2023, 139 (182) hectares or 0.1% (0.2%) of productive land owned by Veracel remained occupied by movements not involved in the agreements. At the end of 2023, the total land area owned by Veracel was 209,000 (210,000) hectares, of which 82,000 (82,000) hectares are used for growing eucalyptus for pulp production. Approximately half of Veracel's lands are dedicated to protecting local biodiversity by restoring and conserving the natural Atlantic rainforest. Anti-corruption and bribery matters Key policies: Business Practice Policy, the Stora Enso Code (Code of Conduct) A total of 131 (153 in 2022) potential non-compliance cases were reported in 2023. During the past years, there has been a significant increase in reported misconduct cases, which is likely due to a greater external and internal focus on ethical conduct, compliance, and voicing concerns. A total of 163 (140) investigations of potential non-compliance were completed, which also included open cases from previous years. Proven cases leading to disciplinary action, legal action and/or process improvements were identified in 30 (44) of the investigations. Based on the Group’s categorisation, 9 (13) of the proven cases were related to corruption and/or fraud, resulting in employee dismissal or a disciplinary process. While Stora Enso continues to enforce zero tolerance for corruption, none of the proven cases had a material impact on the Company. Furthermore, 7 (12) of the proven cases were related to discrimination, harassment and/or bullying. Remediation plans have been or are being implemented together with relevant management representatives. Unaudited 11 Environmental investments and liabilities In 2023 Stora Enso’s environmental investments amounted to EUR 132 (82) million. These investments were mainly to improve the quality of air and water, to enhance resource and energy efficiency, and to minimise the risk of accidental spills. Stora Enso’s environmental costs in 2023 excluding interest and including depreciation totalled EUR 240 (243) million. These costs include taxes, fees, refunds, permit-related costs, and repair and maintenance costs, as well as wastewater treatment chemicals and certain other materials. Provisions for environmental remediation amounted to EUR 63 (73) million at 31 December 2023, details of which are in note 4.9 Provisions. There are currently no active or pending legal claims concerning environmental issues that could have a material adverse effect on Stora Enso’s financial position. EU Taxonomy To meet the EU’s climate and energy targets for 2030 and reach the objectives of the European Green Deal, a classification system for sustainable economic activities called EU Taxonomy was introduced in 2020. Large companies are obligated to report the share of Taxonomy-eligibility and Taxonomy-alignment in their operations. Taxonomy-eligibility describes if an economic activity is included in the scope of activities recognised in the EU Taxonomy Regulation. Taxonomy-alignment describes if an economic activity is sustainable based on the technical screening criteria for substantial contribution and do-no-significant harm specified for the activity. Taxonomy-aligned activity needs to be also carried out in compliance with the minimum safeguards, thus to respect basic human rights and follow good business conduct rules. In 2023 EU Taxonomy was expanded to four remaining environmental objectives with the EU Environmental Delegated Act and with amendments to Climate Delegated Act. The amendments did not bring major impact on Stora Enso's Taxonomy-eligibility. The forest industry is not at the core of the current legislation and therefore the Group has only few activities to report on. From Stora Enso’s main products, the wood-based solutions for construction industry are included in the EU Taxonomy through their contribution to buildings' energy efficiency. Other main products, production of pulp, consumer board, containerboard and corrugated packaging, are out of the scope of the EU Taxonomy and therefore the reported Taxonomy-eligible KPIs are low. Accounting principles The EU Taxonomy KPIs, turnover, capex and opex, are presented in separate tables as defined in the regulation. The total turnover is the Group’s total sales, as presented in the line of sales, in consolidated income statement, and rental income in 2023, which respectively include the IFRS 15 and the IFRS 16 income according to the EU Taxonomy turnover definition. The external sales connected to the economic activities are reported under Taxonomy-eligible turnover. The total capex is the Group's total capital expenditure in 2023, as presented in the line of additions, excluding goodwill additions, in note 4.1 Intangible assets, property, plant and equipment and right of use assets, and note 4.2 Forest assets. The Taxonomy-eligible capex are the investments related to the assets or processes associated with the respective economic activities. The total opex covers the maintenance expenses, short-term lease costs, non- capitalised research and development costs and silviculture costs at the Group level. The Taxonomy-eligible opex include the corresponding direct non-capitalised costs related to the economic activities. Double counting is avoided by having a clear cost structure in reporting which ensures that the profit centers and cost elements are separate for each activity. In reporting the activities do not overlap between environmental objectives. Taxonomy eligible and aligned activities Stora Enso has identified seven eligible activities to report in the EU Taxonomy in the conducted yearly exercise. The eligibility and alignment assessments have been carried out based on the best interpretation of the Taxonomy Regulation and the available guidelines from the European Commission. In case of unclarities, the conservative approach has been chosen. The assessments and the data are covered by external assurance. 1.3 Forest management Taxonomy-eligible forest management includes Stora Enso's own forest activities in Sweden where the Group has full control over the activity. Tree plantations in South America and China are not included in the activity. Of Stora Enso’s Swedish forests, 100% are certified under certification systems (PEFC or FSC) which lays the foundation for sustainable forest management. Stora Enso considers its forest management practices aligned with EU Taxonomy, but has been unable to fulfill the third party verification requirement described in forest management substantial contribution criteria (section 4. Audit). Stora Enso has been actively searching a partner who is capable of conducting EU Taxonomy compliant verification and will continue the search. Until then the Group reports its forest management as eligible but not- aligned in EU Taxonomy. The output of the activity, the grown wood, is used mostly internally in Stora Enso’s own operations. The forest management turnover in the EU Taxonomy includes the sale of externally sold roundwood and forest residuals. 1.4 Conservation forestry In Brazil, Stora Enso’s 50% owned joint operation Veracel has dedicated more than half of its land for the protection and restoration of biological biodiversity in natural Atlantic rainforest. The forest is excluded from the harvesting activities. Stora Enso considers the conservation practises aligned with EU Taxonomy, but has been unable to fulfil the third party verification requirement described in conservation forestry substantial contribution criteria (section 4. Audit). The activity is thus reported as eligible but not- aligned. Costs from the conservation operations are reported in opex. 2.4 Remediation of contaminated sites and areas Remediation projects of contaminated sites and areas are related to discontinued operations and mill closures at Stora Enso sites. The expenses related to the environmental remediation work carried out are included in the reported opex. 3.4 Manufacture of batteries Stora Enso's pilot plant costs and research and development expenses related to hard carbon innovation are included in Taxonomy-eligible opex. Turnover for the activity is expected within future years. The alignment assessment is done based on the predicted future industrial scale operations and production which will be aligned with the technical screening criteria of 3.4 Manufacture of batteries once started. For more information on Lignode® by Stora Enso, see the Group's website storaenso.com/lignode. Unaudited 12 3.5 Manufacture of energy efficiency equipment for buildings Stora Enso produces wood-based solutions for the construction industry. As Stora Enso is not a manufacturer of the end products, the compliance with the substantial contribution was assessed based on the knowledge of the end use and the energy efficiency related regulations in the primary market areas. The external sales related to the share of production that is estimated to end up for doors, windows, roofing and external wall systems, is included under the EU Taxonomy turnover. The same share is used in the allocation of the related capex and opex for the activity. 4.20 Cogeneration of heat/cool and power from bioenergy Wood residuals and by-products from the pulp process are used for energy production. The bioenergy generated from biobased feedstock is considered eligible in the EU Taxonomy reporting. The turnover includes the external sales of the excess electricity and heat which is not consumed internally. The largest single capex item in the reporting is the investment to bioenergy production at the Oulu production site, expected to be in use 2025. 7.6 Installation, maintenance and repair of renewable energy technologies The installation of renewable energy technologies is considered eligible in the EU Taxonomy reporting. The reported capex includes the investments in the installation of solar panels at Stora Enso sites. Minimum safeguards Minimum safeguards were assessed in Group-level from two angles: by reviewing the company processes for human rights, corruption, taxation and fair competition to determine that the adequate processes and controls are in place, and by investigating that there are no known breaches or violations existing in the parent company, in its subsidiaries or by senior management. The Group considers its processes to be at a robust level and with no violations to meet the alignment with the minimum safeguards. Read more in the following chapters in the Sustainability reporting section: Human rights, Business ethics, and Stora Enso as a taxpayer. Unaudited 13 Proportion of Turnover from products or services associated with Taxonomy-aligned economic activities 2023 EUR million Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities Code Turnover Proportion of turnover year 2023 Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned or eligible turnover year 2022 Category enabling activity Category transition al activity EUR % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Forest management CCM 1.3 100% Manufacture of energy efficiency equipment for buildings CCM 3.5 413 4.4% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E Cogeneration of heat/cool and power from bioenergy CCM 4.20 41 0.4% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 96.6% Turnover of environmentally sustainable activities (Taxonomy- aligned) (A.1) 454 4.8% 100% 99.7% Of which Enabling 413 4.4% 100% 78.3% E Of which Transitional T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Forest management CCM 1.3 118 1.3% —% Cogeneration of heat/cool and power from bioenergy CCM 4.20 2 0.0% 3.4% Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 119 1.3% 0.3% A.Turnover of Taxonomy eligible activities (A.1+A.2) 574 6.1% 100% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 8,836 93.9% TOTAL1 9,410 100% 1 In the EU Taxonomy, turnover includes also rental income, therefore the figure differs slightly from the Group total sales. Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective Unaudited 14 Proportion of capex from products or services associated with Taxonomy-aligned economic activities 2023 EUR million Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities Code Capex Proportion of capex year 2023 Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned or eligible capex year 2022 Category enabling activity Category transition al activity EUR % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Forest management CCM 1.3 100% Manufacture of batteries CCM 3.4 — 0.0% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E Manufacture of energy efficiency equipment for buildings CCM 3.5 4 0.4% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E District heating/cooling distribution CCM 4.15 100% Cogeneration of heat/cool and power from bioenergy CCM 4.20 57 5.1% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 70.1% Installation, maintenance and repair of renewable energy technologies CCM 7.6 3 0.3% Y N n/a n/a n/a n/a n/a Y n/a n/a n/a n/a Y —% E Capex of environmentally sustainable activities (Taxonomy-aligned) (A.1) 64 5.7% 100% 94.3% Of which Enabling 7 0.6% 100% 54.9% E Of which Transitional T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Forest management CCM 1.3 7 0.6% —% Cogeneration of heat/cool and power from bioenergy CCM 4.20 4 0.3% 29.9% Capex of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activites) (A.2) 10 0.9% 5.7% A.Capex of Taxonomy eligible activities (A.1+A.2) 75 6.6% 100% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Capex of Taxonomy-non-eligible activities 1,051 93.4% TOTAL 1,125 100% Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective Unaudited 15 Proportion of opex from products or services associated with Taxonomy-aligned economic activities 2023 EUR million Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities Code Opex Proportion of opex year 2023 Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular Economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned or eligible opex year 2022 Category enabling activity Category transition al activity EUR % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Forest management CCM 1.3 100% Conservation forestry CCM 1.4 100% Remediation of contaminated sites and areas PPC 2.4 6 0.7% n/a n/a n/a Y n/a n/a Y Y Y n/a Y Y Y —% Manufacture of batteries CCM 3.4 21 2.6% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E Manufacture of energy efficiency equipment for buildings CCM 3.5 20 2.5% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E Cogeneration of heat/cool and power from bioenergy CCM 4.20 32 4.1% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 52.9% Opex of environmentally sustainable activities (Taxonomy-aligned) (A.1) 78 9.9% 92.7% 7.3% 82.9% Of which Enabling 41 5.2% 100% 45.0% E Of which Transitional T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Forest management CCM 1.3 23 2.9% —% Conservation forestry CCM 1.4 1 0.1% —% Cogeneration of heat/cool and power from bioenergy CCM 4.20 6 0.7% 47.1% Opex of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activites) (A.2) 30 3.8% 17.1% A.Opex of Taxonomy eligible activities (A.1+A.2) 108 13.7% 100% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Opex of Taxonomy-non-eligible activities 681 86.3% TOTAL 790 100% Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective Unaudited 16 Risks and risk management Our approach to risk management Risk is an integral element of business and corporate governance, and it is characterised by both threats and opportunities, which may have an impact on future performance and the financial results of Stora Enso, as well as on its ability to meet certain social and environmental objectives. Stora Enso is committed to ensuring that systematic, holistic and proactive management of risks and opportunities is among its organisational core capabilities, and that a culture is fostered where both are carefully considered in all business decisions. Through consistent application of dynamic risk analysis and scenario planning, Stora Enso enhances opportunities and manages risk in order to reduce threats which may prevent the Group from reaching its business goals. Risk governance Stora Enso defines risk as the effect of uncertainty on the Group's ability to meet organisational values, objectives and goals. The Group Risk Policy, which is approved by the Board of Directors, sets out the overall approach to governance and the management of risks in accordance with the COSO (Committee of Sponsoring Organizations) framework and in line with the ISO 31000 standard. The Board retains the ultimate responsibility for the overall risk management process and for determining predominantly through Group policies the appropriate and acceptable level of risk. The Board has established a Financial and Audit Committee to provide support to the Board in monitoring the adequacy of the risk management process within Stora Enso, and specifically regarding the management and reporting of financial risks. This oversight scope includes also monitoring of the cybersecurity risk. The Sustainability and Ethics Committee is responsible for overseeing the company’s sustainability and ethical business conduct, its strive to be a responsible corporate citizen, and its contribution to sustainable development. The head of Enterprise Risk Management, reporting to the Chief Strategy and Innovation Officer, is responsible for the design, development and monitoring of the top-down implementation of the Group risk management framework. Each division and Group function head, together with their respective management teams, are responsible for process execution and cascading the framework and guidelines further down in the organisation. The Internal Audit unit evaluates the effectiveness and efficiency of the Stora Enso risk management process. Risk management process Risk management is embedded in all decision-making processes, with holistic risk assessments conducted also as part of all significant investment decisions. In connection with the annual strategy process, business divisions and group service and support functions conduct a holistic baseline risk assessment, linked to their key objectives. Specific guidance regarding the risk management process is outlined in the enterprise risk management instructions. Business entities and functions identify the sources of risk events including changes in circumstances and their causes and potential consequences. Stora Enso’s risk model outlines the overall risk universe which is used to support holistic risk identification and risk consolidation, while also providing taxonomy as well as consistency in risk terminology. Risk analysis involves developing an understanding of the risk to provide an input for risk evaluation. The purpose of risk evaluation is to determine the risk priorities and to support decision making to determine which risks require treatment/actions. Risks are assessed in terms of their impact and likelihood of occurrence, often based on specific risk scenarios. The effectiveness of existing risk reduction is factored in to define the residual risk level. Pre-defined impact scales consider financial, safety and reputational impacts, on both a quantitative and qualitative basis. Risk treatment involves selecting one or more risk management option, such as avoidance, reduction, sharing or retention. Additional risk mitigation actions are determined for risks which exceed the perceived risk tolerance incorporating the assignment of responsibility, schedule and timetable of the risk response actions. Following the annual baseline assessment, prioritised and emerging risks, as well as the corresponding risk mitigation and business continuity plans related to those risks, are reviewed in divisional business review meetings on a semi-annual basis. Despite the measures taken to manage risks and mitigate the impact of risks, and while some of the risks remain beyond the direct control of the management, there can be no absolute assurance that risks, if they occur, will not have a materially adverse effect on Stora Enso’s business, financial condition, operating profit or ability to meet financial obligations. Main risks Reputation Reputational risks often reflect the combined impacts of many other types of risks and could be a consequence of incidents or non-compliant behaviour of employees, contractors, suppliers or other business partners. This includes failure to comply with norms, laws and regulations, or policy documents. Damage to Stora Enso’s reputation and brand may result in a loss of investor and customer confidence leading to higher cost of capital and decreased revenues. Mitigation measures and opportunities Policies such as the Stora Enso Code and Supplier Code of Conduct ensure that the Board has oversight. Continuous and mandatory training sessions for employees and, on occasion, suppliers guarantees that the policies are being implemented, and audits are conducted to monitor that Stora Enso’s requirements are met. Stora Enso has established a Speak Up Hotline, through which employees and any third party globally can anonymously report potential non-compliance cases. All reported cases are subject to an established investigation and reporting process, with proven cases leading to actions. Stora Enso continuously engages with its stakeholders to enhance relationships, to respond to developing needs and to inform its strategy. Macroeconomy, geopolitics, and currency rates Changes in global economic conditions, such as sharp market corrections and foreign exchange volatility, could have a negative and material impact on Stora Enso's profit, cash flows and financial position. Stora Enso is exposed to several financial market risks that the Group is responsible for managing under policies approved by the Board of Directors. The objective is to achieve cost- effective funding in Group companies and manage financial risks by using financial instruments to reduce earnings volatility. The main exposures for the Group, besides currency risk, are interest rate risk, liquidity risk, refinancing risk, commodity price risk and credit risk. Financial risks are discussed in detail in note 5.1 Financial risk management. Unaudited 17 Mitigation measures and opportunities Stora Enso has a diversified portfolio of businesses which mitigates exposure to any one country or product segment. The external environment is continuously monitored and planning assumptions take account of important near- to medium-term and long-term drivers and risks related to key macro-economic factors. The compliance to the Board-approved risk appetite is closely monitored and cash flow and liquidity are actively managed. Stora Enso hedges 15–60% of the highly probable 12-month net foreign exchange flows in main currency pairs. Currency translation risk is reduced by funding assets, whenever economically possible, in the same currency as the asset. The divisions regularly monitor their order flows and other leading indicators, where available, so that they may respond quickly to a deterioration in trading conditions. In the event of a significant deterioration in general economic condition and in main leading economic indicators, the Group has a possibility to implement cost reduction measures to offset the impact on margins from deterioration in sales. Competition and market demand The packaging, pulp, paper and wood products industries are mature, capital intensive and highly competitive. Stora Enso’s principal competitors include several large international forest products companies and numerous regional and more specialised competitors. Customer demand is influenced by the general economic conditions and inventory levels and affects product price levels. Product prices, which tend to be cyclical, are affected by capacity utilisation, which decreases in times of economic slowdowns. Changes in prices differ between products and geographic regions. The following table shows the operating profit sensitivity to a +/- 10% change in either price or volume for different segments based on figures for 2023. Operating profit: Impact of changes +/- 10%, EUR million Segments Price Volume Packaging Materials 434 110 Packaging Solutions 107 43 Biomaterials 143 52 Wood Products 152 32 Forest 246 6 Mitigation measures and opportunities The ability to respond to changes in product demand and consumer preferences and to develop new products on a competitive and economic basis calls for innovation, continuous capacity management and structural development. The risks related to factors such as demand, price, competition and customers are regularly monitored by each division and unit as a routine part of business management. These risks are also continuously monitored and evaluated on a Group level to gain a perspective of the Group’s total asset portfolio and overall long-term profitability potential. Stora Enso, as one of the biggest private forest owners in the world, also benefits from a strategic renewable resource base. The Group's expertise in wood and wood based renewable materials is focused on responding to changing customer and consumer preferences, driven by climate change. Products based on renewable materials with a low carbon footprint help customers and society at large to reduce CO2 emissions by providing an alternative to solutions based on fossil fuels or other non-renewable materials. Sourcing Increasing input costs or availability of materials, goods and services may adversely affect Stora Enso’s profitability. Securing access to reliable low-cost supplies and proactively managing costs and productivity are of key importance. Reliance on outside suppliers for energy also makes Stora Enso susceptible to changes in energy market prices. There is also an increased risk of disturbances in the supply chain due to cyber incidents, political instability and other drivers related to global trade. The following table shows Stora Enso’s major cost items. Composition of costs in 2023 Operative costs % of costs % of sales Logistics and commissions 10% 10% Manufacturing costs Fiber 33% 32% Chemicals and fillers 9% 8% Energy 7% 7% Material 10% 9% Personnel 14% 14% Other 11% 11% Depreciation 6% 6% Total costs and sales 100% 97% Total operative costs and sales in EUR million 9,130 9,396 Associated companies, operational 76 Operational EBIT (EUR million) 342 In many areas Stora Enso is dependent on suppliers and their ability to deliver a product or a service at the right time and of the right quality. The most important products are fiber, chemicals and energy, and machinery and equipment in capital investment projects. Increased demand for carbon neutral primary and secondary biomass fuels may increase energy costs. The most important services are transport and various outsourced business support services. For some of these inputs, the limited number of suppliers is a risk. Mitigation measures and opportunities Input cost volatility is closely monitored at the business unit, divisional and group level and a consistent long-term energy risk management is applied. The price and supply risks are mitigated through increased own generation, shareholding in competitive power assets such as PVO/TVO, physical long-term contracts and financial derivatives. Stora Enso hedges price risks in raw material and end-product markets and supports the development of financial hedging markets. A wide range of suppliers are used and monitored to avoid situations that might jeopardise continued production, business transactions or development projects. Suppliers and subcontractors must also comply with Stora Enso’s sustainability requirements as they are part of Stora Enso’s value chain. The sustainability requirements for suppliers and audit schemes cover raw materials, and other goods and services procured. Suppliers are assessed for risks related to environmental, social and business practices through our internal risk assessment tool. Supplier code of conduct audits are conducted on high-risk suppliers and findings from such audits are followed-up. Suppliers should have the possibility to mitigate, but where necessary, the supplier contract would be terminated. Stora Enso also has an opportunity to add value and bring innovation to its business globally by building strong and measurable relationships with the best suppliers as well as enforcing Unaudited 18 harmonised sourcing processes to increase capabilities, increase tender quality to reduce cost, and develop sustainable suppliers. Regulatory changes Stora Enso's businesses may be affected by political or regulatory developments in any of the countries and jurisdictions where it operates, including changes to forest, biodiversity, environmental, fiscal, tax or other regulatory regimes. Potential impacts include higher costs and capital expenditure to meet new requirements, the expropriation of assets, imposition of royalties or other taxes targeted at the industry, and requirements for local ownership or beneficiation. The EU Green Deal and its climate targets for 2030 and 2050 have resulted in a proliferation of future legislation which have been further advanced in 2022 and may impact Stora Enso's future operations. The policy initiatives from the European Commission will include policies and legislation on areas such as EU Forest and Biodiversity strategies, the Renewable Energy Directive, EU Emission Trading System (ETS), Sustainable products initiative, Packaging and Packaging waste revision as well as EU taxonomy. Political decisions on forest resources, could limit the availability of wood, increase costs and reduce investment opportunities. Stora Enso has been granted various investment subsidies and has given certain investment commitments in different countries e.g. Finland, China and Sweden. If committed planning conditions are not met, local officials may pursue administrative measures to reclaim some of the formerly granted investment subsidies or to impose penalties on Stora Enso, and the outcome of such a process could result in a negative financial impact on Stora Enso. Mitigation measures and opportunities Active monitoring of regulatory and political developments in the countries where Stora Enso operates as well as participation in policy development mainly through industry associations and other partnership programmes are important risk mitigation regarding regulatory changes. Regulatory changes can also bring significant opportunities by driving market growth for sustainable products and create competitive advantage through resource efficiency and renewability. Climate change – physical impacts Long-term (25–30 years) changes in precipitation patterns, periods of drought, frequent extreme weather events and higher average temperatures that increase the risk of forest fires and insect outbreaks, could cause damage to operations, forests and tree plantations, affecting forests asset values and regional wood prices. Milder winters could also have an impact on the harvesting and transport of wood and related costs in northern regions. More frequent extreme weather events also increase the risk of disruptions in the production, logistics and supply of raw materials and energy. During 2023, focus was on deep dives into specific physical risk impacts and further developing transition scenarios. Read more in the following TCFD chapter, and in an index table available at storaenso.com. Mitigation measures and opportunities Physical risks are to a great extent subject to risk transfer and thereby within the cover of Stora Enso's property and business interruption insurance programs. With regards to forest and plantation assets, Stora Enso benefits from strategic resilience through geographical diversification within the asset portfolio. Diligent plantation planning is ensured to avoid frost sensitive areas and R&D programmes are applied to increase tolerance to extreme temperatures. Stora Enso maintains a diversity of forest types and structures and enforces diversification in wood sourcing. Wood harvesting in soft soils involves the implementation of best practices guidelines. Nordic forests in Finland and Sweden could also benefit from increased heat summation and longer growing seasons, leading to acceleration in forest growth with direct positive impact on the value of own forest assets and an indirect impact related to market wood availability and costs. Biodiversity Stora Enso’s forestry and industrial sites impact on biodiversity. At the same time, Stora Enso’s business depends on raw material natural capital inputs, such as wood and fresh water. These raw materials are supported by soil quality alongside ecosystem services for bioremediation, forest disease and pest control, and climate regulation, among others. Biodiversity loss can have a negative impact on the value of Stora Enso’s forest assets, increase risks of shortages in wood supply and damage reputation. Read more in the TNFD chapter, and in an index table available at storaenso.com. Mitigation measures and opportunities Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and plantations by 2050. Biodiversity management is an integral part of Stora Enso’s forest management practices, and the Group strive to do more than just to mitigate biodiversity loss. Operations are supported by digitalisation as well as continuous research and innovation to develop the forestry operations and to provide the best value to Stora Enso’s customers and other stakeholders. The Group knows the origin of all the wood it uses, and 99% of the land that it owns or manage is covered by forest certification schemes. Stora Enso engages in collaboration with various stakeholders with the aim to protect ecosystems and safeguard natural resources. People and capabilities Competition for personnel is intense and Stora Enso may, in the long term, not be successful in attracting or retaining qualified personnel. The loss of key employees, the inability to attract new or adequately trained employees, or a delay in hiring key personnel could seriously harm Stora Enso’s business and impede reaching the Group's strategic objectives. Labour market disruptions and strikes, especially in times of restructuring and redundancies due to divestments and mill closures or during labour market negotiations, could also have adverse material effects on Stora Enso's business, financial position and profitability. Mitigation measures and opportunities Stora Enso manages the risks and loss of key talents through a combination of different actions. Some of the activities aim towards making the Stora Enso employer brand better known both internally and externally, globalising some of the remuneration practices and intensifying the efforts to identify and develop talents. Finally, the Group actively focuses on talent and management assessments, including succession planning for key positions. The majority of employees are represented by labour unions under several collective agreements in different countries where Stora Enso operates, thus relations with unions are of high importance to manage labour disruption risks. Unaudited 19 Stora Enso recognises the opportunity of skilled and dedicated employees being essential for success. Engaged high performing people enable the implementation of transformation strategy and commercial success. Personal safety – employees and wider workforce Failure to maintain high levels of safety management can result in harm to Stora Enso’s employees and contractors, and also to communities near our operations and the environment. Impacts in addition to physical injury, health effects and environmental damage could include liability to employees or third parties, damage to reputation, or an inability to attract and retain skilled employees. Government authorities could additionally enforce the closure of our operations on a temporary basis. Personnel safety and security can never be compromised and, thus, Stora Enso must be aware of potential safety risks and provide adequate guidelines to people for managing risks related to, for example, travelling, working and living in countries with security or crime concerns. Mitigation measures and opportunities Stora Enso’s goal is to provide an accident-free workplace. Encouraging a group-wide safety culture means that everyone is responsible for making every workday healthy and safe - from top management and throughout the Group. The approach to safety extends to contractors, suppliers, and on-site visitors. Everyone is encouraged to give feedback and provide ideas on how to further improve safety. Additionally, safety is promoted among contractors and suppliers through a dedicated e-learning. The Group also emphasise the importance of safety by asking suppliers for information on their safety performance in the tendering process. Stora Enso’s Health and Safety Policy defines the objectives for safety management, as well as a governance model on how to manage health and safety topics in practice and how to integrate them into annual planning and reporting. Leading health and safety performance can potentially strengthen the brand as an employer, as well as improved engagement, efficiency and productivity. Physical assets The installed capacity of Stora Enso's production facilities have an inherent risk of potential for failure or off-specification operations, which could result in poor product quality, unplanned production downtime, lower output or increased production costs. It may also impact the Group's ability to meet delivery commitments and the business plan. In some instances, the risks are the result of inherent design deficiencies, failures in the mode of operation or operating practices. The most significant asset risks lie predominantly in integrated pulp and board production and related energy generation. Mitigation measures and opportunities Protecting production assets and business results is a high priority for Stora Enso. This is achieved through structured methods of identifying, measuring and controlling different types of process risk and exposure. Divisional risk specialists manage this process together with insurance companies and other loss prevention specialists. Each year a number of technical risk inspections are carried out at production units. Risk improvement programmes and cost-benefit analyses of proposed investments are managed via internal reporting and risk assessment tools. Internal and external property loss prevention guidelines, fire loss control assessments, key machinery risk assessments and specific loss prevention programmes are also utilised. Planned stoppages for maintenance and other work are important to keep machinery in good order. Preventive maintenance programmes and spare part criticality analyses are utilized to secure the high availability and efficiency of key machinery. Product safety and compliance Some of our products are used for package liquids and food consumer products, so any defects could affect health or packaging functions and result in costly product recalls. Wood products are incorporated into buildings, and this may involve product liability resulting from failures in structural design, product selection or installation. Failure to ensure product safety could result in product recalls involving significant costs including compensation for indirect costs of customers, and reputational damage. Mitigation measures and opportunities The mills producing food and drink contact products have established certified hygiene management systems based on risk and hazard analysis. To ensure the safety of its products, Stora Enso actively participates in CEPI (Confederation of European Paper Industry) working groups on chemical and product safety. In addition, Stora Enso mills have certified relevant ISO quality management systems. Furthermore, contractual liability limitation and insurance protection are used to limit the risk exposure to Stora Enso. The Group recognises the opportunity of differentiation and value creation through superior product quality and the highest level of product conformity. Information technology, security, and digitalisation Stora Enso is dependent on IT systems for both internal and external communications and for the day-to-day management of its operations. Information systems, personnel and facilities are subject to cyber security risk, such as ransomware. In addition, accidental disclosure of confidential information due to a failure to follow information handling guidelines or due to an accident or criminal act may result in financial damage, penalties, disrupted or delayed launch of new lines of business or ventures, loss of customer and market confidence, loss of research secrets, breach of data privacy regulation and other business critical information. Mitigation measures and opportunities The management of risks is actively pursued in the Information Risk Management System and best practice change management and project methodologies are applied. We actively work to prevent cybercrime. A number of security controls have been implemented to strengthen the protection of confidential information and to facilitate compliance with international regulations. Opportunities may arise from efficient operations, performance optimisation, innovative product offerings, and new customer services through digitisation and sophisticated IT systems, as well as new technologies offering significant potential for higher level of process optimisation and automatisation, generating new business and enhanced value propositions for customers and consumers. Unaudited 20 Strategic investments To succeed with the implementation of its strategy, Stora Enso has to understand the needs of its customers and find the best way to serve them with the right offering and with the right production asset portfolio. Failure to complete strategic projects in accordance with the agreed schedule, budget or specifications can, therefore, have serious impacts on the Group's financial performance. Significant, unforeseen changes in costs or an inability to sell the envisaged volumes or achieve planned price levels may prevent Stora Enso from achieving its business goals. Mitigation measures and opportunities Risks are mitigated through profound and detailed pre-feasibility and feasibility studies which are prepared for each large investment. Investment guidelines stipulate the process, governance, risk assessment, management and monitoring procedures for strategic projects, including climate related risk factors. The guidelines also require that the calculation of potential cost and income for CO2 emissions as part of the investment proposal, Environmental and Social Impact Assessments (ESIAs) are conducted for all new projects that could cause significant adverse effects in local communities. Post completion audits are carried out for all significant investments. Mergers, acquisitions, and divestments Failure to realise the expected benefits from an acquisition of a company or asset can have serious financial impacts on Stora Enso. The Group can also find itself liable for past acts or omissions of the acquired business, without any adequate right of redress. Failure to achieve expected values from the sales of assets or deliveries beyond the expected receipt of funds may also impact the Group's financial position. Divestments or business restructuring may involve additional costs due to historical and unaccounted liabilities as well as reputational impacts. Mitigation measures and opportunities Rigorous M&A guidelines, including due diligence procedures are applied to the evaluation and execution of all acquisitions. Structured governance and policies such as the policy for responsible right-sizing, are followed when making restructuring decisions. A strong balance sheet and cash flow enable value enhancing M&A, when the timing and opportunity are right. Ethics and compliance Stora Enso operates in a highly regulated business area and is, thereby, exposed to risks related to breach of applicable laws and regulations associated to e.g. capital markets regulation, company and tax laws, customs, environment, human rights, and safety, as well as areas covered by policies such as the Stora Enso Code and Business Practice Policy, e.g. fraud, anti- trust, corruption, conflict of interests and other misconduct. Breaches may lead to high compliance and remediation costs including prosecution costs, fines, penalties, and contractual, financial and reputational damage. Mitigation measures and opportunities Stora Enso’s Ethics and Compliance Programme, which includes policy setting, promoting values, training, knowledge sharing and grievance mechanisms, is continuously updated and developed. Other compliance mechanisms include Stora Enso Group’s internal control system and Internal Audit assurance, as well as Supplier Code of Conduct in supplier contracts, risk assessments, trainings and audits. In response to capital markets regulations, Stora Enso’s Disclosure Policy emphasises the importance of transparency, credibility, responsibility, proactivity and interaction. Environmental risks are minimised through environmental management systems and environmental due diligence for acquisitions and divestments, and indemnification agreements where effective and appropriate remediation projects are required. Special remediation projects related to discontinued activities and mill closures are executed based on risk assessments. Focus on ethics in a wider sense, not mere compliance with laws and regulations, promotes a value-driven and more successful business, fosters accountability and enhances corporate reputation. Climate-related financial disclosures (TCFD) The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) recommends a framework for disclosing climate-related risks and opportunities. Stora Enso's disclosures with reference to TCFD recommendations are listed in an index table, available for downloading at storaenso.com, with references to those locations where these issues are addressed in the Group's annual reporting. Scenario analysis in 2023 Aligned with the TCFD recommendations, Stora Enso utilises scenarios to assess the impacts of climate change. During 2023, the focus was on deep dives to specific physical risk impacts and further developing transition scenarios. Scenario analysis during the previous years In 2020, Stora Enso developed a scenario analysis with the qualitative assessment of the physical climate impacts on the Nordic forests and the Group's business until 2050. This work was based on the Business-As-Usual scenario by the International Panel for Climate Change (RCP 8.5 scenario) that would deliver a temperature increase of 4–5 degrees by the end of the century. The climate change attributes considered were pests, diseases, droughts, wildfires, floods, periods of frost, water scarcity, changes to precipitation patterns, rise in sea level and changing temperatures. In 2021, the work with physical climate impacts continued by a deeper analysis of measures improving resiliency of the forests against the negative impacts of global warming. Results showed that sustainable forest management practices as well as possibilities to monitor and to react to events such as forest fires and diseases, play an important role in mitigating the negative impacts of climate change. During 2021, Stora Enso assessed a business impact scenario for 2030 according to the global transition required to limit the global average temperature increase in line with the Paris agreement of 1.5 degrees (RCP 1.9). The work concluded that the overall transition to a low carbon, circular bioeconomy is well aligned with Stora Enso’s strategy. The scenario work also showed that potential new regulations and market mechanisms motivated by the ambitions to limit climate change and its effects on the society and environment could impact Stora Enso’s operating costs by limiting wood harvesting volumes or forest management practices as well as increasing greenhouse gas emission costs and energy prices. Sustainable product initiatives and requirements may also have an impact on the Group's future market access, product demand growth and product development requirements. During 2022, a quantitative resilience analysis was conducted for tree plantations in South America against three global Shared Socioeconomic Pathway (SSP) scenarios: SSP1-1.9 Unaudited 21 (Sustainability – Taking the Green Road), SSP2-4.5 (Regional Rivalry – a Rocky Road) and SSP5-8.5 (Fossil-fuelled Development – Taking the Highway). Results show a relative resilience of Stora Enso's tree plantations in all the three scenarios. Financial impacts are not expected to be material in SSP1-1.9 and SSP2-4.5 scenarios but in SSP5-8.5 scenario the growth conditions of tree plantations would be affected resulting in potentially material financial impacts. Nature-related financial disclosures (TNFD) The Taskforce on Nature-related Financial Disclosures (TNFD) is a market-led and science- based initiative supported by national governments, businesses, and financial institutions worldwide. The TNFD’s mission is to help companies responding to the global acceleration of nature loss as an increasing source of risk to businesses and providers of financial capital. The TNFD Recommendations and Additional Guidance are there to support organisations to report and act on evolving nature-related issues. The recommendations support the outcomes of the agreed Kunming-Montreal Global Biodiversity Framework and hope to support a shift in global financial flows away from businesses and business activities that lead to nature-negative outcomes and towards those that support nature-positive outcomes. The version 1.0 of the TNFD recommendations, published in September 2023, build on the Taskforce on Climate- related Financial Disclosures (TCFD) recommendations and are consistent with other standards including the International Sustainability Standards Board (ISSB), IFRS Sustainability Disclosure Standards, the Global Reporting Initiative (GRI) and the European Sustainability Reporting Standards (ESRS). The TNFD includes 14 recommended disclosures that extend or add to those included in the TCFD recommendations' disclosures which support integrated climate and nature reporting. Stora Enso’s business depends on several raw material natural capital inputs, such as wood and fresh water, and are supported by soil quality, alongside ecosystem services for bioremediation, forest disease and pest control, and climate regulation, among others. The Group's dependency on and responsibility for nature is explored, for instance, through its Biodiversity Leadership Programme to support the Group's commitment to achieve a net positive impact on biodiversity in Stora Enso’s own forests and plantations through active biodiversity management to align with the society’s expectations and goals for nature positive actions. Stora Enso expects the TNFD’s recommendations to help the Group to further evolve current nature- related disclosures, based on building on the Group's existing processes, over the coming years. As part of the work, Stora Enso piloted the draft TNFD recommendations and parts of the Locate, Evaluate, Assess and Prepare (LEAP) approach by undertaking a biodiversity screening in the supply chain of the Biomaterials division. The pilot was undertaken to help prepare for future disclosure requirements, and anticipated investor and market interest on the potential biodiversity risks and opportunities across the supply chain. This pilot focused on transparency in selected chemicals, logistics and energy sub-categories of the supply-chain. High-level findings included that the Group’s current nature-related risks included: policy and legal risks in relation to forestry legislation, potential reputational risks and location-based risks associated with the functioning of underpinning natural capital assets and supply chain operations. In addition to nature-related risks, potential nature-related opportunities were also identified including the development of nature-based solutions and recognition of the multiple nature- related benefits associated with different types of ecosystems. The pilot provides the starting point for further qualitative and quantitative assessments of Stora Enso's business activities and supply chains to prioritise areas for action across the Group by applying an adapted process to other supply chains. For further details about the pilot, please see the case study at littleblueresearch.com. Stora Enso has participated in the WBCSD’s TNFD pilot project 'Roadmap to Nature Positive' which provides an analysis for forest products value chain having high impact on nature. The Group also contributed to the development of TNFD Additional Guidance for the Forest Sector by the WBCSD Forest Solutions Group. Stora Enso is a member of Mistra’s research programme BIOPATH, hosted by the Swedish University of Lund, which aims to identify pathways for efficient alignment of the financial system with the requirements of biodiversity. As announced by the TNFD in January 2024, after the reporting date, Stora Enso has signed up as a ‘TNFD Early Adopter’ which means that Stora Enso intend to adopt the recommendations and publish its first TNFD-aligned report in the financial year 2024. Corporate governance in Stora Enso Stora Enso complies with the Finnish Corporate Governance Code 2020 issued by the Securities Market Association (the “Code”). The Code is available at cgfinland.fi. Stora Enso also complies with the Swedish Corporate Governance Code (“Swedish Code”), with the exception of the deviations listed in Appendix 1 of the Corporate Governance part of this report. The deviations are due to differences between Swedish and Finnish legislation, governance code rules and practices, and in these cases Stora Enso follows the practice in its domicile. The Swedish Code is issued by the Swedish Corporate Governance Board and is available at corporategovernanceboard.se. Legal proceedings Contingent liabilities Stora Enso has undertaken significant restructuring actions in recent years which have included the divestment of companies, sale of assets and mill closures. These transactions include a risk of possible environmental or other obligations the existence of which would be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A provision has been recognised for obligations for which the related amount can be estimated reliably and for which the related future cost is considered to be at least probable. Stora Enso is party to legal proceedings that arise in the ordinary course of business and which primarily involve claims arising out of commercial law. The management does not consider that liabilities related to such proceedings before insurance recoveries, if any, are likely to be material to the Group’s financial condition or results of operations. Veracel On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State of Bahia for the operations of Stora Enso’s joint operations company Veracel were not valid. The judge also ordered Veracel to take certain actions, including reforestation with native trees on part of Veracel’s plantations and a possible fine of, at the time of the decision, BRL 20 (EUR 4) million. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the relevant authorities. In November 2008, a Federal Court suspended the effects of the decision. No provisions have been recorded in Veracel’s or Stora Enso’s accounts for the reforestation or the possible fine. Unaudited 22 Changes in the Group management Micaela Thorström was appointed EVP Legal and General Counsel and a member of the Group Leadership Team as of 1 April 2023. René Hansen EVP, Brand and Communications and a member of the Group Leadership Team, left his position at Stora Enso in May 2023. Annette Stube, Executive Vice President Sustainability, and a member of the Group Leadership Team, left her position at Stora Enso in December 2023. Minna Björkman, Executive Vice President Sourcing and Logistics, and a member of the Group Leadership Team (GLT), left her position in the GLT to assume a business leadership role in Stora Enso’s Packaging Materials division in November 2023. Ad Smit started as Executive Vice President of the Packaging Solutions division and a member of the Group Leadership Team in December 2023. Prior to that, he led the Business Unit Western Europe within Stora Enso’s Packaging Solutions division. David Ekberg left his position as Executive Vice President of the Packaging Solutions division on 30 November 2023. Share capital Stora Enso Oyj’s shares are divided into A and R shares. The A and R shares entitle holders to the same dividend but different number of votes. Each A share and every ten R shares carry one vote at a shareholders’ meeting. However, each shareholder has at least one vote. During 2023, a total of 7,364 A shares converted into R shares were recorded in the Finnish Trade Register. Number of shares as at 31 December 2023 A shares R shares Total Number of shares 176,230,916 612,389,071 788,619,987 Number of votes (at least) 176,230,916 61,238,907 237,469,823 Board of Directors is authorised to decide on the repurchase and on the issuance of Stora Enso R shares. The amount of shares to be issued or repurchased shall not exceed a total of 2,000,000 R shares, corresponding to approximately 0.25% of all shares and 0.33% of all R shares. Major shareholders as of 31 December 2023 By voting power A shares R shares % of shares % of votes 1 Solidium Oy1 62,655,036 21,792,540 10,7 % 27,3 % 2 FAM AB2 63,123,386 17,000,000 10,2 % 27,3 % 3 Social Insurance Institution of Finland 23,825,086 — 3,0 % 10,0 % 4 Ilmarinen Mutual Pension Insurance Company 4,159,992 15,290,638 2,5 % 2,4 % 5 Varma Mutual Pension Insurance Company 5,163,018 1,140,874 0,8 % 2,2 % 6 MP-Bolagen i Vetlanda AB 4,885,000 1,000,000 0,7 % 2,1 % 7 Elo Mutual Pension Insurance Company 2,010,000 9,987,000 1,5 % 1,3 % 8 Bergslaget's Healthcare Foundation 626,269 1,609,483 0,3 % 0,3 % 9 The State Pension Fund — 5,600,000 0,7 % 0,2 % 10 The Society of Swedish Literature in Finland — 3,000,000 0,4 % 0,1 % 11 Avanza Pension Insurance 142,664 1,372,515 0,2 % 0,1 % 12 OP Finland Fund — 2,549,753 0,3 % 0,1 % 13 Danske Invest Finnish Equity Fund — 2,435,000 0,3 % 0,1 % 14 Unionen (Swedish trade union) — 2,312,750 0,3 % 0,1 % 15 EVLI Finland Select Fund — 1,940,000 0,2 % 0,1 % Total 166,590,451 87,030,553 32,2 % 73,8 % Nominee-registered shares3 75,045,090 487,121,848 71,3 % 52,1 % 1 Entirely owned by the Finnish State 2 As confirmed to Stora Enso 3 According to Euroclear Finland The list has been compiled by the Company on the basis of shareholder information obtained from Euroclear Finland, Euroclear Sweden and a database managed by Citibank, N.A (Citi). This information includes only directly registered holdings, thus certain holdings (which may be substantial) of shares held in nominee or brokerage accounts are not included. The list is therefore incomplete. Share distribution as at 31 December 2023 By size of holding, A share1) Shareholders % of shareholders Shares % of shares 1–100 7,111 59.83% 273,712 0.16% 101–1,000 4,211 35.43% 1,474,615 0.84% 1,001–10,000 529 4.45% 1,222,373 0.69% 10,001–100,000 24 0.20% 559,602 0.32% 100,001–1,000,000 2 0.02% 347,113 0.20% 1,000,001– 8 0.07% 172,353,501 97.80% Total 11,885 100.00% 176,230,916 100.00% By size of holding, R share1) Shareholders % of shareholders Shares % of shares 1–100 17,659 37.87% 840,387 0.14% 101–1,000 22,681 48.64% 8,919,537 1.45% 1,001–10,000 5,813 12.47% 15,389,391 2.51% 10,001–100,000 408 0.88% 10,699,825 1.75% 100,001–1,000,000 47 0.10% 16,081,788 2.63% 1,000,001– 23 0.05% 560,458,143 91.53% Total 46,631 100.00% 612,389,071 100.00% 1) According to Euroclear Finland. This list includes only directly registered shares in Euroclear Finland. E.g. Stora Enso's Swedish shareholders are listed under their nominee bank in this list. Therefore, this listing is not comparable with the table Major shareholders as of 31 December 2023 Unaudited 23 Ownership distribution as at 31 December 2023 % of shares % of votes Solidium Oy1 10.7% 27.3% FAM AB2 10.2% 27.3% Social Insurance Institution of Finland (KELA) 3.0% 10.0% Finnish institutions (excl. Solidium and KELA) 11.0% 8.1% Swedish institutions (excl. FAM) 1.1% 0.9% Finnish private shareholders 3.9% 2.4% Swedish private shareholders 3.0% 2.2% ADR holders 1.6% 0.5% Under nominee names (non-Finnish/non-Swedish shareholders) 55.4% 21.3% 1 Entirely owned by the Finnish State 2 As confirmed to Stora Enso Short-term outlook Stora Enso expects market conditions to remain uncertain in 2024, with ongoing pressure on demand, prices and margins. However, there are some positive signs such as increasing pulp prices, declining global pulp inventories, less customer destocking, and lower inflation and interest rates. The first quarter is not expected to show a significant market improvement following a historical low fourth quarter in 2023 and a slow recovery. All variable costs continued to ease in the fourth quarter, except for wood, which are expected to follow similar trends also in the first quarter this year. The potential risk of logistical challenges from the Red Sea area could disrupt the flow of goods and increase costs. During the second half of 2023, Stora Enso implemented significant restructuring measures to enhance its financial performance going forward. These included the closure of sites and production lines, the sale of assets, the adoption of a more decentralised operating model, and a reduction of employees by approximately 1,150. These actions are expected to improve the Group's cost competitiveness and streamline its organisation, leading to a stronger financial performance in the years to come. Guidance Stora Enso's full year 2024 operational EBIT is expected to be higher than for the full year 2023, EUR 342 million. Short-term risks and uncertainties Risk is characterised by both threats and opportunities, which may affect future performance and the financial results of Stora Enso, reputation, as well as its ability to meet certain social and environmental objectives. The geopolitical unrest could have an adverse impact on the Group. Retaliatory measures, conflict-related risks to people, operations, trade credit, cyber security, supply, and demand, could also affect the Group negatively. The risk of a prolonged global economic downturn and recession, continued high inflation, as well as sudden interest rate increases, currency fluctuations, trade union strike actions, and logistical chain disruptions could all adversely affect the Group’s profits, cash flow and financial position, as well as access to material, flow of goods and transport. The challenging and rapidly changing macroeconomic and geopolitical disruption may increase cost, add complexity and lower short-term visibility. A slow market recovery might further impact market demand, prices, profit margin and volumes of the Group's products. New capacity and volume entering the market might distort demand, volumes, inventories and pricing, with the risk of a deepening margin squeeze. Moreover, forced capacity cuts might further impact on profitability. There is a risk of continued high interest rates along with increased price volatility for raw materials such as wood, chemicals, other components and energy in Europe. The continued tight wood market could cause increased costs, limit harvesting and cause disruptions such as delays and/or lack of wood supply to the Group's production sites. Stora Enso has been granted various investment subsidies and has given certain investment commitments in several countries e.g., Finland, China and Sweden. If commitments to planning conditions are not met, local officials may pursue administrative measures to reclaim some of the formerly granted investment subsidies or to impose penalties on Stora Enso, the outcome of such a process could result in adverse financial impact on Stora Enso. Sensitivity analysis Energy sensitivity analysis: the direct effect of a 10% change in electricity and fossil fuel market prices would have an impact of approximately EUR 5 million on operational EBIT for the next 12 months. Wood sensitivity analysis: the direct effect of a 10% change in wood prices would have an impact of approximately EUR 200 million on operational EBIT for the next 12 months. Pulp sensitivity analysis: the direct effect of a 10% change in pulp market prices would have an impact of approximately EUR 120 million on operational EBIT for the next 12 months. Chemical and filler sensitivity analysis: the direct effect of a 10% change in chemical and filler prices would have an impact of approximately EUR 54 million on operational EBIT for the next 12 months. Foreign exchange rates transaction risk sensitivity analysis for the next twelve months: the direct effect on operational EBIT of a 10% strengthening in the value of the US dollar, Swedish krona and British pound would be approximately positive EUR 81 million, negative EUR 9 million and positive EUR 9 million annual impact, respectively. Weakening of the currencies would have the opposite impact. These numbers are net of hedges and assuming no changes occur other than a single currency exchange rate movement in an exposure currency. The Group's consolidated income statement on operational EBIT level is exposed to a foreign-currency translation risk worth approximately EUR 179 million expense exposure in Brazilian real (BRL) and approximately EUR 67 million income exposure in Chinese Renminbi (CNY). These exposures arise from the foreign subsidiaries and joint operations located in Brazil and China, respectively. For these exposures a 10% strengthening in the value of a foreign currency would have a negative EUR 18 million and a positive EUR 7 million impact on operational EBIT, respectively. Annual General Meeting Stora Enso Oyj's Annual General Meeting (AGM) will be held on Wednesday 20 March 2024 at 16:00 EET at the Marina Congress Center in Helsinki, Finland. More information is available at storaenso.com/agm Proposal for the distribution of dividend The Board of Directors proposes to the AGM that a dividend of EUR 0.10 per share be distributed on the basis of the balance sheet adopted for the year 2023. In addition, the Board of Directors proposes that the AGM would authorise the Board of Directors to decide at its Unaudited 24 discretion on the payment of an additional dividend up to a maximum of EUR 0.20 per share. The authorisation would be valid until 31 December 2024. The Board of Directors has assessed the Company’s financial situation and liquidity before making the proposal. There have been no material changes in the parent company’s financial position since 31 December 2023, the liquidity of the parent company remains good and the proposed dividend does not risk the solvency of the Company. Stora Enso's policy is to distribute 50% of earnings per share (EPS) excluding fair valuation over the cycle. In 2023, EPS excluding fair valuation was EUR -0.73. The Parent company distributable shareholders’ equity on 31 December 2023 amounted to EUR 1,542,290,968.57 including the profit for the period of EUR 44,769,653.04. The Board of Directors proposes to the Annual General Meeting of the Company that the distributable funds be used as follows: A dividend of EUR 0.10 per share from the distributable shareholders’ equity to be distributed on 788,619,987 shares, not to exceed EUR 78,861,998.70, which would leave EUR 1,463,428,969.87 in distributable shareholders’ equity. It is proposed that the Board may at its discretion decide on a second dividend instalment of a maximum of EUR 0.20 latest during the fourth quarter of 2024, which would lead to a further decrease in distributable shareholders’ equity of EUR 157,723,997.40, leaving EUR 1,305,704,972.47 in distributable shareholders’ equity. The first dividend instalment would be paid to shareholders who on the record date of the dividend payment, 22 March 2024, are recorded in the shareholders’ register maintained by Euroclear Finland Oy or in the separate register of shareholders maintained by Euroclear Sweden AB for Euroclear Sweden registered shares. Dividends payable to Euroclear Sweden registered shares will be forwarded by Euroclear Sweden AB and paid in Swedish crowns. Dividends payable to ADR holders will be forwarded by Citibank N.A. and paid in US dollars. The Board of Directors proposes to the AGM that the first instalment of the dividend be paid on or about 4 April 2024. Unaudited 25 Alternative performance measures According to the European Securities and Markets Authority (ESMA) Guidelines, an alternative performance measure is understood as a financial measure of historical or future financial performance, financial position, or cash flows, not defined under IFRS. Used together with the IFRS measures, alternative performance measures provide meaningful supplemental information to the management, investors, analysts and other parties with regards to the financial development of the business operations. Alternative performance measures Definition Purpose Operating result (IFRS) Net result for the period excluding income tax and net financial items (finance costs). Used in combination with below measures to determine the profitability of the Group. Operational EBIT Operating result (IFRS) excluding items affecting comparability (IAC) and fair valuations and non-operational items (FV) of the line-by-line consolidated entities and Stora Enso’s share of operating result excluding IAC and FV of its associated companies. The Group’s key non-IFRS performance metric, which is used to evaluate the performance of operating segments and, in combination with below ratios, to steer allocation of resources to them. Operational EBITDA Operating result (IFRS) excluding silviculture costs and damage to forests, fixed asset depreciation and impairment, IACs and FV. The definition includes the respective items of subsidiaries, joint arrangements and associated companies. Used by management to analyse the business and, from time-to-time, for short term and long-term target setting. Operational return on capital employed, operational ROCE, LTM3 (%) Operational EBIT3 x 100 Capital employed1 Used for long-term Group financial targets setting. Operational return on operating capital, operational ROOC, LTM3 (%) Operational EBIT3 x 100 Operating capital 1 Used for long-term divisional financial targets setting. Return on equity, ROE, LTM3 (%) Net result for the period x 100 Total equity1 A measure of the profitability in relation to equity. Net debt Interest-bearing liabilities – interest-bearing assets, marked with “I” in the statement of financial position. Used for long-term Group financial targets setting. Net debt/equity ratio Net debt Equity2 Used for long-term Group financial targets setting. Net debt/last 12 months’ operational EBITDA ratio Net debt LTM operational EBITDA Used for long-term Group financial targets setting. Earnings per share (EPS) excluding FV Net result for the period excluding fair valuations and non-operational items after tax divided by the weighted average number of shares Stora Enso's dividend policy is to distribute 50% of earnings per share (EPS) excluding fair valuation over the cycle. Operating capital and capital employed Operating capital is comprised of items marked with “O” in the statement of financial position. Capital employed = Operating capital – Net tax liabilities. Net tax liabilities are marked with "T" in the statement of financial position. Used for long-term Group financial targets setting. Items affecting comparability (IAC) The most common IAC are significant capital gains and losses, impairments or impairment reversals, disposal gains and losses relating to Group companies, provisions for planned restructurings, environmental provisions, changes in depreciation due to restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share. Represent certain significant items, identified by the management, considered not indicative of the operating business performance due to their nature and/or frequency. Fair valuations and non-operational items (FV) Fair valuations and non-operational items include non-cash income and expenses related to CO2 emission rights and liabilities, non-operational fair valuation changes of biological assets, adjustments for differences between fair value and acquisition cost of forest assets upon disposal and the Group’s share of income tax and net financial items of associated companies. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and parameters. The adjustments for differences between fair value and acquisition cost of forest assets upon disposal are a result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in previous periods in IFRS operating result (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the disposal date (for non-strategic forest assets disposals). Represent adjustments for certain items considered by the management less relevant for understanding operating business performance. These adjustments result in differences in the recognition and measurement principles applicable under IFRS. Operational fair value change of biological assets Operational fair value changes of biological assets contain all other fair value changes (see above about non-operational fair value changes of biological assets), mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan. The long-term value change of the growing forests is an important component of the forestry business profitability. Cash flow from operations (non-IFRS) and Cash flow after investing activities (non-IFRS) Cash flow from operations (non-IFRS) is equal to Net cash provided by operating activities (IFRS) before cash flows related to financial items and income taxes. Cash flow after investing activities (non-IFRS) is equal to Cash flow from operations (non-IFRS) minus cash spent on intangible assets, property, plant and equipment, and biological assets and acquisitions of associated companies. These are measures of cash generation, working capital efficiency and capital expenditure outflows. Capital expenditure Capital expenditure on fixed assets includes investments in and acquisitions of tangible and intangible assets as well as internally generated assets and capitalised borrowing costs, net of any related subsidies. Capital expenditure on leased assets includes new capitalised leasing contracts. Capital expenditure on biological assets consists of acquisitions of biological assets and capitalisation of costs directly linked to growing trees in plantation forests. The cash flow impact of capital expenditure is presented in cash flow from investing activities, excluding lease capex, where the cash flow impact is based on paid lease liabilities and presented in cash flow from financing and operating activities. A measure of the operating business investments capitalised as tangible and intangibles assets. Fixed costs Maintenance, personnel and other administration type of costs, excluding IAC and FV. A measure of the costs that are less variable in nature. 1 Average for the last five quarter ends 2 Attributable to the owners of the Parent 3 Last 12 months prior to the end of reporting period 26 Changes in the calculation of operational ROCE and ROOC Presenting return measures based on the last 12 months is an effective way to analyse the most recent financial data on an annualised basis and is considered more suitable for tracking the development of long-term targets. From Q1/2023 onwards, Stora Enso presents the operational return on capital employed (operational ROCE) based on the last 12 months prior to the end of the reporting period. This is calculated by dividing the operational EBIT of the last 12 months with the average capital employed. The average capital employed for the last 12 months is determined as the average of the published capital employed of the last five quarter-ends. Similarly, the return on operating capital (operational ROOC) for the divisions and the return on equity (ROE) for the Group will be based on the last 12 months prior to the end of the reporting period. The presentation of operational ROCE, operational ROOC and ROE based on quarter or year-to-date figures has been discontinued. Reconciliation of key figures EUR million 2023 2022 2021 Operational EBIT 342 1,891 1,528 Capital employed, average 14,230 13,795 12,243 Operational ROCE 2.4% 13.7% 12.5% Operational EBIT excl. Forest division 89 1,687 1,262 Capital employed excl. Forest division, average 8,490 8,276 7,120 Operational ROCE excl. Forest division 1.0% 20.4% 17.7% Net result for the period -431 1,536 1,268 Total equity, average 11,413 11,532 9,730 Return on equity (ROE) -3.8% 13.3% 13,0 % Net debt 3,167 1,853 2,309 Operational EBITDA 989 2,529 2,184 Net debt to operational EBITDA ratio 3.2 0.7 1.1 Earnings per share (EPS) excl. fair valuation EUR million 2023 2022 2021 Earnings per share (EPS) excl. FV EUR Net result for the period attributable to owners of the Parent -357 1,550 1,266 FV on net result for the period attributable to owners of the Parent 218 324 330 Net result for the period attributable to owners of the parent excl. FV -575 1,225 936 Average number of shares 789 789 789 Earnings per share (EPS) excl. FV EUR -0.73 1.55 1.19 Reconciliation of operational profitability EUR million 2023 2022 2021 Operational EBITDA 989 2,529 2,184 Depreciation and silviculture costs of associated companies -11 -11 -11 Silviculture costs1 -102 -100 -89 Depreciation and impairment excl. IAC -534 -527 -555 Operational EBIT 342 1,891 1,528 Fair valuations and non-operational items 231 363 394 Items affecting comparability (IAC) -895 -245 -354 Operating result (IFRS) -322 2,009 1,568 1 Including damages to forests Segment share of operational EBIT, IAC, fair valuations and non-operational items and operating profit/loss Operational EBIT IAC, fair valuations and non-operational items Operating profit/loss EUR million 2023 2022 2023 2022 2023 2022 Packaging Materials -57 655 -585 -2 -642 653 Packaging Solutions 43 16 -27 -98 17 -81 Biomaterials 118 687 -199 -19 -81 668 Wood Products -64 309 -22 -56 -86 253 Forest 253 204 208 319 461 523 Other 1 63 -42 -27 -41 36 Total 342 1,891 -664 118 -322 2,009 Net financial items -173 -151 Profit before Tax -495 1,858 Income tax expense 64 -322 Net Profit -431 1,536 27 Items affecting comparability in 2023 EUR million 2023 Impairments - Packaging Materials -468 Impairments - Biomaterials -103 Impairments - Wood Products -16 Impairments - Segment Other -14 Impairment reversal - Forest 5 Disposal of Nymölla -30 Disposal of Hylte -45 Disposal of Maxau 52 Disposal of biocomposite business -15 Disposal of Wood Products DIY unit -4 Disposals related transaction costs -6 Acquisition of De Jong Packaging Group -16 Closure of Sunila pulp mill -116 Closure of De Hoop -79 Restructuring - Anjala -26 Restructuring - Packaging Materials -21 Restructuring - Packaging Solutions -10 Restructuring - Wood Products -5 Restructuring - Biomaterials -4 Restructuring - Group functions -15 Restructuring (2021 announced) - Kvarnsveden 29 Restructuring (2021 announced) - Veitsiluoto 9 Updates in environmental provisions -5 Other items -2 Total -895 Items affecting comparability in 2022 EUR million 2022 Disposal of Russian operations - Packaging Solutions -93 Disposal of Russian operations - Wood Products -56 Disposal of Russian operations - Forest -43 Disposal of Russian operations - other divisions -6 Impairments, transaction costs and other items related to the upcoming paper site disposals (Nymölla, Hylte and Maxau) -28 Disposal of Kvarnsveden site 8 Impairments - Forest -5 Impairments - Segment Other -2 Restructuring (2021 announced) - Kvarnsveden 13 Restructuring (2021 announced) - Veitsiluoto -10 Restructuring - Packaging Materials -4 Restructuring - Packaging Solutions -5 Restructuring - Biomaterials -4 Updates in environmental provisions (mainly closed Finnish sites -13 Other items -3 Total -245 Fair valuations and non-operational items in 2023 and 2022 EUR million 2023 2022 Non-operational fair valuation changes of biological assets, Packaging Materials 12 7 Non-operational fair valuation changes of biological assets, Biomaterials 25 -17 Non-operational fair valuation changes of biological assets, Forest 156 201 Non-cash income and expenses related to CO2 emission rights and liabilities, Other -13 6 Non-operational items of associated companies, Forest 56 169 Adjustments for differences between fair value and acquisition cost of forest assets upon disposal, Forest -5 -3 Total 231 363 Calculation of net debt EUR million 31 Dec 2023 31 Dec 2022 Listed securities 9 8 Non-current interest-bearing receivables 76 120 Current interest-bearing receivables 64 77 Cash and cash equivalents 2,464 1,917 Interest-bearing assets 2,613 2,122 Non-current interest-bearing liabilities 4,446 2,792 Current portion of non-current debt 286 667 Current interest-bearing liabilities 476 513 Interest-bearing liabilities held-for-sale 571 4 Interest-bearing liabilities 5,780 3,976 Net debt 3,167 1,853 28 Consolidated financial statements Consolidated income statement Year ended 31 December EUR million Note 2023 2022 Sales 2.1 9,396 11,680 Other operating income 2.2 378 326 Changes in inventories of finished goods and work in progress -209 258 Materials and services -6,133 -6,979 Freight and sales commissions -883 -1,148 Personnel expenses 3.1 -1,275 -1,315 Other operating expenses 2.2 -638 -594 Share of results of associated companies 4.3 136 221 Change in net value of biological assets 4.2 209 195 Depreciation, amortisation and impairment charges 2.3 -1,303 -635 Operating result 2.1 -322 2,009 Financial income 2.4 91 40 Financial expense 2.4 -264 -191 Result before Tax -495 1,858 Income tax 2.5 64 -322 Net result for the year -431 1,536 Attributable to Owners of the Parent 5.5 -357 1,550 Non-controlling Interests 5.7 -74 -13 Net result for the year -431 1,536 Earnings per share Basic earnings per share, EUR 2.6 -0.45 1.97 Diluted earnings per share, EUR 2.6 -0.45 1.96 Consolidated statement of comprehensive income Year ended 31 December EUR million Note 2023 2022 Net result for the year -431 1,536 Other Comprehensive Income (OCI) Items that will not be reclassified to profit and loss Equity instruments at fair value through OCI 4.4 -645 519 Actuarial gains and losses on defined benefit plans 3.3 -52 147 Revaluation of forest land 4.2 -49 259 Share of OCI of associated companies 4.3 -23 58 Income tax relating to items that will not be reclassified 2.5 22 -77 -748 906 Items that may be reclassified subsequently to profit and loss Cumulative translation adjustment (CTA) 5.6 56 -197 Net investment hedges and loans 5.6 -15 -27 Cash flow hedges and cost of hedging 5.4 -1 52 Share of OCI of non-controlling interests (NCI) 5.7 5 0 Income tax relating to items that may be reclassified 2.5 -1 -6 44 -177 Total comprehensive income -1,135 2,265 Attributable to Owners of the Parent -1,066 2,278 Non-controlling interests 5.7 -69 -13 Total comprehensive income -1,135 2,265 The accompanying Notes are an integral part of these consolidated financial statements. 29 Consolidated statement of financial position As at 31 December EUR million Note 2023 2022 Assets Goodwill O 4.1 505 244 Other intangible assets O 4.1 283 121 Property, plant and equipment O 4.1 4,544 4,860 Right-of-use assets O 4.1 323 418 5,656 5,643 Forest assets O 4.2 6,921 6,846 Biological assets O 4.2 4,652 4,531 Forest land O 4.2 2,269 2,315 Emission rights O 4.5 108 123 Investments in associated companies O 4.3 926 832 Listed securities I 4.4 9 8 Unlisted securities O 4.4 810 1,437 Non-current interest-bearing receivables I 5.3 76 120 Deferred tax assets T 2.5 134 74 Other non-current assets O 4.5 58 38 Non-current assets 14,699 15,120 Inventories O 4.6 1,466 1,810 Tax receivables T 31 11 Operative receivables O 4.7 1,191 1,473 Interest-bearing receivables I 5.3 64 77 Cash and cash equivalents I 2,464 1,917 Current assets 5,216 5,287 Assets held for sale 6.1 839 514 Total assets 20,754 20,922 As at 31 December EUR million Note 2023 2022 Equity and liabilities Share capital 5.5 1,342 1,342 Share premium 77 77 Invested non-restricted equity fund 633 633 Fair value reserve 2,293 3,002 Cumulative translation adjustment 5.6 -375 -415 Retained earnings 7,015 7,893 Equity attributable to owners of the Parent 10,985 12,532 Non-controlling Interests 5.7 -97 -30 Total equity 10,889 12,502 Post-employment benefit obligations O 3.3 217 159 Provisions O 4.9 83 81 Deferred tax liabilities T 2.5 1,433 1,443 Non-current interest-bearing liabilities I 5.3 4,446 2,792 Non-current operative liabilities O 4.8 11 11 Non-current liabilities 6,190 4,486 Current portion of non-current debt I 5.3 286 667 Interest-bearing liabilities I 5.3 476 513 Provisions O 4.9 85 43 Operative liabilities O 4.8 2,112 2,410 Tax liabilities T 2.5 45 64 Current liabilities 3,004 3,697 Liabilities related to assets held for sale 6.1 671 237 Total liabilities 9,865 8,419 Total equity and liabilities 20,754 20,922 Items designated "O" comprise Operating Capital, items designated "I" comprise Interest-bearing Net Liabilities, items designated "T" comprise Net Tax Liabilities. The accompanying Notes are an integral part of these consolidated financial statements. 30 Consolidated cash flow statement Year ended 31 December EUR million Note 2023 2022 Cash flow from operating activities Net result for the year -431 1,536 Adjustments and reversal of non-cash items: Taxes 2.5 -64 322 Depreciation and impairment charges 2.3 1,303 635 Change in value of biological assets 4.2 -209 -195 Change in fair value of share awards -2 7 Share of results of associated companies 4.3 -136 -221 CTA and profits and losses on sale of fixed assets and investments1 2.2 -20 52 Net financial items 2.4 173 151 Other adjustments 16 22 Dividends received from associated companies 4.3 25 25 Interest received 64 13 Interest paid -149 -119 Other financial items, net -31 -7 Income taxes paid 2.5 -85 -178 Change in net working capital, net of businesses acquired or sold 300 -461 Net cash provided by operating activities 752 1,582 Cash flow from investing activities Acquisition of subsidiary shares and business operations, net of acquired cash 6.1 -584 0 Acquisition of shares in associated companies 4.3 -5 -7 Acquisition of unlisted securities 4.4 -18 -11 Cash flow on disposal of subsidiary shares and business operations, net of disposed cash 6.1 237 -77 Cash flow on disposal of shares in associated companies 4.3 0 10 Cash flow on disposal of intangible assets and property, plant and equipment 4.1 47 17 Capital expenditure 2.1, 4.1 -897 -603 Investment in biological assets 4.2 -92 -101 Proceeds from/payment of non-current receivables, net -1 31 Net cash used in investing activities -1,313 -742 Year ended 31 December EUR million Note 2023 2022 Cash flow from financing activities Proceeds from issue of new long-term debt 5.3 2,006 366 Repayment of long-term debt and lease liabilities 5.3 -716 -390 Change in short-term interest-bearing liabilities 5.3 272 9 Dividends paid -472 -434 Purchase of own shares -6 -1 Net cash used in financing activities 1,084 -450 Net change in cash and cash equivalents 523 389 Translation adjustment 24 48 Net cash and cash equivalents at beginning of year 1,917 1,480 Net cash and cash equivalents at year end 2,464 1,917 Cash and cash equivalents at year end2 2,464 1,917 Bank overdrafts at year end 0 0 Net cash and cash equivalents at year end 2,464 1,917 1 CTA = Cumulative Translation Adjustment 2 Cash and cash equivalents comprise cash-in-hand, deposits held at call with banks and other liquid investments with original maturity of less than three months. Bank overdrafts are included in current liabilities. The accompanying Notes are an integral part of these consolidated financial statements. 31 Consolidated cash flow statement Supplemental cash flow information Year ended 31 December EUR million Note 2023 2022 Change in net working capital consists of: Change in inventories 328 -454 Change in interest-free receivables: Current 347 -165 Non-current -19 -1 Change in interest-free liabilities: Current -355 163 Non-current -2 -3 Change in net working capital, net of businesses acquired or sold 300 -461 Cash and cash equivalents consist of: Cash on hand and at banks 825 1,272 Cash equivalents 1,639 646 Cash and cash equivalents 2,464 1,917 Non-cash investing activities Total capital expenditure excluding right-of-use assets 946 656 Amounts paid -897 -603 Non-cash part of additions to intangible assets and property, plant and equipment 49 53 Cash flow on acquisitions of subsidiaries and business operations Purchase consideration on acquisitions, cash part 6.1 -612 0 Cash and cash equivalents in acquired companies, net of bank overdraft 6.1 27 0 Net cash flow on acquisition -584 0 Cash flow on disposals of subsidiaries and business operations Cash part of the consideration 6.1 266 13 Cash and cash equivalents in divested companies 6.1 -29 -90 Net cash flow from disposal 237 -77 The accompanying Notes are an integral part of these consolidated financial statements. 32 Statement of changes in equity Fair value reserve EUR million Share capital Share premium and reserve fund Invested non- restricted equity fund Treasury shares Equity instruments through OCI Cash flow hedges Revaluation reserve OCI of associated companies CTA and net investment hedges and loans Retained earnings Attributable to owners of the parent Non- controlling interests Total Balance at 1 January 2022 1,342 77 633 — 778 -4 1,373 29 -195 6,650 10,683 -16 10,666 Net result for the year — — — — — — — — — 1,550 1,550 -13 1,536 OCI before tax — — — — 519 52 259 58 -224 147 812 — 812 Income tax relating to OCI — — — — 1 -9 -53 — 3 -25 -83 — -83 Total Comprehensive Income — — — — 520 43 206 58 -220 1,672 2,278 -13 2,265 Dividend — — — — — — — — — -434 -434 — -434 Acquisitions and disposals — — — — — — — — — — — — — Purchase of treasury shares — — — -1 — — — — — — -1 — -1 Share-based payments — — — 1 — — — — — 5 6 — 6 Balance at 31 December 2022 1,342 77 633 — 1,298 39 1,579 87 -415 7,893 12,532 -30 12,502 Net result for the year — — — — — — — — — -357 -357 -74 -431 OCI before tax — — — — -645 -1 -49 -23 41 -52 -730 5 -726 Income tax relating to OCI — — — — — — 10 — — 12 22 — 22 Total Comprehensive Income — — — — -645 -1 -39 -23 41 -397 -1,066 -69 -1,135 Dividend — — — — — — — — — -473 -473 — -473 Acquisitions and disposals — — — — — — — — — — — 2 2 Purchase of treasury shares — — — -6 — — — — — — -6 — -6 Share-based payments — — — 6 — — — — — -8 -2 — -2 Balance at 31 December 2023 1,342 77 633 — 653 38 1,540 63 -375 7,015 10,985 -97 10,889 CTA = Cumulative Translation Adjustment, NCI = Non-controlling Interests, OCI = Other Comprehensive Income 33 Notes to the consolidated financial statements 1 Basis for reporting 1.1 Accounting principles Principal activities Stora Enso Oyj (“the Company”) is a Finnish public limited liability company organised under the laws of the Republic of Finland and with its registered address at Salmisaarenaukio 2, 00180 Helsinki. Its shares are currently listed on Nasdaq Helsinki and Stockholm. The operations of Stora Enso Oyj and its subsidiaries (together “Stora Enso” or “the Group”) are organised into the following reportable segments: Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest and segment Other. The Group’s main market is Europe. The Financial Statements were authorised for issue by the Board of Directors on 31 January 2024. Basis of preparation The consolidated financial statements of Stora Enso have been prepared in accordance with IFRS Accounting Standards as adopted by the European Union. The consolidated financial statements of Stora Enso have been prepared according to the historical cost convention, except as disclosed in the accounting policies. The detailed accounting principles are explained in the related notes with a few exceptions where the accounting principles are presented in this note. The consolidated financial statements are presented in euros, which is the parent company’s functional currency. All figures in these consolidated financial statements have been rounded to the nearest million, unless otherwise stated. Therefore, figures in this report may not add up precisely to the totals presented and may vary from previously published financial information. New and amended standards and interpretations adopted in 2023 The Group has applied the following new and amended standards and interpretations which are effective from 1 January 2023: • Amendments to IAS 1 Presentation of Financial Statements: Disclosure of Accounting policies. The amendment requires entities to disclose their material accounting policy information rather than their significant accounting policies. The effective date is 1 January 2023. The amendment had a minor impact on the disclosures. • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates. The amendments introduce the definition of accounting estimates and includes other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. The effective date is 1 January 2023. The amendment did not have a significant impact on the Group. • Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify how entities account for deferred tax on transactions such as leases and decommissioning obligations. The main change is related to the initial recognition exemption and is in accordance with the amendment; the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The effective date is 1 January 2023. The amendment did not have a significant impact on the Group. • Amendment to IAS 12 Income taxes: Pillar Two rules. The amendment includes 1) a mandatory temporary exception to IAS 12 meaning that an entity does not recognise or disclose information about deferred tax assets and liabilities related to Pillar Two, and a requirement to disclose that the exception has been applied; 2) a requirement to disclose separately the current tax expense (income) related to Pillar Two; and 3) for periods in which Pillar Two legislation is enacted or substantively enacted, but not yet in effect, a requirement to disclose the known or reasonably estimable information about the entity’s exposure to Pillar Two income taxes. The effective date is 1 January 2023. The Group has applied the exception and provides an estimate of the impact of Pillar Two in note 2.5 Income taxes. • Other standards, standard amendments and interpretations did not have any significant impact on the Group's consolidated financial statements or disclosures. Changes in segment reporting Due to the divestments and reorganisation of retained Paper division operations, Stora Enso's segment reporting was changed as of 1 January 2023. The Paper division was discontinued and not reported as a separate segment from 1 January 2023 onwards. The paper sites divested in 2023 (Maxau, Nymölla and Hylte) together with all previously sold and closed sites are reported as part of the segment Other. The retained sites Langerbrugge and Anjala are reported as part of the Packaging Materials division. As of 1 January 2023, emerging business related units in the Packaging Solutions division were moved to the segment Other. These units include Formed Fiber, Circular Solutions (biocomposites) and Selfly Store. The comparative figures have been restated accordingly. As of 1 January 2023, the reportable segments are Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest, and segment Other. Consolidation principles The consolidated financial statements include the parent company, Stora Enso Oyj, and all companies controlled by the Group. Control is defined as when the Group: • has power over the investee, • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns. If facts and circumstances indicate that there are changes to the three elements of control listed above the Group reassess whether or not it controls an investee. Acquired companies are accounted for under the acquisition method whereby they are included in the consolidated financial statements from the date the control over the subsidiary is obtained, whereas, conversely, disposed companies are included up to the date when the control is lost. The subsidiaries and joint operations are listed in note 6.2 Group companies. All intercompany transactions, receivables, liabilities and unrealised profits, 34 as well as intragroup profit distributions, are eliminated. Accounting policies for subsidiaries, joint arrangements and associated companies are adjusted where necessary to ensure consistency with the policies adopted by Stora Enso. Associated companies over which Stora Enso exercises significant influence are accounted for by using the equity method. These companies are investments in which the Group has significant influence, but which it does not control. Significant influence means the power to participate in the financial and operating policy decisions of the company without control or joint control over those policies. More detailed information is presented in note 4.3 Associates. Joint control is the contractually agreed sharing of control of the joint arrangement, which exists only when decisions on relevant activities require the unanimous consent of the parties sharing control. Joint operations are joint arrangements, whereby the partners who have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint ventures are joint arrangements, whereby the partners who have joint control of the arrangement have rights to the net assets of the joint arrangement. The Group has two joint operations, Veracel and Montes del Plata. In both companies, Stora Enso’s ownership is 50%. The arrangements are based on shareholders’ agreements, which give Stora Enso rights to a share of returns and make the Group indirectly liable for the liabilities, as its ability to pay for the pulp is used to finance debts. In relation to its interest in joint operations, the Group recognises its share of assets, liabilities, revenues, expenses and cash flows of the joint operation. The share is determined based on rights to the assets and obligations for the liabilities of each joint operator. • Veracel is a jointly owned company of Stora Enso and Suzano located in Brazil. The pulp mill produces 1.2 million tonnes of bleached eucalyptus hard wood pulp per year and both owners are entitled to half of the mill’s output. The eucalyptus is sourced mostly from the company’s own forest plantations. The mill commenced production in 2005. • Montes del Plata is a jointly owned company of Stora Enso and Arauco located in Uruguay. The Montes del Plata Pulp Mill’s annual capacity is 1.4 million tonnes of bleached eucalyptus hard wood pulp and Stora Enso’s part, 0.7 million tonnes, is sold entirely as market pulp. The eucalyptus is sourced mostly from the company’s own forest plantations. The mill commenced production in 2014. Revenue recognition Sales comprise products, raw materials and services less indirect sales tax and discounts, and are adjusted for cash flow hedging result on sales in foreign currencies. Sales are recognised after Stora Enso has transferred the control of goods and services to a customer and the Group retains neither a continuing right to dispose of the goods, nor effective control of those goods; usually, this means that sales are recorded upon the delivery of goods to customers in accordance with the agreed terms of delivery. Stora Enso’s terms of delivery are based on Incoterms 2020, which are the official rules for the interpretation of trade terms as issued by the International Chamber of Commerce (ICC). The main categories of the terms covering Group sales are: • “D” terms, under which the group is obliged to deliver the goods to the buyer at the agreed place in the manner specified in the chosen rule, in which case the point of sale is the moment of delivery to the buyer. • “C” terms, whereby the Group arranges and pays for the external carriage and certain other costs, though the Group ceases to be responsible for the goods once they have been handed over to the carrier in accordance with the relevant term. The point of sale is thus the handing over of the goods to the carrier contracted by the seller for the carriage to the agreed destination. • “F” terms, being where the buyer arranges and pays for the carriage, thus the point of sale is the handing over of the goods to the carrier contracted by the buyer at the agreed point. Where local rules may result in invoices being raised in advance of the above, the effect of this revenue advancement is quantified, and an adjustment is made accordingly. Stora Enso’s sales mainly comprise sales of products and the revenue is typically recognised at a point in time when Stora Enso transfers control of these products to a customer. Revenues from services are recognised over time once the service has been performed. More detailed information regarding Stora Enso's principal activities from which the Group generates its revenue and disaggregation of revenue is presented in note 2.1 Segment information. Foreign currency transactions Transactions in foreign currencies are recorded at the rate of exchange prevailing at the transaction date, but at the end of the month foreign-currency-denominated receivables and liabilities are translated using the month-end exchange rate. Foreign exchange differences for operating items are presented in the appropriate income statement line in the operating profit, and, for financial assets and liabilities, they are presented in the financial items in the consolidated income statement, except when deferred in equity as qualifying cash flow hedges, net investment hedges or net investment loans. Translation differences on non-monetary financial assets, such as equities classified at fair value through other comprehensive income (FVTOCI), are included in equity. Foreign currency translations The income statements of Group companies with functional and presentational currencies other than the euro are translated into the Group reporting currency using the average exchange rates of the year, whereas the statements of the financial position of these companies are translated using the exchange rates at the reporting date. The Group is exposed to currency risks arising from exchange rate fluctuations on the value of its net investment in non-euro foreign entities. Exchange differences arising from the retranslation of net investments in foreign entities that are non-euro foreign subsidiaries, joint operations or associated companies and of financial instruments that are designated to hedge such investments, are recorded directly in equity as cumulative translation adjustment (CTA). See note 5.6 Cumulative translation adjustment and equity hedging for more details. Future standard changes endorsed by the EU but not yet effective in 2023 • Amendments to IAS 1 Presentation of Financial Statements: Information about long-term debt with covenants. IAS 1 requires a company to classify debt as non-current only if the company can avoid settling the debt in the 12 months after the reporting date. However, a company’s ability to do so is often subject to complying with covenants. The amendments specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. Instead, the amendments require a company to disclose information about these covenants in the notes to the financial statements. The effective date is 1 January 2024. The Group is evaluating the impact of the amendments and expects that the amendment does not have significant impact. 35 • Amendments to IAS 1 Presentation of Financial Statements: Classification of liabilities as current or non-current. The amendments clarify a criterion for classifying a liability as non-current. The amendments specify that an entity’s right to defer settlement must exist at the end of the reporting period; clarify that classification is unaffected by management’s intentions or expectations about whether the entity will exercise its right to defer settlement; clarify how lending conditions affect classification; and clarify requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments. The effective date is 1 January 2024. The Group is evaluating the impact of the amendment and expects that the amendment does not have significant impact. • Amendments to IFRS 16 Leases: Lease Liability in Sale and Leaseback. Amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease. The effective date is 1 January 2024. The Group expects that the amendment does not have a significant impact. • No other published standards, standard amendments or interpretations which would be expected to have any significant impact on the Group’s consolidated financial statements or disclosures. Future standard changes not yet effective and not yet endorsed by the EU in 2023 • Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements. The amendments require entities to add disclosure requirements, and ‘signposts’ within existing disclosure requirements that ask entities to provide qualitative and quantitative information about supplier finance arrangements. The effective date is 1 January 2024. The Group is engaged in supply chain financing and is evaluating the impact of the amendment and expects that the amendment will result in additional disclosures in the notes of the consolidated financial statements. • Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability. The amendment contains guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The effective date is 1 January 2025. The Group expects that the amendment does not have a significant impact. • Other published standards, standard amendments or interpretations are not expected to have any significant impact on the Group’s consolidated financial statements or disclosures. 1.2 Critical accounting estimates and judgements The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, judgements and assumptions that affect the reported assets and liabilities, as well as the disclosure of contingent assets and liabilities at the reporting date and the reported revenues and expenses during the period. These estimates, judgments and assumptions might have a significant impact on the amounts recognised in the consolidated financial statements. The estimates are based on historical experience and various other assumptions that are believed to be reasonable and reflect management's best estimates, though actual result and timing could differ from these. The estimates, judgements and assumptions are reviewed regularly and updated if there are changes in circumstances or as a result of new information. The accounting items presented below represent those matters which include the most estimation uncertainty and exercise of judgement. Property, plant and equipment, intangible assets and right-of-use assets The carrying amounts of property, plant and equipment and intangible assets and right-of- use assets are assessed at each reporting date to determine whether there is any indication that an asset may be impaired. If an indicator of impairment exists, the asset's recoverable amount is determined and compared with its carrying amount. The recoverable amount of an asset is estimated as the higher of fair value less the cost of disposal and the value in use, and an impairment charge is recognised whenever the carrying amount exceeds the recoverable amount. The value in use is calculated using a discounted cash flow method which is most sensitive to the discount rate as well as the expected future cash flows. The key assumptions used in the impairment testing, are explained further in note 2.3 Depreciation, amortisation and impairment charges. Management believes that the assigned values and useful lives, as well as the underlying assumptions, are reasonable, though different assumptions and assigned useful lives could have a significant impact on the reported amounts. For material intangible assets and property, plant and equipment in an acquisition, an external advisor makes a fair valuation of the acquired intangible assets and property, plant and equipment and assists in determining their remaining useful life. Goodwill Goodwill is tested per cash generating unit (CGU) or by a group of CGUs at least on an annual basis and recoverable amount is determined as the higher of fair value less cost to sell and their value in use (discounted cash flow method). Impairment is recognised if the carrying amount exceeds the recoverable amount. The discounted cash flow method uses future projections of cash flows from each of the reporting units in a CGU or a group of CGUs and includes, among other estimates, projections of future product pricing, production levels, product costs, market supply and demand, projected capital expenditures and an assumption of the weighted average cost of capital. The discount rates used reflect the best estimate of the weighted average cost of capital. The Group has evaluated the most sensitive estimates and assumptions, which, when changed, could have a material impact on the valuation of the assets including goodwill and, therefore, could lead to an impairment. These estimates and assumptions are expected sales prices, expected operating costs and the discount rate. The key assumptions used in the impairment testing are presented in note 2.3 Depreciation, amortisation and impairment charges. Leases When assessing the lease term and if an extension or renewal options are included or not, the Group considers all relevant facts, circumstances and incentives that might have an impact on the assessment. Options to extend or renew the lease are included in the lease term only if it is reasonably certain that Stora Enso will exercise the option. The Group will do a reassessment, for example upon changes in circumstances, receiving new information or an occurrence of a significant event that is within the control of the lessee and might have an impact on the assessment. See note 4.1 Intangible assets, property, plant and equipment and right-of- 36 use assets for more details about right-of- use assets and note 5.3 Interest-bearing assets and liabilities for more details about lease liabilities. Biological assets The Group has biological assets in subsidiaries, joint operations and associated company. Biological assets, in the form of standing trees, are measured at fair value less the costs to sell. Fair value is determined by using discounted cash flows from continuous operations based on sustainable forest management plans taking into account the growth potential of one cycle. These discounted cash flows require estimates of growth, harvesting, sales price, costs and discount rate. In determining the fair value of biological assets, the management needs to make estimates of future price levels and trends for sales and costs, and to undertake regular surveys of the forest to establish the volumes of wood available for harvesting and their current growth rates. See next chapter for estimates and judgement applied in valuation of Nordic forest assets and note 4.2 Forest assets for more detailed information about Nordic and plantation forest assets. Nordic forest assets The fair value of forest assets in the Nordics is determined using a market approach, which is based on the forest market transactions in the areas where Stora Enso’s forests are located. Market prices between areas vary significantly and judgement is applied to define relevant areas for market transactions used in valuation. The valuation of the forest assets is based on detailed transaction data and price statistics as provided by market data suppliers. Market transaction data is adjusted to consider characteristics and nature of Stora Enso's forest assets and to exclude certain non- forest assets and transactions considered as outliers compared to other transactions. The valuation takes into account where the forest land is located, price levels and volume of standing stock. The value of the forest assets will be affected by changes in transaction prices and by how the volume of standing stock develops. Stora Enso is applying weighted three-year average market transaction prices and this is considered to include a sufficient amount of transactions and estimated to represent market conditions at the reporting date. The value of the forest assets is allocated to biological assets and forest land. Allocation of the combined fair value of forest assets is based on the income approach where separate present values of expected net cash flows are calculated for both biological assets and forest land. The discount rate is determined as the rate at which the valuation based on market transaction prices matches the total forest assets combined cash flows for biological assets and forest land. The total net cash flows for each of the components include estimates in respect of future harvesting volumes, sales price levels, and cost development. See note 4.2 Forest assets for more information. Fair value of financial instruments Where the fair value of financial assets and liabilities cannot be derived directly from publicly quoted market prices, other valuation techniques, such as discounted cash flow models, transaction multiples, the Black and Scholes model and the Gordon model, are applied. The key judgements include future cash flows, credit risk, volatility and changes in assumptions about these factors which could affect the reported fair value of the financial instruments. Investments in debt and equity instruments of unlisted entities, such as Pohjolan Voima Oyj (PVO), represent a significant portion of the Group’s assets and require management judgement, as explained in more detail in notes 4.4 Equity instruments and 5.1 Financial risk management. Income taxes Tax assets and liabilities are reviewed on a regular basis and balances are adjusted appropriately. The deferred tax assets, whether arising from temporary differences or from tax losses, are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Management considers that adequate provision has been made for future tax consequences based on the current facts, circumstances and tax laws. However, should any tax positions be challenged and not prevail, different outcomes could result and have a significant impact on the amounts reported in the consolidated financial statements. See note 2.5 Income taxes for more detailed information. Post-employment benefits The determination of the Group pension obligation and expense is subject to the selection of certain assumptions used by actuaries in calculating such amounts, including, among others, the discount rate, the annual rate of increase in future compensation levels and estimated lifespans. Amounts charged in the income statement are determined by independent actuaries; however, where actual results differ from the initial estimates, together with the effect of any change in assumptions or other factors, these differences are recognised directly in equity, as disclosed in the statement of comprehensive income. See note 3.3 Post-employment benefit obligations for detailed information on the assumptions used in the pension obligation calculations. Provisions The Group has recognised provisions for known environmental, restructuring and other obligations, where legal or constructive obligation exist as a result of past events. The amounts recognised as provisions are based on the management’s best estimate of the costs required to settle the obligation. Due to uncertainty regarding the timing and amount of these costs, the actual costs might differ significantly from the original estimate. The carrying amounts of provisions are reviewed regularly and adjusted when needed to consider changes in cost estimates, regulations, applied technologies and conditions. See note 4.9 Provisions for more detailed information. 37 2 Financial performance 2.1 Segment information Accounting principles Stora Enso’s reportable segments are Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest and the segment Other. Operating segments reflect the Group’s management structure and the way financial information is regularly reviewed by Stora Enso’s President and CEO who is responsible for allocating resources and assessing the performance of the operating segments. Costs, revenues, assets and liabilities are allocated to operating segments on a consistent basis. Transactions between operating segments are based on arm’s length terms, and they are eliminated on consolidation. The activities of the reportable segments are: Packaging Materials The Packaging Materials division is a global leader and expert in circular packaging providing premium packaging materials based on virgin and recycled fiber. Stora Enso helps customers replace fossil-based materials with low-carbon, renewable and recyclable alternatives for their food, beverage and transport packaging with a wide selection of base boards and barrier coatings. Packaging Solutions The Packaging Solutions division is a packaging converter that provides premium fiber-based packaging products and services used by leading brands across multiple market areas, including retail, e-commerce, fresh produce, and industrial applications. The division also provides design and sustainability services for customers to optimise material use, logistics and to reduce CO2 emissions. Biomaterials The Biomaterials division’s business opportunities are strongly driven by the need to replace fossil-based and other non-renewable materials. Stora Enso uses all fractions of a tree to develop new biobased solutions for various applications. The division’s long-term growth is driven by new products and innovations, while pulp continues to be the foundation. Wood Products The Wood Products division is Europe’s largest sawn timber producer and a leading provider of sustainable wood-based solutions for the global construction industry. Additionally, it offers window and door components, and co-products such as pellets made from wood residuals. Forest The Forest division is responsible for wood sourcing for Stora Enso’s Nordic and Baltic operations and B2B customers. It manages the Group’s forest assets in Sweden and a 41% share of Tornator, whose forests are mainly located in Finland. The division’s operations are based on sustainable forest management from planning and logistics to harvesting and forest regeneration. Segment Other The segment Other includes the divested paper sites until the completion of the divestments, the reporting of the emerging businesses (including Formed Fiber and Selfly Stores), as well as Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s shared services and administration. Read more about the changes in segment reporting in 2023 in the note 1.1 Accounting principles. The comparative figures for 2022 have been restated accordingly. 38 Operating segments 2023 EUR million Packaging Materials Packaging Solutions Biomaterials Wood Products Forest Other Eliminations Group External sales 4,362 1,066 1,363 1,453 989 162 0 9,396 Internal sales 195 11 223 127 1,501 801 -2,859 0 Sales total 4,557 1,077 1,587 1,580 2,490 964 -2,859 9,396 Product sales 9,317 Service sales 79 Sales total 9,396 Operating result -642 17 -81 -86 461 -41 49 -322 Net financial expense -173 Income taxes 64 Result for the period -431 Operative assets 3,562 1,223 2,772 855 7,906 1,189 -371 17,136 Tax receivables 166 Interest-bearing receivables 2,613 Assets held for sale 839 Total assets 20,754 Operative liabilities 1,059 195 321 238 549 505 -358 2,508 Tax liabilities 1,478 Interest-bearing liabilities 5,209 Liabilities related to assets held for sale 671 Total liabilities 9,865 Other items Depreciations/impairments/impairment reversals -805 -74 -297 -67 -21 -38 0 -1,303 Capital expenditures 636 161 162 51 29 15 0 1,054 Operating capital1 3,243 1,028 2,451 617 7,358 684 -13 15,368 Average personnel 7,269 4,389 2,196 4,079 1,434 1,455 0 20,822 1 Including assets held for sale and related liabilities. 39 Operating segments 2022 EUR million Packaging Materials Packaging Solutions Biomaterials Wood Products Forest Other Eliminations Group External sales 5,257 704 1,798 2,058 848 1,014 0 11,680 Internal sales 239 23 382 137 1,671 1,136 -3,589 0 Sales total 5,496 727 2,180 2,195 2,519 2,150 -3,589 11,680 Product sales 11,521 Service sales 159 Sales total 11,680 Operating result 653 -81 668 253 523 36 -42 2,009 Net financial expense -151 Income taxes -322 Result for the period 1,536 Operative assets 4,792 351 3,095 998 7,481 1,924 -440 18,201 Tax receivables 85 Interest-bearing receivables 2,122 Assets held for sale 514 Total assets 20,922 Operative liabilities 1,265 146 299 280 518 574 -377 2,704 Tax liabilities 1,507 Interest-bearing liabilities 3,972 Liabilities related to assets held for sale 237 Total liabilities 8,419 Other items Depreciations/impairments/impairment reversals -287 -62 -110 -59 -50 -67 0 -635 Capital expenditures 363 36 121 87 35 59 0 701 Operating capital1 3,527 205 2,796 718 6,963 1,660 -63 15,806 Average personnel 7,113 3,865 2,135 4,445 1,412 2,822 0 21,790 1 Including assets held for sale and related liabilities. Comparative figures have been restated as described in the Group's release from 29 March 2023. 40 Geographical information External sales by destination Non-current assets by country1 Capital expenditure by country2 EUR million 2023 2022 2023 2022 2023 2022 Austria 347 450 134 128 15 16 Baltic States 271 377 66 74 9 12 Czech Republic 189 231 193 198 8 41 Finland 664 759 2,872 2,729 587 311 France 299 449 2 2 0 0 Germany 862 1,208 34 53 9 10 Italy 453 650 0 0 1 0 Netherlands 597 317 797 9 131 7 Poland 511 733 407 379 30 35 Sweden 1,111 1,071 7,127 6,837 174 173 UK 344 444 8 0 0 0 Other Europe 901 1,245 126 135 12 16 Total Europe 6,548 7,934 11,767 10,543 975 623 China (incl. Hong Kong) 991 1,125 43 1,044 15 25 Japan 242 417 0 0 0 0 Uruguay 33 31 1,543 1,580 35 31 USA 302 397 0 32 0 0 Other countries 1,279 1,776 316 282 29 22 Total 9,396 11,680 13,669 13,481 1,054 701 1 Non-current assets excluding assets held for sale, financial instruments and deferred tax assets. 2 Excluding biological asset capital expenditure 2.2 Other operating income and expense Accounting principles Research and development Research costs are expensed as incurred in other operating expenses in the consolidated income statement. Development costs are also expensed as incurred unless they meet the criteria to be recognised as intangible assets in accordance with IAS 38, in which case they are capitalised as intangible assets and amortised over their expected useful lives. Government grants Government grants relating to the purchase of property, plant and equipment are deducted from the carrying value of the asset, while the net cost is capitalised. Other government grants are recognised as income on a systematic basis over the periods necessary to match them with the related costs which they were intended to compensate. Green certificates Stora Enso is part of the local green energy production system which entitles selected mills in Europe to receive green certificates based on megawatt hours of green energy produced. Green certificates received are recognised at grant date market value only in the balance sheet. As such, subsequent changes in market prices do not have an impact on the income statement and the income is recognised only when certificates are sold. Other operating income and expense EUR million 2023 2022 Other operating income Emission rights allocated and disposal gains 145 177 Sale of green certificates 12 10 Gains on disposal of fixed assets 44 4 Gains on disposal of Group companies and business operations 52 18 Dividend and gain on sale of unlisted shares 1 1 Insurance compensation 8 10 CTA release 0 5 Government grants 40 16 Other1 76 85 Total 378 326 1 Including rent income, fair value changes for non-hedge accounted derivatives and other items. Derivatives are discussed in more detail in note 5.4 Derivatives. EUR million 2023 2022 Other operating expenses Lease expenses 43 40 Credit losses, net of reversals 9 13 Losses on disposal of fixed assets 4 0 Losses on disposal of Group companies and business operations 19 26 CTA release 56 52 Provision changes in income statement 94 31 Other1 414 431 Total 638 594 1 Including expenses related to, among others, consultancy and other services, IT and telecommunications, properties and administration, audit, training, travelling, insurance, penalties, and currency translation differences on operative payables. Materials and services include 2023 2022 Emissions rights to be delivered 82 112 The Group has recorded an other operating income of EUR 145 (177) million related to emission rights. Actual realised profits amounted to EUR 75 (59) million on the disposal of surplus rights. Under Materials and Services an expense of EUR 82 (112) million has been booked related to the cost of CO2 emissions from production. See note 4.5 Emission rights and other non-current assets for more details related to emission rights. The income from the sale of green certificates amounted to EUR 12 (10) million. Lease expenses include expenses relating to short-term leases of EUR 12 (12) million, low- value assets of EUR 26 (21) million and variable lease payments not included in the measurement of lease liabilities of EUR 2 (2) million. Lease expenses also include service payments included in lease contracts, which are not included in the measurement of lease liabilities. In 2023, research and development expenses of EUR 98 (89) million were recorded. 41 Auditor's fees and services EUR million 2023 2022 Audit fees 4 4 Audit-related fees 0 0 Tax fees 0 0 Other fees 0 0 Total 5 4 Aggregate fees for professional services rendered to the Group principal auditor PwC amounted to EUR 5 (4) million. Audit fees relate to the auditing of the annual financial statements or ancillary services normally provided in connection with statutory and regulatory filings. Audit- related fees are incurred for assurance and associated services that are reasonably related to the performance of the audit or for the review of financial statements. 2.3 Depreciation, amortisation and impairment charges Accounting principles Depreciation, amortisation and impairment charges Depreciation or amortisation of an asset begins when it is available for use in the location and condition necessary for it to be operated in the manner intended by management. Depreciation or amortisation ceases when the asset is derecognised or classified as held for sale. Depreciation or amortisation does not cease when the asset becomes idle. Tangible and intangible assets are depreciated and amortised on a straight-line basis during their useful lives. Useful lives are reviewed annually. If an asset is disposed and the asset’s book value is higher than the disposal proceeds, the difference is recognised as an impairment in the period when reliable estimate of disposal loss is available, at the latest when a binding sales contract is signed. Right-of- use (ROU) assets are depreciated using the straight line method from the commencement date of the contract to the earlier of the end of the lease term or the end of the useful life of the ROU assets. The carrying amounts of intangible assets, property, plant and equipment and ROU assets are reviewed at each reporting date to determine whether there is any indication of impairment, whereas goodwill is tested annually. If any such indication exists, the recoverable amount is estimated as the higher of the fair value less costs of disposal and the value in use, with an impairment loss being recognised whenever the carrying amount exceeds the recoverable amount. A previously recognised impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, however, not to an extent higher than the carrying amount that would have existed had no impairment loss been recognised in prior years. For goodwill, however, a recognised impairment loss is not reversed. Whilst intangible assets, property, plant and equipment and ROU assets are subject to impairment testing at the cash generating unit (CGU) level, goodwill is subject to impairment testing at the CGU level for groups of CGUs, which represents the lowest level within the Group at which goodwill is monitored for internal management purposes. Depreciation, amortisation and impairment charges EUR million 2023 2022 Depreciation and amortisation Intangible assets 41 24 Buildings and structures 76 81 Plant and equipment 349 371 Right-of-use assets 59 50 Other tangible assets 8 8 Total 533 533 Impairment Goodwill 85 11 Intangible assets 24 1 Buildings and structures 134 25 Plant and equipment 494 75 Right-of-use assets 33 0 Other tangible assets 6 2 Total 776 114 Reversal of impairment Plant and equipment -6 -7 Total -6 -7 Disposal gains/losses Gain on sale of assets 0 -10 Loss on sale of assets 0 4 Total 0 -5 Depreciation, amortisation and impairment charges 1,303 635 Impairment testing The recoverable amount for the cash generating units (CGUs) has been determined as the higher of fair value less cost to sell and their value in use. Value in use is determined by using cash flow projections from financial estimates approved by the Board of Directors and management. The pre-tax discount rates are calculated for each CGU, taking into account the business environment of the CGU and the tax and risk profile of the country in which the cash flow is generated. The table in the goodwill impairment testing section below sets out the pre-tax discount rates used for goodwill impairment testing, which are similar to those used in the impairment testing of other intangible assets, property, plant and equipment, and ROU assets. The following assumptions were used in calculating value in use for each CGU: • Sales price estimates in accordance with internal and external specialist analysis; • Cash flows and discount rates were prepared in nominal terms; • Current cost structure to remain unchanged; • For goodwill testing, a five-year future period was used, after which the perpetuity value was determined using inflation based growth rates; • For intangible assets, property, plant and equipment, and ROU assets testing period was the remaining expected economic life of the assets. 42 Property, plant and equipment, other intangible assets and ROU assets impairments The total impairment charges on property, plant and equipment, other intangible assets and ROU assets in 2023 amounted to EUR 691 (103) million and resulted from business restructuring, Group company disposals and predictions of a weaker outlook compared to previous estimates. In 2023, impairments were mainly related to Biomaterials and Packaging Materials divisions. Biomaterials related impairments of EUR 146 million concerned Nordic Mills CGU and are mainly related to Sunila due to the closure of pulp production site Finland and Uimaharju site due to predictions of a weaker outlook compared to previous estimates. Packaging Materials related impairments of EUR 490 million concerned mainly Containerboard Oulu CGU of EUR 228 million due to predictions of a weaker outlook compared to previous estimates, Consumer Board China CGU of EUR 202 million in connection to potential disposal transaction and based on fair value less cost to sell, and CGU De Hoop of EUR 42 million due to the closure of the site in the Netherlands. In 2022, impairments were mainly related to Group company disposals in Russia and disposals in the Paper division. Russia related impairments of EUR 75 million concerned Wood Products Baltic and Russia CGU, Packaging Solutions Corrugated Nordics, and CEE CGU and Forest operations CGU. Paper related impairments of EUR 22 million concerned News and Office CGUs. Due to disposals, Wood Products Baltic and Russia CGU no longer exists as its own CGU. Due to segment changes in 2023, News and Office CGUs, previously part of Paper, are presented as part of the segment Other. Goodwill impairments In 2023, a goodwill impairment of EUR 28 million was recognised in Anjala Mill CGU and EUR 13 million in De Hoop mill CGU mainly due to restructurings in the Packaging Materials division. Additionally, a goodwill impairment of EUR 44 million was recognised in the Biomaterials division's CGU Nordic Mills, due to predictions of a weaker outlook compared to previous estimates. Due to disposals in 2022 in the Paper division, a goodwill impairment of EUR 11 million was recognised in News and Office CGUs. Due to segment changes in 2023, News and Office CGUs, previously part of Paper, are presented as part of the segment Other. The most material groups of CGUs containing goodwill 2023 2022 EUR million Goodwill at year end Pre-tax discount rate Goodwill at year end1 Pre-tax discount rate Packaging Solutions - Western Europe 277 9.3% 0 — Wood Products - Southern Europe 110 11.8% 111 9.9% Biomaterials - Nordic Mills 0 10.1% 45 8.2% Other CGUs 119 88 Total 505 244 1 Goodwill excluding assets held for sale The calculation of value in use is highly sensitive to discount rates, sales prices and costs. Sensitivity analysis are conducted to calculate the amounts by which the value assigned to the key assumption must change in order for the unit’s recoverable amount to be equal to its carrying amount for the CGUs for which a reasonably possible change in an assumption could result in an impairment. In 2023, any reasonably possible change in key assumptions would not cause carrying amount to exceed its recoverable amount. Summary of impairments and impairment reversals per division EUR million 2023 2022 Packaging Materials 530 0 Packaging Solutions 5 36 Biomaterials 190 0 Wood Products 20 10 Forest 1 31 Other 23 28 Total (impairment +) / (Impairment reversal -) 770 107 2.4 Net financial items Accounting principles Net financial items comprise net interest expenses, foreign exchange gains and losses and other financial income and expenses mainly arising from interest-bearing assets and liabilities. 43 Financial income and expense EUR million 2023 2022 Net financial expense in the income statement Financial income 91 40 Financial expense -264 -191 Total -173 -151 Represented by Interest expense Interest expense from borrowings measured at amortised cost -167 -96 Interest component of the effective hedges under cash flow hedge 9 -12 Interest expense on leases -23 -17 Interest capitalised 7 0 Interest income on loans and receivables measured at amortised cost 61 20 Net interest expense -113 -105 Foreign exchange gains and losses Currency derivatives -12 8 Borrowings, cash equivalents, lease liabilities and other -10 -10 Net foreign exchange gains and losses -22 -1 Other financial income 6 2 Other financial expense Financial fees -28 -8 Fair valuation losses 0 -4 Impairments of interest-bearing assets -11 -30 Net interest on net defined benefit liabilities -5 -3 Net other financial expense -38 -45 Total -173 -151 Gains and losses on derivative financial instruments are shown in note 5.4 Derivatives. In 2023, the net interest expense increased mainly as a result of higher interest rates on borrowings and higher amount of gross debt. The negative impact was partly offset by higher interest income on loans and receivables. The amount of interest costs capitalised during the year amounted to EUR 7 (EUR 0) million, and were mainly related to the Oulu site conversion project in Finland. The average interest rate used for capitalisation was 3.6% (-). Costs on long-term debt issues capitalised as part of non- current debt amounted to EUR 9 (6) million in the statement of financial position. During the year, EUR 2 (2) million was amortised through interest expense by using the effective interest rate method. Exchange gains and losses for currency derivatives mainly relate to non-hedge accounted instruments fair valued in the income statement. In 2023, the amount reported as other financial income mainly consists of fair valuation gains, while other financial expense in the table above relates to net financial fees for unused committed credit facilities, guarantees, and factoring and supply chain financing programmes. Impairments of interest-bearing assets relate to receivables originating from the sale of the Russia operations in 2022 and are discussed in more detail in note 5.3 Interest-bearing assets and liabilities. 2.5 Income taxes Accounting principles The Group income tax expense/benefit includes taxes of Group companies based on taxable profit/loss for the period, together with tax adjustments for previous periods and the change in deferred taxes. Tax assets and liabilities reflect uncertainty related to income taxes, if any. Deferred taxes are provided using the liability method, as measured with enacted, or substantially enacted, tax rates, to reflect the net tax effects of all temporary differences between the tax bases and the accounting bases of assets and liabilities. No deferred tax is recognised for the initial recognition of goodwill and the initial recognition of an asset or liability in a transaction which is not a business combination, and at the time of the transaction this affects neither accounting profit nor taxable profit. Deferred tax is recognised on transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. Deferred tax assets reduce income taxes payable on taxable income in future years. The deferred tax assets, whether arising from temporary differences or from tax losses, are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Tax expense EUR million 2023 2022 Current tax -54 -196 Deferred tax 119 -126 Total income tax 64 -322 Income tax rate reconciliation EUR million 2023 2022 Profit before tax -495 1,858 Tax at statutory rates applicable to profits in the country concerned1 121 -337 Non-deductible expenses and tax exempt income2 -10 -15 Valuation of deferred tax assets -60 15 Taxes from prior years -3 2 Changes in tax rates and tax laws -1 0 Results from associated companies 27 44 Other -10 -31 Total income taxes 64 -322 Effective tax rate 13.0% 17.3% Statutory tax rate (blended) 24.5% 18.2% 1 Includes a EUR 22 million impact from countries with tax holidays and tax benefits in 2023 and a EUR 55 million impact from tax holidays and other tax benefits in 2022. 2 The tax value of non-deductible expenses of EUR 12 million has been netted against tax exempt income of 3 EUR million in 2023, and tax value of non-deductible expenses of EUR 16 million has been netted against tax exempt income of EUR 1 million in 2022. The statutory tax rate is a weighted average of the statutory tax rates prevailing in jurisdictions where Stora Enso operates. 44 Change in deferred taxes in 2023 EUR million Value at 1 Jan 2023 Income statement OCI Acquisitions / disposals Translation difference Value at 31 Dec 2023 Forest assets -1,267 -54 9 0 -4 -1,315 Fixed assets -123 58 0 -60 -3 -128 Financial instruments -10 -2 -1 0 0 -12 Untaxed reserves -85 77 0 0 2 -6 Pensions and provisions 26 -3 9 0 1 34 Tax losses and tax credits carried forward 74 40 0 0 -2 112 Other deferred taxes 15 2 0 -2 1 17 Total -1,370 119 18 -62 -4 -1,299 Equity hedges and net investment loans (CTA) 0 0 Cash flow hedging 0 0 Change in deferred tax 119 18 -62 -4 Assets1 74 134 Liabilities1 -1,443 -1,433 1 Deferred tax assets and liabilities have been offset in accordance with IAS 12. OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment Change in deferred taxes in 2022 EUR million Value at 1 Jan 2022 Income statement OCI Acquisitions / disposals1 Translation difference Value at 31 Dec 2022 Forest assets -1,268 -43 -53 0 97 -1,267 Fixed assets -103 -44 0 17 7 -123 Financial instruments 1 -3 -8 0 0 -10 Untaxed reserves -80 -16 0 4 7 -85 Pensions and provisions 58 -1 -25 -4 -2 26 Tax losses and tax credits carried forward 107 -34 0 0 1 74 Other deferred taxes -2 19 0 -2 0 15 Total -1,287 -122 -86 15 110 -1,370 Equity hedges and net investment loans (CTA) -3 3 Change in deferred tax -125 -83 15 110 Assets2 143 74 Liabilities2 -1,430 -1,443 1 Includes assets held for sale. 2 Deferred tax assets and liabilities have been offset in accordance with IAS 12. OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment The recognition of deferred tax assets is based on the Group’s estimations of future taxable profits available against which the Group can utilise the benefits. Non-recognised deferred tax assets on deductible temporary differences amounted to EUR 50 (50) million. There is no expiry date for these differences. Taxable temporary differences in respect of investments in subsidiaries, branches and associates and interests in joint operations, for which deferred tax liabilities have not been recognised amounted to EUR 428 (367) million. Tax losses Tax losses carried forward Recognised tax values Unrecognised tax values EUR million 2023 2022 2023 2022 2023 2022 Expiry within five years 88 359 9 5 13 72 Expiry after five years 326 100 60 9 6 14 No expiry 1,213 1,173 42 58 219 198 Total 1,626 1,633 111 73 237 283 At the end of 2023 tax losses of EUR 259 million related to Finland and a deferred tax asset of EUR 52 million was recognized of these tax losses. At the end of 2022, there were no material tax losses related to Finland. Uncertain tax positions At balance sheet date there were on-going tax audits in several jurisdictions. It is not expected that any significant additional taxes in excess of those already recorded for will arise as a result of these audits. Impact of OECD Pillar Two model rules The Group is within the scope of the OECD Pillar Two model rules as from 1 January 2024. The Group has no related current tax exposure for the financial year 2023. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12. The Group has initially assessed its exposure to the legislation. Part of the Group's operation in Uruguay may become subject to the Pillar Two minimum tax. The impact of the legislation to the Group’s average effective tax rate is expected to vary from year to year, and the Group estimates the tax impact in the short term to be between 0–15 million EUR per year. Estimates are based on the current understanding of the interpretation of the new rules. 2.6 Earnings per share Accounting principles Basic earnings per share, attributable to the owners of the parent company, are calculated by dividing the net result attributable to shareholders by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the group and held as treasury shares. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares plus the diluted effect of all potential dilutive ordinary shares, such as shares from share-based payments. Earnings per share 2023 2022 Net result for the period attributable to the owners of the parent, EUR million -357 1,550 Weighted average number of A and R shares 788,619,987 788,619,987 Weighted average number of share awards 1,094,121 771,150 Weighted diluted number of shares 789,714,108 789,391,137 Basic earnings per share, EUR -0.45 1.97 Diluted earnings per share, EUR -0.45 1.96 45 3 Employee remuneration 3.1 Personnel expenses Personnel expenses EUR million 2023 2022 Wages and salaries 962 996 Pension expenses 147 152 Share-based remuneration 4 8 Other statutory employer costs 139 140 Other voluntary costs 23 20 Total 1,275 1,315 Pension expenses EUR million 2023 2022 Defined benefit plans 7 5 Defined contribution plans 140 146 Total 147 152 The average number of employees in 2023 amounted to 20,822 (21,790). Pension costs are discussed further in note 3.3 Post-employment benefit obligations. In 2023, the expense of the share-based remuneration was EUR 4 (8) million. Share-based remuneration comprising of share awards is described in more detail in note 3.4 Employee variable compensation and equity incentive schemes. Remuneration of the Group Leadership Team and Board are described in note 3.2 Board and executive remuneration. 3.2 Board and executive remuneration Board and committee remuneration 2023 2022 EUR thousand (before taxes) Cash Value of shares1 Total4 Total Committee memberships Board members at 31 December 2023 Kari Jordan, Chair 135 85 220 86 People and Culture, Nomination2,3 Håkan Buskhe, Vice Chair 77 48 125 122 People and Culture, Nomination2,3 Elisabeth Fleuriot 64 33 97 94 Financial and Audit Helena Hedblom 55 33 88 86 Sustainability and Ethics Astrid Hermann 64 33 97 — Financial and Audit Christiane Kuehne 60 33 93 90 Sustainability and Ethics Antti Mäkinen 55 33 88 214 People and Culture Richard Nilsson 71 33 104 101 Financial and Audit Former Board members Hock Goh (until 16 March, 2023) — — — 94 Financial and Audit Hans Sohlström (until 18 September, 2023) 55 33 88 86 Sustainability and Ethics Total remuneration as Directors1 636 364 1,000 972 140% of the Board remuneration, excluding Committee remuneration, in 2023 was paid in Stora Enso R shares purchased from the market and distributed as follows: to Chair 7,326 R shares, Vice Chair 4,136 R shares, and members 2,839 R shares each. The Company has no formal policy requirements for the Board members to retain shares received as remuneration. 2 Stora Enso’s Shareholders’ Nomination Board has been appointed by the AGM in 2016 to exist until otherwise decided. The Shareholders’ Nomination Board according to its Charter as approved by the AGM comprises of four members: the Chair and Vice Chair of the Board of Directors, as well as two members appointed by the two largest shareholders (one each) as of 31 August each year. No separate remuneration is paid to members of the Nomination Board. 3 Marcus Wallenberg, appointed by FAM AB, is Chair of the Nomination Board. Jouko Karvinen is the member of the Shareholders’ Nomination Board appointed by Solidium Oy. Kari Jordan and Håkan Buskhe were appointed as members of the Shareholders’ Nomination Board in their roles as Chair and Vice Chair of the Board of Directors. 4 The Company additionally pays the transfer tax for share purchases for each member, in line with AGM decision, which amount is considered also taxable income for each member. Shareholders at the Annual General Meeting (AGM) have established a Shareholders’ Nomination Board to exist until otherwise decided and to annually prepare proposals for the AGM's approval concerning the number of members of the Board of Directors, the Chair, Vice Chair and other members of the Board, as well as the remuneration for the Chair, Vice Chair and members of the Board and its committees. 46 Board share interests at 31 December 2023 Shares held (direct and indirect ownership) A R Board members at 31 December 2023 Kari Jordan, Chair 9,012 Håkan Buskhe, Vice Chair 12,069 Elisabeth Fleuriot 32,868 Helena Hedblom 6,356 Astrid Hermann 2,839 Christiane Kuehne 17,429 Antti Mäkinen 19,415 Richard Nilsson1 127 30,207 Total shares held 127 130,195 1 Spouse holds 127 of A shares and 236 of R shares The following Board members also served in 2023 Shares held when Board membership ended (direct and indirect) Effective date of Board membership ending Hock Goh 34,782 16 March 2023 Hans Sohlström1 16,535 18 September 2023 1 Spouse holds 179 of the shares Group Leadership Team (GLT) remuneration and share interests The table below includes the remuneration earned by GLT members during the year, including those shares with performance conditions that have ended and are due to vest in the coming year. The Company recommends and expects the CEO and GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. The aggregate cost of earned remuneration for GLT in 2023 amounted to EUR 12 (15) million. The total number of GLT members was 11 (11) at the year end in 2023. In accordance with their respective pension arrangements, GLT members may retire at sixty- five years of age with pensions consistent with local practices in their respective home countries. Contracts of employment provide for six months’ notice prior to termination with severance compensation of twelve months basic salary if the termination is at the Company’s request. The outcome of the financial targets relating to the Short term incentive programmes for the performance year 2023, and Long term incentive programmes for the performance years 2021 to 2023 were reviewed and confirmed by the People and Culture Committee, and approved by the Board of Directors in January 2024. Note 3.4 Employee variable compensation and equity incentive schemes includes details of incentive schemes and share opportunity programmes for the management and staff of Stora Enso. Group Leadership Team remuneration 2023 2022 EUR thousand CEO2 Former CEO2 Others3,6 GLT Total CEO Others GLT Total Remuneration1,5 Annual salary 290 669 3,656 4,615 953 4,802 5,755 Local housing (actual costs) — — 3 3 0 2 2 Other benefits — 26 263 289 32 272 304 Termination benefits — 933 300 1,233 0 0 0 Short Term Incentive programme4 — 157 1,024 1,181 845 2,167 3,012 Long Term Incentive programme4 — 912 1,652 2,564 987 2,848 3,835 290 2,697 6,898 9,885 2,817 10,091 12,908 Pension costs Mandatory plans 48 428 920 1,396 477 1,154 1,631 Stora Enso voluntary plans — — 730 730 0 933 933 48 428 1,650 2,126 477 2,087 2,564 Total compensation 338 3,125 8,548 12,011 3,294 12,178 15,472 1 The Finnish Corporate Governance code requires companies to report remuneration that is paid or due, and due to this the figures presented in the above table do not directly reconcile with the amounts recognised as personnel expenses in the Income statement as presented in the below table Group Leadership Team remuneration in Income statement. 2 CEO remuneration consists of remuneration delivered to Hans Sohlström as of 18 September 2023 and Annica Bresky until 18 September 2023. 3 Includes earnings related to René Hansen until 4 May 2023, Minna Björkman until 30 September 2023 and David Ekberg until 30 November 2023. And Micaela Thorström as of 1 April 2023 and Ad Smit as of 1 December 2023. 4 Related to amounts due at year end, which will be paid in 2024. LTI value is calculated using the 29 December 2023 closing price of EUR 12.53. The final value of the vested shares will depend on the share price on vesting date 1 March 2024. 5 Remuneration for executives is disclosed only for the period during which they were GLT members. 6 Remuneration of GLT members decreased in 2023 compared to 2022 mainly due to the performance outcome of variable pay programmes. The average number of GLT members during 2023 was 10.40. Group Leadership Team remuneration in Income statement 2023 2022 EUR thousand CEO Former CEO Others GLT Total CEO Others GLT Total Salaries and other short-term employee benefits 290 852 4,946 6,088 1,830 7,243 9,073 Long Term Incentive programme1 137 432 1,245 1,814 714 1,581 2,295 Post-employment benefits 48 428 1,650 2,126 477 2,087 2,564 Total recognised in Income statement 475 1,712 7,841 10,028 3,021 10,911 13,932 1 The costs of long-term incentive (LTI) programmes are recognised as costs over the three year vesting period based on the share price at grant date and the estimate of equity instruments that will eventually vest. 47 Executives other than CEO Short term incentive (STI) programmes for management In 2023, GLT members have STI programmes with up to a maximum of 70% or 80% of their annual fixed salary, payable the year after the performance period. 80–100% of the STI for 2023 was based on financial measures and 0–20% on individual strategic key targets. Long term incentive (LTI) programmes for management The 2021 programme has three one-year performance periods which are accumulated after three years. The 2022 and 2023 programmes feature performance metrics with one-year performance periods, which are accumulated after three years, as well as three-year performance periods. All three programmes will be settled in only one portion after three years, and the absolute maximum vesting level is 100% of the number of shares granted. The 2021 programme is related to performance period 2021–2023, the 2022 programme is related to performance period 2022–2024 and the 2023 programme is related to performance periods 2023–2025. The opportunity under the programmes is in Performance Shares, where the shares are vested in accordance with performance criteria proposed by the People and Culture Committee and approved by the Board of Directors. During the year the 2023 programme was launched, in which the GLT members (in GLT at year end) can potentially receive a value corresponding to 227,130 shares before taxes, assuming the maximum vesting level during the three-year vesting period (2023–2025) is achieved. The total number of shares actually transferred will be lower because a portion of shares corresponding to the tax obligation will be withheld to cover income tax. The fair value of employee services received in exchange for share-based compensation payments is accounted for in a manner that is consistent with the method of settlement and is either cash or equity settled as described in more detail in note 3.4 Employee variable compensation and equity incentive schemes. For the equity settled part, it is possible that the actual cash cost does not agree with the accounting charges because the share price is not updated at the time of the vesting. The figures in the Group Leadership Team Remuneration table refer to individuals who were executives at year end or during part of the year. At the end of the year, the performance period for the 2021 programme ended, and will be settled in one portion after three years in March 2024, dependent on Economic Value Added (EVA) for the Stora Enso Group and Earnings Per Share (EPS) for the Stora Enso Group. The Performance Share programme resulted in a 89 % performance outcome. The number of shares due for executives (GLT members at year end) from programmes that ended during 2023 amounted to 115,580 shares. The total number of shares actually transferred will be lower because a portion of shares corresponding to the tax obligation will be withheld to cover income tax. CEO President & Chief Executive Officer – Hans Sohlström The CEO has been employed by Stora Enso and assumed the position of CEO on 18 September 2023. He has a notice period of six months with a severance payment of twelve months salary on termination by the Company but with no contractual payments on any change of control. The CEO’s pension plan and retirement age is according to the Finnish statutory TyEL plan. Short term incentive (STI) programme for CEO As of 18 September 2023, for the next 12+12 months, the CEO is entitled to an STI programme with a maximum opportunity of 100% of the annual fixed salary for each 12 month period. Long term incentive (LTI) programme for CEO As of 18 September 2023, there is a two-year CEO Performance Plan initiated with a vesting date in Q4/2025. The CEO has the potential to receive a value corresponding to a maximum of 169,420 shares before taxes. The performance targets are related to balance sheet, capital expenditure, strategy and sustainability. The CEO is not eligible to participate in LTI 2023–25 or other potential LTI programmes starting during 2024. Former President & Chief Executive Officer – Annica Bresky Annica Bresky was employed by Stora Enso since 1 May 2017 and assumed the position of CEO on 1 December 2019 until 18 September 2023. She had a notice period of six months with a severance payment of twelve months salary on termination by the Company. The severance payment is due to be paid in 2024. In 2023, the former CEO was entitled to an STI programme decided by the Board giving a maximum opportunity of 100% of the annual fixed salary. The payout is prorated to employment during Jan–Sep, 2023. The former CEO participated in the 2021, 2022 and 2023 share based LTI programmes. Each programme has cliff vesting after three years. At the payout, the actual value of these plans is prorated according to active employment in the Company. Group Leadership Team share interests Executives in office at the year end R shares held1 Shares due 20242 Performance share opportunity 2025–20265 Restricted share opportunity 2024–20255 Hans Sohlström 6 100,799 — 169,420 — Seppo Parvi 63,162 16,457 61,160 — Tobias Bäärnman 4,196 9,892 25,980 — Johanna Hagelberg 35,645 12,047 43,520 — Hannu Kasurinen 52,736 19,961 57,810 — Katariina Kravi 10,383 11,945 33,600 — Per Lyrvall 3 84,143 15,074 47,840 — Annette Stube 9,054 11,218 31,570 — Ad Smit — — 8,168 22,722 Micaela Thorström — 1,677 12,858 302 Lars Völkel 16,477 17,309 51,280 — Total, serving officers4 376,595 115,580 543,206 23,024 1 Direct and indirect ownership. None of the GLT members holds A shares. 2 Shares due to GLT member are gross of taxes for the LTI programmes with performance periods that ended in 2023 and are due to be paid 2024. The Performance Share programme resulted in a 89% performance outcome due to be paid in 2024 partly in shares and cash. Some GLT members hold restricted shares in the Restricted Shares programme that ended in 2023 and those shares are due to be paid 2024. 3 Spouse holds 1,257 of the shares. 4 The Company recommends and expects GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. 5 Potential shares to GLT members are gross of taxes for LTI programmes with performance periods that end in 2024–2025 and are due to be paid 2025–2026. 6 Spouse holds 179 of the shares. 48 The following Executive Officers also served in 2023 R shares held when GLT membership ended Performance Share Awards when GLT membership ended Restricted Share Awards when GLT membership ended Effective date of GLT membership ending Annica Bresky 52,594 79,197 17 September 2023 Minna Björkman 2,344 16,508 1,122 30 September 2023 David Ekberg 1 8,830 37,820 30 November 2023 René Hansen 1 1,462 27,100 3,400 4 May 2023 1 Unvested shares are forfeited at end of employment 3.3 Post-employment benefit obligations Accounting principles Employee benefits The Group operates a number of defined benefit and contribution plans throughout the world, the assets of which are generally held in separate trustee administered funds. Such pension and post-retirement plans are generally funded by payments from employees and by the relevant Group companies, taking into account the recommendations of independent qualified actuaries. Employer contributions to the defined contribution pension plans are charged to the consolidated income statement in the year they relate to. For defined benefit plans, accounting values are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated income statement to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plan every year in all major pension countries. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of highly rated corporate bonds or government securities, as appropriate, that match the currency and expected duration of the related liability. The Group recognises all actuarial gains and losses arising from defined benefit plans directly in equity, as disclosed in its consolidated statement of comprehensive income. Past service costs are identified at the time of any amendments to the plans and are recognised immediately in the consolidated income statement regardless of vesting requirements. In the Group’s consolidated statement of financial position, the full liability for all plan deficits is recorded. The Group's pension expenses amounted to EUR 147 (152) million in 2023, as shown in note 3.1 Personnel expenses. Pensions are classified as defined contribution plans and defined benefit plans. The majority of the Group's pensions plans are defined contribution plans for which the charge amounted to EUR 140 (146) million. The priority of the Group is to provide defined contribution plans as its post-employment benefits. Net defined benefit obligation reconciliation Defined benefit obligation Fair value of plan assets Net defined benefit obligation / (asset) EUR million 2023 2022 2023 2022 2023 2022 At 1 January 736 1,108 -577 -762 159 347 Current service cost 7 12 0 0 7 12 Past service cost 0 -6 0 0 0 -6 Settlements 0 -7 0 7 0 0 Interest expense (+) income (-) 27 13 -22 -10 5 3 Total included in income statement 34 11 -22 -3 12 9 Actuarial changes in demographic assumptions 1 -13 0 0 1 -13 Actuarial changes in financial assumptions 31 -306 0 0 31 -306 Actuarial changes from experience adjustments 19 63 0 0 19 63 Return on plan assets1 0 0 -1 105 -1 105 Asset ceiling impact1 0 0 2 5 2 5 Total remeasurement gains (-) / losses (+) included in OCI 52 -256 0 109 52 -147 Benefit payments -56 -54 45 41 -12 -13 Employer contributions and refunds 0 0 -20 4 -20 4 Translation difference 3 -38 -3 33 0 -5 Disposals and classification as held for sale 6 -35 -1 0 5 -35 At 31 December 775 736 -578 -577 197 159 1 Excluding amounts included in interest expense (+) income (-) In 2024, contributions of EUR 22 (19) million are expected to be paid to Group's defined benefit plans. Significant actuarial assumptions used in the valuation of defined benefit obligations Finland Germany Sweden 2023 2022 2023 2022 2023 2022 Discount rate % 3.1 3.6 3.3 3.6 3.1 4.0 Future salary increase % 3.0 3.0 2.5 2.5 2.9 2.9 Future pension increase % 2.2 2.2 2.0 2.0 2.0 2.0 Duration of pension plans 8.0 8.0 8.8 10.2 12.7 13.1 Sensitivity of the defined benefit obligation Impact on defined benefit obligation Change in assumption Increase in assumption Decrease in assumption Discount rate 0.50% Decrease by 4.9% Increase by 5.5% Salary growth rate 0.50% Increase by 1.1% Decrease by 1.0% Pension growth rate 0.50% Increase by 4.1% Decrease by 3.7% Life expectancy 1 year Increase by 3.6% Decrease by 3.5% The Group defines following actuarial risks associated with defined benefit plans: 49 Interest risk The obligations are assessed using market rates of high-quality corporate or government bonds to discount the obligations and are therefore subject to any volatility in the movement of the market rate. The net interest income or expense recognised in profit and loss are also calculated using the market rate of interest. Life expectancy In the event that members live longer than assumed, the obligations may be understated originally and a deficit may emerge if funding has not adequately provided for the increased life expectancy. Defined benefit plan summary by country as at 31 December 2023 EUR million Finland Germany Sweden Other Total Present value of funded obligations 167 5 277 151 600 Present value of unfunded obligations 0 131 20 23 174 Defined benefit obligations (DBO) 167 136 297 174 775 Fair value of plan assets -160 -5 -271 -142 -578 Net obligation in the balance sheet 7 131 26 32 197 Represented by Defined benefit pension plans 7 131 26 9 174 Other post-employment benefits 0 0 0 23 23 Net obligation in the balance sheet 7 131 26 32 197 Defined benefit plan summary by country as at 31 December 2022 EUR million Finland Germany Sweden Other Total Present value of funded obligations 172 3 226 163 563 Present value of unfunded obligations 0 134 15 24 173 Defined benefit obligations (DBO) 172 137 241 187 736 Fair value of plan assets -157 -4 -266 -150 -577 Net obligation in the balance sheet 15 134 -26 36 159 Represented by Defined benefit pension plans 15 134 -26 13 136 Other post-employment benefits 0 0 0 23 23 Net obligation in the balance sheet 15 134 -26 36 159 Finland In Finland the employees are entitled to a statutory pensions benefit determined by Employee's pension Act (TyEL). These benefits are defined as contribution benefits. They are insured with an insurance company and provide coverage for old age, disability and death. Charge in the income statement from contribution benefits is EUR 62 (64) million. In addition, the Group has additional defined benefit plans which resulted in a charge of EUR 0 (0) million excluding finance costs. Defined benefit plans and plan assets are managed by insurance companies. Details of the exact structure and investment strategy surrounding plan assets are not available to participating employers, as the assets actually belong to the insurance companies themselves. The assets are managed in accordance with EU regulations, and also national requirements, under which there is an obligation to pay guaranteed benefits irrespective of market conditions. Germany German pension costs amounted to EUR 3 (6) million, of which EUR 3 (6) million related to defined contribution plans and EUR 0 (1) million to defined benefits excluding finance costs. The net defined benefit obligation amounted to EUR 131 (134) million. Defined benefit pension plans are mainly accounted for in the statement of financial position through book reserves with some minor plans using insurance companies or independent trustees. Retirement benefits are based on years worked and salaries received during the pensionable service and the commencement of pension payments are linked to the national pension scheme’s retirement age. Pensions are paid directly by the companies themselves to their former employees. The security for the pensioners is provided by the legal requirement that the book reserves held in the statement of financial position are insured up to certain limits. Sweden In Sweden, all blue-collar staff and part of white-collar staff are covered by defined contribution plans, the charge in the Income statement being EUR 53 (54) million. Defined benefit plans are covering the remaining white-collar staff and resulted in a charge of EUR 3 (1) million excluding finance costs. The net defined benefit obligation amounted to EUR 26 (net asset EUR -26) million. The increase in net obligation arose mainly from changes in actuarial assumptions, especially from an decrease in discount rate. Stora Enso has undertaken to pay all local legal pension obligation for the main ITP scheme to the foundation, thus the remaining obligation relates to other small plans. The long-term investment return target for the foundation is a 3% real return after tax. Other countries The net defined benefit obligation in the remaining countries amounted to EUR 32 (EUR 36) million. The change in net obligation arose mainly from changes in actuarial assumptions. Plan assets 2023 2022 EUR million Quoted Unquoted Total % of total Quoted Unquoted Total % of total Equity 89 7 96 17% 88 12 101 17% Debt 41 51 92 16% 46 44 90 16% Property 0 62 62 11% 0 55 55 9% Cash 5 0 5 1% 10 0 10 2% Assets held by insurance companies 0 228 228 39% 0 226 226 39% Others 7 89 96 17% 0 96 96 17% Total pension fund assets 142 436 578 100% 144 433 577 100% Plan assets do not include any real estate or other assets occupied by the group or the Company's own financial instruments. The two main financial factors affecting Group's pension obligation are changes in interest rates and inflation expectations. The aim of asset investment allocations is to neutralise these effects, secure solvency for benefit payments and maximise returns. 50 3.4 Employee variable compensation and equity incentive schemes Accounting principles Share awards The costs of all employee-related share-based payments are charged to the consolidated income statement as personnel expenses over the vesting period. All share-based payment transactions are classified as equity-settled share awards. The equity-settled share awards (net of tax), are measured at the fair value of the equity instruments on the grant date, and are adjusted for the present value of expected dividends. The fair value of the equity-settled share-based payments determined on the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of equity instruments that will eventually vest, with a corresponding increase in equity. Short term incentive (STI) programmes Salaries for senior management are negotiated individually. Stora Enso has incentive plans that take into account the performance, development and results of both business units and individual employees. This performance-based variable compensation system is based on profitability as well as on attaining key business targets. Group Executives, as well as division and business unit management have STI programmes in which the payment is calculated as a percentage of the annual base salary with a maximum level ranging from 7% to 100%. Non-management employees participate in an STI programme with a maximum incentive level of 7%. All incentives are discretionary. These performance- based programmes cover most employees globally, where allowed by local practice and regulations. For the performance year 2023, the annual incentive programmes were based on financial measures as well as targets related to operational efficiency, emission reduction, safety and individual targets. The financial success metrics in the STI programme 2023 are Sales growth and EBITDA. Long term incentive (LTI) programmes Since 2005, new share based programmes for executives have been launched every year. The 2021 programme, ending in 2023 and settled in 2024 has a three one-year performance periods which are accumulated after three years. The 2022 and 2023 programmes, features performance metrics with one-year performance periods which are accumulated after three years as well as three-years performance periods. All outstanding programmes will be settled in one portion after three years. For the vast majority of awarded employees, three quarters (75%) of the opportunity under the programmes are in performance shares, where shares will vest in accordance with performance criteria proposed by the People and Culture Committee and approved by the Board of Directors. The financial performance metrics are 3-year Economic Value Added (EVA) and Earnings Per Share (EPS) for the Stora Enso Group for the 2021 programme and EPS and Relative Total Shareholder Return for the 2022 and 2023 programme, which in addition feature ESG metrics (emissions reduction and diversity). One quarter (25%) of the opportunity under the programmes are in Restricted Shares, for which vesting is only subject to continued employment. Members of the GLT have been awarded performance shares only. Outstanding restricted and performance share opportunities before taxes are shown in the table below. The total number of shares actually transferred will be less than that shown below because a portion of shares corresponding to employees' tax obligation will be withheld to cover income tax. Share awards at 31 December 2023 Outstanding restricted and performance share awards at year end Number of shares 2024 2025 2026 Total 2021 programme 649,329 649,329 2022 programme 719,101 719,101 2023 programme 1,060,720 1,060,720 Total 649,329 719,101 1,060,720 2,429,150 The costs of the Stora Enso share-based programmes are recognised as costs over the vesting period, which is the period between the grant and vesting. The total impact of share-based programmes in the income statement amounted to an expense of EUR 4 (EUR 8) million, all of which were related to restricted and performance share awards. 51 4 Operating capital 4.1 Intangible assets, property, plant and equipment and right-of-use assets Accounting principles Goodwill Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognised by the Group on an acquisition. Goodwill is computed as the excess of the cost of an acquisition over the fair value of the Group’s share of the fair value of net assets of the acquired subsidiary at the acquisition date and is allocated to those groups of cash generating units expected to benefit from the acquisition. Goodwill arising on the acquisition of non-euro foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate. Goodwill is not amortised but tested for impairment on an annual basis, or more frequently if there is an indication of impairment. Other intangible assets Intangible assets are stated at their historical cost and amortised on a straight-line basis over their expected useful lives, which usually varies from 3 to 10 years and up to 20 years for patents. An adjustment is made for any impairment. Intangible items acquired must be recognised as assets separately from goodwill if they meet the definition of an asset, are either separable or arise from contractual or other legal rights, and their fair value can be measured reliably. The cost of development or acquisition of new software clearly associated with an identifiable asset that will be controlled by the Group and has a probable benefit exceeding its cost beyond one year is recognised as an intangible asset and will be amortised over the expected useful life of the software between 3 to 10 years. Intangible assets recognised separately from goodwill in acquisitions consist of marketing and customer- related or contract and technology-based intangible assets. Typical marketing and customer-related assets include trademarks, trade names, service marks, collective marks, certification marks, customer lists, order or production backlogs, customer contracts and the related customer relationships. Contract and technology- based intangible assets are normally licensing and royalty agreements or patented technology and trade secrets, such as confidential formulas, processes or recipes. The initial fair value of customer contracts and related relationships is derived from expected retention rates and cash flow over the customers’ remaining estimated lifetime using excess earnings method. The initial fair value of trademarks is derived from a discounted cash flow analysis using the relief from royalty method. Property, plant and equipment Property, plant and equipment acquired by Group companies are stated at their historical cost, which are augmented where appropriate by asset retirement costs. Assets arising on the acquisition of a new subsidiary are stated at fair value at the date of acquisition. Depreciation is computed on a straight-line basis and adjusted for any impairment and disposal charges. The carrying amount represents the cost deducted by received grants and subsidies and less the accumulated depreciation and any impairment charges. Interest costs on borrowings to finance the construction of assets are capitalised as part of the cost during the construction period when the requirements are fulfilled. Land and water areas are not depreciated, as these are deemed to have an indefinite life, but otherwise depreciation is based on the following expected useful lives: Asset class Depreciation years Buildings, industrial 10-50 Buildings, office & residential 20-50 Groundwood mills 15-20 Hydroelectric power 40 Paper, board and pulp mills, main machines 20-30 Heavy machinery 10-20 Converting factories 10-15 Sawmills 10-15 Computers 3-5 Vehicles 5 Office equipment 3-5 Railway, harbours 20-25 Forest roads 10-15 Roads, fields, bridges 15-20 Ordinary maintenance and repair charges are written as expensed when incurred, but the costs of significant renewals and improvements are capitalised and depreciated over the remaining useful lives of the related assets. Retirements, sales and disposals of property, plant and equipment are recorded by deducting the cost and accumulated depreciation from the accounting records with any resulting terminal depreciation adjustments reflected in impairment charges in the consolidated income statement. Capital gains are shown in other operating income. Spare parts are accounted for as property, plant and equipment if they are major and used over more than one period, or if they are used only in connection with an item of property, plant and equipment. In all other cases, spare parts are carried as part of the inventory and recognised in profit or loss as consumed items. Right-of-use (ROU) assets At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted mainly for lease payments made at or before the commencement date. The Group allocates the consideration in the contract to each lease component and will separate non-lease components if these are identifiable. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The ROU assets are subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the lease term or the end of the useful life of the ROU asset. In addition, the ROU asset is adjusted for certain remeasurements of the lease liability. The Group has elected not to recognise ROU assets for short-term leases that have a lease term of 12 months or less and leases of low value assets. Leases of low value assets mainly include IT and office equipment, certain vehicles and machinery and other low value items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term, see note 2.2 Other operating income and expense, for more information. 52 Intangible assets EUR million Computer software Customer relationships and trademarks Other intangible assets Assets in progress Goodwill Total Acquisition cost At 1 January 2022 226 0 103 7 532 867 Translation difference 0 0 -1 0 -2 -4 Reclassifications 5 0 2 -4 0 3 Additions 3 0 2 16 0 21 Disposals1 -11 0 -6 0 -28 -46 At 31 December 2022 222 0 100 18 502 842 Translation difference -1 0 -3 0 -3 -7 Reclassifications 5 0 0 0 0 5 Additions 15 206 6 18 349 594 Disposals and classification as held for sale1 -13 0 77 0 0 64 At 31 December 2023 229 206 179 36 848 1,498 Accumulated amortisation and impairment At 1 January 2022 178 0 34 0 250 462 Translation difference 0 0 0 0 -3 -3 Disposals1 -11 0 -6 0 0 -17 Amortisation 17 0 8 0 0 24 Impairment 1 0 0 0 11 12 At 31 December 2022 185 0 35 0 258 478 Translation difference -1 0 -2 0 -1 -3 Disposals and classification as held for sale1 -9 0 93 0 0 85 Amortisation 17 16 8 0 0 41 Impairment 6 0 14 3 85 109 At 31 December 2023 198 16 149 3 343 709 Net Book Value at 31 December 2023 31 190 30 32 505 789 Net Book Value at 31 December 2022 38 0 65 18 244 364 1 Company disposals are included in Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale. Included in Customer relationships and trademarks, as part of the acquisition of De Jong Packaging Group, are customer related intangibles purchased with a carrying amount of EUR 156 million and a remaining amortisation period of 14 years and marketing related intangibles of EUR 34 million with remaining amortisation periods of between 4–19 years. Property, plant and equipment EUR million Land and water Buildings and structures Plant and equipment Other tangible assets Assets in progress Total Acquisition cost At 1 January 2022 117 3,355 13,421 448 394 17,735 Translation difference -1 -12 -266 -11 -10 -300 Reclassifications 0 57 207 10 -277 -3 Reclassifications to biological assets 0 -2 -1 0 0 -3 Additions 6 33 217 4 373 634 Disposals1 -19 -390 -2,668 -58 -27 -3,162 At 31 December 2022 103 3,041 10,909 393 454 14,900 Translation difference 1 -22 -17 -2 7 -32 Reclassifications 0 25 260 8 -298 -5 Reclassifications to biological assets 0 -2 -1 0 0 -3 Additions 5 77 434 14 583 1,113 Disposals and classification as held for sale1 -1 -286 -956 -10 -6 -1,259 At 31 December 2023 109 2,833 10,629 404 739 14,714 Accumulated depreciation and impairment At 1 January 2022 3 2,113 10,164 380 14 12,674 Translation difference 0 -30 -262 -9 0 -302 Disposals1 -1 -378 -2,458 -49 0 -2,886 Depreciation 0 78 371 10 1 460 Impairments and reversals 0 21 68 4 2 95 At 31 December 2022 2 1,804 7,882 336 16 10,040 Translation difference 0 -4 7 -1 0 1 Disposals and classification as held for sale1 0 -180 -742 -9 0 -931 Depreciation 0 74 349 10 0 433 Impairments and reversals 0 133 488 5 1 628 At 31 December 2023 2 1,827 7,984 340 17 10,170 Net Book Value at 31 December 2023 107 1,006 2,644 64 722 4,544 Net Book Value at 31 December 2022 101 1,237 3,027 57 437 4,860 1 Company disposals are included in the Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale. 53 Right-of-use assets EUR million Land and water Forest land Buildings and structures Plant and equipment and other Total Acquisition cost At 1 January 2022 107 253 104 127 591 Translation difference -2 -2 -3 -1 -7 Reclassifications to biological assets 0 -17 0 0 -17 Additions 1 6 20 18 45 Disposals1 -2 0 -23 -36 -62 Other changes 1 2 0 4 6 At 31 December 2022 105 243 96 113 556 Translation difference -5 -14 -1 0 -19 Reclassifications to biological assets 0 -16 0 0 -16 Additions 0 5 188 14 207 Disposals and classification as held for sale1 -75 -181 -26 -21 -303 Other changes 1 15 7 3 26 At 31 December 2023 25 52 264 109 451 Accumulated depreciation and impairment At 1 January 2022 8 18 55 69 150 Translation difference 0 -1 -2 -2 -4 Disposals1 -1 0 -23 -34 -58 Depreciation 3 5 19 23 50 Impairment 0 0 1 0 0 At 31 December 2022 10 22 49 56 138 Translation difference -1 -1 0 0 -3 Disposals and classification as held for sale1 -36 -24 -20 -20 -100 Depreciation 3 3 32 21 59 Impairment 28 0 3 2 33 At 31 December 2023 4 0 64 60 128 Net Book Value at 31 December 2023 21 52 201 49 323 Net Book Value at 31 December 2022 95 221 47 57 418 1 Company disposals are included in the Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale. Stora Enso’s most material right-of-use assets capitalised consist of land areas used in forestry and industrial operations, various machinery and equipment leases including operative machinery and logistic equipment, as well as properties including offices, warehouses and other operative properties. Some of the leases contain renewal options and extension options that are considered in the lease term if the Group is reasonably certain to exercise the option. See notes 5.3 Interest-bearing assets and liabilities for more details about lease liabilities and 2.2 Other operating income and expense for details about lease expenses included in the income statement. Intangible assets and property, plant and equipment, and right-of-use asset additions The total capital expenditure excluding investments in biological assets for the year amounted to EUR 1,054 (701) million. Details of ongoing projects and future plans are discussed in more detail in the Report of the Board of Directors. 4.2 Forest assets Accounting principles The forest assets of Stora Enso are defined as standing growing trees, classified as biological assets, and related forest land. The biological assets of Stora Enso consist of standing trees to be used as raw material in pulp and mechanical wood production and as biofuels. Forest asset valuation is based on continuous operations and sustainable forest management, also taking into consideration environmental restrictions and other reservations. Biological assets are recognised and valued in accordance with the IAS 41 Agriculture standard at fair value and forest land assets are recognised in accordance with the IAS 16 Property, plant and equipment standard. Leased forest land assets are presented as part of right-of-use assets in note 4.1 Intangible assets, property, plant and equipment and right- of-use assets. Nordic and plantation forest assets are classified as different classes of assets due to different nature, usage and characteristics of the assets. The main difference is the short-term growing cycle of 6–12 years in plantations versus the long-term growing cycle of 60-100 years in Nordic forests. There are also differences in regeneration methods, forest management, and the use of the assets for other purposes. Nordic forest assets include holdings in Sweden and Finland and plantation forest assets include holdings in China, Brazil and Uruguay. Accounting policies for the different class of forest assets are presented separately below. In addition the Group has minor forest asset holdings in Estonia and Romania through associate company Tornator. The Group has forest assets in its own subsidiaries in Sweden and China as well as in joint operations in Brazil and Uruguay, and in associate company in Finland. Stora Enso also ensures that the Group’s share of the valuation of forest holdings in associated companies and joint operations are consistent with Group accounting policies. At harvesting, biological assets are transferred to the inventory. Nordic forest assets Forest assets in Sweden and Finland are recognised at fair value and valued by using a market approach method on the basis of the forest market transactions in the areas where Stora Enso’s forests are located. Stora Enso’s forest assets create value by securing wood supply, increasing long-term yield, optimising land use and securing financial flexibility. They play an important role in mitigating climate change impacts, as growing trees absorb CO2. The forests also offer opportunities for future value streams, such as wind power. The total forest assets value is calculated with verified inventory data and regional standing stock prices, considering among others: • regional market transaction data based on the forest assets' geographical locations, • standing stock prices by forest cubic meter (m3 fo) combined from traded forest estates and • regional standing stock inventory. Information relating to forest asset transactions are available from market data suppliers. Stora Enso is applying three-year weighted average market transaction prices and this is considered to include a sufficient amount of transactions and is estimated to represent market conditions at the reporting date. The market transaction information can be viewed as market-corroborated inputs. Certain adjustments are made to refine the market-corroborated inputs using unobservable inputs, therefore inputs are categorised to fair value hierarchy measurement level 3. The judgements are further explained in note 1.2 Critical accounting estimates and judgements. The total value of the forest assets in Nordics is allocated across biological assets and forest land. Allocation of the combined fair value of forest assets is based on the income approach where separate present values of expected net cash flows are calculated for both biological assets and forest land. The 54 discount rate is determined as the rate at which the valuation based on market transaction prices matches the total forest assets combined cash flows for biological assets and forest land. The discount rate is estimated to be the same for biological assets and forest land as the nature and timing of the cash flows are similar. Biological assets are measured at fair value in accordance IAS 41. The fair value is based on the income approach and the discounted cash flow method whereby the fair value of the biological assets is calculated using cash flows from continuous operations, taking into account the growth potential of one cycle. Forest land is measured at fair value using the revaluation method as defined in the IAS 16 standard. Fair value of forest land is measured based on income approach, including net cash flows related to trees to-be-planted in the future as well as other land related income, such as hunting rights, wind power leases and soil material sales. Changes in the fair value of biological assets are recognised in the income statement. Changes in the fair value of forest land, net of deferred taxes, are recognised in other comprehensive income (OCI) and accumulated in a revaluation reserve in equity. Revaluation reserve is not recycled to the income statement upon disposal. If the fair value of forest land were to be less than cost, the difference would be recognised in the income statement as an impairment loss. Plantation forest assets In plantation forest areas, biological assets are recognised at fair value in accordance with the IAS 41 standard and based on the income approach in those areas where the Group has forest land. Fair value measurement is based on fair value hierarchy measurement level 3. Forest land is measured initially and subsequently at cost, using the cost model as defined in IAS 16 standard. The valuation of biological assets is based on the discounted cash flow method calculated using cash flows from continuous operations and based on sustainable forest management, taking into account growth potential of one cycle. The fair value of the biological assets is based on the productive forest land. The yearly harvest from the forecasted tree growth is multiplied by wood prices and the cost of silviculture and harvesting is deducted. The fair value of the biological assets is measured as the present value of the harvest from one growth cycle, taking into consideration environmental restrictions and other reservations. The discount rate applied is determined using the weighted average cost of capital method. Young standing timber less than two years old (less than three years in Montes del Plata) is considered to be an immature asset and accounted at cost. Fair value is deemed to approximate the cost when little biological transformation has taken place or the impact of the transformation on the price is not expected to be significant, which varies according to the location and species of the assets. Changes in the fair value of biological assets are recognised in the income statement. The forest land is measured at cost and not depreciated. The value of forest assets disclosed in the consolidated statement of financial position from subsidiary companies and joint operations amounts to EUR 6,921 (6,846) million as shown below. The Group’s indirect share of forest assets held by associated company amounts to EUR 1,417 (1,271) million. The total forest asset value, excluding leased forest land and including forest assets classified as held for sale, amounts to EUR 8,522 (8,117) million. Forest assets Biological assets Forest land2 Forest assets total EUR million 2023 2022 2023 2022 2023 2022 Subsidiaries and joint operations Value at 1 January 4,531 4,547 2,315 2,201 6,846 6,747 Translation differences 2 -305 0 -145 2 -449 Unrealized change in fair value 1 385 336 -49 259 335 596 Additions 71 77 1 2 72 78 Disposals and classification as held for sale3 -181 -2 2 -2 -178 -4 Change due to harvesting1 -168 -141 0 0 -168 -141 Other operative changes1 -7 -1 0 0 -7 -1 Reclassification from PPE 20 20 0 0 20 20 Value at 31 December 4,652 4,531 2,269 2,315 6,921 6,846 Classified as held for sale 184 0 0 0 184 0 Associated company Tornator Oyj (41%) 1,287 1,122 130 149 1,417 1,271 Value at 31 December 1,287 1,122 130 149 1,417 1,271 Total 6,123 5,653 2,399 2,464 8,522 8,117 1 For biological assets, changes are presented in the profit and loss. For forest land, changes in fair value are recognised directly in equity. 2 Not including leased forest land. 3 Assets held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale. 55 Valuation and standing stock of forest assets As at 31 December 2023 Swedish forests Guangxi 3 Veracel (50%) MdP (50%) Tornato r (41%) Total Total area Thousand ha 1,383 70 116 138 310 2,016 - of which owned Thousand ha 1,383 — 104 95 310 1,892 - of which leased Thousand ha — 70 12 43 — 125 Productive area Thousand ha 1,139 61 49 92 285 1,627 Total area Standing stock million m3 fo.1 151.9 4.3 6.1 15.0 33.7 210.8 Productive area Standing stock million m3 fo.1 149.7 4.3 6.1 15.0 33.4 208.4 Estimated growth million m3 fo.1 5.8 1.3 2.2 2.0 1.5 12.8 Harvesting million m3 fo.1 -4.2 -1.2 -1.3 -2.3 -1.4 -10.5 Other changes million m3 fo.1 -2.5 0.0 0.0 -0.3 0.6 -2.1 Harvesting million m3 u.b.2 -3.5 -1.0 -1.1 -1.9 -1.1 -8.6 Biological assets EUR million 4,239 184 124 288 1,287 6,123 Biological assets Productive area EUR/ha 3,723 3,010 2,531 3,121 4,509 3,764 Forest land EUR million 2,072 — 30 167 130 2,399 Total forest assets EUR million 6,312 184 154 455 1,417 8,522 Leased forest land EUR million — 157 4 48 — 209 1Forest cubic meters 2Solid under bark (sub) cubic meters 3 Classified as held for sale As at 31 December 2022 Swedish forests Guangxi Veracel (50%) MdP (50%) Tornator (41%) Total Total area Thousand ha 1,389 73 113 138 301 2,014 - of which owned Thousand ha 1,389 — 105 95 300 1,890 - of which leased Thousand ha — 73 8 43 — 124 Productive area Thousand ha 1,142 64 47 92 277 1,622 Total area Standing stock million m3 fo.1 152.7 4.2 5.2 15.5 33.2 210.8 Productive area Standing stock million m3 fo.1 150.5 4.1 5.2 15.5 32.8 208.1 Estimated growth million m3 fo.1 5.8 1.3 1.8 3.2 1.5 13.6 Harvesting million m3 fo.1 -4.6 -1.2 -1.7 -1.8 -1.3 -10.7 Other changes million m3 fo.1 -1.1 -0.8 0.0 0.2 -0.1 -1.8 Harvesting million m3 u.b.2 -3.8 -1.0 -1.4 -1.5 -1.2 -8.9 Biological assets EUR million 3,963 196 103 269 1,122 5,653 Biological assets Productive area EUR/ha 3,471 3,062 2,162 2,922 4,054 3,485 Forest land EUR million 2,113 — 29 173 149 2,464 Total forest assets EUR million 6,076 196 131 441 1,271 8,117 Leased forest land EUR million — 166 3 52 — 221 1Forest cubic meters 2Solid under bark (sub) cubic meters Subsidiaries and joint operations At the end of 2023, forest assets, including assets held for sale in China (excluding leases), were located by value, in Sweden 89% (89%), China 3% (3%), Brazil 2% (2%) and Uruguay 6% (6%). The total area amounts to 1,706 (1,713) thousand hectares of which 7% (7%) is leased and under 0% (1%) is restricted. From Stora Enso's total forest holdings 1,341 (1,345) thousand hectares is productive forest area. The Montes del Plata and Veracel amounts take into account the ownership share. Swedish forests At the end of 2023, the value of the biological assets in Swedish forests amounted to EUR 4,239 (3,963) million, related forest land amounted to EUR 2,072 (2,113) million and the total forest assets amounted to EUR 6,312 (6,076) million. The increase in the forest assets value is mainly driven by higher market prices. Foreign exchange impact increased the value slightly. Deferred tax liabilities related to forest assets amounted to EUR 1,297 (1,250) million. The discount rate of 3.8% (3.6%) was applied in the valuation. The productive area in Swedish forests amounted to 1,139 (1,142) thousand hectares with a standing stock of 149.7 (150.5) million forest m3. The weighted three-year average market transaction price applied in the valuation for Swedish forests assets in 2023 is EUR 42 (40) per forest m3. The forest asset value corresponds to an average of EUR 5,540 (5,320) per ha of productive forest area. The valuation of the forest assets is based on detailed transaction data and price statistics as provided by different market data suppliers. Market transaction data is adjusted to consider the characteristics and nature of Stora Enso's forest assets and to exclude certain non-forest assets and outliers. The valuation takes into account where the forest land is located, price levels and volume of standing stock. Market prices between areas varies significantly. Future changes in value of Swedish forest assets are impacted by changes in market transaction prices and changes in volume of standing stock, considering growth and other changes. See also note 1.2 Critical accounting estimates and judgements for information related estimates and judgment applied in the valuation. Forest asset location and volume 2023 North Middle South Total Productive area Thousand ha 186 953 0 1,139 Percentage of total % 16% 84% 0% 100% Standing stock million m3 fo. 16.9 132.8 0.0 149.7 Percentage of total % 11% 89% 0% 100% 2022 North Middle South Total Productive area Thousand ha 190 951 0 1,142 Percentage of total % 17% 83% 0% 100% Standing stock million m3 fo. 17.5 133.0 0.0 150.5 Percentage of total % 12% 88% 0% 100% Guangxi At the end of 2023, the value of the biological assets in Guangxi, China, amounted to EUR 184 (196) million. All the forest land in China is leased. The value decrease is mainly driven by harvesting depletion and foreign exchange impact, whereas capital expenditure and higher volume increased the value. The biological assets included young standing timber with a value of EUR 24 (27) million. The discount rate of 9.7% (10.2%) used in the discounted cash flows (DCF) decreased in 2023. These forestry operations were classified as held for sale at the end of 2023. See note 6.1 Acquisitions, disposals and assets held for sale for more details. 56 Veracel Veracel is a 50% joint operation in Brazil. Stora Enso’s share of the biological assets was EUR 124 (103) million. The increase is mainly driven by increased prices, volume and planting, whereas increased discount rate decreased the value. The biological assets included young standing timber with a value of EUR 40 (31) million. The discount rate of 10.2% (7.9%) used in the DCF increased in 2023. The related forest land is measured at cost. Montes del Plata Montes del Plata (MdP) is a 50% joint operation in Uruguay. Stora Enso’s share of the biological assets was EUR 288 (269) million. The slight increase is mainly driven by higher wood price, harvesting volume estimates and additions, whereas foreign exchange impact decreased the value. During 2023 there were severe drought periods in Uruguay causing decreased annual forest growth estimate compared to the previous years. The biological assets included young standing timber with a value of EUR 48 (50) million. The discount rate of 9.0% (9.0%) is used in the DCF in 2023. The related forest land is measured at cost. Associated company Tornator Tornator Oyj is a 41% owned Finnish associate company. Stora Enso’s share of the biological assets was EUR 1,287 (EUR 1,122) million, related forest land amounted to EUR 130 (149) million, and total forest assets equalled to EUR 1,417 (1,271) million. The increase in the value of forest assets is mainly driven by higher market prices and acquisitions. Stora Enso’s share of the productive forest area totals to 285 (277) thousand hectares with a standing stock of 33.4 (32.8) million forest m3. The weighted three-year average market transaction price applied in the valuation for forest assets located in Finland in 2023 is EUR 42 (42) per forest m3. The forest asset value in Finland corresponds to an average of EUR 4,960 (4,750) per ha of productive forest area. Valuation sensitivities of significant assumptions of a +/- 10% movement EUR million Wood market prices Growth rate Discount rate Guangxi +/-26 +/-1 +/-3 Veracel +/-11 +/-11 +/-2 Montes del Plata +/-32 +/-32 +12/-11 Swedish forest asset valuation is sensitive for changes in market transaction prices and volume of standing stock. A change in the average market price of forest assets of EUR 1 per forest m3 would impact the value of forest assets by EUR 150 (151) million. A change in the volume of standing stock of 1 million forest m3 would impact the value of forest assets by EUR 42 (40) million. 4.3 Associates Accounting principles Associated companies over which Stora Enso exercises significant influence are accounted for using the equity method. Stora Enso does not control associated companies alone or jointly with other parties, but has significant influence. The Group’s share of the associated companies profit or loss is recognised in the consolidated income statement. The Group’s interest in an associated company is carried in the consolidated statement of financial position at an amount that reflects its share of the net assets of the associate together with goodwill. Goodwill arising from the acquisition of an associated companies is included in the carrying amount of the investment and is assessed for impairment as part of that investment. There is no material goodwill in the carrying amount of associated companies. When the Group share of losses exceeds the carrying amount of an investment, the carrying amount is reduced to zero and any recognition of further losses ceases unless the Group is obliged to satisfy obligations of the investee that it has guaranteed or which it is otherwise committed to. The Group’s share of results in associated companies is reported in the operating result to reflect the operational nature of these investments. Similarly, dividends received from associated companies are presented in the net cash provided by operating activities in the consolidated cash flow statement. Principal associated company investments Ownership interest % EUR million Company Reportable segment Domicile and principal place of operations 2023 2022 2023 2022 Tornator Oyj Forest Finland 41.00 41.00 892 800 Others 35 32 Carrying amount 926 832 In 2022, Stora Enso divested its 30.41% participation in Encore Ympäristöpalvelut Oy. The transaction did not have a material impact on the Group. Group share of associated companies income statements EUR million 2023 2022 Sales 126 147 Net operating expenses -69 -103 Biological asset valuation 121 189 Operating result 178 233 Net financial items -12 40 Net result before tax 166 273 Income tax -30 -52 Net result for the year 136 221 The average number of personnel in the associated companies was 1,046 in 2023, compared with 1,043 in 2022. A summary of the financial information, prepared in accordance IFRS, in respect of the Group’s material associate, Tornator Oyj is set out below. The Group’s share of Tornator Oyj is reported in the Forest division and covers the majority of the Group’s total carrying amount of associated companies. 57 Tornator Oyj EUR million 2023 2022 Forest Assets 3,456 3,101 Other non-current assets 73 70 Current assets 102 73 Non-current liabilities 851 752 Current liabilities 146 120 Tax liabilities 459 420 Sales 194 176 Net result for the year 341 542 Other comprehensive income -57 141 Total comprehensive income 284 683 Dividends received during the financial year 60 25 Net assets of the associate 2,175 1,952 Ownership interest 41.00% 41.00% Carrying amount of the Group's interest in Tornator Oyj 892 800 The Group’s current 41% ownership is valued at EUR 892 (800) million at the year-end of 2023. The Group’s share of Tornator’s net profit was EUR 140 (222) million, including a biological asset valuation gain net of taxes of EUR 97 (152) million. Aggregate information of associated companies that are not individually material EUR million 2023 2022 Non-current assets 33 35 Current assets 13 12 Non-current liabilities 0 3 Current liabilities 11 12 Sales 47 74 Net result for the year -4 -2 Dividends received during the financial year 0 1 Net assets of the associates 35 32 Associate company value 35 32 Associate company value for Tornator Oyj 892 800 Total associate company value 926 832 Associated company balances EUR million 2023 2022 Receivables from associated companies Non-current loan receivables 2 2 Trade receivables 2 1 Liabilities to associated companies Trade payables 128 101 Associated company transactions EUR million 2023 2022 Sales to associated companies 16 19 Purchases from associated companies 181 163 The Group engages in transactions with associated companies such as sales and purchases of wood. All agreements are negotiated at arm’s length and are conducted on terms that the Group considers customary in the industry and generally no less favourable than would be available from independent third parties. 4.4 Equity instruments Accounting principles The Group has elected to classify its equity investments in Pohjolan Voima shares and certain listed shares held by the Group at fair value through other comprehensive income (FVTOCI) under IFRS 9 by applying the irrevocable election for equity instruments under the standard due to the long-term nature of the ownership. The gains and losses resulting from changes in the fair value of equity investments under FVTOCI are not recycled to the income statement upon impairment or disposal, only the dividend income is recognised in the income statement. In addition, the Group also has certain equity investments in unlisted securities that are classified as fair value through income statement. The majority of the Group's equity instruments consist of investments in Pohjolan Voima Oyj (PVO). Equity instruments EUR million 2023 2022 Carrying amount at 1 January 1,445 918 Change in fair value - OCI -645 519 Change in fair value - Income statement 0 0 Additions 18 10 Disposals 0 0 Translation difference and other changes 0 -2 Carrying amount at 31 December 819 1,445 58 PVO shares The Group holds a 15.7% (15.7%) interest in Pohjolan Voima Oyj (PVO), a public limited company in the energy sector that produces electricity and heat for its shareholders in Finland at cost-based and non-profit making principle (Mankala-principle). Each subsidiary of the PVO group has its own class of shares that, instead of dividends, entitle the shareholder to the energy produced in proportion to its ownership of that class of share. Also, the shareholders then have an obligation to cover the costs of production, which are generally lower than market prices. Stora Enso did not receive actual dividend payments from PVO during 2023. The holding is fair valued quarterly using the discounted cash flow method. The valuation is categorised at level 3 in the fair value hierarchy according to IFRS 13; levels are explained in 5.2 Fair values. The electricity prices used in the valuation are based on market future derivative prices for the first two years and on long-term electricity price estimates for the years thereafter. The historical financial statements provide the basis for the cost structure for each power asset and for future periods, estimates from PVO shareholder information is used when available and these are adjusted by inflation factor in future years. The discount rate of 6.93% used in the valuation model is determined using the weighted average cost of capital method. A +/- 5% change in the electricity price used in the DCF would change the valuation by EUR +92 million and -92 million, respectively. A +/- percentage point change in the discount rate would change the valuation by EUR -140 million and +183 million, respectively. PVO's shares are divided in different share series. The B and B2 series relate to PVO's shareholdings in Teollisuuden Voima Oyj (TVO), which operates three nuclear plants in Finland (Olkiluoto 1–3).Stora Enso holds an indirect share of approximately 8.9% of the capacity of the Olkiluoto 3 nuclear plant unit through its PVO B2 shares. The Olkiluoto 3 plant related test production was completed in April 2023 and regular electricity production was started. Olkiluoto 3 electricity production capacity is approximately 1,600 megawatt, which corresponds to about 15% of electricity demand in Finland. As the largest nuclear power plant in Europe, Olkiluoto in total will produce about 30% of Finland's electricity. The production of Olkiluoto 3 plays a key role in Finland's green transition, and accelerates the move towards a carbon-neutral society and electricity self-sufficiency. PVO shareholding on 31 December 2023 EUR million Share Series % Holding Asset Category Fair value 2023 Fair value 2022 Pohjolan Voima Oyj A 20.6 Hydro 226 307 Pohjolan Voima Oyj B, B2 15.7, 14.8 Nuclear 546 1,113 Pohjolan Voima Oyj C,C2,V,M Various Various 7 4 Total 778 1,423 The valuation in 2023 amounted to EUR 778 (1,423) million. The decrease in PVO’s valuation is mainly caused by a decrease in the electricity price estimates. No deferred tax is recognised, as under Finnish tax regulations holdings above 10% are exempt from tax on disposal proceeds. Principal equity instruments EUR million Holding % Number of shares Acquisition cost Fair value Packages Ltd, Pakistan - listed shares 6.4 5,396,650 3 9 Total listed securities 3 9 Pohjolan Voima Oyj 15.7 5,073,972 131 778 Other unlisted securities 32 32 Total unlisted securities 163 810 Total Equity instruments at 31 December 2023 166 819 Total Equity instruments at 31 December 2022 147 1,445 4.5 Emission rights and other non-current assets Accounting principles The Group participates in the European Emissions Trading Scheme, with the aim of reducing greenhouse gas emissions. The Group has been allocated allowances to emit a fixed tonnage of carbon dioxide (CO2) over a fixed period of time, which are recognised as intangible assets, government grants and as liabilities for the obligation to deliver allowances equal to those emissions that have been made during the compliance period. Intangible assets related to emission allowances are measured at level 1 fair value at the date of initial recognition. The liabilities to deliver allowances are recognised based on actual emissions and are settled using allowances on hand and measured at the carrying amount of those allowances. At the reporting date, if the market value for the emission allowances is less than the carrying amount, any surplus allowances that are not required to cover emissions made are impaired to the market value. The Group expenses emissions made at the grant date fair value, under materials and services, together with purchased emission rights at their purchase price. Such costs will be offset under other operating income by the income from the original rights used at their grant date fair value. The consolidated income statement will, thus, be neutral in respect to all the rights consumed that were within the original grant of rights. Sales of excess emission allowances are recognised as income on the delivery date. Any net effect represents the costs of purchasing additional rights to cover excess emissions, or the sale of unused rights in case that the realised emissions are below the allowances received free of charge or the impairment of allowances that are not required for own use. Emission rights EUR million 2023 2022 Value at 1 January 123 137 Emission allowances allocated 146 160 Sales -64 -62 Settlement with the government -98 -85 Disposals and classification as held for sale — -27 Value at 31 December 108 123 The liability to deliver allowances is presented in the consolidated statement of financial position in line other operative liabilities. As of 31 December 2023, the liability to deliver allowances amounted to EUR 79 (91) million as presented in note 4.8 Operative liabilities. The excess emission rights held at the year end were valued at EUR 28 (32) million. 59 Other non-current assets EUR million 2023 2022 Prepaid expenses and accrued income 25 22 Tax credit 4 4 Other non-current operative assets 29 12 Total 58 38 4.6 Inventories Accounting principles Inventories are reported at lower of cost and net realisable value with the cost determined by the first-in first- out (FIFO) method or, alternatively, by the weighted average cost where it approximates FIFO. The same cost formula is used for all inventories having a similar nature and use to the Group. The cost of finished goods and work in progress comprises raw material, direct labour, depreciation, other direct costs and related production overheads, but excludes interest expenses. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and sale. Where market conditions result in the manufacturing costs of a product exceeding its net realisable value, a valuation allowance is made. Valuation allowances are also made for old, slow moving and obsolete finished goods and spare parts when needed. Such valuation allowances are deducted from the carrying value of the inventories in the consolidated statement of financial position. EUR million 2023 2022 Materials and supplies 384 501 Work in progress 62 84 Finished goods 774 962 Spare parts and consumables 307 337 Other inventories 29 25 Advance payments and cutting rights 52 63 Obsolescence allowance - spare parts and consumables -100 -103 Obsolescence allowance - finished goods -18 -19 Net realisable value allowance -25 -40 Total 1,466 1,810 EUR 6,271 (6,576) million of inventories in total have been expensed during the year. EUR 35 (78) million of inventory write-downs have been recognised as an expense. EUR 55 (9) million have been recognised as a reversal of previous write-downs. 4.7 Operative receivables Accounting principles Trade receivables Trade receivables are recognised initially at fair value and subsequently at their anticipated realisable value with an estimate made for loss allowance on expected credit losses based on a forward-looking and objective review of all outstanding amounts at period end. A simplified approach under IFRS 9 has been implemented for trade receivables and loss allowances are recognised based on expected lifetime credit losses in the consolidated income statement within other operating expenses. For non-defaulted receivables, expected credit losses are estimated based on externally generated customer level probability of default data that is used in the forward-looking loss allowance calculation model. The loss allowance model for non-defaulted receivables also takes into account a macroeconomic indicator that considers the macroeconomic developments and further incorporates forward-looking data to the calculation model. The rebuttable presumption that default does not occur later than when a financial asset is 90 days past due has been applied in the calculation model and a default is normally estimated to occur when trade receivables are at least 90 days overdue or there is otherwise objective evidence supporting the conclusion that a default has occurred. Trade receivables will be written off and booked as a credit loss only with the court's decision of bankruptcy or in some other cases when there is objective evidence supporting the write-off. Trade receivables are presented in current assets under operative receivables in the consolidated statement of financial position. Trade receivables under factoring arrangements Stora Enso uses factoring arrangements as one of the working capital management tools. Sold trade receivables are derecognised once significant related risks and rewards of ownership have been transferred to the buyer. Outstanding balances for trade receivables that were not yet sold at period end but qualify to be sold under factoring programmes in the next period, are classified as trade receivables fair valued through other comprehensive income in accordance with the business model and contractual cash flow characteristics tests under IFRS 9. Please refer to note 5.2 Fair values for further details. Current operative receivables EUR million 2023 2022 Trade receivables - gross carrying amount including amount held for sale 939 1,329 Trade receivables - gross carrying amount held for sale -46 -92 Trade receivables - gross carrying amount 893 1,236 Loss allowance -27 -32 Prepaid expenses and accrued income 80 68 Other receivables 245 200 Total 1,191 1,473 Age analysis of trade receivables EUR million 2023 2022 Not overdue 841 1,213 Less than 30 days overdue 57 55 31 to 60 days overdue 1 10 61 to 90 days overdue 3 2 91 to 180 days overdue 1 3 Over 180 days overdue 36 47 Total 939 1,329 60 As at 31 December 2023, a gross amount of EUR 98 (116) million of trade receivables were overdue. These relate to a number of countries and unrelated customers that have no recent history of default. At 31 December 2023, lifetime expected credit losses for trade receivables amounted to EUR 27 (32) million. Loss allowances for trade receivables are estimated on an individual basis based on a forward-looking model where estimated probabilities of customer default are used in the calculation model. If the Group has concerns regarding the financial status of a customer, an advance payment or an irrevocable letter of credit drawn from a bank is required. At the year end, the letters of credit awaiting maturity totalled EUR 54 (74) million. Please refer to note 5.1 Financial risk management for details of customer credit risk management. Age analysis of loss allowance EUR million 2023 2022 Not overdue and less than 90 days overdue 2 5 91 to 365 days overdue 2 7 Over 365 days overdue 23 21 Total 27 32 Reconciliation of loss allowance EUR million 2023 2022 Opening balance at 1 January 32 26 Change in loss allowance booked through income statement 9 13 Write-offs -15 -6 Other 1 0 Closing balance at 31 December 27 32 The actual credit losses during 2023 amounted to EUR 15 (6) million of trade receivables being written-off from the Group's balance sheet. Stora Enso has entered into factoring agreements to sell trade receivables in order to accelerate cash conversion. These agreements resulted in full derecognition of trade receivables amounting to a nominal value of EUR 178 (174) million at the end of the year. The continuing involvement of Stora Enso in the sold receivables was estimated as being insignificant due to the non-recourse nature of the factoring arrangements involved. 4.8 Operative liabilities Non-current operative liabilities EUR million 2023 2022 Share-based payments 2 2 Other payables 9 9 Total 11 11 Current operative liabilities EUR million 2023 2022 Trade payables 1,582 1,831 Payroll and staff-related accruals 224 245 Accrued liabilities and deferred income 112 130 Emission liabilities 79 91 Advances received 18 18 Other payables1 96 94 Total 2,112 2,410 1 Other payables consist especially of taxes payable to government, such as VAT and payroll taxes. 4.9 Provisions Accounting principles Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the management’s best estimate and there is some uncertainty regarding the timing and amount of the costs. Provisions for obligations to dismantle, remove or restore assets after their use are added to the carrying amount of the assets at acquisition date and depreciated over the useful life of the asset. Provisions are discounted to their current net present value if the effect of the time value of money is material. Environmental provisions Environmental expenditures resulting from the remediation of an existing condition caused by past operations, and which do not contribute to current or future revenues, are recognised as provisions. Environmental provisions are recorded when it is probable, based on current interpretations of environmental laws and regulations, that a present obligation has arisen and the amount of such liability can be reliably estimated. Restructuring provisions A restructuring provision is recognised in the period in which the Group becomes legally or constructively committed to the plan. The relevant costs are those that are incremental to, or incurred as a direct result of, the exit plan, or are the result of a continuing contractual obligation with no ongoing economic benefit, or represent a penalty incurred to cancel the obligation. Other provisions Other provisions are recognised regarding different legal or constructive obligations, such as reforestation, onerous contracts, ongoing lawsuits, claims, or similar. 61 Provisions EUR million Environmental provisions Restructuring provisions Other provisions Total provisions Carrying Value at 1 January 2022 75 88 67 231 Translation difference -4 -3 -2 -9 Disposals and classification as held for sale -3 -1 0 -4 Charge in Income Statement New provisions 14 8 19 40 Increase in existing provisions 1 12 2 15 Reversal of existing provisions -1 -16 -8 -25 Payments -9 -66 -50 -124 Carrying Value at 31 December 2022 73 21 30 124 Translation difference 0 0 1 1 Disposals and classification as held for sale 3 0 0 3 Charge in Income Statement New provisions 7 89 12 107 Increase in existing provisions 4 4 1 8 Reversal of existing provisions -16 -7 0 -22 Payments -9 -31 -14 -54 At 31 December 2023 63 77 28 168 Allocation between current and non- current provisions Current provisions: Payable within 12 months 1 72 12 85 Non-current provisions: Payable after 12 months 61 5 16 83 Total at 31 December 2023 63 77 28 168 The Group has undergone major restructuring in recent years, from divestments to mill closures and administrative cost-saving programmes. The most material restructuring provision included in the ending balance of 2023 is EUR 35 million related to closing down the De Hoop containerboard site in the Netherlands. Other restructuring provisions relate mainly to permanently closing down Sunila pulp production in Finland and restructuring programmes to reduce the number of office employees in Group functions and the Packaging Materials division. Material payments in 2022 in restructuring and other provisions are mainly related to closing down pulp and paper production at the Kvarnsveden site in Sweden and the Veitsiluoto site in Finland. The most material environmental provision is based on an agreement between Stora Enso and the City of Falun that obligates the Group to purify runoff from the Kopparberg mine before releasing the water into the environment. The provision at year end amounted to EUR 27 (EUR 31) million. The most material case in other provisions is related to an obligation in some Nordic countries to take care of reforestation within a specified time after final harvesting. 62 5 Capital structure and financing 5.1 Financial risk management Risk management principles and process Stora Enso is exposed to several financial market risks that the Group is managing under the policies approved by the Board of Directors. The objective is to ensure cost-effective funding of Group companies and manage financial risks effectively. The Stora Enso Group Financial Risk Policy governs all financial transactions in Stora Enso. This policy and any future amendments take effect once they are approved by the Board of Directors and all policies covering the use of financial instruments must comply with it. The Group’s joint operations companies operate under their own financial risk policies, which may not be fully similar to the Group’s policies. The major financial market risks are detailed below with the main exposures for the Group being interest rate risk, currency risk, liquidity risk, refinancing risk, and commodity price risk, especially for fiber, pulp, and energy. Interest rate risk The Group is exposed to an interest rate risk that is the risk of fluctuating interest rates affecting the interest expense of the Group and value of its assets and liabilities. Stora Enso is exposed to the interest rate risk through interest-bearing assets and liabilities, such as loans, financial instruments and lease liabilities, but also through commercial agreements and operative assets and liabilities such as biological assets. The Group’s aim is to keep interest costs stable. The Group’s aggregate duration should not exceed the average loan maturity, but should aim towards a long duration. A duration above the average loan maturity is approved by the Board of Directors. The Group may use interest-rate swaps and cross-currency swaps to manage the interest- rate risk by synthetically converting floating-rate loans into fixed-rate loans through the use of derivatives. The Group's floating and fixed rate interest-rate position as per the year-end is presented in the following table. The table includes the respective assets and liabilities classified as held for sale. Floating and fixed interest-rate position As at 31 December 2023 As at 31 December 2022 EUR million Floating rate Fixed rate Floating rate Fixed rate Non-current interest-bearing receivables1 11 51 11 80 Current interest-bearing receivables1 1 14 1 — Cash and cash equivalents 2,464 1,917 Interest-bearing liabilities2 -1,422 -4,293 -1,074 -2,818 Interest-bearing assets and liabilities excluding interest rate derivatives 1,053 -4,229 855 -2,738 Interest-rate and cross-currency swaps 488 -488 650 -650 Interest-bearing assets and liabilities, net of interest rate derivatives 1,541 -4,717 1,506 -3,388 1 Excluding interest receivable, listed securities, and derivative assets 2 Non-current interest-bearing liabilities, current portion of non-current debt, short-term interest bearing liabilities and bank overdrafts excluding derivative liabilities and interest payable The average interest duration for the Group's net interest-bearing liabilities, including all interest rate derivatives but excluding cash and cash equivalents, is 2.7 (3.3) years. As of 31 December 2023, one percentage point increase in interest rates would increase annual net interest expenses by approximately EUR 10 (EUR 4) million and a similar decrease in interest rates would decrease net interest expenses by EUR 10 (EUR 4) million. This assumes that the duration and the funding structure of the Group remain constant throughout the year. This simulation calculates the interest effect of a 100 basis point parallel shift in interest rates on all floating rate instruments excluding cash equivalents from their next reset date to the end of the year. In addition, all short-term loans maturing during the year are assumed to be rolled over on maturity to year end using the new higher or lower interest rate. A one percentage point parallel change up or down in interest rates would also result in fair valuation gains or losses of EUR 6 (EUR 10) million before taxes in the cash flow hedge reserve in OCI regarding interest rate swaps under cash flow hedge accounting. Note 5.4 Derivatives summarises the nominal and fair values of the outstanding interest rate derivative contracts. Foreign exchange risk - transaction risk The Group operates globally and is exposed to a foreign-currency transaction risk arising from exchange rate fluctuations. Foreign exchange transaction risk exposure comprises both the geographical location of Stora Enso production facilities around the world, sourcing of raw materials and sales of end products in foreign currencies, mainly denominated in US dollars, British pounds and Swedish crowns. Stora Enso Group companies with functional currency other than euro are also exposed to a foreign-currency transaction risk arising from EUR denominated net cash flows. These EUR exposures mainly arise from Stora Enso subsidiaries located in Sweden, Czech Republic and Poland. The currency transaction risk is the impact of exchange rate fluctuations on the Group's Income statement, which is the effect of currency rates on expected future cash flows and subsequent trade receivables or payables. The Group's standard policy to mitigate the risk is to hedge 15–60% of the highly probable forecast cash flows in major currencies for the next 12 months by using derivative financial instruments, such as foreign exchange forwards and foreign exchange options. The Group may also hedge periods between 12 months and 36 months, or change the above mentioned hedging ratio for the next 12 months upon the discretion of the Group's management. For operative receivables and payables in foreign currencies, the objective is to hedge 50– 100% of the outstanding net receivable balance in major currency pairs. The table below presents the estimated net operative foreign currency transaction risk exposures for the main currencies for the next 12 months and the related foreign-currency hedges in place as at 31 December, retranslated using year-end exchange rates. The net operative receivables and payable exposures, representing the balances as at 31 December, include foreign currency exposures generated by external and intercompany transactions in line with the requirements of IFRS 7. A positive amount of exposure in the table below represents an estimated future inflow or receivable of a foreign currency amount. 63 Operative foreign currency transaction risk exposure As at 31 December 2023 As at 31 December 2022 EUR million EUR SEK USD GBP AUD UYU EUR SEK USD GBP AUD UYU Estimated annual net cash flow exposure in hedged foreign-currency flows1 674 -278 1,446 126 63 -48 960 -238 1,983 240 83 -48 Cash flow hedges for the next 12 months -394 188 -632 -34 -15 27 -525 119 -843 -59 -26 26 Estimated annual net cash flow exposure, net of hedges 280 -90 814 93 47 -21 435 -119 1,139 181 57 -22 Hedging percentage as at 31 December for next 12 months 58% 68% 44% 27% 25% 57% 55% 50% 43% 24% 31% 54% Weighted-average hedged rate against EUR2 11.57 1.10 0.87 1.66 45.07 10.63 1.09 0.87 1.52 45.20 Operative receivables and payables net exposure -38 -23 181 18 18 -5 -22 8 284 30 49 -5 Net receivable currency hedges -7 7 -119 -15 -20 — -18 -3 -186 -16 -51 — Net operative receivables exposure, net of hedges -45 -15 62 3 -2 -5 -39 5 98 14 -2 -5 Estimated annual net transaction risk exposure after hedges 235 -105 876 96 46 -26 396 -113 1,238 195 55 -27 1 Cash flows are forecasted highly probable net operating foreign-currency cash flows in hedged currencies. The exposure presented in the EUR column relates to operative transaction risk exposure from EUR denominated cash flows in Group companies located in Sweden, Czech Republic and Poland with functional currency other than EUR. 2 The weighted-average exchange rate against EUR is calculated based on bought leg of option collar structure and forward contracts' forward rate and therefore represents the weighted-average hedged rate based on the least favourable hedged rate from the Group's point-of-view. The following table includes the estimated effect on the annual operating result of a weakening of an exposure currency against the functional currencies of exposed subsidiaries. The sensitivities have been calculated based on a 5% movement in EUR, SEK, USD, GBP and AUD while 10% movement in UYU. These changes are estimated as reasonably possible changes in exchange rates, measured against year-end closing rates. A corresponding strengthening of the exposure currency would have an approximately equal opposite impact. A negative amount in the table reflects a potential net loss in the income statement or equity and, conversely, a positive amount reflects a potential net gain. In practice, the actual foreign currency results may differ from the sensitivity analysis presented below, since the income statements of subsidiaries with functional currencies other than the euro are translated into the Group reporting currency using the average exchange rates for the year, whereas the statements of the financial position of such subsidiaries, including currency hedges, trade receivables and payable, are translated using the exchange rates at the reporting date. The translation risk exposures are discussed more in detail under the Translation risk chapter below. The calculation includes currency hedges and assumes that there are no changes in other underlying currencies. The currency effects are based on estimated operative foreign currency flows for the next twelve months, hedging levels at the year end, and the assumption that the currency cash flow hedging levels and all other variables will remain constant during the next twelve months. Hedging instruments include foreign exchange forward contracts and foreign exchange options. Indirect currency effects with an impact on prices and product flows, such as a product becoming cheaper to produce in a different geographical location, have not been considered in this calculation. Sensitivity analysis of operative foreign currency transaction risk exposure As at 31 December 2023 As at 31 December 2022 EUR million EUR SEK USD GBP AUD UYU EUR SEK USD GBP AUD UYU Exposure currency change by1 -5% -5% -5% -5% -5% -10% -5% -5% -5% -5% -5% -10% Effect on estimated annual net cash flows in hedged flows -34 14 -72 -6 -3 5 -48 12 -99 -12 -4 5 Effect on cash flow hedging OCI reserve before taxes as at year end 2 20 -9 32 2 1 -3 26 -6 42 3 1 -3 Effect on net operative receivables and payables after hedges3 2 1 -3 — — 1 2 — -5 -1 — — Estimated annual EBIT impact4 -12 5 -44 -5 -2 3 -20 6 -62 -10 -3 3 1 The sensitivity analysis for EUR denominated annual net cash flows, operative net receivables and related hedges refer to the EUR denominated transaction risk arising from EUR denominated foreign-currency cash flows in Sweden, Czech Republic and Poland with functional currency other than EUR. 2 The effect on OCI cash flow hedging reserve before taxes at year end is related to the fair value change in derivative contracts qualifying as cash flow hedges of highly probable forecast transactions under IFRS 9. Amount effecting OCI will be recycled to operative result when the transaction realises. 3 Currency effect related to net operative receivables or payables and related hedges. 4 The estimated annual EBIT impact includes currency effects in respect of operative exposures in the Statement of Financial Position, forecast cash flows and the related hedges. The following table presents the financial foreign currency exposure and the related hedges in place as at 31 December for the main currencies. Net debt includes foreign-currency external loan payables and receivables, foreign-currency internal loan payables and loan receivables and cash equivalents. Loans designated as net investment loans under IAS 21 are excluded from the table as they reduce the foreign-currency exposures on a Group level. Internal transaction exposure includes foreign-currency payables and receivables outstanding within the Group at reporting date. The currency derivatives mainly hedge financial exposures in the statement of financial position. A negative amount of exposure in the table represents a net payable of a foreign currency amount. Additionally, the table includes the estimated effect on the income statement of a currency weakening of an exposure currency against EUR. The sensitivities have been calculated based on a 5% movement in SEK, USD, CNY, PLN, and CZK. These changes are estimated as reasonably possible changes in exchange rates, measured against year-end closing rates. A corresponding strengthening of the exposure currency would have an approximately equal opposite impact. A negative amount in the table reflects a potential net loss in the Income statement and, conversely, a positive amount reflects a net potential gain. In practice, the actual foreign currency results may differ from the sensitivity analysis below as the exposure amounts may change during the year. 64 Financial foreign currency exposure and estimated currency effects in income statement As at 31 December 2023 As at 31 December 2022 EUR million SEK USD CNY PLN CZK SEK USD CNY PLN CZK Foreign-currency net debt1 140 -121 185 -3 24 -418 -101 355 -6 -62 Currency hedges -158 -5 — -5 -21 -3 -46 -211 -7 62 Net exposure after hedges -18 -126 185 -8 3 -422 -146 144 -12 — Internal transaction exposure 137 13 138 45 Currency hedges — — -124 -41 Net non-operative exposure 137 — — 13 — — — — 14 3 Exposure currency change by -5% -5% -5% -5% -5% -5% -5% -5% -5% -5% Effect in the Income Statement2 -6 6 -9 -1 — 21 7 -7 — 6 1 The Group has designated certain internal loans to Chinese subsidiaries as net investment loans under IAS 21. The loans are denominated in EUR, USD, and CNY. The underlying foreign currency gain or loss will be posted as part of CTA in Equity. The nominal amount of net investment loans amounted to EUR 591 (EUR 398) million as per the year end and reduces the currency exposure for relevant currencies in the above table. 2 Gains and losses are recognised as part of Net financial items in the Income Statement Foreign exchange risk – translation risk Translation risk results from fluctuations in exchange rates affecting the value of Stora Enso’s consolidated net foreign currency denominated assets, liabilities, and income. Translation risk is reduced by funding assets, whenever economically possible, in the same currency as the asset itself. The Group may also enter into foreign exchange forwards, foreign exchange options or foreign currency denominated loans to hedge its net investments in foreign entities with different functional currencies than the Group. The balance sheets of foreign subsidiaries, associated companies and foreign currency denominated equity instruments in the scope of IFRS 9 are translated into euros using exchange rates prevailing on the reporting date, thus exposing consolidated Group equity to fluctuations in currency rates. The resulting translation differences, along with other movements such as the translation rate difference in the income statement, are recorded directly in shareholders’ equity. These cumulative differences materialise through the Income statement on the disposal, in whole or in part, of the foreign entity. The following table presents the translation risk exposure in the Group's Income statement arising from the translation of subsidiaries' and joint operations' foreign-currency income statements into the presentation currency of the Group in the consolidated financial statements. Translation exposure in Income statement As at 31 December 2023 As at 31 December 2022 EUR million SEK USD BRL CZK CNY SEK USD BRL CZK CNY Translation exposure in Income Statement -357 -196 -179 -65 67 -147 -192 -164 -38 77 Exposure currency change by -5% -5% -10% -5% -5% -5% -5% -10% -5% -5% Effect on EBIT from translation risk exposure 18 10 18 3 -3 7 10 16 2 -4 The next table presents the translation exposure for geographical areas for which the Group has applied net investment hedging techniques to reduce the foreign-currency translation exposure in the consolidated equity. In practise, the Group also incurs material unhedged translation risk exposures in other geographical areas such as Sweden and China. The exposures used in the calculations are based on the foreign currency denominated equity and the hedging levels as at 31 December. Full details of actual CTA movements and hedging results are given in note 5.6 Cumulative translation adjustment and equity hedging. The sensitivity analysis includes the effects of currency hedges of net investments in foreign entities and assumes that no changes take place other than a single currency exchange rate movement on 31 December each year. Hedged translation exposure in Equity As at 31 December EUR million 2023 2022 Translation exposure on equity in USD area1 1,625 1,686 EUR/USD equity hedges2 -271 -281 Translation exposure after hedges 1,354 1,405 Sensitivity before hedges - EUR strengthening 5% -81 -84 Sensitivity after hedges - EUR strengthening 5% -68 -70 1 Includes the joint operation Montes del Plata in Uruguay, which has USD as its functional currency. 2 USD denominated bonds classified as hedges of net investments in foreign assets. Liquidity and refinancing risk Liquidity risk arises from the difficulty of obtaining finance for operations at a given point in time. Stora Enso’s financial risk policy states that the average maturity of outstanding loans and committed credit facilities covering short-term borrowings should be at least four years. The policy further states that the Group must have cash equivalents and undrawn committed credit facilities to cover all debt maturing within the next 12 months, including supply chain financing and factoring. At 31 December 2023, undrawn committed credit facilities and undrawn loans were at EUR 800 (EUR 1,100) million. The credit facilities are used as a backup for general corporate purposes and are fully undrawn. Additionally, Stora Enso has access to various additional long-term sources of funding up to EUR 1,100 (EUR 1,050) million. These mainly relate to available funding sources from Finnish pension funds. During 2023, Stora Enso issued or refinanced altogether EUR 2,006 million of long-term debt, including both bonds and bilateral bank loans. Funding events from during 2023 are described in more detail in note 5.3 Interest-bearing assets and liabilities Refinancing risk, or the risk that maturing debt is not refinanced in the markets, is mitigated by Stora Enso’s target of maintaining an even maturity profile of outstanding debt. The table below shows maturity analysis for the Group's contractual financial liabilities classified under principal headings based on the remaining period to contractual maturity at the reporting date. Forward interest rates as at the year-end were used for estimating contractual finance charges for the upcoming years. The table includes the respective assets and liabilities classified as held for sale. 65 Contractual maturity repayments of financial liabilities, settlement net: 2023 EUR million 2024 2025 2026 2027 2028 2029+ Total Bond loans 136 440 590 591 548 1,310 3,615 Loans from credit institutions 140 717 105 5 5 27 998 Lease liabilities 71 57 48 43 39 263 520 Other non-current financial liabilities 0 2 0 0 0 0 2 Non-current borrowings including current portion 347 1,217 742 639 592 1,600 5,137 Estimated contractual finance charges 193 152 113 82 69 194 802 Estimated contractual lease charges 29 26 25 23 22 225 350 Contractual repayments on non- current borrowings 569 1,395 880 744 683 2,018 6,289 Current borrowings, carrying amounts 595 0 0 0 0 0 595 Gross-settled derivative liabilities - receipts -2,154 0 0 0 0 0 -2,154 Gross-settled derivative liabilities - payments 2,132 0 0 0 0 0 2,132 Trade payables 1,666 0 0 0 0 0 1,666 Estimated contractual finance charges 9 0 0 0 0 0 9 Total contractual repayments at 31 December 2023 2,817 1,395 880 744 683 2,018 8,537 Contractual maturity repayments of financial liabilities, settlement net: 2022 EUR million 2023 2024 2025 2026 2027 2028+ Total Bond loans 300 270 404 90 325 1,081 2,470 Loans from credit institutions 306 40 273 5 0 0 624 Lease liabilities 63 49 44 33 30 159 377 Other non-current financial liabilities 0 2 0 0 0 0 2 Non-current borrowings including current portion 668 361 721 128 355 1,240 3,472 Estimated contractual finance charges 108 90 74 43 40 190 545 Estimated contractual lease charges 16 14 13 11 10 58 123 Contractual repayments on non- current borrowings 792 465 807 182 405 1,489 4,140 Short-term borrowings, carrying amounts 429 0 0 0 0 0 429 Gross-settled derivative liabilities - receipts -2,405 0 0 0 0 0 -2,405 Gross-settled derivative liabilities - payments 2,401 0 0 0 0 0 2,401 Net-settled derivative liabilities -4 0 0 0 0 0 -5 Trade payables 1,831 0 0 0 0 0 1,831 Bank overdrafts 0 0 0 0 0 0 0 Estimated contractual finance charges 6 0 0 0 0 0 6 Total contractual repayments at 31 December 2022 3,050 464 807 182 405 1,489 6,398 Financial transactions counterparty credit risk Financial counterparty risk is the risk of fluctuations in the value of the Group’s assets as a result of counterparties being unable to meet their obligations arising from financial contracts. The exposure to a financial counterparty risk is measured as the maximum loss that Stora Enso can suffer directly in the event of a single counterparty’s credit default. This risk is minimised by: • entering into transactions only with leading financial institutions and with industrial companies that have a good credit rating; • only investing in liquid funds and deposits with financial institutions or companies that have a minimum credit rating of A-3 or BBB-. • at least the higher of 50% of cash equivalents, or EUR 150 million, of cash equivalents to be held at counterparties with a minimum rating of A- or equivalent using credit ratings from main rating agencies; • investing at least EUR 75 million of the Group's cash and cash equivalents at counterparties other than the counterparty at which most of Stora Enso's cash and cash equivalents are held; • requiring parent company guarantees when dealing with any subsidiary of a rated company. The Group Financial Risk Policy defines the limits for accepted counterparty risk, based on the tenor of financial contract and counterparty’s credit rating. At the year end 2023, there were no significant concentrations of risk with respect to counterparties of derivative contracts, with the highest counterparty mark-to-market exposure being at EUR 13 (41) million and credit rating of A+ (A+) using Standard and Poor’s credit rating symbols. Customer credit risk Customer credit risk is Stora Enso’s exposure to contracts arising from deterioration in the financial health of its customers. The Group uses various measures to reduce customer credit risks, including, but not limited to, letters of credit, prepayments and bank guarantees. The Group has also obtained export guarantees, covering both political and commercial risks, which are used in connection with individual customers outside the OECD area. Management considers that no significant concentration of credit risk with any individual customer, counterparty or geographical region exists for Stora Enso. The ageing information of trade receivables and related loss allowances are given in note 4.7 Operative receivables. Commodity price risk Outstanding commodity hedges As at 31 December 2023 As at 31 December 2022 Underlying amount of commodity hedged Average hedged commodity price Nominal amount hedged in EUR million Fair value EUR million Underlying amount of commodity hedged Average hedged commodity price Nominal amount hedged in EUR million Fair value EUR million Electricity purchases - Nordic region 245,712 MWh EUR 55.6 14 -1 175,200 MWh EUR 29.1 5 18 Oil purchases 205,058 barrels USD 75.9 14 -1 200,474 barrels USD 73.5 14 0 The Group is exposed to commodity and energy price volatility that will have an impact on the Group's profitability. Electricity, natural gas and oil hedge derivatives are part of energy price risk management in the Group, whilst other commodity risks are measured and hedged if economically possible. In addition to electricity hedge derivatives, the Group also manages 66 energy price risk by entering into long-term physical fixed price purchase agreements, and by holding a 15.7% stake in Pohjolan Voima Oy (PVO), which is a privately owned Group of companies in the energy sector in Finland. The fair value of the shares amounted to EUR 778 (EUR 1,423) million as per the year-end. The fair value of these shares is dependent on electricity market prices and discussed in more detail in note 4.4 Equity instruments. A 10% movement in energy and raw material prices would result in a EUR 5 (EUR 6) million change in the fair value of commodity financial hedges described in the above table. The majority of these fair value changes, after taxes, are recorded directly in Equity under Hedging Reserves, until the contracts mature and the result is entered in the Income statement. These estimates only represent the sensitivity of commodity financial instruments to market risk and not the Group's full exposure to raw material and energy price risks as a whole, since the actual underlying purchases are not financial instruments within the scope of the IFRS 7 standard. At the end of 2023, the maturities of the energy and commodity contracts, including both financial hedges and fixed-price physical purchase agreements, ranged between 2024 and 2025. In 2022, the maturities ranged between 2023 and 2024. In an effort to mitigate other commodity price risk exposures in relation to wood fiber price risk, the Group is a significant owner of forest assets in the Nordic region. In Sweden the Group owns 1.4 million hectares of forest land. In addition, Stora Enso holds 41% share in Tornator Oyj, which is a significant forest owner in Finland. The Group's share in Tornator is reported as an associate company and discussed in more detail in note 4.3 Associates. The Group's forest assets are discussed in more detail in note 4.2 Forest assets. Equity price risk The Group has certain investments in publicly traded securities. Currently these relate to Packages Ltd shares in Pakistan. The market value of these equity investments was EUR 9 (EUR 8) million at the year end. Market value changes in these investments are recorded, after taxes, directly under Shareholders’ Equity in the Equity instruments through OCI reserve. More details on the publicly traded securities can be found from note 4.4 Equity instruments. Capital risk management Stora Enso’s debt structure is focused on capital markets and commercial banks. Group objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, as well as to maintain an optimal capital structure to maintain reasonable cost of capital. In order to maintain or adjust the capital structure, the Group may, subject to shareholder approval as appropriate, vary the dividends paid to shareholders, buy its own shares on financial markets, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group strives to pay stable dividends linked to the long-term performance with the aim of distributing 50% of Earnings per share (EPS) excluding fair valuations over the cycle. The Group monitors its capital on the basis of a target net debt-to-equity ratio of 0.60 or less, and aiming that the Net-debt-to-Operational EBITDA ratio remains below 2.0, indicating a solid financial position and financial flexibility. Capital structure As at 31 December EUR million 2023 2022 Interest-bearing liabilities1 5,780 3,976 Interest-bearing assets1 2,613 2,122 Net debt 3,167 1,853 Equity attributable to owners of the parent 10,985 12,532 Operational EBITDA2 989 2,529 Net debt to equity ratio 0.29 0.15 Net debt to operational EBITDA 3.2 0.7 1 Interest-bearing liabilities and assets in the table include the respective amounts classified as held for sale. More detailed reconciliation of net debt is included in the "Alternative performance measures" chapter in the Report of the Board of Directors. 2 Operational EBITDA definition is included in the "Alternative performance measures" chapter in the Report of the Board of Directors. Montes del Plata, a joint operation of Stora Enso, and the Group's subsidiary Stora Enso (Guangxi) Packaging and Forestry Company Ltd have complied with financial covenants related to debt-to-assets ratio during the reported periods. There are no other covenants in the Group's financing contracts. 5.2 Fair values Accounting principles Financial assets The Group classifies its financial assets into three categories, which are amortised cost, fair value through other comprehensive income and fair value through profit and loss. The classification is made according to the IFRS 9 standard and management determines the classification of investments at the time of initial recognition. With investments in debt instruments, the classification is made based on the business model and contractual cash flow characteristics of debt instruments. Investments in debt instruments, for which the business model objective is to hold the financial instruments to collect contractual cash flows and those cash flows are solely payments of principal and interest, are classified as amortised cost and presented under current or non-current assets in the consolidated statement of financial position. Investments in debt instruments, for which the business model objective is to hold the financial instruments for both to collect contractual cash flows and sell financial instruments and the cash flows are solely payments of principal and interest, are classified as fair value through other comprehensive income and presented under current or non-current assets in the consolidated statement of financial position. The Group's investments into equity instruments, such as listed and unlisted securities, are classified as fair value through profit and loss unless the Group has at inception decided to apply the irrevocable election under IFRS 9 to classify the investments as fair value through other comprehensive income with only dividend income from the investments being recognised in the income statement. Investments that are not measured at amortised cost or at fair value through other comprehensive income are classified as fair value through profit and loss and are therefore fair valued through the consolidated income statement and presented under current or non-current assets in the consolidated statement of financial position. Financial liabilities The Group's financial liabilities are classified into amortised cost or fair value through profit and loss categories. Financial liabilities are measured at amortised cost unless the Group has decided to apply a fair value option to designate a financial liability to be measured at fair value through profit and loss. 67 Derivatives Derivative financial assets and liabilities are measured at fair value and classified as fair value through profit and loss or, if the Group has applied hedge accounting, at fair value through other comprehensive income according to the IFRS 9 standard. Derivative financial instruments and hedge accounting are discussed in more detail in note 5.4 Derivatives. Fair value of financial instruments The fair values of publicly traded derivatives and listed securities, are based on quoted market prices at the reporting date; the fair values of interest rate swaps are calculated as the present value of the estimated future cash flows, and the fair values of foreign exchange forward contracts are determined using forward exchange rates at the reporting date. The valuation principles for derivative financial instruments have been described in more detail in note 5.4 Derivatives. In assessing the fair values of non-traded derivatives and other financial instruments, the Group uses a variety of methods and makes assumptions based on the market conditions at each reporting date. Quoted market prices or dealer quotes for identical or similar instruments are used for non-current debt. Other techniques, such as option pricing models and estimated discounted value of future cash flows, are used to determine fair values for the remaining financial instruments. The face values, less any estimated credit adjustments, for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair values of financial liabilities for disclosure purposes are estimated by discounting the future contractual cash flows at the current market interest rates available to the Group for similar financial instruments. Purchases and sales of financial instruments are recognised based on trade date accounting, which is the date on which the Group commits to purchasing or selling the financial instrument. Financial instruments are derecognised when the rights to receive or the cash flows from the financial instruments have expired or have been transferred and the Group has substantially transferred all risks, rewards and obligations of the ownership of the financial asset or liability. Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; • Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; • Level 3: techniques which use inputs which have a significant effect on the recorded fair values that are not based on observable market data. The Group evaluates the categorisation of its fair value measurements within the fair value hierarchy on a regular basis at the end of the reporting period. There were no transfers recognised in the fair value hierarchy between Levels 1 and 2 and no transfers into or out of Level 3 fair value measurements during 2023 and 2022. See note 4.4 Equity instruments for more information on Level 3 fair value measurement of listed and unlisted securities. 68 Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2023 Fair value hierarchy EUR million Amortised cost Fair value through OCI Fair value through income statement Total carrying amount Fair value Level 1 Level 2 Level 3 Note Financial assets Listed securities — 9 — 9 9 9 — — 4.4 Unlisted securities — 794 15 810 810 — — 810 4.4 Non-current interest-bearing receivables 62 14 — 76 76 — 15 — 5.3 Derivative assets — 14 — 15 15 — 15 — Loan receivables 62 — — 62 62 — — — Trade and other operative receivables 835 30 — 865 865 — 30 — 4.7 Current interest-bearing receivables 21 39 4 64 64 — 43 — 5.3 Derivative assets — 39 4 43 43 — 43 — Other short-term receivables 21 — — 21 21 — — — Cash and cash equivalents 2,464 — — 2,464 2,464 — — — Total 3,382 887 19 4,288 4,288 9 87 810 Fair value hierarchy EUR million Amortised cost Fair value through OCI Fair value through income statement Total carrying amount Fair value Level 1 Level 2 Level 3 Note Financial liabilities Non-current interest-bearing liabilities 4,445 1 — 4,446 5,071 — 1 — 5.3 Derivative liabilities — 1 — 1 1 — 1 — Non-current debt 4,445 — — 4,445 5,069 — — — Current portion of non-current debt 286 — — 286 286 — — — 5.3 Current interest-bearing liabilities 469 4 2 476 476 — 6 — 5.3 Derivative liabilities — 4 2 6 6 — 6 — Current debt 469 — — 469 469 — — — Trade and other operative payables 1,806 — — 1,806 1,806 — — — 4.8 Bank overdrafts — — — — — — — — Total 7,006 6 2 7,014 7,639 — 8 — In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion. 69 Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2022 Fair value hierarchy EUR million Amortised cost Fair value through OCI Fair value through income statement Total carrying amount Fair value Level 1 Level 2 Level 3 Note Financial assets Listed securities — 8 — 8 8 8 — — 4.4 Unlisted securities — 1,423 14 1,437 1,437 — — 1,437 4.4 Non-current interest-bearing receivables 92 28 — 120 120 — 28 — 5.3 Derivative assets — 28 — 28 28 — 28 — Loan receivables 92 — — 92 92 — — — Trade and other operative receivables 1,138 66 — 1,204 1,204 — 66 — 4.7 Current interest-bearing receivables 10 50 16 77 77 — 67 — 5.3 Derivative assets — 50 16 67 67 — 67 — Other short-term receivables 10 — — 10 10 — — — Cash and cash equivalents 1,917 — — 1,917 1,917 — — — Total 3,157 1,576 30 4,763 4,763 8 161 1,437 Fair value hierarchy EUR million Amortised cost Fair value through OCI Fair value through income statement Total carrying amount Fair value Level 1 Level 2 Level 3 Note Financial liabilities Non-current interest-bearing liabilities 2,792 — — 2,792 2,749 — — — 5.3 Derivative liabilities — — — 0 0 — — — Non-current debt 2,792 — — 2,792 2,748 — — — Current portion of non-current debt 667 — — 667 667 — — — 5.3 Current interest-bearing liabilities 462 30 20 513 513 — 50 — 5.3 Derivative liabilities — 30 20 50 50 — 50 — Current debt 462 — — 462 462 — — — Trade and other operative payables 2,076 — — 2,076 2,076 — — — 4.8 Bank overdrafts — — — 0 0 — — — Total 5,998 30 20 6,048 6,005 — 51 — In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion. In the previous tables, the fair value is estimated to be equal to the carrying amount for current financial assets and financial liabilities, such as trade receivables and payables due to their short time to maturity and limited credit risk. The fair value of non-current loan receivables, considered as a level 2 fair value measurement, is based on the discounted cash flow analysis. The fair value of non-derivative interest-bearing liabilities, considered as a level 2 fair value measurement, is estimated based on a discounted cash flow analysis in which the yield curves observable at commonly quoted intervals are used as a discount factor in the model. 70 Reconciliation of level 3 fair value measurement of financial assets and liabilities EUR million 2023 2022 Financial assets Opening balance at 1 January 1,437 905 Reclassifications 0 -1 Gains/losses recognised in other comprehensive income -646 523 Additions 18 10 Closing balance at 31 December 810 1,437 The Group did not have level 3 financial liabilities as at 31 December 2023. 5.3 Interest-bearing assets and liabilities Accounting principles Interest-bearing assets - loan receivables Loan receivables are debt instruments with fixed or determinable payments that are not quoted on an active market. They are recorded initially at fair value and subsequently measured at an amortised cost. Loss allowance for expected credit losses is calculated based on the general approach under IFRS 9, where loss allowance is recognised based on 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. A significant increase in the credit risk will be evaluated based on a comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of default occurring on the financial instrument as at the date of initial recognition. The Group may use, for example, rates of credit default swaps (CDS) observable on financial markets to produce the risk assessment. Interest income on loan receivables is included in financial income and expense. Loan receivables with a maturity less than 12 months are included in current assets under interest-bearing receivables, and those with maturities greater than 12 months, in non-current interest-bearing receivables. Interest-bearing liabilities Interest-bearing liabilities are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, interest-bearing liabilities are measured at amortised cost using the effective interest method. Any difference between the proceeds net of transaction costs and redemption value is recognised in the consolidated income statement over the maturity period of the borrowings. Interest expenses are accrued for and recorded in the consolidated Income statement for each period. Interest-bearing liabilities with an original maturity greater than 12 months are classified as non-current interest-bearing liabilities in the consolidated statement of financial position, though repayments falling due within 12 months are presented in current liabilities under the current portion of non-current debt. Short-term commercial paper, bank and other interest-bearing liabilities, for which the original maturity is less than 12 months, are presented in current liabilities under interest-bearing liabilities. Lease liabilities At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease liabilities are initially capitalised at the commencement of the lease and measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Group’s incremental borrowing rate. The lease term applied corresponds to the non- cancellable period except in cases where the Group is reasonably certain to exercise renewal option or prolong the contract. The Group allocates the consideration in the contract to each lease component and separates non-lease components if these are identifiable. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease liabilities are subsequently measured at amortised cost using the effective interest method. Lease payment is allocated between the capital liability and finance charges to achieve a constant interest rate on the outstanding liability balance. Lease liabilities are remeasured mainly when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in the Group’s assessment whether it will exercise an extension option. When lease liability is remeasured, a corresponding adjustment is generally made to the carrying amount of the right-of-use asset. The Group has elected not to recognise lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. Leases of low value assets mainly include IT and office equipment, certain vehicles and machinery and other low value items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Managing Interest Rate Benchmark Reform and associated risks The Group monitors the process of the transition from IBORs to new benchmark rates by reviewing the total amounts of contracts that have yet to transition to an alternative benchmark rate. The impact of any ongoing changes is expected to be limited. The Group's financial instruments are mainly indexed to Euribor and Stibor reference rates which are expected to continue to exist for now. At the end of 2022 the Group had EUR 211 million of outstanding interest-bearing liabilities that were indexed to US dollar LIBOR of which publication ceased after June 2023. During the year, these interest-bearing liabilities have been transitioned to follow new benchmark rates. There has been no significant impact on the Group from the change. Interest-bearing assets EUR million 2023 2022 Listed securities 9 8 Long-term derivative assets 15 28 Long-term deposits 48 48 Long-term loans to associated companies 2 2 Other long-term loan receivables 12 41 Total non-current interest-bearing assets 85 128 Short-term derivative assets 42 66 Other short-term loan receivables 22 11 Cash and cash equivalents 2,464 1,917 Total current interest-bearing assets 2,528 1,994 Total interest-bearing assets 2,613 2,122 The annual average interest income rate for deposits and loan receivables during the year was approximately 3.0% (1.0%). Current interest-bearing receivables included EUR 8 (EUR 10) million accrued interest at 31 December 2023. The Group has evaluated that there has not been a significant increase in credit risk related to interest-bearing deposits and investments after the initial recognition. Accordingly, the loss allowance is recognised based on 12-month expected credit losses. Of the other long-term loan receivables EUR 10 (41) million and of the other short-term loan receivables EUR 14 (0) million represent receivables originating from the sale of the Russia operations in 2022. These receivables were recognised at inception at their fair value (EUR 58 million) using a discount rate of 27.1% and are carried in the statement of financial position at amortised cost. In 2023, an impairment of EUR 11 million was recognised on the receivables. The fair valuation of these receivables and evaluation of their credit risk and collectability involves a significant degree of judgement. 71 Interest-bearing liabilities EUR million 2023 2022 Bond loans 3,601 2,460 Loans from credit institutions 794 623 Lease liabilities 334 375 Long-term derivative financial liabilities 1 0 Other non-current liabilities 2 2 Non-current interest-bearing liabilities including current portion 4,733 3,459 Short-term borrowings 418 429 Interest payable 52 35 Short-term derivative financial liabilities 6 49 Total Interest-bearing Liabilities 5,209 3,972 EUR million 2023 2022 Carrying value at 1 January 3,972 3,938 Additions in long-term debt, companies acquired 131 0 Proceeds of new long-term debt 2,006 366 Repayment of long-term debt -619 -351 Additions in lease liabilities, companies acquired 99 0 Additions in lease liabilities 109 45 Repayment of lease liabilities and interest -87 -73 Change in short-term borrowings 177 75 Change in interest payable 40 19 Change in derivative financial liabilities -41 -19 Disposals and classification as held for sale -575 -5 Other 26 8 Translation differences -29 -32 Total Interest-bearing Liabilities 5,209 3,972 Events during 2023 and 2022 Stora Enso published a new framework for green and sustainability-linked financing in May 2023. The combined Green and Sustainability-Linked Financing Framework allows Stora Enso to issue both green and sustainability-linked financing instruments, as well as a combination of the two. In May 2023, Stora Enso issued two EUR 500 million green bonds with 3- and 6.25-year maturities. In November 2023, Stora Enso issued new SEK green bonds with nominal value of SEK 6,100 million, equal to EUR proceeds of 524 million at the transaction date FX rate. The SEK green bonds feature several tranches, with the maturities ranging from 2025 to 2028. Later in December 2023 the Company also completed a private placement of SEK 425 million with maturity in 2033. This was equal to EUR proceeds of 38 million at the transaction date FX rate. In addition, during the year, the Company re-financed altogether EUR 550 million of its bilateral loans and committed credit facility, and also drew bilateral loans of EUR 200 million in total that were arranged but undrawn at the end of 2022. The existing loans were extended by one to two years and new terms also include extension options. The Company also arranged a new EUR 100 million bilateral loan with a 1.5-year maturity and a 1-year extension option during the second quarter. In the fourth quarter a one-year extension was signed to the revolving credit facility of EUR 700 million to extend its maturity to 2028. During 2023, Stora Enso’s total repayments of SEK and EUR bond notes amounted to a nominal of EUR 427 million. This amount includes partial repayment of SEK bond notes with original maturity in February 2024, which resulted in a EUR 1 million modification net gain being recognised in the Income Statement under net financial items. During 2022, altogether EUR 550 million of bilateral bank loans were arranged. Maturities of these loans varied from 18 months to 3 years with extension options. Repayments of credit institution loans based on the original maturity schedule amounted to a nominal of EUR 289 million in 2022. There were no repayments of bond notes in 2022. Interest-bearing liabilities - maturities, interest rates and currency breakdown Stora Enso's borrowings maturities range from 2024 to the longest borrowing maturing in 2039. The Company's borrowings have either fixed or floating interest rates ranging from 0.6% (0.5%) to 7.3% (7.3%). Stora Enso's average interest rate on borrowings for the full year amounted to 3.7% (3.2%) with a run-rate of 4.0% as per the year end. Part of Stora Enso's borrowings have been fixed through floating-to-fixed interest rate swaps. The majority of Group loans are denominated in euros, US dollars, Swedish crowns or Chinese renminbis. Detailed maturity analysis of the Group's borrowings are set out in note 5.1 Financial risk management. Net debt In 2023 net interest-bearing liabilities, including amounts classified as held for sale, increased by EUR 1,314 (decreased by EUR 456) million to EUR 3,167 (EUR 1,854) million. Net interest- bearing liabilities are equal to total interest-bearing liabilities less total interest-bearing assets such as cash equivalents and deposits. Cash and cash equivalents net of overdrafts increased by EUR 547 (increased by EUR 437) million to EUR 2,464 (EUR 1,917) million as at 31 December 2023. In 2023, the total cash outflow for leases was EUR 87 (EUR 73) million including interest component of EUR 23 (EUR 17) million. The ratio of net debt to the last 12 months' operational EBITDA was 3.2 (0.7). The net debt/ equity ratio was 0.29 (0.15) as per the year-end. 72 Bond loans Issue/ Maturity Dates Description of Bond Interest Rate % Currency of Bond Nominal Value Issued Outstanding As at 31 December Carrying Value As at 31 December 2023 2022 2023 2022 All Liabilities are Held by the Parent Company Currency million EUR million Fixed Rate 2006-2036 Global 7.250% Notes 2036 7.25 USD 300 300 300 269 278 2016-2023 Euro Medium Term Note 2.125 EUR 300 0 300 0 300 2017-2027 Euro Medium Term Note 2.50 EUR 300 300 300 299 299 2018-2028 Euro Medium Term Note 2.50 EUR 300 300 300 299 299 2019-2024 Euro Medium Term Note (Green Bond) 1.875 SEK 1,750 484 1,750 44 157 2020-2025 Euro Medium Term Note (Green Bond) 2.375 SEK 1,550 1,550 1,550 140 140 2020-2030 Euro Medium Term Note (Green Bond) 0.625 EUR 500 500 500 496 495 2023-2027 Euro Medium Term Note (Green Bond) 4.75 SEK 400 400 0 36 0 2023-2026 Euro Medium Term Note (Green Bond) 4.00 EUR 500 500 0 499 0 2023-2029 Euro Medium Term Note (Green Bond) 4.25 EUR 500 500 0 497 0 2023-2027 Euro Medium Term Note (Green Bond) 4.75 SEK 600 600 0 54 0 2023-2028 Euro Medium Term Note (Green Bond) 5.00 SEK 2,250 2,250 0 202 0 Total Fixed Rate Bond Loans 2,834 1,968 Floating Rate 2015-2025 Euro Medium Term Note Euribor+2.25 EUR 125 125 125 125 125 2015-2027 Euro Medium Term Note Euribor+2.35 EUR 25 25 25 25 25 2019-2024 Euro Medium Term Note (Green Bond) Stibor+1.45 SEK 1,250 1,030 1,250 93 112 2019-2026 Euro Medium Term Note (Green Bond) Stibor+1.60 SEK 1,000 1,000 1,000 90 90 2020-2025 Euro Medium Term Note (Green Bond) Stibor+2.20 SEK 1,550 1,550 1,550 140 140 2023-2027 Euro Medium Term Note (Green Bond) Stibor+1.25 SEK 2,350 2,350 0 211 0 2023-2028 Euro Medium Term Note (Green Bond) Stibor+1.60 SEK 500 500 0 45 0 2023-2033 Euro Medium Term Note (Green Bond) Stibor+2.20 SEK 425 425 0 38 0 Total Floating Rate Bond Loans 766 492 Total Bond Loans 3,601 2,460 73 5.4 Derivatives Accounting principles Derivative financial instruments and hedge accounting Derivative financial instruments are initially recognised in the consolidated statement of financial position at fair value and subsequently measured at their fair value at each reporting date according to valuation methods described in this note. Derivative contracts with maturity greater than 12 months are classified as non-current interest-bearing receivables and liabilities, and contracts maturing within 12 months are presented under current interest-bearing receivables and liabilities. When derivative contracts are entered into, the Group designates them as either hedges of highly probable forecast transactions or firm commitments (cash flow hedges), hedges of the exposure to changes in the fair value of recognised assets or liabilities (fair value hedges), hedges of net investments in foreign entities, or derivative financial instruments not meeting the hedge accounting criteria in accordance with IFRS 9. The method of recognising the resulting gains or losses on derivative instruments is dependent on the nature of the item being hedged. At the inception of a hedge, the Group documents the relationship between the hedging instrument and the hedged item, as well as its risk management objective and strategy for undertaking various hedging transactions. This process includes linking all financial instruments designated under hedge accounting to specific assets and liabilities or to specific firm commitments or highly probable forecast transactions in order to verify and document the hedge relationship between the hedged item and the hedging instrument as required by IFRS 9. The Group also documents its qualitative prospective assessment at the hedge inception of whether the derivatives used in a hedge relationship are highly effective in offsetting changes in fair value or cash flows of hedged items. Hedge effectiveness will be assessed in accordance with IFRS 9 requirements. The hedge ratio used for hedging relationships is usually 1:1. For currency and commodity hedging purposes, the Group uses a hedge designation where the critical terms of the hedging instrument and the hedged item will coincide in terms of the notional amount and timing. In respect of interest rate hedging, the interest rate basis between swap contracts and underlying debt will coincide. Since the critical terms of the hedges and underlying risks match, the hedging instruments are considered to offset any changes related to the anticipated transactions. Potential sources of ineffectiveness that may be expected to occur in relation to currency and commodity hedges are mainly related to the forecasted transaction not occurring in the amount or at the time expected. For interest rate hedges, cross-currency basis spread or initial fair value of the hedging instrument at the date of hedge designation may result in ineffectiveness being recognised in the income statement. Potential sources of ineffectiveness for all the aforementioned hedges also include possible effects of credit risk dominating fair value changes arising from the hedging instrument and the hedged item designated under the hedging relationship. Cash flow hedges Derivatives used in currency cash flow hedges are mainly forward contracts and options, with swaps mainly used for commodity and interest rate hedging purposes. During 2023 and 2022, the Group did not enter into new interest rate swap contracts. Changes in the fair value of derivatives designated and qualifying as cash flow hedges, and which are effective, are recognised in a separate equity category of OCI cash flow hedges reserve, the movements of which are disclosed in the consolidated statement of comprehensive income. For foreign exchange forwards, both the spot element and forward points have been included to the hedge designation. In case of foreign exchange options, the time value of an option is excluded from the hedge designation and only the intrinsic value component of an option is designated as the hedging instrument. The changes in option time value are recognised in a cost of hedging reserve within OCI. The cumulative gain or loss of a derivative deferred in equity is transferred to the consolidated income statement and classified as an income or expense in the same period in which the hedged item affects the consolidated income statement. The unrealised gains and losses related to cash flow hedges are expected to be recycled through the income statement within one to four years with the longest hedging contract maturing in 2027 (2027). However, the majority of the contracts are expected to mature in 2024. Realised results of hedge accounted derivative instruments hedging foreign currency sales transactions or purchases are booked as adjustments to sales or materials and services, depending on the nature of the underlying hedged item. In respect of hedges of exposures to foreign currency risk of future transactions resulting in the recognition of non-financial assets, the gains and losses deferred to the cash flow hedges reserve within OCI are transferred from equity to be included in the initial acquisition cost of the non-financial asset at the time of recognition. The Group may hedge foreign-currency risk of external or internal foreign- currency purchases where the underlying amount purchased in a foreign-currency impacts the value of inventory in a local currency. In such cases the gains and losses are initially booked as an adjustment to raw material inventory and recycled further to finished goods inventory with being ultimately recognised in the consolidated income statement at the time when the hedged items are sold to an external customer. In case of non-current assets, the deferred amounts are ultimately recognised in the income statement through depreciation over the lifetime of the non-financial assets. When a hedging instrument expires or is sold, terminated or exercised or no longer meets the hedge accounting criteria under IFRS 9, any cumulative gain or loss deferred in equity at that time remains in equity and is accounted for as an adjustment to income or expense when the committed or forecast transaction is ultimately recognised in the consolidated income statement. However, if the underlying forecasted transaction is no longer expected to occur, the cumulative gain or loss reported in equity from the period when the hedge was effective is immediately recognised in the consolidated income statement. Fair value hedges In case of fair value hedges, the Group uses either derivatives or borrowings as a hedging instrument to manage the risk associated with the fair value of a hedged item. The gains and losses on hedging instruments designated and qualifying as fair value hedges, and which are highly effective, are recorded in the consolidated income statement, along with any changes in the fair value of the hedged assets or liabilities attributable to the hedged risk. As at the end of 2023, the Group did not have fair value hedges. Net investment hedges For hedges of net investments in foreign entities, the Group uses either derivatives or foreign-currency borrowings for this purpose. If the hedging instrument is a derivative, any gain or loss thereon relating to the effective portion of the hedge is recognised in equity in CTA as disclosed in the consolidated statement of comprehensive income; the gain or loss relating to the ineffective portion is immediately recognised in the consolidated income statement. In addition, exchange gains and losses arising on the translation of a foreign- currency borrowing that hedges net investment in a foreign operation are also recognised in CTA, with any ineffective portion being immediately recognised in the consolidated income statement. The gains and losses recognised in CTA are recycled from equity to the consolidated income statement at the time when the underlying hedged net investment is disposed. Non-hedge accounted derivatives Certain derivative transactions, while providing effective economic hedges under Group risk management policies, do not qualify for hedge accounting under the specific rules in IFRS 9 and therefore changes in the fair value of such non-qualifying hedges are accounted for at fair value in the consolidated income statement. For non-hedge accounted derivatives economically hedging foreign-currency risk of net of operative receivables and payables, the fair value changes are recognised in operating result under other operating income and expense. For other non-hedge accounted derivatives, the fair value changes are recognised in the consolidated income statement under financial income and expense. Valuation of derivatives Derivative financial instruments are recorded in the statement of financial position at their fair values defined as the amount at which the instrument could be exchanged in an orderly transaction between market participants at the measurement date. The fair values of such financial items have been estimated on the following basis: 74 • Foreign exchange forward contract fair values are calculated using forward exchange rates at the reporting date. • Foreign exchange option contract fair values are calculated using reporting date market rates together with common option pricing models. • Commodity contract fair values are computed with reference to quoted market prices on futures exchanges or other reliable market sources. • Interest rate swaps fair values are calculated using a discounted cash flow method. • Cross-currency swaps fair values are calculated by using a discounted cash flow method with the exchange of notional also included in the valuation model. Total foreign exchange gains and losses in the income statement excluding hedges EUR million 2023 2022 Other operating income -11 42 Other operating expense -4 -21 Borrowings, cash equivalents. lease liabilities and other -10 -10 Total -25 11 Hedge gains and losses in operating result EUR million 2023 2022 Cash flow hedge accounted derivatives Currency hedges -7 -105 Commodity hedges -2 43 Total -8 -62 As adjustments to sales -7 -103 As adjustments to materials and services -2 41 Realised from OCI through income statement -8 -62 Currency hedges ineffectiveness 1 -2 Net gains/losses from cash flow hedges -7 -65 Non-hedge accounted derivatives Net receivable hedges 5 -12 Commodity contract hedges 0 9 Net gains/losses on non-hedge accounted derivatives 5 -3 Net hedge gains/losses in operating result -2 -67 In 2023, certain forecasted future transactions were no longer expected to occur, and due to this hedge accounting was ceased for those transactions. This resulted in a gain of EUR 1 (loss of 2) million being booked in the Group's operating result and is being presented in the table above as ineffectiveness from cash flow hedges. Hedge gains and losses in financial items EUR million 2023 2022 Non-hedge accounted derivatives Currency derivatives -12 8 Interest rate derivatives 4 -4 Net gains/losses on non-hedge accounted derivatives -8 4 Net gains/losses in financial items -8 4 75 Nominal and fair values of derivative instruments EUR million Nominal values Positive fair values Negative fair values Net fair values Nominal values Positive fair values Negative fair values Net fair values 2023 2022 Currency derivatives Forwards: Operational cash flow hedging 1,210 31 -4 27 902 19 -13 6 Options: Operational cash flow hedging 405 6 -1 5 1,700 12 -16 -4 Total cash flow hedge accounted 1,615 37 -5 33 2,603 32 -30 2 Forwards: Trade and loan receivables hedging 379 4 -1 3 1,151 7 -5 2 Total non-hedge accounted 379 4 -1 3 1,151 7 -5 2 Total currency derivatives 1,994 41 -6 35 3,754 39 -35 4 Commodity derivatives Electricity swaps: Costs hedging 14 0 -1 -1 5 18 0 18 Oil swaps: Costs hedging 14 0 -1 -1 14 1 -1 0 Total cash flow hedge accounted 28 0 -2 -2 19 18 -1 18 Electricity swaps: Closed contracts 0 0 0 0 11 9 0 9 Total non-hedge accounted 0 0 0 0 11 9 0 9 Total commodity derivatives 28 0 -2 -2 30 27 -1 27 Interest rate derivatives Interest rate swaps: Financial expenses hedging 443 16 0 16 450 28 0 28 Total cash flow hedge accounted 443 16 0 16 450 28 0 28 Cross-currency swaps: Financial expenses hedging 0 0 0 0 200 0 -15 -15 Total non-hedge accounted 0 0 0 0 200 0 -15 -15 Total interest rate derivatives 443 16 0 16 650 28 -15 13 Total cash flow hedge accounted 2,086 54 -7 47 3,072 78 -30 48 Total non-hedge accounted 379 4 -1 3 1,363 16 -20 -4 Total derivatives 2,464 57 -8 49 4,435 95 -51 44 Positive and negative fair values of financial derivative instruments are shown under interest- bearing receivables and liabilities, and non-current interest-bearing receivables and liabilities. The presented fair values in the table include accrued interest and option premiums. 76 Changes in fair values of hedged items and hedging instruments 2023 EUR million Change in value of hedged item to determine hedge effectiveness Change in value of outstanding hedging instruments Ineffectiveness Foreign exchange risk - Forward and option contracts (excluding option time value)1 -23 24 1 Foreign exchange risk - Net investment hedges -10 10 0 Commodity price risk - Commodity swaps 21 -21 0 Interest rate risk - Interest rate swaps 13 -13 0 1 Ineffectiveness booked in operating result. Changes in fair values of hedged items and hedging instruments 2022 EUR million Change in value of hedged item to determine hedge effectiveness Change in value of outstanding hedging instruments Ineffectiveness Foreign exchange risk - Forward and option contracts (excluding option time value)1 77 -79 -2 Foreign exchange risk - Net investment hedges2 16 -16 0 Commodity price risk - Commodity swaps -31 31 0 Interest rate risk - Interest rate swaps -34 34 0 1 Ineffectiveness booked in operating result. 2 Comparison figures restated. Breakdown of cash flow hedging reserve and net investment hedges in equity 2023 EUR million At 1 Jan 2023 Change in fair value recognised in OCI/CTA Reclassified from OCI to profit and loss Reclassified to non- financial assets Tax impact At 31 Dec 2023 Foreign exchange risk - Operational cash flow hedging 2 20 8 2 -6 25 Commodity price risk - Commodity swaps 15 -21 2 0 4 -1 Interest rate risk - Interest rate swaps 23 -13 0 0 3 13 Interest rate and foreign exchange risk - Cross-currency swaps 1 0 -1 0 0 0 Cost of hedging reserve -1 2 0 0 0 1 Total cash flow hedge reserve in OCI 39 -12 9 2 0 38 Foreign exchange risk - Net investment hedges 1 10 -2 0 -2 7 Total net investment hedges in CTA 1 10 -2 0 -2 7 Total hedging reserves 40 -3 7 2 -2 45 Breakdown of cash flow hedging reserve and net investment hedges in equity 2022 EUR million At 1 Jan 2022 Change in fair value recognised in OCI/CTA Reclassified from OCI to profit and loss Reclassified to non- financial assets Tax impact At 31 Dec 2022 Foreign exchange risk - Operational cash flow hedging -21 -82 107 3 -5 2 Commodity price risk - Commodity swaps 23 41 -52 0 3 15 Interest rate risk - Interest rate swaps -4 33 0 0 -7 23 Interest rate and foreign exchange risk - Cross-currency swaps -1 0 2 0 0 1 Cost of hedging reserve -1 0 0 0 0 -1 Total cash flow hedge reserve in OCI -4 -8 57 3 -9 39 Foreign exchange risk - Net investment hedges 14 -16 0 0 3 1 Total net investment hedges in CTA 14 -16 0 0 3 1 Total hedging reserves 10 -24 57 3 -6 40 Financial impact of netting for instruments subject to an enforceable master netting agreement 2023 Not offset in the statement of financial position EUR million Gross amount of recognised financial instruments Related liabilities (-) or assets (+) subject to master netting agreements Collateral received (-) or given (+) Net exposure Derivative assets 57 -2 0 56 Derivative liabilities -8 2 0 -6 Financial impact of netting for instruments subject to an enforceable master netting agreement 2022 Not offset in the statement of financial position EUR million Gross amount of recognised financial instruments Related liabilities (-) or assets (+) subject to master netting agreements Collateral received (-) or given (+) Net exposure Derivative assets 95 -30 0 65 Derivative liabilities -51 30 0 -21 The Group enters into derivative transactions under master netting agreements agreed with each counterparty. In case of an unlikely credit event, such as default, all outstanding transactions under the agreements are terminated, and only a single net amount per counterparty is payable for settlement of all transactions. The agreements do not meet the criteria for offsetting in the statement of financial position, because offsetting is enforceable only in the occurrence of certain future events. 77 5.5 Shareholders' equity Accounting principles Dividend and capital repayments Any dividend or capital repayment proposed by the Board is not deducted from distributable shareholders’ equity until approved by the shareholders at the Annual General Meeting. At 31 December 2023, shareholders’ equity amounted to EUR 10,985 (12,532) million, compared to the market capitalisation on Nasdaq Helsinki of EUR 9,864 (10,503) million. The market values of the shares were EUR 12.45 (13.90) for A shares and EUR 12.53 (13.15) for R shares. In 2023, EUR 473 (434) million of dividends was recognised as distributed to owners, corresponding to EUR 0.60 (0.55) per share. The A shares entitle the holder to one vote per share, whereas R shares entitle the holder to one vote per ten shares with a minimum of one vote, though the accountable par of both shares is the same. A shares may be converted into R shares at any time at the request of a shareholder. At 31 December 2023, the Company’s fully paid-up share capital, as entered in the Finnish Trade Register, was EUR 1,342 (1,342) million. The current accountable par of each issued share is EUR 1.70 (1.70). At 31 December 2023, Directors and Group Leadership Team members owned 127 (127) A shares and 506,790 (363,604) R shares representing 0.02% of the total voting rights of the Company. Full details of Director and Executive interests are shown in note 3.2 Board and executive remuneration. A full description of Company share award programmes is shown in note 3.4 Employee variable compensation and equity incentive schemes. However, none of these have any impact on the issued share capital. Change in number of shares A shares R shares Total At 1 January 2022 176,244,049 612,375,938 788,619,987 Conversion of A shares to R shares -5,769 5,769 — At 31 December 2022 176,238,280 612,381,707 788,619,987 Conversion of A shares to R shares -7,364 7,364 — At 31 December 2023 176,230,916 612,389,071 788,619,987 Number of votes as at 31 December 20231 176,230,916 61,238,907 237,469,823 Share capital at 31 December 2023, EUR million2 300 1,042 1,342 1 R share votes are calculated by dividing the number of R shares by 10. 2 No changes in share capital in 2023 or 2022. 5.6 Cumulative translation adjustment and equity hedging Accounting principles The Group operates internationally and is thus exposed to currency risks arising from exchange rate fluctuations on the value of its net investment in non-euro entities. Exchange rate differences arising from the retranslation of net investments in foreign non-euro entities, and financial instruments that are designated as hedges of such investments, are recognised directly in equity in the cumulative translation adjustment (CTA). Movements in CTA (including related hedges) are shown in the consolidated statement of comprehensive income. The cumulative translation adjustments related to disposed and liquidated entities are combined with their gain or loss on disposal. The CTA is recycled in the consolidated income statement upon disposal and liquidation. The Group policy for translation risk exposure is to minimise this by funding assets in the same currency whenever economically viable, but if matching the assets and liabilities in the same currency is not possible, hedging of the remaining translation risk may take place. The Group has also applied net investment loan accounting for certain intragroup loans for which settlement is neither planned nor likely to occur in the foreseeable future. These are in substance, a part of the entity’s net investment in the foreign operation. Cumulative translation adjustment - movement EUR million 2023 2022 At 1 January CTA on net investments -432 -235 Net investment hedges and loans 21 48 Income tax related to hedges and loans -5 -8 Net CTA in equity -415 -195 CTA movement OCI CTA movement 0 -244 CTA release through income statement 56 47 Net investment hedges and loans -15 -27 Income tax related to hedges and loans 0 3 CTA movement OCI total 41 -220 At 31 December CTA on net investments -376 -432 Net investment hedges and loans 6 21 Income tax related to hedges and loans -4 -5 Net CTA in equity -375 -415 In 2023 the release of cumulative translation adjustments to the income statement amounted to a loss of EUR 56 million and was related to disposals of Hylte and Nymolla sites in Sweden. In 2022 the release to the income statement amounted to a loss of EUR 47 million and was related to disposal of Russian Packaging Solutions, Wood Products and Forest operations. After the release, there is no CTA remaining related to Russian ruble. 78 Cumulative translation adjustment - financial position Cumulative Translation Adjustment (CTA) Net investment hedges and loans Net CTA in the statement of financial position EUR million 2023 2022 2023 2022 2023 2022 Brazil -242 -255 0 0 -242 -255 China 151 131 -4 10 147 141 Czech Republic 39 43 -9 -9 30 34 Poland -22 -59 17 17 -5 -42 Sweden -494 -543 33 47 -461 -497 Uruguay (USD) 191 248 -31 -44 160 204 Others 1 4 0 0 1 4 CTA before Tax -376 -432 6 21 -370 -411 Taxes 0 0 -4 -5 -4 -5 Net CTA in Equity -376 -432 2 17 -375 -415 Hedging instruments and unrealised hedge losses Nominal amount (Currency) Nominal amount (EUR) Unrealised losses (EUR) EUR million 2023 2022 2023 2022 2023 2022 Borrowings USD area 300 300 271 281 -33 -41 Total hedging 271 281 -33 -41 The Group is currently only hedging its equity exposure to the US dollar arising from its joint operation located in Uruguay with USD functional currency. 5.7 Non-controlling interests Accounting principles Non-controlling interests are presented as a separate component within the equity of the Group in the consolidated statement of financial position. The proportionate shares of profit or loss attributable to non- controlling interests and to owners of the parent company are presented in the consolidated income statement after the net result for the period. Transactions between non-controlling interests and Group shareholders are transactions within equity and are thus shown in the statement of changes in equity. The measurement type of non-controlling interest is decided separately for each acquisition. Non-controlling interests EUR million 2023 2022 At 1 January -30 -16 Acquisitions 2 0 Share of net result for the period -74 -13 Share of other comprehensive income 5 0 At 31 December -97 -30 Principal non-controlling interests 2023 2023 2022 Company Principal place of business Ownership held by non-controlling Interests, % EUR million Stora Enso Pulp and Paper Asia AB Group Sweden and China See table below -100 -31 Others - 3 1 Total -97 -30 Non-controlling interests in Stora Enso Pulp and Paper Asia AB Group 2023 2022 Company Principal place of business Direct-% of NCI Indirect- % of NCI Total-% of NCI Direct-% of NCI Indirect- % of NCI Total-% of NCI Stora Enso Pulp and Paper Asia AB Sweden and China 5.79 — 5.79 5.79 — 5.79 Guangxi Stora Enso Forestry Co Ltd China 5.00 5.50 10.50 5.00 5.50 10.50 Stora Enso (Guangxi) Packaging Company Ltd China 15.00 4.92 19.92 15.00 4.92 19.92 Stora Enso (Guangxi) Forestry Company Ltd China 15.00 4.92 19.92 15.00 4.92 19.92 Summarised financial information in respect of the subsidiaries that have material non- controlling interests is set out below. Stora Enso's approximately 80% owned consumer board and forestry operations in Beihai, China have been classified as held for sale at the end of 2023. See note 6.1 Acquisitions, disposals and assets held for sale for more details. Stora Enso Pulp and Paper Asia AB Group EUR million 2023 2022 Assets 858 1,235 Equity attributable to the owners of the parent -345 -165 Non-controlling interests1 -100 -31 Total equity -445 -196 Liabilities 1,303 1,430 Net result for the period -268 -74 Attributable to Owners of the parent -194 -61 Non-controlling interests -74 -13 Net result for the period -268 -74 Net cash flow from operating activities 16 64 Net cash flow from investing activities -37 -41 Net cash flow from financing activities -23 4 Net cash flow -43 27 1 No dividends were paid to non-controlling interests in 2023 or 2022. 79 6 Group structure 6.1 Acquisitions, disposals and assets held for sale Accounting principles Acquired companies are accounted in accordance with the acquisition method whereby these companies are included in the consolidated financial statements from the date the control is obtained. Accordingly, the consideration transferred (including contingent consideration) and the acquired company's identifiable net assets are measured at fair value at the date of the acquisition. Transaction costs related to acquisition are expensed as incurred. The measurement type of non-controlling interest is decided separately for each acquisition, and measured either at fair value or non-controlling interest's proportionate share of the net assets. The excess of the consideration transferred, non-controlling interest and possible previously held equity interest over the fair value of net assets of the acquired company is recognised as goodwill. The disposed companies are included in the consolidated financial statements up to the date when the control is lost. The gain or loss on disposal together with cumulative translation adjustments (CTA) related to disposed companies are recognised in the consolidated income statement at the date control is lost. Gains and losses on the disposal of a Group entity include any goodwill relating to the entity sold. Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification. These assets and related liabilities are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated when classification is made. Assets classified as held for sale are not depreciated. Acquisition of Group companies De Jong Packaging Group In September 2022, Stora Enso signed an agreement to acquire De Jong Packaging Group and the transaction was completed at the beginning of January 2023. De Jong Packaging Group is based in the Netherlands and is one of the largest corrugated packaging producers in the Benelux countries. De Jong Packaging Group is also active in containerboard production through the acquisition of the De Hoop mill in the Netherlands in 2021. De Jong Packaging Group has 16 sites in the Netherlands, Belgium, Germany and the UK and employs approximately 1,300 people. The acquisition will advance Stora Enso’s strategic direction, increase its corrugated packaging capacity, accelerate revenue growth and build market share in renewable packaging in Europe. De Jong Packaging Group's products enhance Stora Enso’s offering. The acquisition is expected to generate synergies over the cycle, mainly through sourcing, containerboard integration optimisation and commercial opportunities. The shares of the acquired companies are mainly 100% owned, with certain units having minor non-controlling interests. The non-controlling interest is measured on the basis of the proportionate share of the identifiable net assets. The cash purchase consideration was EUR 612 million, excluding a contingent earn-out component. The maximum amount of the earn-out component is EUR 45 million, which will be settled in cash in 2024 and is subject to De Jong Packaging Group achieving certain earnings thresholds. The contingent consideration is measured at its fair value and is estimated at EUR 0 million at the date of acquisition and at the of the year 2023. The fair values of the identifiable assets and liabilities as of the acquisition date are presented in the table below. EUR million 2023 Net assets acquired Cash and cash equivalents 27 Property, plant and equipment 200 Intangible assets 222 Right-of-use assets 99 Working capital 5 Tax assets and liabilities -56 Interest-bearing assets and liabilities -233 Fair value of net assets acquired 265 Purchase consideration, cash part 612 Purchase consideration, contingent 0 Total purchase consideration 612 Fair value of net assets acquired -265 Non-controlling interest 2 Goodwill 349 Cash outflow on acquisitions -612 Cash and cash equivalents of acquired subsidiaries 27 Cash flow on acquisition, net of acquired cash -584 The post combination review was completed at the end of 2023 and therefore acquisition accounting is considered to be final. The fair values of the acquired assets, liabilities and goodwill in the table above are representing final acquisition accounting. Measurement period adjustments in 2023 included property, plant and equipment decrease of EUR 23 million, right- of-use assets decrease of EUR 5 million, working capital items decrease of EUR 10 million, tax items increase of EUR 14 million and goodwill increase of EUR 22 million. The goodwill represent the expected synergies, mainly through sourcing, containerboard integration optimisation and commercial opportunities. The goodwill is allocated to divisions benefiting from the acquisition, Packaging Solutions and Packaging Materials. None of the goodwill recognised is expected to be deductible for tax purposes. Also, as part of the acquisition, customer related intangible assets have been recognised with a carrying amount of EUR 167 million and an amortisation period of 15 years, and marketing related intangible assets of EUR 39 million with amortisation periods of between 5–20 years. See note 4.1 Intangible assets, property, plant and equipment and right-of-use assets for more details. For 2023, De Jong Packaging Group contributed sales of EUR 598 million and a net result of EUR -88 million to the Group’s results, which mainly relate to the De Hoop unit closure impairment and provision charges with approximately EUR -58 million net result impact. The acquired units are included in Stora Enso Group’s consolidated sales and net result from the beginning of 2023. The related transaction costs amounted to EUR 6 million and are presented in other operating expenses. The acquired units are reported in the Packaging Solutions and Packaging Materials divisions. Stora Enso did not complete any company or business acquisitions in 2022. 80 Disposal of Group companies EUR million 2023 2022 Net assets sold Cash and cash equivalents 29 90 Property, plant and equipment 271 8 Intangible assets 60 0 Working capital -5 -1 Tax assets and liabilities -28 6 Interest-bearing assets and liabilities -96 -19 Net assets in disposed companies 233 85 Total disposal consideration 266 70 CTA release -56 -47 Asset writedowns1 -219 -155 Loan impairments 0 -23 Transaction costs -6 -4 Total net gain/loss -247 -244 1 2023 mainly related to units classified as held for sale. 2022 mainly related to writedowns in connection to Russia operation disposals and including also writedowns related to paper units which were classified as assets held for sale. 2023 Biocomposite business In November 2023, Stora Enso divested its Biocomposite business to Sweden Timber, which also owns the paper production site at Hylte. The sold unit was part of the segment Other at the time of disposal. The transaction did not have a significant impact on the Group. Wood Products DIY site In August 2023, Stora Enso divested its 100% owned Wood Products DIY unit in the Netherlands to Megahout, a local importer, wholesaler and producer of a wide variety of wood products. The divestment reduced Stora Enso’s planing capacity by 80,000 m3. The sold unit was part of the Wood Products division. The transaction did not have a significant impact on the Group. Hylte site In April 2023, Stora Enso divested its 100% owned Hylte paper production site in Sweden and all related assets to Sweden Timber, a Swedish based sawmill and planing mill company. The Hylte site’s annual capacity is 245,000 tonnes of newsprint paper. During 2022, the Group recognised asset write-downs of EUR 16 million related to the transaction. The selling price of the transaction was not significant. The loss on disposal was approximately EUR 45 million, consisting mainly of cumulative translation adjustments (CTA) being released from equity to the income statement. The sold unit was part of the segment Other at the time of disposal. Maxau site In February 2023, Stora Enso divested its 100% owned the Maxau paper production site in Germany and all related assets to Schwarz Group, one of the top retailers in the world. The transaction reduced Stora Enso’s annual supercalendered paper (SC paper) capacity by 530,000 tonnes. The selling price of the transaction was approximately EUR 211 million and the gain on disposal was approximately EUR 52 million. The sold unit was part of the segment Other at the time of disposal. Nymölla site In January 2023, Stora Enso divested its 100% owned Nymölla paper production site in Sweden and all related assets to Sylvamo, a US-based global producer of uncoated paper. The Nymölla site’s capacity is 485,000 metric tonnes of woodfree uncoated office papers. During 2022, the Group recognised asset write-downs of EUR 6 million related to the transaction. The selling price of the transaction was approximately EUR 49 million. The loss on disposal was approximately EUR 30 million, consisting mainly of cumulative translation adjustments (CTA) being released from equity to income statement. The sold unit was part of the segment Other at the time of disposal. Russian operations As communicated in 2022, Stora Enso sold all of its operations in Russia. Related to one forest operations unit, the disposal was expected to be completed in 2023, upon finalisation of certain formalities. These formalities were finalised in 2023 and did not have a significant impact on the Group. For more information about the valuation of remaining Russia-related receivables, see note 5.3 Interest-bearing assets and liabilities. 2022 Kvarnsveden site In December 2022, Stora Enso divested its 100% owned Kvarnsveden site in Sweden to Northvolt, a European supplier of sustainable battery cells. Due to structural decline in demand for graphical paper, in April 2021 Stora Enso announced a plan to close its Kvarnsveden paper site and the production was ended in September 2021. The site will be developed into a battery manufacturing plant, reusing and refurbishing the existing facilities and site infrastructure. The sold unit was part of segment Other at the time of disposal. The transaction did not have a significant impact on the Group. Russian operations - Wood Products and Forest In July 2022, Stora Enso divested its two Nebolchi and Impilahti sawmills in Russia to local management. In addition, the divestment included Russian forest operations which supplies wood to the sawmills. The disposed sawmill sites are located in Novgorod and Karelia and have a total annual capacity of 350,000 m3 of sawn timber, including 55,000 m3 of processed timber and 65,000 tonnes of pellets. Russian forest operations managed long-term harvesting rights for around 370,000 hectares. The divested seven legal entities were mainly 100% owned, with exception of one unit that was 99.48% owned. Related to one forest operations unit, the disposal will be completed in 2023, upon finalisation of certain formalities. During 2022, the Group recognised asset write-downs of EUR 74 million (mainly fixed assets, inventories and trade receivables) related to the transaction. About two thirds of the sale consideration is to be received in instalments at future dates. The loss on disposal was EUR 24 million, including cumulative translation adjustments (CTA) being released from equity to income statement. In addition, there were impairments of loan receivables of EUR 23 million related to the transaction. The sold units were part of the Wood Products and Forest divisions. 81 Russian operations - Packaging Solutions In May 2022, Stora Enso divested its three 100% owned corrugated packaging plants in Russia to local management. The divested three packaging plants are located in Lukhovitsy, Arzamas and Balabanovo and have a total annual capacity of 395 million m² of corrugated packaging. The sites primarily produce corrugated packaging in the domestic Russian market. During 2022, the Group recognised asset write-downs of EUR 42 million (mainly fixed assets, inventories and trade receivables) related to the transaction. The sale consideration is to be received in instalments at future dates. The loss on disposal was approximately EUR 49 million, consisting mainly of cumulative translation adjustments (CTA) being released from equity to income statement. The sold units were part of the Packaging Solutions division. Vlar Papier In February 2022, Stora Enso divested its 100% shareholdings in Vlar Papier NV in Belgium. The sold company was part of the Paper division at the time of disposal (presented as part of the segment Other due to the segment changes in 2023). The transaction did not have a significant impact on the Group. Assets held for sale EUR million 2023 2022 Property, plant and equipment 310 261 Intangible assets 20 55 Right-of-use assets 198 2 Forest assets 184 0 Inventories 79 91 Current operative receivables 48 104 Assets held for sale 839 514 Non-current operative liabilities 0 42 Current operative liabilities 99 163 Tax liabilities 0 28 Interest-bearing liabilities 571 4 Liabilities related to assets held for sale 671 237 As announced in December 2022, Stora Enso has initiated a sales process for a divestment of its consumer board production site and forestry operations in Beihai, China, which are part of the Packaging Materials division. Stora Enso’s Beihai production site started operations in 2016. It has a mechanical pulp mill and a consumer board line serving the Chinese market. The annual production capacity is 250,000 tonnes of mechanical pulp and 550,000 tonnes of consumer board. Stora Enso also operates about 70 thousand hectares of land in the Guangxi region for eucalyptus plantations. Stora Enso owns approximately 80% of the production site and forest operations. In accordance with the progress in the ongoing divestment process, the operations were classified as held for sale at the end of 2023 and the transaction is expected to be completed in 2024. In 2023 and in connection to the potential disposal transaction, the Group recognised EUR 202 million of asset writedowns. Assets held for sale at the end of 2022 included the Maxau, Nymölla and Hylte sites. 82 6.2 Group companies Group ownership, % Group ownership, % Subsidiaries Country 2023 2022 A/O Ladenso Russia 0.00 100.00 Anjala Fiber & Energy Oy Finland 100.00 100.00 AS Stora Enso Latvija Latvia 100.00 100.00 Bangma Productie B.V. Netherlands 100.00 0.00 Bangma Verpakking B.V. Netherlands 100.00 0.00 Bergnät 1 AB Sweden 100.00 100.00 Beta Skog 1 AB Sweden 100.00 100.00 Cellutech AB Sweden 100.00 100.00 Centrum Dystrybucji i Obróbki Drewna Sp. z.o.o. Poland 100.00 100.00 Changzhou Stora Enso Packaging Technology Co. Ltd. China 100.00 100.00 DanFiber A/S Denmark 51.00 51.00 De Jong Box B.V. Netherlands 100.00 0.00 De Jong Kasser Ehf. Iceland 100.00 0.00 De Jong Packaging Ltd. UK 100.00 0.00 De Jong Verpackung GmbH Germany 100.00 0.00 De Jong Verpakking B.V. Netherlands 100.00 0.00 DJV Holding B.V. Netherlands 100.00 0.00 DJV Strategisch Advies B.V. Netherlands 100.00 0.00 Dongguan Stora Enso Inpac Packaging Co. Ltd. China 100.00 100.00 DuraSense AB (formerly Box Inc.) Sweden 100.00 100.00 eCorrugated Ltd. UK 100.00 0.00 Efora Oy Finland 0.00 100.00 Enso Alueverkko Oy Finland 100.00 100.00 Euro - Timber, spol. s.r.o. Slovak Republic 100.00 100.00 Felco B.V. Netherlands 100.00 0.00 Gaster Wellpappe GmbH Germany 100.00 0.00 Green Packaging System B.V. Netherlands 100.00 0.00 Guangxi Stora Enso Forestry Co. Ltd. China 89.50 89.50 Herman Andersson Oy Finland 100.00 100.00 HESPOL Sp. z.o.o. Poland 100.00 100.00 Jiashan Stora Enso Inpac Packaging Co. Ltd. China 100.00 100.00 Karpack B.V. Netherlands 100.00 0.00 KPMB Agri BV Belgium 100.00 0.00 KPMB NV Belgium 100.00 0.00 Lignode AB Sweden 100.00 100.00 Lignode Holding Oy Finland 100.00 100.00 Lignode Oy Finland 100.00 100.00 Lumipaper Ltd UK 100.00 100.00 Lumipaper NV Belgium 100.00 100.00 Mena Wood Oy Ltd Finland 0.00 100.00 PTI Packmitteltechnik GmbH Germany 100.00 0.00 Pulse Anilox Cleaning B.V. Netherlands 100.00 0.00 Rudico B.V. Netherlands 100.00 0.00 Rudico Groep B.V. Netherlands 100.00 0.00 Rudico Holding B.V. Netherlands 100.00 0.00 Selfly Store Oy Finland 100.00 100.00 Skogsutveckling Syd AB Sweden 66.67 66.67 Stora Enso China Packaging (HK) Co., Limited Hong Kong 100.00 100.00 Stora Enso (Guangxi) Forestry Company Ltd. China 80.08 80.08 Stora Enso (Guangxi) Packaging Company Ltd. China 80.08 80.08 Stora Enso (HK) Ltd Hong Kong 100.00 100.00 Stora Enso (Southern Africa) (Pty) Ltd South Africa 100.00 100.00 Stora Enso AB Sweden 100.00 100.00 Stora Enso Amsterdam B.V. Netherlands 100.00 100.00 Stora Enso Arapoti Holding Florestal S.A. Brazil 100.00 100.00 Stora Enso Australia Pty Ltd Australia 100.00 100.00 Stora Enso Belgium NV Belgium 100.00 100.00 Stora Enso Bergskog 2 AB Sweden 100.00 100.00 Stora Enso Bergskog 3 AB Sweden 100.00 100.00 Stora Enso Bois SAS France 100.00 100.00 Stora Enso Brasil Ltda Brazil 100.00 100.00 Stora Enso China Co., Ltd China 100.00 100.00 Stora Enso China Holdings AB Sweden 100.00 100.00 Stora Enso Corbehem SAS France 100.00 100.00 Stora Enso Danmark A/S Denmark 100.00 100.00 Stora Enso De Hoop B.V. Netherlands 100.00 0.00 Stora Enso Eesti AS Estonia 100.00 100.00 Stora Enso Espana S.A.U Spain 100.00 100.00 Stora Enso Fors AB Sweden 100.00 100.00 Stora Enso France SAS France 100.00 100.00 Stora Enso Germany GmbH Germany 100.00 100.00 Stora Enso Holding B.V. Netherlands 100.00 0.00 Stora Enso Holding France SAS France 100.00 100.00 Stora Enso Holdings UK Ltd UK 100.00 100.00 Stora Enso Hylte Bruk AB Sweden 0.00 100.00 Stora Enso Ingerois Oy Finland 100.00 100.00 Stora Enso Inpac Corrugated Packaging (Hebei) Company Limited China 100.00 100.00 Stora Enso Inpac Hebei Protective Packaging Co., Ltd. China 100.00 100.00 Stora Enso Inpac Packaging Co. Ltd China 100.00 100.00 Stora Enso International Oy Finland 100.00 100.00 Stora Enso Italia Srl Italy 100.00 100.00 Stora Enso Japan K.K. Japan 100.00 100.00 Stora Enso Kvarnsveden Industriutveckling AB Sweden 100.00 100.00 Stora Enso Langerbrugge NV Belgium 100.00 100.00 Stora Enso LLC Ukraine 100.00 100.00 Stora Enso Maxau GmbH Germany 0.00 100.00 Stora Enso Mexico S.A. Mexico 100.00 100.00 Stora Enso Middle East DMCC United Arab Emirates 100.00 100.00 Stora Enso Narew Sp.z.o.o. Poland 100.00 100.00 Stora Enso North American Sales, LLC USA 100.00 100.00 Stora Enso Nymölla Paper AB Sweden 0.00 100.00 Stora Enso Oulu Oy Finland 100.00 100.00 Stora Enso Packaging AB Sweden 100.00 100.00 Stora Enso Packaging AS Estonia 100.00 100.00 Stora Enso Packaging Oy Finland 100.00 100.00 Stora Enso Packaging SIA Latvia 100.00 100.00 83 Stora Enso Packaging UAB Lithuania 100.00 100.00 Stora Enso Paper AB Sweden 100.00 100.00 Stora Enso Paper France SAS France 100.00 100.00 Stora Enso Paper GmbH Germany 100.00 100.00 Stora Enso Paper Oy Finland 100.00 100.00 Stora Enso Paper UK Ltd UK 100.00 100.00 Stora Enso Pension Trust Ltd. UK 100.00 100.00 Stora Enso Poland S.A. Poland 100.00 100.00 Stora Enso Polska Sp.z.o.o. Poland 100.00 100.00 Stora Enso Portugal Lda Portugal 100.00 100.00 Stora Enso Praha s.r.o. Czech Republic 100.00 100.00 Stora Enso Publication Papers Oy Ltd Finland 100.00 100.00 Stora Enso Pulp AB Sweden 100.00 100.00 Stora Enso Pulp and Paper Asia AB Sweden 94.21 94.21 Stora Enso Skog AB Sweden 100.00 100.00 Stora Enso Skog AS Norway 100.00 100.00 Stora Enso Skog och Mark AB Sweden 100.00 100.00 Stora Enso South East Asia Pte Ltd Singapore 100.00 100.00 Stora Enso Timber AB Sweden 100.00 100.00 Stora Enso Timber DIY Products B.V. Netherlands 0.00 100.00 Stora Enso Treasury Stockholm AB Sweden 100.00 100.00 Stora Enso Turkey Karton Ve Kağıt Ticaret Anonim Sirketi Turkey 100.00 100.00 Stora Enso UK Limited UK 100.00 100.00 Stora Enso US Inc. USA 100.00 100.00 Stora Enso Veitsiluoto Oy Finland 100.00 100.00 Stora Enso Wood Products d.o.o. Koper Slovenia 100.00 100.00 Stora Enso Wood Products GmbH Austria 100.00 100.00 Stora Enso Wood Products Japan K.K. Japan 100.00 100.00 Stora Enso Wood Products Planá s.r.o. Czech Republic 100.00 100.00 Stora Enso Wood Products Sp.z.o.o. Poland 100.00 100.00 Stora Enso Wood Products Zdirec s.r.o. Czech Republic 100.00 100.00 Stora Enso WP Bad St. Leonhard GmbH Austria 100.00 100.00 Stora Enso WP HV s.r.o. Czech Republic 100.00 100.00 Stora Kopparbergs Bergslags AB Sweden 100.00 100.00 Sumarbox B.V. Netherlands 100.00 0.00 Sydved AB Sweden 66.67 66.67 Södra Norrlands Hamnbolag nr 1 AB Sweden 100.00 100.00 Twinpack B.V. Netherlands 100.00 0.00 UAB Stora Enso Lietuva Lithuania 100.00 100.00 Virdia B2X, LLC USA 100.00 100.00 Virdia LLC USA 100.00 100.00 Virdia Ltd Israel 100.00 100.00 Wellpappenfabrik Gesellschaft GmbH Germany 80.00 0.00 Group ownership, % Group ownership, % Associated companies Country 2023 2022 A.C.D.F. Industrie France 35.00 35.00 Honkalahden Teollisuuslaituri Oy Finland 50.00 50.00 Industriewater Eerbeek B.V. Netherlands 37.50 0.00 Kemira Cell Sp.z.o.o. Poland 45.00 45.00 Metsäteho Oy Finland 23.95 23.95 Oy Keskuslaboratorio - Centrallaboratorium Ab Finland 32.24 32.24 Perkaus Oy Finland 33.33 33.33 SELF Logistika SIA Latvia 50.00 50.00 Steveco Oy Finland 34.39 34.39 Stora Enso Vind 1 AB Sweden 50.00 0.00 Suomen Keräyspaperi Tuottajayhteisö Oy Finland 40.09 40.09 SweTree Technologies AB Sweden 23.83 23.83 Tornator Oyj Finland 41.00 41.00 Trätåg AB Sweden 50.00 50.00 TreeToTextile AB Sweden 28.94 28.94 T&B Containers Holdings Ltd. UK 30.00 0.00 ZMP GMBH Austria 30.00 30.00 Österbergs Förpackningsmaskiner AB Sweden 50.00 50.00 Group ownership, % Group ownership, % Other companies Country 2023 2022 AMEXCI AB Sweden 9.10 9.10 Arevo AB Sweden 12.73 7.89 CarbonScape Ltd New Zealand 15.00 0.00 Clic Innovation Oy Finland 9.87 9.87 Combient AB Sweden 5.40 5.40 East Office of Finnish Industries Oy Finland 4.00 4.00 Packages Limited Pakistan 6.40 6.40 Pohjolan Voima Oy Finland 15.71 15.71 PulPac AB Sweden 10.30 10.30 Radioskog AB Sweden 10.00 10.00 RK Returkartong AB Sweden 8.40 8.40 SSG Standard Solutions Group AB Sweden 14.29 14.29 Suomen Puukauppa Oy Finland 10.74 10.74 Sölvesborgs Stuveri & Hamn AB Sweden 0.00 7.36 T&B Containers Ltd. UK 30.00 0.00 Union Developement Récup. Pap. France 10.70 10.70 84 Group ownership, % Group ownership, % Joint operations Country 2023 2022 Celulosa y Energia Punta Pereira S.A. Uruguay 50.00 50.00 El Esparragal Asociación Agraria de Responsabilidad Limitada Uruguay 50.00 50.00 Eufores S.A. Uruguay 50.00 50.00 Forestal Cono Sur S.A. Uruguay 50.00 50.00 Ongar S.A. Uruguay 50.00 50.00 Stora Enso Uruguay S/A Uruguay 50.00 50.00 Terminal Logística e Industrial M`Bopocuá S.A. Uruguay 50.00 50.00 Veracel Celulose SA Brazil 50.00 50.00 Zona Franca Punta Pereira S.A. Uruguay 50.00 50.00 6.3 Related party transactions Balances and transactions between Stora Enso and its subsidiaries and joint operations have been eliminated on consolidation and are not disclosed in this note. For the other entities which are classified as the Group's related parties and disclosed in this note, their subsidiary companies are also considered as related parties. The Group has classified Solidium Oy as a related party. Solidium Oy is entirely owned by the State of Finland, and it owned 10.7% of Stora Enso shares and 27.3% of all votes on 31 December 2023. The Group has applied an exemption, outlined in the paragraph 25 of IAS 24, not to disclose transactions and outstanding balances with government-related entities. The Group has classified FAM AB and Wallenberg Investments AB as related parties. FAM AB owned 10.2% of Stora Enso shares and 27.3% of all votes on 31 December 2023. FAM AB is wholly owned by Wallenberg Investments AB. The key management personnel of the Group are the members of the Group Leadership Team and the Board of Directors. The compensation of key management personnel is presented in note 3.2 Board and executive remuneration. In the ordinary course of business, the Group engages in transactions on commercial terms with associated companies, joint arrangements and other related parties that are not any more favourable than those that would be available to other third parties – with the exception of Veracel. Stora Enso intends to continue with transactions on a similar basis with its associated companies and joint arrangements. Further details of the transactions with associated companies are shown in note 4.3 Associates. Group companies, including subsidiary companies and joint operations, are listed in note 6.2 Group companies. Forest assets and wood procurement The Group has a 41.0% interest in Tornator with the remaining 59.0% being held mainly by Finnish institutional investors. Stora Enso has long-term purchase contracts of wood at market prices with the Tornator Group, and in 2023 purchases of 2 (3) million cubic metres came to EUR 150 (126) million. The Group procures wood at market prices from Kopparfors Fastigheter AB, a fully owned subsidiary of Kopparfors Skogar AB, which is wholly owned by FAM AB. In 2023 the purchases from the related party amounted to EUR 21 (23) million and the sales of services by Stora Enso to the said related party amounted to EUR 1 (0) million. At the end of 2023 the Group had EUR 6 (6) million of open payables to the related party. Stevedoring The Group owns 34.4% of shares in Steveco Oy, a Finnish company engaged in loading and unloading vessels. The other shareholders in Steveco are UPM-Kymmene, Finnlines and Myllykoski. The stevedoring services are provided by Steveco at market prices and in 2023 amounted to EUR 24 (27) million. 85 7 Other 7.1 Commitments and contingencies Accounting principles Guarantees The guarantees entered into with financial institutions and other credit guarantors generally oblige the group to make payment in the event of default by the borrower. The guarantees have an off-balance sheet credit risk representing the accounting loss that would be recognised at the reporting date if the counterparties fail to perform completely as contracted. The credit risk amounts are equal to the contract sums, assuming the amounts are not paid in full and are irrecoverable from other parties. Commitments EUR million 2023 2022 On own behalf Guarantees 18 14 Other commitments 6 0 On behalf of associated companies Guarantees 5 5 On behalf of others Guarantees 16 5 Other commitments 0 36 Total 44 60 Guarantees 38 24 Other commitments 6 36 Total 44 60 In 2023, the Group’s commitments amounted to EUR 44 (60) million. In addition, the parent company Stora Enso Oyj has guaranteed the liabilities of many of its subsidiaries and joint operations up to EUR 734 ( 826) million as of 31 December 2023. Capital commitments EUR million 2023 2022 Total 683 593 Capital expenditure commitments are not recognised in the balance sheet and these include the Group’s share of direct capital expenditure contracts in joint operations. The largest commitments in relation to capital expenditure relate to the mill conversion at Oulu site in Finland. Contingent liabilities Stora Enso has undertaken significant restructuring actions in recent years which have included the divestment of companies, sale of assets and mill closures. These transactions include a risk of possible environmental or other obligations the existence of which would be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A provision has been recognised for obligations for which the related amount can be estimated reliably and for which the related future cost is considered to be at least probable. Stora Enso has been granted various investment subsidies and has given certain investment commitments in several countries e.g., Finland, China and Sweden. If commitments to planning conditions are not met, local officials may pursue administrative measures to reclaim some of the formerly granted investment subsidies or to impose penalties on Stora Enso, the outcome of such a process could result in adverse financial impact on Stora Enso. The Group announced its intention in December 2022 to divest its consumer board production and forest operations sites in Beihai, China. As previously disclosed, Stora Enso has been granted investment subsidies and has given certain investment commitments in China. There is a risk that the majority owned local Chinese company may be subject to a claim based on alleged costs resulting from certain uncompleted investment commitments. Given the specific mitigating circumstances surrounding the investment case as a whole, Stora Enso does not consider it to be probable that this situation would result in an outflow of economic benefits that would be material to the Group. The Company continues to monitor the situation as the divestment process proceeds. Stora Enso is party to legal proceedings that arise in the ordinary course of business and which primarily involve claims arising out of commercial law. The management does not consider that liabilities related to such proceedings before insurance recoveries, if any, are likely to be material to the Group’s financial condition or results of operations. Veracel On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State of Bahia for the operations of Stora Enso’s joint operations company Veracel were not valid. The judge also ordered Veracel to take certain actions, including reforestation with native trees on part of Veracel’s plantations and a possible fine of, at the time of the decision, BRL 20 (EUR 4) million. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the relevant authorities. In November 2008, a Federal Court suspended the effects of the decision. No provisions have been recorded in Veracel’s or Stora Enso’s accounts for the reforestation or the possible fine. 7.2 Events after the reporting period The were no significant adjusting or non-adjusting events after the reporting period end. 86 Parent company Stora Enso Oyj financial statements Parent company income statement Year ended 31 December EUR million Note 2023 2022 Sales 2 2,809 3,325 Changes in inventories of finished goods and work in progress + / - -43 86 Production for own use 3 2 Other operating income 3 658 703 Materials and services 4 -1,985 -2,288 Personnel expenses 5 -341 -320 Depreciation and impairment 6 -274 -133 Other operating expenses 7 -1,283 -889 3,265 2,839 Operating profit -455 485 Financial income and expenses 9 278 290 Profit before Appropriations and Taxes -177 775 Appropriations 10 222 -331 Income tax expense 11 0 -28 Profit for the period 45 416 Parent company statement of financial position As at 31 December EUR million Note 2023 2022 Assets Non-current assets Intangible assets 13 53 49 Tangible assets 13 917 1,032 Investments 14 8,596 8,187 Non-current assets total 9,567 9,269 Current assets Inventories 15 473 574 Short-term receivables 16 2,257 1,278 Financial securities 17 1,550 1,130 Cash in hand and at bank 661 1,117 Total current assets 4,941 4,099 Total assets 14,508 13,368 Equity and liabilities Equity 18 Share capital 1,342 1,342 Share premium 3,639 3,639 Fair value reserve 14 25 Invested non-restricted equity fund 633 633 Retained earnings 864 922 Profit for the period 45 416 Total equity 6,537 6,977 Accumulated appropriations 19 201 290 Obligatory provisions 20 36 25 Liabilities Non-current liabilities 22 4,123 2,265 Current liabilities 23 3,611 3,811 Total liabilities 7,734 6,076 Total equity and liabilities 14,508 13,368 87 Parent company cash flow statement Year ended 31 December EUR million 2023 2022 Cash provided by operating activities Profit for the period 45 416 Adjustments and reversal of non-cash items: Direct taxes 0 28 Appropriations -222 331 Depreciation according to plan and impairment 274 133 Unrealised foreign exchange gains and losses 38 18 Other non-cash items 15 13 Financial income and expenses -278 -290 Change in working capital: Increase(-)/decrease(+) in current non-interest-bearing receivables 48 -198 Increase(-)/decrease(+) in inventories 101 -187 Increase(+)/decrease(-) in current non-interest-bearing liabilities -154 199 Cash flow from operating activities before financial items and taxes -133 463 Interest received from operating activities 181 58 Interest paid from operating activities -173 -79 Dividends received from operating activities 371 626 Other financial items, net 36 -57 Direct taxes paid -23 -2 Cash provided by operating activities 259 1,009 Net cash provided by investing activities Investments in tangible and intangible assets -166 -186 Capital gains from sale of tangible and intangible assets 0 0 Investments in other financial assets -16 0 Investments in subsidiary shares and other capital contributions 0 -374 Proceeds from disposal of shares in associated companies and repayment of capital 0 10 Proceeds from disposal of other investments 0 0 Payments of non-current loan receivables -2,184 -626 Proceeds from non-current loan receivables 780 944 Net cash provided by investing activities -1,586 -233 Year ended 31 December EUR million 2023 2022 Cash flow from financing activities Proceeds from (issue of) long-term liabilities 3,468 350 Proceeds from (payment of) long-term liabilities -1,623 -560 Proceeds from (issue of) short-term liabilities 164 1,587 Proceeds from (payment of) short-term liabilities -249 -546 Dividends paid -472 -434 Group contributions received 0 -275 Cash flow from financing activities 1,287 121 Net change in cash and cash equivalents -39 897 Translation differences 3 -1 Cash and cash equivalents at start of year 2,247 1,350 Cash and cash equivalents at year end 2,211 2,247 Cash and cash equivalents at year end includes: Financial securities 1,550 1,130 Cash in hand and at bank 661 1,117 Cash and cash equivalents total 2,211 2,247 88 Notes to the parent company financial statements Note 1 Accounting principles The financial statements of Stora Enso Oyj have been prepared in accordance with the Finnish Accounting Act and other current rules and regulations concerning financial statements in Finland. The financial statements are presented in millions of euros and rounded and therefore the sum of individual figures might deviate from the presented total figure. Derivative contracts Stora Enso is exposed to several financial market risks that the Group is responsible for managing under policies approved by the Board of Directors. The objective is to have cost- effective funding in Group companies and to manage financial risks using financial instruments in order to decrease earnings volatility. The main exposures for the Group are interest rate risk, currency risk, funding risk and commodity price risk, especially for fiber and energy. The parent company manages these risks centrally in the Group. The Group’s risk management principles are presented in more detail in note 5.1 Financial Risk Management to the consolidated financial statements. Derivative contracts are measured at fair value on the balance sheet. Derivatives with external counterparties that are subject to hedge accounting are recognised as financial assets and liabilities at fair value through the income statement in the same manner as the parent company’s derivatives with other Group companies as counterparties. The parent company’s derivative contracts that are used to hedge the parent company’s own cash flow are measured at fair value, and the change in fair value (effective part) is recognised, in line with hedge accounting principles, in the fair value reserve in equity on the balance sheet, while the ineffective part is recognised in the parent company’s income statement. The change in fair value of derivatives not included in hedge accounting is entered immediately in the income statement. Interest income and expenses related to derivatives that are used to manage the interest rate risk are allocated over the contract period and are used to adjust interest expenses related to hedged loans. Option premiums are recognised as advance payments until the options mature. With regard to derivatives, more information about the measurement principles, fair values and changes in fair value is provided in note 25 Financial instruments. Foreign currency transactions Transactions in foreign currencies are recorded at the rate of exchange prevailing at the transaction date, but at the end of the month foreign-currency-denominated receivables and liabilities are translated using the month-end exchange rate. Equity incentive schemes The employees covered by the scope of Stora Enso Oyj’s share-based incentive schemes are awarded with shares in the company. The awarded shares and the costs of the schemes are recognised as an expense in the income statement when the shares are delivered. The settlement covers taxes and similar changes incurred. The principles of the Group’s share opportunity programmes are presented in more detail in note 3.4 Employee variable compensation and equity incentive schemes to the consolidated financial statements. Pensions Statutory pension security is arranged through employment pension insurance companies outside the Group. Some employees have additional pension security through life insurance companies outside the Group. Pension contributions are allocated in accordance with performance-based salaries and wages for the financial period. Non-current assets The balance sheet value of intangible and tangible assets is their direct acquisition cost less depreciation according to plan and any impairment. Depreciation according to plan is recognised for intangible and tangible assets, based on their expected useful lives. Depreciation is based on the following useful lives: Buildings and structures 10–50 years Production machinery and equipment 10–20 years Light machinery and equipment 3–5 years Intellectual property rights 3–20 years No depreciation is recognised for land and water areas. Interest in Group companies Interest in the Group companies is measured at cost less any impairment losses. Interest in the Group companies is assessed for impairment annually. The fair value of the subsidiary shares has been assessed mainly based on income approach, in which the fair value of investment is calculated based on the discounted cash flow model (DCF). Impairment need is assessed by comparing the fair value of the subsidiary shares to the book value in the parent company’s balance sheet and possible write down is booked through profit or loss, if considered permanent in nature. Loan receivables Loan receivables are debt instruments with fixed or determinable payments that are not quoted on an active market. They are recorded initially at fair value and subsequently measured at an amortised cost. Investments in subsidiaries and other companies are measured at cost, or fair value in case the fair value is less than cost. Loan receivables are presented in the balance sheet item Investments. The loan receivables are mainly from Group companies. 89 Inventories Inventories are measured at acquisition cost or at net realisable value if lower. Acquisition cost is determined using the FIFO method or the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, depreciation and other direct costs, as well as the related production overhead. Net realisable value is the estimated selling price less the costs of completion and sale. Leasing Leasing payments are recognised in other operating expenses. The remaining leasing payments under leasing agreements are presented in note 24 Commitments and Contingencies. Expenditure on research and development Expenditure on research and development is recognised as an expense for the financial period. Income taxes The tax expense on the income statement includes income taxes based on the taxable profit for the financial period and tax adjustments for previous periods. The parent company does not recognise deferred tax assets and liabilities, excluding derivatives, in its financial statements. Deferred tax assets and liabilities that can be recognised on the balance sheet are presented in note 21 Deferred tax liabilities and receivables. Obligatory provisions Future costs and losses that no longer generate corresponding income, to which the company is committed or by which the company is obligated, are recognised in the income statement according to their nature and in obligatory provisions on the balance sheet. Emission rights During 2023, 0.4 million tonnes of free emission allowances in accordance with the EU Emissions Trading Directive were allocated to the company. Emission allowances are recognised through a net cash cost basis, meaning that the difference between the actual emissions and the emission allowances received is recognised through profit or loss if the actual emissions are larger than the emission allowances received. During the financial period, the emissions emitted were estimated at 0.3 million tonnes. The emission rights purchased during the financial period are recognised in other operating expenses, and the emission rights sold during the financial period are recognised in other operating income. At the end of the financial period, the market value of the emission rights was EUR 77.25 per tonne. Comparability of the information for the financial period Net sales of Stora Enso Oyj include the group's internal production and sales service charges. The parent company and certain group companies have agreed on allocation of profit based on the operating model of the group. The allocation of profit is presented as other operating income or expenses. The operating model of the Group came into effect in 2022. The derivative accounts intended to hedge trade receivables and the accounts for the exchange rate differences of sales related to these hedges were transferred from net sales and other operating income to financial income and expenses during the 2023 financial period. Note 2 Net sales by division and market area EUR million 2023 2022 By division Packaging Materials 1,564 1,882 Biomaterials 351 296 Forest 596 700 Wood Products 158 228 Other 140 219 Total 2,809 3,325 Distribution by region Finland 1,256 1,361 Other Europe 888 1,076 North and South America 211 298 Asia and Oceania 279 381 Africa 99 118 Others 76 91 Total 2,809 3,325 Note 3 Other operating income EUR million 2023 2022 Rent and equivalents 3 3 Gains on sale of fixed assets 0 0 Insurance compensation 0 0 Production and maintenance services 0 1 Subsidies, grants and equivalents 11 2 Administration services 64 60 Proceeds from sales of emission rights 75 52 Other operating income1 505 586 Total 658 703 1 Other operating income in 2022 and 2023 consists mainly of items relating to the division based operating model in the Group. Note 4 Materials and services EUR million 2023 2022 Materials and supplies Purchases during the period 1,402 1,822 Change in inventories +/- 59 -105 External services 524 571 Total Materials and Services 1,985 2,288 90 Note 5 Personnel expenses and average number of employees EUR million 2023 2022 Salaries and fees 278 263 Statutory employer costs Pensions 52 47 Other personnel costs 10 9 Total 341 320 Remuneration for the CEO and the members of the Board of Directors Remuneration for the CEO and the members of the Board of Directors is presented in note 3.2 Board and executive remuneration to the consolidated financial statements. Pension liabilities for the CEO Pension liabilities for the CEO are presented in note 3.2 Board and executive remuneration to the consolidated financial statements. Receivables from management There were no loan receivables from the company’s management. Average number of employees 2023 2022 Number of employees during the financial period 4,048 4,066 Note 6 Depreciation and impairment EUR million 2023 2022 Depreciation according to plan 126 133 Impairment of fixed assets 148 1 Total 274 133 Depreciation and amortisation on each item in the statement of financial position is included under intangible and tangible assets. Note 7 Other operating expenses EUR million 2023 2022 Product freight 204 267 Sales commissions 60 55 Rental costs 22 20 Administration and office services 330 319 Insurance premiums 18 12 Other personnel expenses 18 17 Public and other relations 4 4 Emission rights expenses 60 40 Other operating expenses1 563 154 Merger loss 4 0 Total 1,283 889 1 Other operating expenses in 2022 and 2023 consist mainly of items relating to the division based operating model in the Group. Note 8 Auditors’ fees EUR million 2023 2022 Audit fees 1 1 Other audit-related fees 0 0 Tax fees 0 0 Other fees 0 0 Total 2 2 Note 9 Financial income and expenses EUR million 2023 2022 Dividend income From Group companies 346 601 From associated companies 25 25 From others 1 0 Total 371 626 Interest income from non-current investments From Group companies 96 52 From associated companies 1 0 From others 1 2 Total 98 55 Other interest and financial income From Group companies 48 20 From associated companies 0 9 From others 54 14 Total 102 44 Total financial income 571 725 Interest and other financial expenses To Group companies -69 -38 Other financial expenses -149 -93 Total -217 -131 Impairment on investments Impairment on investments in non-current assets -75 -305 Total financial expenses -293 -435 Total financial income and expenses 278 290 The item “Financial Income and Expenses” includes exchange rate gains/losses (net) 15 -17 91 Note 10 Appropriations EUR million 2023 2022 Difference between depreciation according to plan and depreciation recognised in taxation 89 -56 Group contributions received 133 0 Group contributions paid 0 -275 Total appropriations 222 -331 Note 11 Income tax expense EUR million 2023 2022 Income taxes from primary operations for the period 0 -28 Total income tax 0 -28 Note 12 Environmental expenses EUR million 2023 2022 Materials and services 40 43 Personnel expenses 3 3 Depreciation and impairment 29 12 Total 72 58 Air quality protection 19 9 Wastewater treatment 34 25 Waste management 12 15 Soil and groundwater protection 1 1 Other environmental protection measures 5 7 Total 72 58 Note 13 Intangible and tangible assets Intangible assets EUR million Intellectual property rights Other non- current expenditure Advance payments and acquisitions in progress Total Acquisition cost 1 Jan 171 23 14 208 Increases 3 2 17 23 Decreases 0 0 0 0 Reclassification 7 2 -7 1 Acquisition cost 31 Dec 180 26 25 231 Accumulated depreciation and impairment 1 Jan -138 -21 0 -158 Accumulated depreciation on decreases and reclassifications 0 0 0 0 Depreciation for the period -14 -1 0 -15 Impairments -2 -3 0 -6 Accumulated depreciation 31 Dec -153 -25 0 -178 Book value on 31 December 2023 27 2 25 53 Book value on 31 December 2022 33 2 14 49 Tangible assets EUR million Land and water areas Buildings and structures Plant and equipment Other tangible assets Advance payments and acquisitions in progress Total Acquisition cost 1 Jan 18 605 2,853 181 107 3,764 Increases 0 13 78 1 49 141 Decreases 0 -3 -8 0 0 -10 Reclassification 0 10 83 1 -96 -1 Acquisition cost 31 Dec 18 626 3,006 184 59 3,893 Accumulated depreciation and impairment 1 Jan 0 -433 -2,140 -160 0 -2,734 Accumulated depreciation on decreases and reclassifications 0 3 8 0 0 10 Depreciation for the period 0 -14 -95 -2 0 -112 Impairment for the period 0 -22 -119 -2 0 -142 Accumulated depreciation 31 Dec 0 -466 -2,347 -165 0 -2,977 Increase in value 1 Jan 2 0 0 0 0 2 Increase in value 31 Dec 2 0 0 0 0 2 Book value on 31 December 2023 20 160 659 19 59 917 Book value on 31 December 2022 20 173 712 21 107 1,032 Production plant and equipment Book value on 31 December 2023 626 Book value on 31 December 2022 693 Advance payments and acquisitions in progress EUR million Intangible assets Buildings and structures Plant and equipment Total Acquisition cost 1 Jan 14 5 101 121 Increases 17 1 47 66 Reclassification -7 -5 -91 -104 Acquisition cost 31 Dec 2023 25 1 58 84 92 Capitalised environmental expenditure Tangible assets 31 Dec 2023 EUR million Land and water areas Buildings and structures Plant and equipment Other tangible assets Advance payments and acquisitions in progress Total Acquisition cost 1 Jan 4 21 53 4 19 101 Increases 0 5 17 0 -1 21 Depreciations for the period 0 -4 -24 -1 0 -29 Book value on 31 December 2022 4 22 46 3 18 93 Air quality protection 1 6 33 0 11 50 Wastewater treatment 0 4 10 0 4 18 Waste management 2 1 1 2 1 7 Soil and groundwater protection 1 12 2 1 2 17 Noise and vibration prevention 0 0 1 1 0 1 4 22 46 3 18 93 31 Dec 2022 EUR million Land and water areas Buildings and structures Plant and equipment Other tangible assets Advance payments and acquisitions in progress Total Acquisition cost 1 Jan 4 24 51 4 11 95 Increases 1 0 9 1 8 18 Depreciations for the period 0 -2 -8 -1 0 -12 Book value on 31 December 2021 4 22 52 5 19 101 Air quality protection 1 7 35 0 12 55 Wastewater treatment 0 2 13 0 4 20 Waste management 2 0 1 3 0 7 Soil and groundwater protection 1 12 2 0 2 18 Noise and vibration prevention 0 0 1 1 0 1 4 22 52 5 19 101 In 2023 and 2022, no environmentally based fines, charges or compensation were paid. Subsidies were received for environmental protection of EUR 0.9 million (EUR 1.2 million in 2022) Note 14 Non-current investments in shares and loan receivables EUR million Shares in Group companies Loan receivables from Group companies Shares in associated companies Loan receivables from associated companies Other shares Other receivables Total investments Acquisition cost 1 Jan 6,845 1,428 37 2 193 102 8,606 Increases 0 488 0 23 16 1 529 Decreases -15 0 0 0 -34 -49 Acquisition cost 31 Dec 6,830 1,916 37 25 209 68 9,086 Impairments 1 Jan -412 0 0 0 -1 -5 -419 Increases -71 0 0 0 0 0 -71 Impairments 31 Dec -483 0 0 0 -1 -5 -490 Book value on 31 December 2023 6,347 1,916 37 25 208 63 8,596 Book value on 31 December 2022 6,432 1,428 37 2 191 97 8,187 Note 15 Inventories 2023 2022 Materials and supplies 229 288 Work in progress 9 11 Finished goods 206 247 Other inventories 0 0 Prepayments 28 27 Total 473 574 93 Note 16 Short-term receivables EUR million 2023 2022 Short-term loan receivables Receivables from Group companies Loan receivables 1,455 536 Interest receivables 38 50 Total 1,493 585 Receivables from others Loan receivables 11 0 Commodity derivative receivables 0 18 Other receivables 36 29 Interest receivables 12 23 Total 59 69 Total current interest-bearing receivables 1,553 654 Current non-interest-bearing receivables Receivables from Group companies Trade receivables 240 150 Other receivables 274 183 Commodity derivative receivables 0 0 Accrued income 0 0 Total 515 333 Receivables from equity accounted investments Trade receivables 1 0 Total 1 0 Receivables from others Trade receivables 137 219 Other receivables 32 41 Accrued income 21 30 Total 189 290 Stora Enso may enter into factoring agreements to sell trade receivables in order to accelerate cash conversion. Nominally, such agreements led to the nominal derecognition of EUR 42,8 million (EUR 30 million in 2022) by the end of the financial period. The continuing involvement of Stora Enso in the sold receivables was estimated as being insignificant due to the non-recourse nature of the factoring arrangements involved. EUR million 2023 2022 Total current non-interest-bearing receivables 705 624 Total current receivables 2,257 1,278 Significant accruals Tax-equivalent receivables 0 3 Advances paid 8 8 Other accruals 13 19 Total 21 30 Note 17 Financial securities EUR million 2023 2022 From Group companies 16 620 From others 1,534 510 Total 1,550 1,130 Note 18 Shareholders' equity EUR million 2023 2022 Restricted shareholders' equity Share capital 1 Jan 1,342 1,342 Share capital 31 Dec 1,342 1,342 Share premium fund 1 Jan 3,639 3,639 Share premium fund 31 Dec 3,639 3,639 Fair value reserve 1 Jan 25 -6 Increase (-) / Decrease (+) -11 32 Fair value reserve 31 Dec 14 25 Total restricted equity 4,995 5,006 Change in share capital and number of shares are presented in Note 5.5 to the consolidated financial statements. Non-restricted shareholders' equity Invested unrestricted equity reserve 1 Jan 633 633 Invested unrestricted equity reserve 31 Dec 633 633 Retained earnings 1 Jan 1,338 1,356 Dividend distribution -473 -434 Retained earnings 31 Dec 864 922 Profit for the period 45 416 Total non-restricted equity 1,542 1,971 Total shareholders' equity 6,537 6,977 Calculation of distributable equity 31 Dec Invested unrestricted equity reserve 31 Dec 633 633 Retained earnings 31 Dec 864 922 Profit for the period 45 416 Total 1,542 1,971 94 Note 19 Accumulated appropriations EUR million 2023 2022 Depreciation difference Intellectual property rights -4 -1 Goodwill 0 0 Other non-current expenditure -2 1 Buildings and structures 13 34 Plant and equipment 198 257 Other tangible assets -3 -1 Total 201 290 Note 20 Obligatory provisions EUR million 2023 2022 Restructuring provisions 20 3 Environmental provisions 14 20 Pension provisions 1 1 Other provisions 1 0 Total 36 24 Note 21 Deferred tax liabilities and receivables EUR million 2023 2022 Deferred tax liability due to depreciation difference -23 -41 Deferred tax receivables and liabilities due to derivatives -4 -6 Deferred tax receivable due to loss 48 0 Deferred tax receivable due to provisions 7 5 Deferred tax receivables and liabilities due to other temporary differences -1 -1 Total deferred tax receivable 27 -43 Deferred tax liabilities and receivables excluding derivatives have not been recognised on the balance sheet. Note 22 Non-current liabilities EUR million 2023 2022 Non-current liabilities Bonds 3,472 2,165 Loans from credit institutions 651 100 Other non-current liabilities 0 0 Other non-current liabilities to group companies 0 0 Total 4,123 2,265 Liabilities with maturities later than five years Bonds 1,303 1,075 Other non-current liabilities 4 5 Total 1,308 1,080 Specifications of Bond loans are presented in Note 5.3 Interest-bearing liabilities in consolidated financial statements. Note 23 Current liabilities EUR million 2023 2022 Current interest-bearing liabilities Liabilities to Group companies Other loans 2,396 1,966 Commodity derivative liabilities 0 18 Interest due 0 0 Total 2,396 1,984 Liabilities to others Other loans 224 141 Interest due 50 32 Bonds 136 300 Loans from credit institutions 100 250 Total 511 722 Total current interest-bearing liabilities 2,907 2,706 Current non-interest-bearing liabilities Liabilities to Group companies Trade payables 72 90 Other loans 0 275 Commodity derivative liabilities 1 6 Accrued liabilities and deferred income 3 0 Total 75 371 Liabilities to associated companies Trade payables 126 98 Total 126 98 Liabilities to others Advances received 6 5 Trade payables 393 468 Other loans 22 27 Accrued liabilities and deferred income 82 134 Total 503 635 Total current non-interest-bearing liabilities 704 1,105 Total current liabilities 3,611 3,811 Substantial accrued liabilities and deferred income Payroll payments accrued 56 66 Income tax accrued 0 28 Annual discounts 12 21 Other accrued liabilities and deferred income 14 18 Total 82 134 95 Note 24 Commitments and contingencies EUR million 2023 2022 For Group debt Guarantees 734 794 On behalf of Associated companies Guarantees 5 37 On behalf of others Guarantees 10 0 Loan commitments 0 36 Other commitments, own Leasing commitments, in next 12 months 9 8 Leasing commitments, after next 12 months 13 14 Mortgages 0 0 Lease commitments 5 5 Other commitments 15 12 Total 792 906 Guarantees 748 831 Leasing commitments 23 22 Lease commitments 5 5 Other commitments 15 47 Total 792 906 Contingent liabilities Stora Enso Oyj has implemented significant restructuring measures in recent years. These measures have included divestments of business operations and production units, as well as mill closures. These transactions include a risk of possible environmental or other obligations, the existence of which would be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A provision has been recognised for obligations for which the related amount can be estimated reliably and the occurrence of which is considered likely. Stora Enso Oyj has been granted various investment subsidies and has given certain investment commitments in Finland. If committed planning conditions are not met, local officials may pursue administrative measures to reclaim some of the formerly granted investment subsidies or to impose penalties on Stora Enso Oyj and the outcome of such a process could result in a negative financial impact on Stora Enso Oyj. Stora Enso Oyj is party to legal proceedings that arise in the ordinary course of business and primarily involve claims arising out of commercial law. The company management does not believe that such processes as a whole, before any insurance compensation, would have significant impacts on the company’s financial position or profit from operations. Some of the most significant legal proceedings are described in note 7.1 to the consolidated financial statements. Note 25 Financial instruments Valuation of derivatives The fair value is defined as the amount at which a derivative instrument could be exchanged in an orderly transaction between market participants at the measurement date. The fair values of such instruments are determined on the following basis: • Foreign exchange forward contract fair values are calculated using forward exchange rates on the reporting date. • Foreign exchange option contract fair values are calculated using reporting date market rates together with common option pricing models. • Commodity contract fair values are computed with reference to quoted market prices on futures exchanges or other reliable market sources. • Interest rate swaps fair values are calculated using a discounted cash flow method. Fair value hierarchy Stora Enso uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; • Level 2: other techniques, for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly; • Level 3: techniques which use inputs that have a significant effect on the recorded fair values that are not based on observable market data. The parent company's derivatives are classified as Level 2 in the fair value hierarchy. Nominal and fair values of derivative instruments As at 31 December 2023 EUR million Nominal values Positive fair values Negative fair values Fair values, Net Cash flow hedges entered on behalf of the parent company and its subsidiaries, for which hedge accounting is applied in target companies Foreign exchange forwards 2,284 34 -34 1 Foreign exchange options 667 7 -5 2 Commodity contracts 27 1 -1 0 Interest rate swaps 443 16 0 16 Non-hedge accounted derivatives Foreign exchange forwards 588 5 -5 0 Total 4,009 63 -44 19 of which against subsidiaries 1,586 6 -37 -31 of which against external parties 2,423 56 -7 49 96 As at 31 December 2022 EUR million Nominal values Positive fair values Negative fair values Fair values, Net Cash flow hedges entered on behalf of the parent company and its subsidiaries, for which hedge accounting is applied in target companies Currency forwards 1,523 29 -26 3 Currency options 3,222 28 -28 0 Commodity contracts 10 18 -18 0 Interest rate swaps 442 28 0 28 Non-hedge accounted derivatives Currency forwards 1,493 8 -8 0 Commodity contracts 11 9 0 9 Total 6,702 120 -79 41 of which against subsidiaries 2,571 29 -45 -15 of which against external parties 4,131 91 -34 57 Fair value reserve The net amount of the parent company's unrealised cash flow hedge gains in the fair value reserve was EUR 14.3 (25.3) million, which was related to currency and interest rate derivatives. Currency and interest rate derivatives also include a gain of EUR 0.2 (0.1) million related to the time value of options. These unrealised gains are recognised in the income statement upon the maturity of the hedging contracts. The longest hedging contract will mature in 2027. However, the majority of the contracts are expected to mature during 2024. The ineffective portions of hedges are recognised as adjustments to financial items, revenue or materials and services according to the hedged item. During 2023 and 2022, there were no material ineffectiveness related to hedges recognised in the income statement. Derivatives used in currency cash flow hedges are mainly forward contracts and options. Swaps are mainly used in commodity hedges and interest rate cash flow hedges. Hedge gains and losses in operating profit EUR million 2023 2022 Cash flow hedge accounted derivatives Currency hedges 2 -20 Total 2 -20 As adjustments to sales 2 -20 As adjustments to materials and services 0 0 Items realised from the fair value reserve that are recognised in the income statement 2 -20 Net losses from cash flow hedges 2 -20 Non-hedge accounted derivatives Currency derivatives 0 -5 Net gains on non-hedge accounted derivatives 0 -5 Net hedge gains/losses in operating profit 2 -25 Hedge gains and losses in financial items EUR million 2023 2022 Non-hedge accounted derivatives Currency derivatives -21 -1 Net gains/losses in financial items -21 -1 Sensitivity of currency derivatives to strengthening of EUR 31 December 2023 EUR million SEK USD GBP Currency change against EUR -5.0% -5.0% -5.0% Nominals of currency derivatives hedging next 12 months cash flow in EUR 0 -136 -11 Estimated effect on fair value reserve in EUR (net of taxes) 0 5 0 Sensitivity of commodity derivatives to price risk There were no outstanding commodity derivatives related to parent company's cash flows at the end of reporting period. . More detailed information about financial instruments are presented in Note 5.1 Financial risk management, Note 5.2 Fair values and Note 5.4 Derivatives to the consolidated financial statements. Note 26 Related party transactions EUR million 2023 2022 Related party transactions with associated companies and joint ventures: Purchase of materials and supplies during the year 23 63 Interest income on non-current loan receivables 1 0 Non-current loan receivables at year end 26 2 Trade payables at year end 126 92 The Group's principles for related party transactions are presented in Note 6.3 to the consolidated financial statements. 97 Note 27 Separated Electricity business statements Basis of preparation of the separated electricity business statements: income, costs, assets and liabilities immediately attributable to the electricity business are allocated directly and indirect costs and non- attributable items are allocated according to allocation or allocation keys. Electricity business income statement EUR million 2023 2022 Sales 126 170 Other operating income 1 2 Materials and services -113 -161 Personnel expenses 0 0 Depreciation and impairment -14 -7 Other operating expenses -1 -1 Operating profit -2 4 Financial income and expenses 0 0 Profit before Appropriations and Taxes -2 4 Appropriations 5 -17 Profit before Taxes 3 -13 Income tax expense and windfall tax -1 0 Profit / loss for the period 2 -13 Electricity business statement of financial position EUR million 2023 2022 Assets Non-current assets Tangible assets 47 53 Investments 190 190 Non-current assets total 237 243 Current assets Short-term receivables 24 21 Total current assets 24 21 Total assets 261 264 Equity and liabilities Equity Share capital 35 35 Share premium 95 95 Invested non-restricted equity fund 17 17 Retained earnings 39 52 Profit for the period 2 -13 Total equity 189 186 Accumulated appropriations 10 15 Liabilities Non-current liabilities 52 56 Current liabilities 10 7 Total liabilities 62 63 Total equity and liabilities 261 264 98 Signatures for the financial statements There have been no material changes in the Parent Company’s financial position since 31 December 2023. The liquidity of the Parent Company remains good and the proposed dividend does not risk the solvency of the Company. 31 January 2024 Kari Jordan Håkan Buskhe Chair Vice Chair Elisabeth Fleuriot Helena Hedblom Astrid Hermann Christiane Kuehne Antti Mäkinen Richard Nilsson Hans Sohlström President and CEO 99 Auditor’s Report (Translation of the Finnish Original) To the Annual General Meeting of Stora Enso Oyj Report on the Audit of the Financial Statements In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU • the financial statements give a true and fair view of the parent 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. Our opinion is consistent with the additional report to the Audit Committee. What we have audited We have audited the financial statements of Stora Enso Oyj (business identity code 1039050-8) for the year ended 31 December 2023. The financial statements comprise: • the consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income, statement of changes in equity, consolidated cash flow statement and notes to the consolidated financial statements, which include material accounting policy information and other explanatory information • the parent company statement of financial position, parent company income statement, parent company cash flow statement and notes to the parent company financial statements. 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 the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the parent company and of the group companies 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. To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and group companies are in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 2.2 to the Consolidated Financial Statements. Our Audit Approach Overview • We have applied an overall group materiality of EUR 60 million. • We performed audit procedures at 24 reporting components in 11 countries that are considered significant based on our overall risk assessment and materiality. • Valuation of forest assets • Provisions and contingent liabilities • Accounting for business combinations As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They 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. Based on our professional judgment, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole. 100 Overall group materiality EUR 60 million How we determined it Based on operating profit and total assets Rationale for the materiality benchmark applied We chose operating profit and total assets as the benchmarks because, in our view, they are relevant benchmarks against which the performance of the group is commonly measured by users of the financial statements. How we tailored our group audit scope We tailored the scope of our audit, taking into account the structure of the group, the accounting processes and controls, and the industry in which the group operates. The Group operates through a number of legal entities or other reporting components globally. We determined the nature, timing and extent of audit work that needed to be performed at reporting components by us, as the group engagement team, or component auditors operating under our instruction. Where the work was performed by component auditors, we issued audit instructions to those auditors including our risk analysis, materiality and global audit approach. We performed audit procedures at 24 reporting components in 11 countries that are considered significant based on our overall risk assessment and materiality. We have considered that the remaining reporting components do not present a reasonable risk of material misstatement for consolidated financial statements and thus our procedures related to these reporting components have been limited to analytical procedures performed at group level and to possible targeted audit procedures over individual significant balances. By performing the procedures above at reporting components, combined with additional procedures at the group level, we have obtained sufficient and appropriate evidence regarding the financial information of the group as a whole to provide a basis for our opinion on the consolidated financial statements. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Key audit matter in the audit of the group How our audit addressed the key audit matter Valuation of forest assets Refer to Note 1.2 and Note 4.2 in the consolidated financial statements for the related disclosures. Forest assets comprise of biological assets and forest land excluding leased forest land assets. As of December 31, 2023 the fair value of the Group’s forest assets owned through subsidiaries, joint operations and associated companies was EUR 8 522 million. The fair value of EUR 6 123 million was related to biological assets and EUR 2 399 million was related to forest land. Forest assets in Sweden and Finland are recognised at fair value and valued by using a market approach method on the basis of the forest market transactions in the areas where Stora Enso’s forests are located. Market prices between areas vary significantly and judgment is applied to define relevant areas for market transactions used in the valuation. Market transaction data is adjusted to consider characteristics and nature of the Group’s forest assets and to exclude certain non- forest assets and transactions considered as outliers compared to other transactions. Biological assets valuation is calculated based on a discounted cash flow (DCF) method in accordance with IAS 41 Agriculture. For forest land the revaluation method is applied as defined in IAS 16 Property, plant and equipment. Forest land is revalued using a DCF method based on estimated future net cash flow streams related to trees to-be-planted in the future as well as other income, such as hunting rights, wind power leases and soil material sales. Total value determined for biological assets and forest land agrees to the market transaction based fair value of forest assets as a discount rate implied by the market transactions is used in the DCF method to value these assets. The value of biological assets outside Sweden and Finland is measured based on fair value less cost to sell. The fair value is determined using a DCF method based on sustainable forest management plans taking into account the growth potential of one cycle. The one cycle varies depending on the geographic location and species. Determining the discounted cash flows require estimates of growth, harvest, sales price and costs. The other European forest lands are revalued by using a DCF method based on its estimated future net cash flows related to trees to-be-planted in the future as well as other non-forest related income. The forest land for the plantations is accounted at cost. Due to the level of judgment involved in the valuation of forest assets as well as the significance of forest assets to the Group's financial position, this is considered to be a key audit matter. We obtained an understanding of management’s forest assets valuation process, evaluated the design and tested the operating effectiveness of internal controls related to directly and indirectly owned forest assets. Our audit procedures over valuation of directly owned forest asset included: • Evaluation of the methodology adopted by management for the valuation; • Testing the mathematical accuracy of the model used for valuation; • Assessment of the discount rates applied in the valuation; • Assessment of the other key valuation assumptions; and • Validation of key inputs and data used in the valuation model including sales price assumptions, growth assumptions and cost assumptions. In addition, specific to the market transaction based valuation our audit procedures included: • Assessment of the definition of relevant areas for market transactions used in the valuation; • Assessment of the adjustments made to the market transaction data; and • Validation of key inputs and data used in the valuation model including market transaction data and volume of standing trees. We involved valuation specialists in the audit work over valuation of directly owned forest assets. Related to indirectly owned forest assets we have communicated with the auditors of the three largest associates and joint operations. As part of the communication, among other things, we have evaluated the audit procedures performed and conclusions reached related to valuation of biological assets. In addition, we assessed the appropriateness of disclosures related to forest assets. 101 Key audit matter in the audit of the group How our audit addressed the key audit matter Provisions and contingent liabilities Refer to Note 1.2, Note 4.9 and Note 7.1 in the consolidated financial statements for the related disclosures. As of 31 December 2023, the Group had environmental, restructuring and other provisions totaling EUR 168 million. In addition, the Group has disclosed significant open legal cases and other contingent liabilities in Note 7.1. The assessment of the existence of the present legal or constructive obligation, the analysis of the probability of the outflow of future economic benefits, and making a reliable estimate, require management’s judgment to ensure appropriate accounting and disclosures. Due to the level of judgment relating to recognition, valuation and presentation of provisions and contingent liabilities, this is considered to be a key audit matter. We obtained an understanding of management’s process to identify new obligations and changes in existing obligations. We analysed significant changes in material provisions from prior periods and obtained a detailed understanding of these changes and assumptions applied. Our audit procedures related to material provisions recognized included: • Assessment of the recognition criteria for the liability; • Evaluation of the methodology adopted by management for the measurement of the liability; • Testing of the mathematical accuracy of the measurement calculation; • Assessment of the discount rates applied in the measurement; and • Assessment of the other key measurement assumptions and inputs. We reviewed minutes of the meetings of the board of directors and board committees. We assessed the appropriateness of the presentation of the most significant contingent liabilities in the consolidated financial statements. Accounting for business combinations Refer to Note 6.1 in the consolidated financial statements for the related disclosures. The Group acquired control in De Jong Packaging Group in January, 2023. The acquisition was accounted for as a business combination. The cash purchase consideration was EUR 612 million, excluding a contingent earn-out component with a maximum amount of EUR 45 million which will be settled in cash in 2024 and is subject to De Jong Packaging Group achieving certain earnings thresholds. The contingent consideration is measured at its fair value and is estimated at EUR 0 million at the date of acquisition. The fair value of net assets acquired was estimated to be EUR 265 million. The business combination resulted in recognition of goodwill of EUR 349 million, customer related intangible assets of EUR 167 million and marketing related intangible assets of EUR 39 million. Due to the level of judgment included in accounting for business combinations and the valuation of the net assets acquired, as well as the significance of the business combination to the Group’s financial position this is considered to be a key audit matter. We obtained an understanding of management’s process related to accounting for business combinations and estimating the value of the net assets acquired. Our audit procedures over accounting for business combinations and valuation of net asset acquired included: • Testing the cash purchase consideration; • Evaluation of the methodology adopted by management for the valuation; • Testing the mathematical accuracy of the model used for the valuation; • Assessment of the key valuation assumptions; and • Validation of key inputs and data used in the valuation model. We involved valuation specialists in the audit work over valuation of the net assets acquired. In addition, we assessed the appropriateness of disclosures related to the business combination. We have no key audit matters to report with respect to our audit of the parent company financial statements. There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial statements or the parent company financial statements. 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 consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and 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 parent company’s and the group’s ability to continue as a 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 parent company or the group or to 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 about 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 102 • 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 parent company’s or the group’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 parent company or the group 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. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Requirements Appointment We were first appointed as auditors by the annual general meeting on 28 March 2018. 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. 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 identified above 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. With respect to the report of the Board of Directors, 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 • 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. Other Statements We support the proposal that the financial statements are adopted. The proposal by the Board of Directors regarding the distribution of profits is in compliance with the Limited Liability Companies Act. We support that the Board of Directors and the Managing Director of the parent company should be discharged from liability for the financial period audited by us. Helsinki 12 February 2024 PricewaterhouseCoopers Oy Authorised Public Accountants Samuli Perälä Authorised Public Accountant (KHT) 103