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Financial risk management

Main objectives of financial risk management are:

Sufficient funding arrangements planned well in advance

  • Sufficient liquidity reserves, diverse sources of financing and balanced debt maturity profile to minimize refinancing risk
  • No more than 30 per cent of the total interest-bearing debt maturing during the next 12 months

Optimal capital structure to enable efficient operations while maintaining sufficient solvency

  • Group level capital structure with a main objective of sustaining a strong credit risk profile and securing the continuity of business operations

Optimal level of financial risk and minimized financing expenses

  • Majority of fuel and electricity price risk hedged with derivatives and index-linked customer agreements
  • Interest rate risk: 1) average interest fixing period at minimum of 3 years 2) hedge ratio of the total interest-bearing debt portfolio at above 50 per cent
  • All committed cash flows in foreign currency fully hedged

Sufficient liquidity maintained in all scenarios

  • Cash and committed credit lines equaling a minimum of 1.2x of the operative cash needs for the next 12 months

Mitigating counterparty risks related to customers, suppliers and financial counterparties

  • Credit assessment of suppliers and business customers
  • Guarantees to cover counterparty risks
  • Only well-known counterparties in financial transactions

Financial risk management guidelines

Policy level

Fixed rate debt of total debt

Min. 50 %

Average interest fixing period

Min. 3.0y

Maturities during the next 12 months out of total debt

Max. 30 %

Liquidity coverage, next 12 months (sources to uses)

Min. 1.2x


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