Operations in 2002 Quarterly Data and Key Figures Board Report Consolidated Financial Statements Parent Company Financial Statements Financial Notes Auditors’ Report The Share Corporate Governance

	Operations in 2002 Value Creation Market Sales and Deliveries Financial Result Non-recurring Items Financing and Capital Expenditure Risk Analysis Risk Management Business Risk Commodity and Energy Price Risk Currency Risk Funding and Financing Costs		Reports 2002  >  Financials 2002  >  Operations in 2002  >  Risk Management  >  Currency Risk Currency Risk As an international producer and seller of paper and forest products, Stora Enso is exposed to both transaction and translation risks; transaction risk is the danger that earnings could be affected by foreign exchange rate movements whilst translation risk is the Balance Sheet exposure to those movements. In respect of exposure to exchange rate fluctuations on the value of the net assets comprising shareholders' equity, Group policy is to minimise this risk by funding investments in the same currency as net assets wherever this is possible and economically viable. The Group has therefore hedged exposures in USD, CAD GBP and SEK under the IAS 39 hedge accounting rules for net investment in foreign entity; the table Translation Risk and Hedges shows the EUR equivalent amount of these hedges.
	Translation Risk and Hedges as at 31 December 2002 EUR million Euro Area USA Sweden Canada UK China Other Total   Capital employed 5 804 2 654 1 887 491 24 203 179 11 242 Interest-bearing liabilities -554 -2 191 -2 041 - -5 -186 -199 -5 176 Interest-bearing assets 361 532 1 023 36 30 11 128 2 121 Minority interests -31 - -3 - - - 4 -30 Translation Exposure on Equity 5 580 995 866 527 49 28 112 8 157   Liabilities hedges* 975 -975 - - - - - - Other hedges* - EUR/CAD 515 - - -515 - - - - - EUR/GBP 43 - - - -43 - - - - EUR/SEK 328 - -328 - - - - - Translation Exposure after Hedges 7 441 20 538 12 6 28 112 8 157 * Long-term debt or forward contracts classified as hedges of investment in foreign assets   The hedging policy of Stora Enso in 2002 was to hedge a minimum 25% and maximum 75% of the upcoming 12 months' net exposure in a specific currency, with a benchmark of 50%, though entities reporting in SEK could deviate from this. Due to changes in the geographical distribution of Group business, the transaction hedging policy has been changed from January 2003 so that up to 75% of exposure is hedged according to divisional risk policy, provided these meet hedge accounting criteria. In addition to divisional hedges, Group exposures may be hedged under the authority of senior management. Transaction Risk and Hedges as at 31 December 2002 EUR million EUR USD GBP SEK CAD Other Total       Sales during 2002 6 600 3 200 1 000 1 100 200 700 12 800 Costs during 2002 -5 500 -2 400 -200 -2 100 -300 -200 -10 700 Net Operating Cash Flow 1 100 800 800 -1 000 -100 500 2 100       IAS 39 hedge-accounted as at 31 Dec 2002 - EUR/USD 145 -145 - - - - - - EUR/GBP 268 - -268 - - - - - EUR/SEK - - - - - - - - EUR/Other -5 - - - - 5 - - USD/SEK - -140 - 140 - - - - GBP/SEK - - -183 183 - - - - SEK/Other - - - - - - - - USD/CAD - -35 - - 35 - - Net Operating Cash Flow after Hedges 1 508 480 349 -677 -65 505 2 100 Not hedge-accounted under IAS as at 31 Dec 2002 - EUR/USD 17 -17 - - - - - - EUR/GBP 16 - -16 - - - - - EUR/SEK - - - - - - - - EUR/Other 23 - - - - -23 - - USD/SEK - -78 - 78 - - - - GBP/SEK - - -71 71 - - - - SEK/Other - - - 3 - -3 - - USD/CAD - -1 - - 1 - - Transaction Exposure, Net 1 564 384 262 -525 -64 479 2 100