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|Note 13 Equity accounted investments|
Associated companies over which Stora Enso exercises significant influence are accounted for using the equity method, which involves recognising in the Consolidated Income Statement the group’s share of the equity accounted investment profit or loss for the year. 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.
The group’s share of results in equity accounted investments is reported in operating profit to reflect the operational nature of these investments, especially those in wood supply. There is no material goodwill in the Statements of Financial Position of equity accounted investments.
|Principal equity accounted investments|
|As at 31 December|
|Proportion of ownership interest/voting rights held %||EUR million|
|Company||Reportable segment||Domicile and principal place of operations||2016||2015||2016||2015|
|Bergvik Skog AB: forest||Other||Sweden||49.00/36.701||49.00/36.701||1 265||1 300|
|Tornator Oyj: forest||Other||Finland||41.00||41.00||246||186|
|Bulleh Shah Packaging (Private) Limited: packaging goods||Consumer Board||Pakistan||35.00||35.00||34||33|
|Arauco Florestal Arapoti S.A.: plantation||Paper||Brazil||20.00||20.00||26||19|
|1 571||1 538|
|Carrying Value at 31 December||1 594||1 570|
|1 The group's shareholding in Bergvik Skog AB is 49%, however, the voting rights are limited to 36.7%.|
|Group share of equity accounted investment income statements|
|Year Ended 31 December|
|Net operating expenses||-200||-229|
|IAS 41 valuation||136||575|
|Net financial items||-53||-34|
|Net Profit before Tax||180||657|
|Net Profit for the Year||156||519|
All of the above companies are accounted for using the equity method in these Consolidated financial statements.
In April 2016, Stora Enso divested its 33.33% shareholding in the Swedish recycled materials company IL Recycling AB for SEK 239 (EUR 26) million. Related to the transaction Stora Enso recorded a capital gain of EUR 16 million in Division Paper second quarter 2016 results.
The average number of personnel in the equity accounted investments was 2 797 in 2016, compared with 3 460 in 2015.
Summarised financial information in respect of the group’s material associates, Bergvik Skog AB and Tornator Oyj, is set out below. The group’s share of these associated companies is reported under segment Other and covers the majority of the group’s total share of results of equity accounted investments. The summarised financial information below represents amounts shown in the associate’s financial statements prepared in accordance with IFRS.
|Bergvik Skog AB|
|Non-current assets||5 074||5 149|
|Non-current liabilities||1 111||1 160|
|Tax liabilities||1 072||1 102|
|Net profit for the year||127||1 015|
|Other comprehensive income||-6||6|
|Total comprehensive income||121||1 021|
|Dividends received from the associate during the financial year||44||22|
|Net assets of the associate||2 572||2 641|
|Proportion of the Group's ownership interest in Bergvik Skog AB||49.00%||49.00%|
|Carrying amount of the Group's interest in Bergvik Skog AB||1 265||1 300|
In 2004, 56.7% of Stora Enso’s Swedish forest holding company Bergvik Skog was divested to institutional investors leaving the group with a minority shareholding of 43.26%. In May 2014 the group spent SEK 891 million (EUR 97 million) to increase its shareholding in Bergvik Skog to 49%. As part of the acquisition the group recorded goodwill of EUR 5 million.
Stora Enso’s shareholding in the company was valued at EUR 1 265 (EUR 1 300) million at the year-end 2016. In 2016, the group’s share of Bergvik Skog’s net profit was EUR 62 (EUR 498) million, including a forest valuation gain of EUR 52 (gain EUR 581) million. The fair value change of Bergvik Skog’s forest holdings was mainly due to the decrease of discount rate used in the discounted cash flow based valuation of the biological assets, an adjustment to the price curve, and a correction in the model from last year. In 2015, the fair value change of Bergvik Skog’s forest holdings was mainly due to the decrease of discount rate used in the discounted cash flow based valuation of the biological assets. Fair value change in 2015 increased income tax approximately EUR 128 million.
During the fourth quarter of 2015 Bergvik Skog had material land disposal transactions. The arrangements resulted in a gain in Bergvik Skog’s income statement of which Stora Enso’s share amounted approximately to EUR 33 million.
|Non-current assets||1 355||1 143|
|Net profit for the year||173||39|
|Other comprehensive income||5||4|
|Total comprehensive income||178||43|
|Dividends received from the associate during the financial year||12||9|
|Net assets of the associate||601||453|
|Proportion of the Group's ownership interest in Tornator Oyj||41.00%||41.00%|
|Carrying amount of the Group's interest in Tornator Oyj||246||186|
Stora Enso’s Finnish forest holdings were divested into an equity accounted investment, Tornator, in 2002. The group’s 41% residual interest was worth EUR 246 (EUR 186) million at the year-end 2016. In 2016, the group’s share of Tornator’s net profit was EUR 71 (EUR 16) million, including a forest valuation gain of EUR 83 (loss EUR 7) million.
During the fourth quarter of 2015 Tornator had a material land disposal transaction which resulted in a gain in Tornator’s income statement of which Stora Enso’s share amounted approximately to EUR 3 million.
|Aggregate information of equity accounted investments that are not individually material|
|As at 31 December|
|PPE1, goodwill and other intangible assets||74||92|
|Net Equity in the Group Statement of Financial Position||83||84|
|Capital and Reserves||83||84|
|Equity Accounting Value||83||84|
|Equity Accounting Value for Bergvik Skog AB||1 265||1 300|
|Equity Accounting Value for Tornator Oyj||246||186|
|Total Equity Accounting Value||1 594||1 570|
|1 PPE = Property, Plant and Equipment|
|Equity accounted investment company balances|
|As at 31 December|
|Receivables from Equity Accounted Investments|
|Non-current loan receivables||5||5|
|Current loan receivables||-||3|
|Liabilities due to Equity Accounted Investments|
|Equity accounted investment transactions|
|Year Ended 31 December|
|Sales to equity accounted investments||53||49|
|Purchases from equity accounted investments||202||182|
The group engages in transactions with equity accounted investments 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.
Total loans including interest receivable to equity accounted investments at the year-end 2016 amounted to EUR 5 (EUR 8) million.