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Note 17 Receivables
Accounting principles
Trade receivables
Trade receivables are recognised initially at fair value and subsequently at their anticipated realisable value, an estimate being made for doubtful receivables based on an objective review of all outstanding amounts at the year end. Losses relating to doubtful receivables are recorded in the Consolidated Income Statement within other operating expenses. Trade receivables are included in current assets under current operative receivables.

Stora Enso is using factoring arrangements as one of the working capital management tools. Sold trade receivables are derecognised when the significant related risks and rewards of ownership have been transferred.
Loan receivables
Loan receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recorded initially at fair value and subsequently measured at amortised cost which is subject to regular and systematic review as to collectability. If any loan receivable is estimated to be unrecoverable, an allowance is made for the shortfall between the carrying amount and the present value of the expected cash flows. Interest income on loan receivables is included in financial income. Loan receivables with a maturity of less than 12 months are included in current assets under interest-bearing receivables and those with maturities greater than 12 months, in non-current loan receivables.
Current operative receivables
As at 31 December
EUR million 2016 2015
Trade receivables 922 1 040
Allowance for doubtful debts -51 -53
Prepaid expenses and accrued income 121 127
TRS Hedges 3 -
Other receivables 278 210
Total 1 273 1 324
As at 31 December 2016, EUR 116 (EUR 104) million of trade receivables were overdue, for which no allowance has been made. These relate to a number of different countries and unrelated customers that have no recent history of default. The age analysis of these trade receivables, net of allowance for doubtful debts, is as follows:
Age analysis of trade receivables, net of allowance for doubtful debts
As at 31 December
EUR million 2016 2015
Less than 30 days overdue 44 57
31 to 60 days overdue 10 10
61 to 90 days overdue 48 24
91 to 180 days overdue 3 -
Over 180 days overdue 11 13
Total: Overdue Accounts 116 104
Trade Receivables within their credit terms 755 883
Total 871 987
Credit losses amounted to EUR 11 (EUR 7) million, which resulted in a net decrease in the allowance for doubtful debts of EUR 2 (decrease EUR 7) million – see Note 24 Financial risk management for details of customer credit risk management. All allowances are made on an individual basis and are regularly reviewed for changes in the financial positions of customers. If the group has concerns as to the financial state of a customer, an advance payment or a letter of credit that must be irrevocable and drawn on a bank is required. At the year end, the letters of credit awaiting maturity totalled EUR 37 (EUR 36) million.

At 31 December 2016, allowances related to overdue trade receivables totalled EUR 51 (EUR 53) million. The age analysis of the receivables under the doubtful accounts is shown in the table below.
Age analysis of doubtful accounts
As at 31 December
EUR million 2016 2015
Less than 90 days 2 -
91 to 180 days 3 1
Over 180 days 46 52
Total 51 53
Stora Enso has entered into factoring agreements to sell trade receivables in order to accelerate cash conversion. These agreements resulted in full derecognition of receivables of a nominal value of EUR 368 (EUR 287) million as at the end of the year. The continuing involvement of Stora Enso in the sold receivables was estimated as being insignificant.
Interest-bearing receivables
As at 31 December
EUR million 2016 2015
Derivatives (see Note 27 ) 41 41
Loans to equity accounted investments 5 8
Other loan receivables 7 72
Total 53 121
Current Assets: Receivable within 12 months 46 53
Non-current Assets: Receivable after 12 months 7 68
Total 53 121
Annual interest rates for loan receivables at 31 December 2016 ranged from 0% (0%) to 8% (8%). Current interest-bearing receivables did not include any accrued interest at 31 December 2016. In the end of 2015 the amount of accrued interest was EUR 5 million, of which EUR 3 million related to interest rate derivatives.

On 1 October 2013, the vendor loan note issued by Papyrus Holding AB, with the nominal value of EUR 54 million, has been classified in the balance sheet as a non-current loan receivable. The note was fair valued on receipt at EUR 47 million and it accrued interest which was added in arrears to the principal of the note. The note was subordinate to senior debt but having priority over equity holders and maturing on 7 May 2017, unless voluntarily prepaid. The fair value of the note at 31 December 2015 was EUR 62 million against a carrying value of EUR 59 million. During November 2016, Papyrus Holding AB has voluntarily prepaid the full note balance and related interests.

During 2012 and 2013, Stora Enso participated, proportionally with its share of ownership in Teollisuuden Voima Oyj (TVO) through Pohjolan Voima Oy, in the financing of the bidding and engineering phase of the Finnish Olkiluoto 4 (OL4) nuclear power plant unit of TVO by granting a shareholder loan of EUR 5 million. TVO’s General Meeting decided in June 2015 not to apply for a construction license for OL4 during the validity of the decision-in-principle given by the Finnish Parliament which had a term limit of 30 June 2015. As a result, the shareholder loan-receivable of EUR 5 million was written off during the second quarter of 2015.

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