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Note 22 Other provisions
Accounting principles
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, 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. Environmental provisions for site reinstatement are made when a project starts production, with the capitalised cost of the provision being depreciated over the useful life of the asset. Provisions are discounted back to their current net present value if the effect of the time value of money is material.
Environmental obligations
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 expensed as incurred. Environmental liabilities 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 obligations
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, are the result of a continuing contractual obligation with no ongoing economic benefit, or represent a penalty incurred to cancel the obligation.
Other obligations
Other obligatory provisions are recognised regarding different legal or constructive obligations as guarantees to customers, ongoing lawsuits, claims or similar.
Other provisions
EUR million Environmental Restructuring Other Obligatory Total Provisions
Carrying Value at 1 January 2016 91 55 14 160
Translation difference -2 - 4 2
Company disposed -7 -6 -7 -20
Charge in Income Statement
New provisions 11 13 1 25
Increase in existing provisions 17 1 3 21
Reversal of existing provisions -1 -3 -3 -7
Payments -9 -36 -2 -47
Carrying Value at 31 December 2016 100 24 10 134
Allocation between Current and Non-current Liabilities
Current liabilities: Payable within 12 months 3 16 1 20
Non-current liabilities: Payable after 12 months 97 8 9 114
Total at 31 December 2016 100 24 10 134
Environmental obligation
Provisions for environmental remediation amounted to EUR 100 million at 31 December 2016, a net increase of EUR 9 million compared with 31 December 2015, mainly due to increase of the Kopparberg mine related provision by EUR 13 million. Other provision increases are related to closed operation sites and old landfill areas. The Kabel Mill divestment decreased the provision by EUR 4 million and Arapoti Mill divestment by EUR 3 million.

Details of the principal provisions are:

• Following an agreement between Stora Enso and the City of Falun, the group is obliged to purify runoff from the Kopparberg mine before releasing the water into the environment. The provision at year end amounted to EUR 47 (EUR 41) million.
• Skoghall Mill site contains ground pollutants that must be removed. The provision at year end amounted to EUR 16 (EUR 17) million.
• The total environmental provision in Finland amounted to EUR 11 (EUR 8) million. The increase of EUR 3 million compared with 31 December 2015 is mainly caused by the dismantling provision of EUR 5 million related to a closed operation at Oulu Mill. The largest provision relates to the cleaning of aerated water basin at closed Kemijärvi Pulp Mill and amounted to EUR 6 (EUR 6) million. Other environmental provisions include EUR 1 (EUR 1) million related to the site of the former Summa Mill.
• Stora Enso Pulp AB has been removing mercury from the harbour basin at Skutskär for a number of years in co-operation with local authorities. In addition, the Company is obliged to upgrade an old landfill previously used by the mill to comply with revised environmental regulations. At year end Stora Enso Pulp AB had environmental provisions of EUR 6 (EUR 7) million.
• The most significant item of remaining obligation relates to landfills that were not disposed of as a part of the disposal of Baienfurt Mill real estate in Germany during 2010.This environmental provision amounted to EUR 6 (EUR 6) million.
• Hylte Mill and the Commune Hylte have a contract about the restoration and leakage water handling in respective on a landfill in Hyltebruk, based on this a new provision by EUR 5 million has been recognized.
Restructuring provisions
The group has undergone major restructuring in recent years, from divestments to mill closures and administrative cost-saving programmes. New restructuring provisions by Divisions are: Paper EUR 6 million, Packaging Solutions EUR 3 million, Consumer Board EUR 2 million, Wood Products EUR 1 million and Biomaterials and Segment Other EUR 1 million combined.

The liability at the end of 2016 for restructuring provisions amounted to EUR 24 (EUR 55) million and covered the costs of closing down operations, demolition, clearance and redundancy costs for reducing staff numbers.

Restructuring provisions decreased by EUR 31 million compared with 31 December 2015. This net change contains Kabel Mill disposal amounting to EUR 6 million of earlier made provisions.

The total cash payments made during the year in respect of established restructuring provisions amounted to EUR 36 (EUR 53) million.

Stora Enso announced in June 2016 the divestment of the Kabel Coated Mechanical Paper Mill in Germany to a German based investor group. New provision amounted to EUR 2 million.

In September 2016 Packaging Solutions announced plans to consolidate manufacturing of corrugated packaging in Finland to improve profitability and competitiveness and to close Heinola Corrugated Mill permanently. The provision amounted to EUR 3 million.

In 2015, the group announced restructuring provisions in Packaging Solutions EUR 5 million, Wood Products EUR 1 million and Paper EUR 1 million. Stora Enso announced in June 2015 the permanent shutdown of the corrugated packaging converting unit in Chennai, India, due to unprofitability and a major decrease in local market demand. Provision amounted to EUR 4 million.

Details of intangible asset and property, plant and equipment impairments relating to restructurings are in Note 10 Depreciation, amortisation and impairment charges.
Other obligatory provisions
Other obligatory provisions amounted to EUR 10 million at 31 December 2016, a decrease of EUR 4 million compared with 31 December 2015. This net decrease contains the Arapoti Mill disposal by EUR 7 million and reversal of EUR 2 million of earlier made provisions regarding the shutdown of packaging converting unit in Chennai, India.

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