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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, with an estimate 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 uses factoring arrangements as one of the working capital management tools. Sold trade receivables are derecognised once 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 on 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 for 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 2017 2016
Trade receivables 993 922
Allowance for doubtful receivables -28 -51
Prepaid expenses and accrued income 119 121
TRS Hedges - 3
Other receivables 235 278
Total 1 319 1 273

As at 31 December 2017, EUR 121 (EUR 116) million of trade receivables were overdue, for which no allowance has been made. These relate to a number of countries and unrelated customers that have no recent history of default. The age analysis of these trade receivables, and the net of allowance for doubtful receivables, is as follows:

Age analysis of trade receivables, net of allowance for doubtful receivables
As at 31 December
EUR million 2017 2016
Less than 30 days overdue 61 44
31 to 60 days overdue 41 10
61 to 90 days overdue 1 48
91 to 180 days overdue 2 3
Over 180 days overdue 16 11
Total: Overdue Accounts 121 116
Trade Receivables within their credit terms 844 755
Total 965 871

Change in credit losses amounted to a gain of EUR 7 (loss of EUR 11) million due to changes in the estimates of credit losses.  The allowance for doubtful receivables decreased by EUR 23 (a decrease of EUR 2) 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 regarding the financial status of a customer, an advance payment or an irrevocable letter of credit drawn from a bank is required. At the year end, the letters of credit awaiting maturity totalled EUR 17 (EUR 37) million.

At 31 December 2017, allowances related to overdue trade receivables totalled EUR 28 (EUR 51) million. The age analysis of the receivables included in the allowance for doubtful receivables is shown in the following table.

Age analysis of doubtful accounts
As at 31 December
EUR million 2017 2016
Less than 90 days - 2
91 to 180 days - 3
Over 180 days 28 46
Total 28 51

Stora Enso has entered into factoring agreements to sell trade receivables to accelerate cash conversion. These agreements resulted in full derecognition of receivables of a nominal value of EUR 355 (EUR 368) million by 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 2017 2016
Derivatives 65 41
Loans to equity accounted investments 3 5
Other loan receivables 67 7
Total 135 53
Current Assets: Receivable within 12 months 80 46
Non-current Assets: Receivable after 12 months 55 7
Total 135 53

Annual interest rates for loan receivables at 31 December 2017 ranged from 0% (0%) to 8% (8%). Current interest-bearing receivables did not include any accrued interest at 31 December 2017.

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