Select note.. se17-btn-dropdown-open

Note 26 Debt

Accounting principles

Debt

Debt is recognised initially at fair value, net of transaction costs incurred. In subsequent periods, it is stated at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and redemption value is recognised in the Consolidated income statement over the period of the borrowings. Interest expenses are accrued for and recorded in the Consolidated income statement for each period.

Debt with an original maturity greater than 12 months is classified as non-current debt in the Consolidated statement of financial position, though repayments falling due within 12 months are presented in current liabilities under the current portion of non-current debt. Short-term commercial paper, bank and other interest-bearing borrowings for which the original maturity is less than 12 months are presented in current liabilities under interest-bearing liabilities.

Finance leases

Leases of property, plant and equipment for which the Group has substantially all the rewards and risks of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased property or the estimated present value of the minimum lease payments. Each lease payment is allocated between the capital liability and finance charges so as to achieve a constant interest rate on the outstanding finance balance. The corresponding rental obligations, and net of finance charges are included in interest-bearing liabilities with the interest element of the finance charge being taken onto the Consolidated income statement over the lease period. Property, plant and equipment acquired under finance leasing contracts are depreciated over the lesser of the useful life of the asset or lease period.


The below table includes a breakdown of the Group’s interest-bearing liabilities and the related changes in the balances.

Interest-bearing liabilities
As at 31 December
EUR million 2017 2016
Bond loans 1 352 1 705
Loans from credit institutions 1 029 1 434
Finance lease liabilities 29 56
Other non-current liabilities 6 12
Non-current Debt including Current Portion 2 416 3 207
Short-term borrowings 525 452
Interest payable 35 54
Derivative financial liabilities (see Note 25 ) 36 57
Bank overdrafts 4 4
Total Interest-bearing Liabilities 3 016 3 774
EUR million 2017 2016
Carrying Value at 1 January 3 774 4 197
Proceeds of new long-term debt 425 368
Repayment of long-term debt -1 034 -781
Change in short-term borrowings and interest payable 54 -50
Change in derivative financial liabilities -21 -13
Translation differences and other -182 53
Total Interest-bearing Liabilities 3 016 3 774

Borrowings have various maturities, details of which are set out in Note 24 Financial risk management, the longest being in 2036, and have either fixed or floating interest rates ranging from 0.6% (0.6%) to 8.6% (8.6%). The majority of Group loans are denominated in euros and US dollars. At 31 December 2017 unused committed credit facilities were at EUR 600 (EUR 700) million. The EUR 600 million committed credit facility agreement with a syndicate of 13 banks matures in January 2023. The facility is used as a backup for general corporate purposes. In addition, Stora Enso has access to various long-term sources of funding up to EUR 950 (EUR 1 000) million mainly from Finnish pension funds.

During 2017, Stora Enso has successfully issued a new bond under its EMTN (Euro Medium Term Note) programme. The EUR 300 million ten-year bond pays a fixed coupon of 2.5% and matures in June 2027.

In June 2017, Stora Enso repurchased in a public tender fixed rate notes with a nominal value of EUR 83 million from the 2018 bond, and of EUR 216 million from the 2019 bond, issued in 2012.

In June 2016, Stora Enso repurchased in a public tender fixed rate notes with a nominal value of EUR 285 million from the 2018 bond, and of EUR 67 million from the 2019 bond, issued in 2012.

Including the previously mentioned repayments, Stora Enso’s total repayments of EUR and SEK bond notes amounted to a nominal of EUR 609 (EUR, SEK and USD bond notes EUR 427) million during 2017.

In 2017, net interest-bearing liabilities decreased by EUR 473 million to EUR 2 253 million. Net interest-bearing liabilities are equal to total interest-bearing liabilities less total interest-bearing assets. Cash and cash equivalents net of overdrafts decreased by EUR 346 million to EUR 603 million at 31 December 2017.

Bond loans in non-current debt
Issue/ Maturity Dates Description of Bond Interest Rate % Currency of Bond Nominal Value Issued Outstanding As at 31 December Carrying Value As at 31 December
2017 2016 2017 2016
All Liabilities are Held by the Parent Company Currency million EUR million
Fixed Rate
1993-2019 Series C Senior Notes 2019 8.600 USD 50 50 50 44 47
2006-2036 Global 7.250% Notes 2036 7.250 USD 300 300 300 247 281
2012-2017 Euro Medium Term Note 5.750 SEK 500 - 480 - 50
2012-2018 Euro Medium Term Note 5.000 EUR 500 112 212 112 212
2012-2019 Euro Medium Term Note 5.500 EUR 500 178 428 178 427
2016-2023 Euro Medium Term Note 2.125 EUR 300 300 300 298 298
2017-2027 Euro Medium Term Note 2.500 EUR 300 300 - 298 -
Total Fixed Rate Bond Loans 1 177 1 315
Floating Rate
2006-2018 Euro Medium Term Note Euribor+0.96 EUR 25 25 25 25 25
2012-2017 Euro Medium Term Note Stibor+3.90 SEK 2 200 - 2 060 - 215
2015-2025 Euro Medium Term Note Euribor+2.25 EUR 125 125 125 125 125
2015-2027 Euro Medium Term Note Euribor+2.35 EUR 25 25 25 25 25
Total Floating Rate Bond Loans 175 390
Total Bond Loans 1 352 1 705

Finance lease liabilities

At 31 December 2017 Stora Enso had a small number of finance leasing agreements for machinery and buildings for which capital costs of EUR 14 (EUR 21) million were included in property, plant and equipment and buildings; the depreciation and impairment thereon was EUR 7 (EUR 8) million. The aggregate leasing payments for the year amounted to EUR 28 (EUR 8) million, the interest element being EUR 1 (EUR 1) million.  

Finance lease liabilities
As at 31 December
EUR million 2017 2016
Minimum Lease Payments
Less than 1 year 29 29
1-2 years - 28
2-3 years - -
3-4 years - -
4-5 years - -
Over 5 years 1 1
30 58
Future finance charges -1 -2
Present Value of Finance Lease Liabilities 29 56
Present Value of Finance Lease Liabilities
Less than 1 year 28 28
1-2 years - 27
2-3 years - -
3-4 years - -
4-5 years - -
Over 5 years 1 1
29 56

Dear reader,

The Stora Enso Financial Report is optimised for mobile devices, but for the best experience, we recommend that you use a larger screen size.