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Note 28 Cumulative translation adjustment and equity hedging

Cumulative translation adjustment
Year Ended 31 December
EUR million 2017 2016
At 1 January
CTA on net investment in non-euro foreign entities -31 -155
Hedging thereof 1 12
Net currency losses/gains in equity -30 -143
Tax on hedging -2 -4
-32 -147
CTA Movement for the Year Reported in OCI
Restatement of opening non-euro denominated equity -281 95
Difference in Income Statement translation -5 1
Internal equity injections and dividends -1 5
CTA release through the Income Statement -1 23
-288 124
Hedging of Net Investment for the Year Reported in OCI
Hedging result 40 -11
Taxes -8 2
32 -9
At 31 December
CTA on net investment in non-euro foreign entities -319 -31
Hedging thereof (see below) 41 1
Cumulative net currency losses in equity -278 -30
Tax on hedging -10 -2
Net CTA in Equity -288 -32
Hedging of Net Investment in Foreign Entities
Hedging 41 1
Tax on hedging -10 -2
Net Hedging Result in Equity 31 -1
Realised gains 45 45
Unrealised gains/losses -14 -46
Total Gains 31 -1

The Group is currently hedging only its equity exposure to the US dollar. The main movements in CTA in 2017 were a loss of EUR 162 (gain of EUR 45) million related to the US dollar, a loss of EUR 63 (gain of EUR 125) million related to the Brazilian real, a loss of EUR 38 (loss of EUR 33) million related to the Swedish crown and a loss of EUR 27 (loss of EUR 27) million related to the Chinese renminbi. The most significant accumulated CTA balances are in Sweden, amounting to a loss of EUR 234 (EUR 196) million, in Brazil, amounting to a loss of EUR 191 (EUR 128) million and in the US dollar area, amounting to a gain of EUR 79 (EUR 241) million, in China, amounting to a gain of EUR 69 (EUR 97) million.

The release of cumulative translation adjustments to the Income statement amounted to a gain of EUR 1 (loss of EUR 23) million in 2017 and was mainly related to the disposal of Stora Enso’s 35% minority holding in the equity accounted investment Bulleh Shah Packaging Ltd. (BSP) in Pakistan to the main owner Packages Ltd.

Amounts recognised in the statement of financial position - CTA and equity hedging
As at 31 December
Cumulative Translation Adjustments (CTA) Equity Hedges Net CTA in the Statement of Financial Position
EUR million 2017 2016 2017 2016 2017 2016
Brazil -191 -128 - - -191 -128
China 69 97 - - 69 97
Czech Republic 33 26 -9 -9 24 17
Poland -19 -34 17 17 -2 -17
Russia -55 -45 - - -55 -45
Sweden -234 -196 50 50 -184 -146
Uruguay 80 227 -17 -57 63 170
USA -1 14 - - -1 14
Others -1 9 - - -1 9
CTA before Tax -319 -31 41 1 -278 -30
Taxes - - -10 -2 -10 -2
Net CTA in Equity -319 -31 31 -1 -288 -32
Amounts recognised in the statement of other comprehensive income - CTA and equity hedging
As at 31 December
Cumulative Translation Adjustments (CTA) Equity Hedges Net CTA in the Statement of Financial Position
EUR million 2017 2016 2017 2016 2017 2016
Brazil -63 125 - - -63 125
China -27 -27 - - -27 -27
Czech Republic 7 - - - 7 -
Poland 15 -10 - - 15 -10
Russia -10 24 - - -10 24
Sweden -38 -33 - - -38 -33
Uruguay -147 39 40 -11 -107 28
USA -15 6 - - -15 6
Others -10 1 - - -10 1
CTA before Tax -288 124 40 -11 -248 113
Taxes - - -8 2 -8 2
Amounts recognised in OCI -288 124 32 -9 -256 115

Hedging of net investment in foreign entities

Group policy for translation risk exposure is to minimise this by funding assets whenever possible and economically viable in the same currency, but if matching of the assets and liabilities in the same currency is not possible hedging of the remaining translation risk may take place. The gains and losses net of tax on all financial liabilities and instruments used for hedging purposes are offset in CTA against the respective currency movements arising from the restatement of the net investments at current exchange rates on the reporting date; the net amount of gains included in CTA during the period as shown in the previous table came to EUR 32 (losses of EUR 9) million.

Hedging instruments and unrealised hedge losses
As at 31 December
Nominal amount (Currency) Nominal amount (EUR) Unrealised Losses (EUR)
EUR million 2017 2016 2017 2016 2017 2016
Borrowings
USD area 350 350 292 332 -14 -46
Total Hedging 292 332 -14 -46

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