Financial Report Stora Enso 2013 Stora Enso in Brief Contents Stora Enso is the global rethinker of the paper, biomaterials, wood products and packaging industry. We always rethink the Stora Enso in Capital Markets 2 old and expand to the new to offer our customers innovative Debt Investors 9 solutions based on renewable materials. Corporate Governance in Stora Enso 10 Board of Directors 18 The Group has some 28 000 employees in more than 35 Group Leadership Team 20 countries worldwide, and is a publicly traded company listed Report of the Board of Directors 22 in Helsinki and Stockholm. Our customers include publishers, Consolidated Financial Statements 38 printing houses and paper merchants, as well as the packaging, Notes to the Consolidated Financial Statements 44 joinery and construction industries. Note 1 Accounting Principles 44 Note 2 Critical Accounting Estimates and Judgements 53 Our annual production capacity is 5.4 million tonnes of Note 3 Segment Information 55 chemical pulp, 11.7 million tonnes of paper and board, 1.3 Note 4 Acquisitions and Disposals 61 billion square metres of corrugated packaging and 5.6 million Note 5 Other Operating Income and Expense 62 cubic metres of sawn wood products, including 2.9 million Note 6 Staff Costs 63 cubic metres of value-added products. Our sales in 2013 were Note 7 Board and Executive Remuneration 64 EUR 10.5 billion, with an operational EBIT of EUR 578 million. Note 8 Net Financial Items 68 Note 9 Income Taxes 70 Stora Enso uses and develops its expertise in renewable Note 10 Valuation Allowances 72 materials to meet the needs of its customers and many of Note 11 Depreciation and Intangible Assets and Property, today’s global raw material challenges. Our products provide Plant and Equipment Impairment Charges 73 a climate-friendly alternative to many products made from Note 12 Intangible Assets and Property, Plant and Equipment 75 competing non-renewable materials, and have a smaller Note 13 Biological Assets 78 carbon footprint. Our solutions based on wood therefore have Note 14 Equity Accounted Investments 79 wide-reaching benefits for us as a business, for people and for Note 15 Available-for-Sale Investments 83 the planet. Being responsible – doing good for the people and Note 16 Other Non-Current Assets 85 the planet – underpins our thinking and our approach to every Note 17 Inventories 85 aspect of doing business. Note 18 Receivables 86 Note 19 Shareholders’ Equity 88 Stora Enso is transforming itself into a value-creating renewable Note 20 Non-Controlling Interests 89 materials company focusing on growth markets. We will Note 21 Post-Employment Benefits 90 focus on growth markets in Asia and Latin America through Note 22 Employee Variable Compensation and Equity fibre-based packaging, plantation-based pulp, innovations Incentive Schemes 97 in biomaterials, competitive paper grades and sustainable Note 23 Other Provisions 99 building solutions. Fibre-based packaging offers steady Note 24 Operative Liabilities 101 long-term growth in most segments and has vast innovation Note 25 Financial Risk Management 102 potential, offering sustainable new solutions for our customers. Note 26 Fair Values 109 Plantation-based pulp allows us to secure low-cost fibre for Note 27 Debt 112 production. Innovations in biomaterials offer scalable concepts Note 28 Derivatives 115 for new markets. Note 29 Cumulative Translation Adjustment and Equity Hedging 119 Note 30 Commitments and Contingencies 122 Note 31 Principal Subsidiaries in 2013 124 Note 32 Related Party Transactions 126 Note 33 Earnings per Share and Equity per Share 127 Extract from the Parent Company Financial Statements 128 The Board of Directors’ Proposal for the Distribution of Dividend 130 Auditor’s Report 131 Capacities by Mill in 2014 132 Calculation of Key Figures 135 Information for Shareholders 136 The Official Financial Statements (in Finnish), an English translation of the Parent Company Financial Statements and the list of principal subsidiaries can be found at www.storaenso.com/annualreport. Stora Enso Financial Report 2013 1 Stora Enso in Capital Markets Stora Enso in Capital Markets Shares and shareholders American Depositary Receipts (ADRs) Stora Enso has a sponsored Level I American Depositary Receipts Shares and voting rights (ADR) facility, and following the delisting from NYSE on 28 Stora Enso Oyj’s (hereafter “Company” or “Stora Enso”) shares are December 2007, Stora Enso’s ADRs are traded on the International divided into A and R shares. The A and R shares entitle holders to OTCQX. The ratio between Stora Enso ADRs and R shares is 1:1, the same dividend but different voting rights. Each A share and each i.e. one ADR represents one Stora Enso R share. Deutsche Bank ten R shares carry one vote at a shareholders’ meeting. However, Trust Company Americas acts as depositary bank for the Stora Enso each shareholder has at least one vote. ADR programme. The trading symbol is SEOAY and the CUSIP is 86210M106. On 31 December 2013 Stora Enso had 177 096 204 A shares and 611 523 783 R shares in issue of which the Company held no A Share registers shares or R shares. The total number of Stora Enso shares in issue The Company’s shares are entered in the Book-Entry Securities was 788 619 987 and the total number of votes 238 248 582. System maintained by Euroclear Finland Oy, which also maintains the official share register of Stora Enso Oyj. Share listings Stora Enso shares are listed on NASDAQ OMX Helsinki and On 31 December 2013, 221 745 266 of the Company’s shares NASDAQ OMX Stockholm. Stora Enso shares are quoted in Helsinki were registered in Euroclear Sweden AB and 21 218 065 of the in euros (EUR) and in Stockholm in Swedish krona (SEK). Company’s R shares were registered in ADR form in Deutsche Bank Trust Company Americas. Distribution by Book-Entry System, 31 December 2013 Number of shares Total A shares R shares Euroclear Finland Oy 545 656 656 102 823 604 442 833 052 Euroclear Sweden AB1) 221 745 266 74 272 600 147 472 666 Deutsche Bank administered ADRs1) 21 218 065 - 21 218 065 Total 788 619 987 177 096 204 611 523 783 1) Share registered in Euroclear Sweden and ADRs are both nominee registered in Euroclear Finland. Ownership Distribution, 31 December 2013 % of shares % of votes % of shareholders % of shares held Foundation Asset Management 10.2% 27.2% 0.0% Solidium Oy1) 12.3% 25.1% 0.0% Finnish institutions 12.8% 20.8% 2.4% Swedish institutions 12.1% 6.4% 2.5% Swedish private shareholders 4.1% 3.0% 50.9% Finnish private shareholders 3.6% 2.3% 40.9% ADR holders 2.7% 0.9% 2.1% Under nominee names (non-Finnish/non-Swedish shareholders) 42.2% 14.3% 1.2% 1) Entirely owned by the Finnish State 2 Stora Enso Financial Report 2013 Stora Enso in Capital Markets Share capital Conversion On 31 December 2013 the Company’s fully paid-up share capital According to the Articles of Association, holders of Stora Enso entered in the Finnish Trade Register was EUR 1 342 million. The A shares may convert these shares into R shares at any time. current accountable par of each issued share is EUR 1.70. Conversion of shares is voluntary. The conversions of a total of 51 568 A shares into R shares during the year were recorded in the Finnish Trade Register on 15 February, 15 May, 15 October and 16 December 2013. Changes in Share Capital 2006–2013 No. of A shares No. of R shares Total no. Share capital issued issued of shares (EUR million) Stora Enso Oyj, 1 Jan 2006 178 159 778 634 817 321 812 977 099 1 382 Cancellation of repurchased shares, 31 Mar 2006 -38 600 -23 400 000 -23 438 600 -40 Conversion of A shares into R shares, Dec 2005–Nov 2006 -18 061 18 061 - - Stora Enso Oyj, 31 Dec 2006 178 103 117 611 435 382 789 538 499 1 342 Conversion of A shares into R shares, Dec 2006–Nov 2007 -624 084 624 084 - - Stora Enso Oyj, 31 Dec 2007 177 479 033 612 059 466 789 538 499 1 342 Conversion of A shares into R shares, Dec 2007–Nov 2008 -326 602 326 602 - - Stora Enso Oyj, 31 Dec 2008 177 152 481 612 386 018 789 538 499 1 342 Conversion of A shares into R shares, Dec 2008–Nov 2009 -2 397 2 397 - - Stora Enso Oyj, 31 Dec 2009 177 150 084 612 388 415 789 538 499 1 342 Conversion of A shares into R shares, Dec 2009–Nov 2010 -300 300 - - Stora Enso Oyj, 31 Dec 2010 177 149 784 612 388 715 789 538 499 1 342 Conversion of A shares into R shares, Dec 2010–Nov 2011 -1 012 1 012 - - Stora Enso Oyj, 31 Dec 2011 177 148 772 612 389 727 789 538 499 1 342 Conversion of A shares into R shares, Dec 2011–Nov 2012 -1 000 1 000 - - Stora Enso Oyj, 31 Dec 2012 177 147 772 612 390 727 789 538 499 1 342 Cancellation of shares owned by the Company, 15 May 2013 - -918 512 788 619 987 - Conversion of A shares into R shares, Dec 2012–Nov 2013 -51 568 51 568 - - Stora Enso Oyj, 31 Dec 2013 177 096 204 611 523 783 788 619 987 1 342 For more historical data about the share capital, please visit www.storaenso.com/investors. Stora Enso Financial Report 2013 3 Stora Enso in Capital Markets Stora Enso’s activities in capital markets during 2013 Stora Enso’s Investor Relations activities cover equity and fixed- meetings with fixed-income analysts and investors.