Financial Report Part of Stora Enso’s Annual Report 2015 WorldReginfo - 0c88d649-7bc9-4378-9909-c0c557e1eb6d Stora Enso’s Annual Report 2015 consists of four reports: Progress Book, Financial Report, Sustainability Report and Corporate Governance Report. All are available at storaenso.com/annualreport. Progress Book Progress Book Part of Stora Enso’s Annual Report 2015 – Sustainability Report part of Annual Report 2015 THE PROGRESS BOOK explains Stora Part of Stora Enso’s Annual Report 2015 THE SUSTAINABILITY REPORT Enso’s strategy, how we create value, and covers Stora Enso’s sustainability how our work is progressing. The publication performance, following the Global is available in English, Finnish and Swedish. Reporting Initiative G4 framework. Stora Enso Stora Financial Report Financial Corporate – part of Annual Report 2015 Report Governance Part of Stora Enso’s Annual Report 2015 THE FINANCIAL REPORT consists of Report THE CORPORATE Part of Stora Enso’s Annual Report 2015 Stora Enso in capital markets, a summary GOVERNANCE REPORT of our sustainability performance, and the covers Stora Enso’s corporate audited Report of the Board of Directors governance policy, practices, and financial statements. and actions in 2015. WorldReginfo - 0c88d649-7bc9-4378-9909-c0c557e1eb6d In this report: Contents This publication consists of both audited and unaudited contents. The audited parts include the Report of the Board of Stora Enso in 2015 2 Directors, financial statements, and notes. Stora Enso in capital markets 4 The unaudited parts – such as Stora Enso Sustainability summary 12 in 2015, Stora Enso in capital markets, and the Sustainability summary – are marked Report of the Board of Directors 26 with grey on the top corner of the page. Consolidated financial statements 44 The official audited Financial statements Notes to the Consolidated financial statements 50 (in Finnish) can be found on the company’s Note 1 Accounting principles 50 website: Note 2 Critical accounting estimates and judgements 59 storaenso.com/about/download-center Note 3 Segment information 61 Note 4 Acquisitions and disposals 67 Note 5 Other operating income and expense 69 Unaudited Note 6 Personnel expenses 70 Note 7 Board and executive remuneration 71 Note 8 Net financial items 75 Note 9 Income taxes 77 Note 10 Depreciation, amortisation and impairment charges 80 Note 11 Intangible assets and property, plant and equipment 83 Note 12 Biological assets 85 Note 13 Equity accounted investments 87 Note 14 Available-for-sale investments 92 Note 15 Other non-current assets 94 Note 16 Inventories 94 Note 17 Receivables 95 Note 18 Shareholders’ equity 97 Note 19 Non-controlling interests 98 Note 20 Post-employment benefits 100 Note 21 Employee variable compensation and equity incentive schemes 106 Note 22 Other provisions 108 Note 23 Operative liabilities 110 Note 24 Financial risk management 111 Note 25 Fair values 118 Note 26 Debt 121 Note 27 Derivatives 124 Note 28 Cumulative translation adjustment and equity hedging 129 Note 29 Commitments and contingencies 132 Note 30 Principal subsidiaries and joint operations 134 Note 31 Related party transactions 136 Note 32 Earnings per share and equity per share 137 Extract from the parent company Stora Enso Oyj financial statements 138 The Board of Directors’ Proposal for the distribution of dividend 140 Auditor’s report 141 Capacities by mill in 2016 142 Calculation of key figures 145 Information for shareholders 146 Stora Enso Financial Report 2015 1 WorldReginfo - 0c88d649-7bc9-4378-9909-c0c557e1eb6d Stora Enso in 2015 Stora Enso in 2015 Why to invest in Dividend proposal Stora Enso EUR Stora Enso is a leading provider of renewable solutions in packaging, biomaterials, wooden constructions and paper on 0.33 global markets. Our customers include publishers, retailers, The Board of Directors' dividend brand owners, print and board producers, printing houses, proposal for the year 2015 merchants, converters and joinery and construction companies. Stora Enso is transforming from a traditional paper and board producer to a global renewable materials growth company. Share price performance Key competitive differentiators are: and volumes • From asset transformation to sales transformation – customer focus Helsinki, Stora Enso R • More innovative use of raw material and new innovations Number of shares, million Share price (EUR) • Investments in growth markets and businesses 250 10 • Growth businesses: packaging, biomaterials and wood 200 8 products • Cash generating paper business 150 6 • Sustainability as integrated part of the business 100 4 50 2 Stora Enso divisions are Consumer Board, Packaging Solutions, 0 0 Biomaterials, Wood Products and Paper. In 2015, group sales 2011 2012 2013 2014 2015 totalled EUR 10.0 billion and operational EBIT EUR 915 million. Volume Monthly average share price Stora Enso shares are listed on Nasdaq Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY) in the International OTCQX over-the-counter market. Key figures 2015 2014 Change Target Sales, EUR million 10 040 10 213 -1.7% Operational EBITDA, EUR million 1 352 1 269 6.5% Operational EBIT, EUR million 915 810 13.0% Operational EBIT margin 9.1% 7.9% Operating profit (IFRS), EUR million 1 059 400 164.8% Net profit for the period, EUR million 783 90 n/m Net interest-bearing liabilities, EUR million 3 240 3 274 -1.0% Operational ROCE 10.6% 9.5% > 13% EPS (basic), EUR 1.02 0.13 Net debt/last 12 months’ operational EBITDA, ratio 2.4 2.6 < 3.0 Debt/equity ratio 0.60 0.65 < 0.8 Fixed costs to sales 25.0% 25.1% < 20% 2 Stora Enso Financial Report 2015 WorldReginfo - 0c88d649-7bc9-4378-9909-c0c557e1eb6d Stora Enso in 2015 Divisions in brief Sales 2015 Consumer Board division Consumer Board division develops and provides Operational ROOC (2015) consumer packaging boards for printing and packaging applications. A wide board and barrier coating selection is suitable for design and optimisation of packaging for liquid, food, pharmaceutical and luxury goods. We serve 15.5% brand owners globally and are expanding in growth (Target: > 20%) markets such as China and Asia Pacific to meet rising demand. Packaging Solutions division Packaging Solutions division develops fibre-based Operational ROOC (2015) packaging, and operates at every stage of the value chain from pulp production, material and packaging production to recycling. Our solutions serve leading Consumer Board 23% converters, brand owners and retailer customers helping 11.1% Packaging Solutions 9% to optimise performance, reduce total costs and enhance (Target: > 20%) Biomaterials 15% sales. Wood Products 16% Paper 36% Biomaterials division Other and elimination of inter-segment sales 1% Biomaterials division offers a variety of pulp grades to Operational ROOC (2015) meet the demands of paper, board, tissue, textile and hygiene product producers. We also develop new ways to maximise the value extractable from wood, as well as other kinds of lignocellulosic biomasses. Sugars and 12.4% lignin hold potential for use in applications in the (Target: > 15%) Operational specialty chemical, construction, personal care and food industries. We have a global presence with operations in EBIT 2015 Brazil, Finland, Laos, Sweden, Uruguay and the USA. Wood Products division Wood Products division provides versatile wood-based Operational ROOC (2015) solutions for building and housing. Our product range covers all areas of urban construction including massive wood elements and housing modules, wood components and pellets. We also offer a variety of sawn 15.7% timber goods. Our customers are mainly construction (Target: > 18%) and joinery companies, merchandisers and retailers. Wood Products operates globally and has more than 20 production units in Europe. Paper division Paper division provides best-in-class paper solutions for Cash flow after investing Consumer Board 32% print media and office use. The wide selection covers activities to sales (2015) Packaging Solutions 10% papers made from recycled and fresh wood fibre. Our Biomaterials 34% main customer groups include publishers, retailers, Wood Products 9% printing houses, merchants, converters and office Paper 8% suppliers. Our mills are located predominantly in Europe, 5.5% as well as in China. Three of the mills produce paper (Target: > 7%) Other 7% based on 100%-recycled fibre. Stora Enso Financial Report 2015 3 WorldReginfo - 0c88d649-7bc9-4378-9909-c0c557e1eb6d 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. Stora Enso’s ADRs are traded on the International The shares of Stora Enso Oyj (hereafter the “Company” or “Stora OTCQX. The ratio between Stora Enso ADRs and R shares is 1:1, Enso”) are divided into A and R shares, which entitle holders to the i.e. one ADR represents one Stora Enso R share. Following the same dividend but different voting rights. Each A share and each ten change of the depositary bank in November 2015, Citibank, N.A. R shares carry one vote at a shareholders’ meeting. However, each acts as the depositary bank for the Stora Enso ADR programme. shareholder has at least one vote. The trading symbol is SEOAY and the CUSIP number is 86210M106. On 31 December 2015, Stora Enso had 176 532 090 A shares and Share registers 612 087 897 R shares in issue, of which the Company held no The Company’s shares are entered in the Book-Entry Securities A shares or R shares. The total number of Stora Enso shares in issue System maintained by Euroclear Finland Oy, which also maintains was 788 619 987 and the total number of votes was 237 740 879. the official share register of Stora Enso Oyj. Share listings On 31 December 2015, 155 853 506 of the Company’s shares Stora Enso shares are listed on the Nasdaq Helsinki and the Nasdaq were registered in Euroclear Sweden AB and 18 016 064 of the Stockholm.