G2. Leasing

AP ACCOUNTING PRINCIPLES

Lease agreements are classified and recognized as either operating or finance leases. In cases where a lease agreement essentially entails that the risks and rewards incidental to ownership have been transferred to SCA, the lease agreement is classified as a finance lease. The leased asset is recognized as a non-current asset with a corresponding interest-bearing liability. The initial value of both these items comprises the lower of the fair value of the assets or the present value of the minimum lease payments. Future lease fees are divided between amortization and interest, so that each reporting period is charged with an interest amount that corresponds to a fixed interest rate on the recognized liability for the respective period. The leased asset is depreciated according to the same principles that apply to other assets of the same nature. If it is uncertain whether the asset will be taken over at the end of the leasing period, the asset is depreciated over the lease term if this is shorter than the useful life that applies to other assets of the same nature. Lease agreements in which the risks and rewards incidental to ownership are essentially carried by the lessor are classified as operating leases, and the lease payments are expensed on a straight-line basis over the lease term.

Leasing expenses

SEKm

2016

2015

2014

Operating leases

–842

–816

–797

Finance leases, depreciation/amortization

–10

–7

–9

Finance leases, interest expense

–5

–2

–3

Total

–857

–825

–809

Operating leases, future minimum lease payments

SEKm

2016

2015

2014

Within 1 year

602

624

605

Between 2 and 5 years

1,384

1,235

1,324

Later than 5 years

1,453

623

708

Total

3,439

2,482

2,637

Operating lease objects comprise a large number of items, including warehouses, offices, other buildings, machinery and equipment, IT equipment, office fixtures and various transport vehicles. The assessment for a number of the objects is that, in reality, it is possible to terminate contracts early.

Finance leases, future minimum lease payments

SEKm

2016

2015

2014

Within 1 year

260

9

44

Between 2 and 5 years

1

13

9

Later than 5 years

35

Total

261

57

53

Of which, interest

0

–18

–3

Present value of future minimum lease payments

261

39

50

Other disclosures

Total payments for finance leases during the period amounted to SEK –46m (–13; –17), of which amortization of debt accounted for SEK –41m (–11; –15). The carrying amount of finance lease assets at year-end amounted to SEK 9m (39; 46) relating to buildings/land and SEK 264m (9; 12) relating to machinery. Significant events in 2016 included the renegotiation and termination of a rental contract for a soda recovery boiler and the termination of a contract for a distribution center. The renegotiated contract for the soda recovery boiler resulted in the contract being recognized as a leased asset with a carrying amount of SEK 258m at the end of the reporting period. The soda recovery boiler will be acquired for its carrying amount in 2017. The distribution center was acquired in 2016 for SEK 29m. For information about significant lease agreements, refer to Note G3 Contingent liabilities.