E4. Financial liabilities

AP Accounting principles

The main principle for recognition of Essity’s financial liabilities is that they are initially measured at fair value, net after transaction costs, and subsequently at amortized cost according to the effective interest method.

In cases where loans with fixed interest rates are hedged using derivatives, both the loan and the derivative are measured at fair value through a fair value hedge. Non-current loans that are subject to hedge accounting are discounted to the market interest rate without a credit spread. The cash flows from the interest rate derivatives are discounted to the market interest rate and the changes in value are recognized in profit or loss.

Financial liabilities

SEKm

2019

2018

2017

1)

Fair value of current loans is estimated to be the same as the carrying amount.

Non-current financial liabilities

 

 

 

Bond issues

31,690

34,247

35,687

Derivatives

95

58

33

Non-current lease liabilities

3,021

Other non-current loans with maturities > 1 year < 5 years

7,944

6,884

9,876

Other non-current loans with maturities > 5 years

329

2,311

2,041

BS Total

43,079

43,500

47,637

 

 

 

 

Current financial liabilities

 

 

 

Amortization within one year

255

347

269

Bond issues

3,005

2,946

Derivatives

572

342

512

Current lease liabilities

851

Loans with maturities of less than one year

7,137

6,948

3,305

Accrued financial expenses

168

185

169

BS Total1)

8,983

10,827

7,201

Total financial liabilities

52,062

54,327

54,838

Fair value of financial liabilities excluding leases

49,106

54,434

54,227

Borrowing

Essity has a Euro Medium Term Note (EMTN) program with a program amount of EUR 6,000m (SEK 62,552m) for issuing bonds in the European capital market. As of December 31, 2019, a nominal EUR 3,134m (3,728; 4,188) was outstanding in public and bilateral issues with a remaining maturity of 3.8 years (4.2; 4.7).

Bond issues

Issued

Maturity

Carrying amount,
SEKm

Fair value,
SEKm

Interest rate,
%

Notes EUR 500m

2021

5,242

5,251

0.50

Notes EUR 600m

2022

6,234

6,321

0.63

Notes EUR 500m

2023

5,532

5,600

2.50

Notes EUR 600m

2024

6,233

6,434

1.13

Notes EUR 300m

2025

3,271

3,219

1.13

Notes EUR 500m

2027

5,178

5,474

1.63

Total

 

31,690

32,299

 

Non-current financial liabilities

Non-current financial liabilities

Carrying amount,
SEKm

Fair value,
SEKm

Other non-current loans with maturities > 1 year < 5 years

7,944

8,005

Other non-current loans with maturities > 5 years

329

547

Total

8,273

8,552

Essity has a Swedish and a Belgian commercial paper program that can be utilized for current borrowing.

Commercial paper program1)

Program size

Issued SEKm

1)

Included in Loans with maturities of less than one year in the Financial liabilities table.

Commercial paper SEK 15,000m

1,520

Commercial paper EUR 1,200m

3,479

Total

4,999

Essity has syndicated bank facilities to limit the refinancing risk and maintain a liquidity reserve. Contracted bilateral credit facilities with banks are used to supplement these syndicated bank facilities.

Credit facilities

 

Nominal

Maturity

Total
SEKm

Utilized
SEKm

Unutilized
SEKm

1)

The syndicated credit facility expiring in 2021 was refinanced in January 2020. The new credit facility falls due in 2025 and has the same nominal amount.

2)

The syndicated credit facility expiring in 2024 was extended in January 2020 by EUR 941m until 2025. The remaining EUR 59m falls due in 2024.

Syndicated credit facilities

EUR 1,000m

20211)

10,425

10,425

 

EUR 1,000m

20242)

10,425

10,425

Total

 

 

20,850

20,850

Maturity profile of gross debt1)

Maturity profile of gross debt (bar chart)

1) Gross debt includes accrued interest in the amount of SEK 286m.

After additions for net pension provisions and lease liabilities and with deductions for cash and cash equivalents, interest-bearing receivables and equity instruments, the net debt was SEK 50,940m (54,404; 52,467). For a description of the methods used by Essity to manage its refinancing risk, refer to the Risks and risk management section.