D6. Other provisions

AP Accounting principles

Provisions are recognized in the consolidated balance sheet when there is a legal or informal obligation arising from events that have occurred and it is probable that payments will be required to settle the obligation. It must also be possible to reliably estimate the amount to be paid. The provision is valued at the present value of the anticipated future expenditure to settle the obligation.

A provision for restructuring measures is recognized when the Group has established a detailed plan and either implementation has begun or the main features of the measures have been communicated to the parties involved. Restructuring costs include, for example, costs for plant closures, impairment of production machinery and costs for personnel reductions.

KAA Key assessments and assumptions

The amount of the provisions made relating to national competition investigations is based on the company’s best assessment, which was determined in consultation with local expertise in the field.

In respect of tax risks, these are also based on Essity’s best assessment, which in most cases is determined in consultation with local experts.

In 2016, provisions for the period amounted to SEK 2,165m, utilization to SEK –1,110m, reclassifications to SEK 15m and dissolutions and translation differences to SEK –29m.

In 2015, provisions for the period amounted to SEK 852m, utilization to SEK –571m, reclassifications to SEK 109m and dissolutions and translation differences to SEK –111m.

Distribution of other provisions by maturity

Provisions for the period for “Efficiency programs” are mainly attributable to the closure of a tissue production facility in the US, the closure of a tissue machine in the UK and the restructuring program related to the acquisition of BSN medical. Provisions for the period for “Tax risks” relate mainly to uncertainty concerning the restructuring programs implemented. Of the provisions for the period for “Environment,” SEK 64m pertains to a liability for carbon dioxide emissions, which will be paid out in 2018. Provisions for the period for “Legal disputes” are mainly related to increased provisions for disputes in Chile and France. Provisions for the period for “Other” are primarily associated with foreign tax of a non-recurring nature on non-current assets outside Sweden arising from the split of SCA into two listed companies.

Dissolutions for the period for “Efficiency programs” are mainly attributable to the restructuring programs in France and India. Dissolutions for the period for “Legal disputes” relate primarily to the competition case in Poland.

The provisions at the end of the period attributable to “Efficiency programs” relate primarily to the restructuring programs in France and India, and the restructuring program related to the acquisition of BSN medical. Provisions for “Tax risks” relate primarily to a tax dispute in Denmark and uncertainty surrounding implemented restructuring programs. Provisions for “Environment” pertain mainly to a liability for carbon dioxide emissions. “Legal disputes” mainly consists of reserves relating to competition cases, primarily attributable to Chile, Hungary and Spain, and recycling fees/taxes for packaging in France. Other provisions mainly comprise reserves in connection with foreign tax of a non-recurring nature on non-current assets outside Sweden.