Year 2017

21. Financial instruments and Financial risk management

 

Financial assets and liabilities

 

2017

                 

EUR million

Financial

assets and

liabilities

at fair value

through

profit or loss

Loans

and

recei-

vables

Assets

held to

maturity

Financial

assets

available-

for-sale

Financial

liabi-

lities at

amortized

cost

Derivatives, hedge accounting

Carrying

value

Fair

value

Level

Financial assets – non-current

                 

Other non-current investments

     

3.5

   

3.5

3.5

3

Non-current receivables

 

1.4

       

1.4

1.4

2

Non-current financial assets

 

1.4

 

3.5

   

4.8

4.8

 

Financial assets – current

                 

Trade and other receivables

 

282.9

       

282.9

282.9

 

Equity fund investments

     

0.1

   

0.1

0.1

3

Currency derivatives

0.0

         

0.0

0.0

2

Money market investments

19.5

         

19.5

19.5

2

Investments in quoted bonds

13.9

         

13.9

13.9

1

Investments in unquoted bonds

4.3

         

4.3

4.3

2

Debt certificates

   

39.7

     

39.7

39.7

 

Current financial assets

37.7

282.9

39.7

0.1

   

360.3

360.3

 

Money market investments

37.5

         

37.5

37.5

2

Cash and bank

 

48.5

       

48.5

48.5

 

Cash and cash equivalents

37.5

48.5

       

86.0

86.0

 
                   

Total financial assets

75.2

332.8

39.7

3.5

   

451.2

451.2

 
                   

Financial liabilities – non-current

                 

Loans from financial institutions

       

59.9

 

59.9

60.1

2

Finance lease liabilities

       

9.8

 

9.8

9.8

2

Other

       

0.8

 

0.8

0.8

2

Non-current borrowings

       

70.5

 

70.5

70.8

 

Interest-rate derivatives

         

0.9

0.9

0.9

2

Equity derivatives

4.8

         

4.8

4.8

3

Other non-current financial liabilities

4.8

       

0.9

5.7

5.7

 

Financial liabilities – current

                 

Commercial papers

       

40.0

 

40.0

40.0

 

Finance lease liabilities

       

9.5

 

9.5

9.5

 

Other

0.0

         

0.0

0.0

 

Current borrowings

0.0

     

49.5

 

49.5

49.5

 

Foreign currency derivatives

0.2

       

0.1

0.2

0.2

2

Trade payables and other liabilities

       

155.8

 

155.8

155.8

 

Other current financial liabilities

0.2

     

155.8

0.1

156.0

156.0

 
                   

Total financial liabilities

5.0

     

275.8

0.9

281.7

282.0

 
                   

2016

                 

EUR million

Financial

assets and

liabilities

at fair value

through

profit or loss

Loans

and

recei-

vables

Assets

held to

maturity

Financial

assets

available-

for-sale

Financial

liabi-

lities at

amortized

cost

Derivatives, hedge accounting

Carrying

value

Fair

value

Level

Financial assets – non-current

                 

Other non-current investments

     

6.1

   

6.1

6.1

3

Non-current receivables

 

2.6

       

2.6

2.6

2

Non-current financial assets

 

2.6

 

6.1

   

8.7

8.7

 

Financial assets – current

                 

Trade and other receivables

 

267.7

       

267.7

267.7

 

Equity fund investments

     

0.2

   

0.2

0.2

3

Currency derivatives

0.0

         

0.0

0.0

2

Money market investments

43.5

         

43.5

43.5

2

Investments in quoted bonds

25.5

         

25.5

25.5

1

Investments in unquoted bonds

8.8

         

8.8

8.8

2

Debt certificates

   

54.7

     

54.7

54.7

 

Current financial assets

77.9

267.7

54.7

0.2

   

400.5

400.5

 

Money market investments

11.5

         

11.5

11.5

2

Cash and bank

 

70.5

       

70.5

70.5

 

Cash and cash equivalents

11.5

70.5

       

82.0

82.0

 
                   

Total financial assets

89.3

340.9

54.7

6.3

   

491.3

491.3

 
                   

Financial liabilities – non-current

                 

Finance lease liabilities

       

19.4

 

19.4

19.4

2

Other

       

0.4

 

0.4

0.4

2

Non-current borrowings

       

19.8

 

19.8

19.8

 

Financial liabilities – current

                 

Bonds

       

99.9

 

99.9

103.7

1

Finance lease liabilities

       

12.3

 

12.3

12.3

 

Other

       

0.2

 

0.2

0.2

 

Current borrowings

       

112.3

 

112.3

116.1

 

Foreign currency derivatives

0.0

       

0.0

0.1

0.1

2

Trade payables and other liabilities

       

121.0

 

121.0

121.0

 

Other current financial liabilities

0.0

     

121.0

0.0

121.1

121.1

 
                   

Total financial liabilities

0.0

     

253.1

0.0

253.1

257.0

 
                   

2015

                 

EUR million

Financial

assets and

liabilities

at fair value

through

profit or loss

Loans

and

recei-

vables

Assets

held to

maturity

Financial

assets

available-

for-sale

Financial

liabi-

lities at

amortized

cost

Derivatives, hedge accounting

Carrying

value

Fair

value

Level

Financial assets – non-current

                 

Other non-current investments

     

6.2

   

6.2

6.2

3

Non-current receivables

 

1.5

       

1.5

1.5

2

Non-current financial assets

 

1.5

 

6.2

   

7.7

7.7

 

Financial assets – current

                 

Trade and other receivables

 

228.3

       

228.3

228.3

 

Equity fund investments

     

0.2

   

0.2

0.2

3

Interest-rate derivatives

1.9

         

1.9

1.9

2

Currency derivatives

0.1

         

0.1

0.1

2

Money market investments

81.4

         

81.4

81.4

2

Investments in quoted bonds

35.8

         

35.8

35.8

1

Investments in unquoted bonds

9.7

         

9.7

9.7

2

Debt certificates

   

95.0

     

95.0

95.0

 

Current financial assets

128.9

228.3

95.0

0.2

   

452.3

452.3

 

Money market investments

42.0

         

42.0

42.0

2

Cash and bank

 

88.1

       

88.1

88.1

 

Cash and cash equivalents

42.0

88.1

       

130.1

130.1

 
                   

Total financial assets

170.9

317.9

95.0

6.4

   

590.2

590.2

 
                   

Financial liabilities – non-current

                 

Bonds

       

99.8

 

99.8

104.1

2

Finance lease liabilities

       

26.4

 

26.4

26.4

2

Other

       

0.5

 

0.5

0.5

2

Non-current borrowings

       

126.7

 

126.7

131.0

 

Financial liabilities – current

                 

Bonds

       

150.4

 

150.4

154.0

1

Finance lease liabilities

       

13.2

 

13.2

13.2

 

Other

       

0.0

 

0.0

0.0

 

Current borrowings

       

163.6

 

163.6

167.2

 

Foreign currency derivatives

0.0

         

0.0

0.0

2

Electricity derivatives

0.9

         

0.9

0.9

1

Trade payables and other liabilities

       

107.7

 

107.7

107.7

 

Other current financial liabilities

0.9

     

107.7

 

108.6

108.6

 
                   

Total financial liabilities

0.9

     

398.0

 

398.9

406.9

 
                   

As at December 31, 2015 assets classified as held for sale contained cash and banks EUR 1.8 million. Additional information can be found in note 16. Assets classified as held for sale and associated liabilities.

                 

Hierarchy levels

Level 1: Fair values are based on the quoted prices of identical asset groups or liabilities in active markets.

                 

Level 2: Fair values are, to significant degree, based on data other than quoted prices included in level 1, but on data that can be either directly or indirectly verified for the asset group or liability in question. To determine the fair value of these instruments, the Group uses generally accepted valuation models that are, to a significant degree, based on verifiable market data.

                 

Level 3: Fair values are based on other data than verifiable market data regarding the asset or liability.

                 

Investments in money market instruments are measured at fair value by employing the market interest rate curves on the reporting date. The fair values of investments in bonds are based on the quoted market prices on the reporting date (Level 1) or a price based on observable market information such as interest yield and issuer's credit spread (Level 2). The measurement of equity funds relies on valuations delivered by external investment managers, based on the general valuation techniques used by asset managers. Posti is not able to provide a description of the valuation techniques and the inputs used in the fair value measurement of investments in equity funds due to the fact that inputs are not developed by Posti but a third party when measuring fair value. The fair values of the loans from financial institutions and finance lease liabilities are calculated by discounting the forecast cash flows with the market rates on the reporting date. The fair values of bonds are based on market quotes on the reporting date. The fair value of currency forward contracts is calculated by valuing forward contracts at the forward rates on the reporting date. The fair values of interest rate swaps are calculated by discounting the forecasted cash flows of the contracts with the market interest rate curves on the reporting date. Due to the short-term nature of the trade and other current receivables and trade payables and other current liabilities, their carrying amount is considered to be the same as their fair value. The fair values of electricity derivatives are based on the quoted market prices on the reporting date.

                 

No transfers between fair value hierarchy levels were made during 2017, 2016 or 2015. The Group identifies and recognizes transfers between different levels as the transaction is exercised or at the moment when the parameters change materially.

                 

Reconciliation of Level 3 financial assets

2017

           

EUR million

     

Shares and investments

in equity funds

Equity derivatives - liabilities

Total

Carrying amount 1 Jan

     

6.3

-

6.3

Profits and losses

               

In income statement

         

-2.6

-

-2.6

In other comprehensive income

         

-0.1

-

-0.1

Additions

         

-

-4.8

-4.8

Exercises

         

0.0

-

0.0

Carrying amount 31 Dec

     

3.5

-4.8

-1.3

             

Total profits and losses recognized on assets held at the end of the reporting period

               

In financial income and expenses

-2.6

-

-2.6

                 

2016

           

EUR million

     

Shares and investments

in equity funds

Equity derivatives - liabilities

Total

Carrying amount 1 Jan

     

6.4

-

6.4

Profits and losses

               

In other comprehensive income

         

0.0

-

0.0

Exercises

     

-0.1

-

-0.1

Carrying amount 31 Dec

     

6.3

-

6.3

         

Total profits and losses recognized on assets held at the end of the reporting period

In financial income and expenses

0.0

-

0.0

             

2015

           

EUR million

     

Shares and investments

in equity funds

Equity derivatives - liabilities

Total

Carrying amount 1 Jan

     

6.2

-

6.2

Profits and losses

               

In income statement

         

0.0

-

0.0

In other comprehensive income

         

-0.1

-

-0.1

Additions

         

0.4

-

0.4

Exercises

         

0.0

-

0.0

Carrying amount 31 Dec

     

6.4

-

6.4

                 

Total profits and losses recognized on assets held at the end of the reporting period

In financial income and expenses

0.0

-

0.0

       

Financial risk management

 

Principles of risk management

The target of financial risk management is to secure adequate and competitive financing for executing the Group’s operative businesses and strategy and to minimize the effects of market risks in Group’s financial results, financial position and cash flows. The Group aims to identify risk concentrations and hedge against them to necessary extent. The Group’s business involves financial risks, such as market, liquidity, credit and counterparty risks. Of Group's commodity risks, the price risk related to electricity is monitored actively, and managed with price secured electricity products. The Group discontinued using electricity derivatives in 2016.

Risk management organization

Group Treasury is responsible for the centralized management of financing and financial risks in line with the treasury policy approved by the Board of Directors. Group Treasury is responsible for the entire Group's currency, interest rate, liquidity and refinancing risk management in close co-operation with the business operations. The business operations are responsible for the identification, management and reporting of the financial risks associated with their operations to Group Treasury. Credit risk related to customer receivables is managed by the sales organizations of the business operations. Posti's real-estate function is responsible for managing the price risk of electricity.

Market risks

Foreign Currency risk

The goal of currency risk management is to reduce the Group’s currency risk to an optimal level as well as improve the transparency of profitability and predictability of financial results. The Group’s transaction risk primarily consists of currency-denominated receivables, payables and commitments. The key principle is to achieve full hedging against the transaction risks related to the balance sheet. Unhedged exposure is permitted within the limits specified in the Group’s treasury policy. Loans granted by the parent company to subsidiaries are primarily in the subsidiary’s domestic currency, in which case the subsidiary has no currency risk arising from financial agreements. On the balance sheet date, Posti Group had external currency derivatives with a nominal value of EUR 13.4 (2016: 8.0, 2015: 8.6) million used to hedge against the currency risk associated with loans, receivables and commitments. The Group is exposed also to translation risk in connection with net investments in subsidiaries outside the euro zone. The objective of translation risk management is to ensure exchange rate fluctuations do not cause any material changes in the Group’s gearing. On the balance sheet date, the Group did not hedge against translation risk in any of the foreign net investments.

                 

Due to high volatility of the ruble, the Group has taken the development of the Russian ruble and ruble markets under particular observation. As defined in the Group's treasury policy, equity investments in Russian subsidiaries are not hedged.  Due to high hedging costs the Group has for the time being ceased hedging of the ruble-denominated receivables of the parent company and the local operative transaction risk has been hedged according to prevailing market conditions. In 2017 Itella Russia's USD denominated lease payments have been hedged from time to time with 3–6 months time horizon. The average size of individual hedges have been 3.6 MUSD. The Group has applied hedge accounting to the currency derivatives hedging Itella Russia’s USD denominated lease payments.

                 

Major transaction risk positions of financial instruments on the balance sheet date

2017

 

EUR-companies

         

RUB-companies

EUR million

 

RUB

SEK

NOK

PLN

USD

 

USD

Trade receivables and payables

 

-

-2.7

0.0

-0.2

0.1

 

0.0

Loans and bank accounts*

 

22.0

-5.1

-2.0

1.0

0.1

 

0.0

Derivatives**

 

-

5.1

2.0

-1.0

0.0

 

3.0

Open position

 

22.0

-2.7

-0.1

-0.2

0.2

 

3.0

                 

2016

 

EUR-companies

         

RUB-companies

EUR million

 

RUB

SEK

NOK

PLN

USD

 

USD

Trade receivables and payables

 

0.5

-1.8

-0.1

-

5.3

 

-0.1

Loans and bank accounts*

 

29.0

-0.9

-1.9

1.2

0.2

 

0.0

Derivatives**

 

-

0.9

1.9

-1.1

-

 

3.4

Open position

 

29.5

-1.8

-0.1

0.0

5.5

 

3.3

                 

2015

 

EUR-companies

         

RUB-companies

EUR million

 

RUB

SEK

NOK

PLN

USD

 

USD

Trade receivables and payables

 

0.1

-2.7

-0.3

0.0

3.0

 

0.2

Loans and bank accounts*

 

14.8

-2.6

0.8

1.6

0.4

 

0.0

Derivatives**

 

-

2.6

-1.2

-1.5

-

 

-

Open position

 

14.8

-2.7

-0.7

0.1

3.4

 

0.2

                 

* Includes cash and cash equivalents, interest-bearing receivables and liabilities

** Including derivatives for hedging purposes

                 

The sensitivity analysis on currency risk is based on balance sheet items denominated in other than functional currencies of the group companies on the balance sheet date. The analysis includes solely the currency risks related to the financial instruments. Based on the analysis, strengthening of the euro by 10 per cent against all other currencies would have an impact of EUR -0.8 (2016: -3.9, 2015: -1.7) million on the Group's profit before tax. Correspondingly, the strengthening of the USD against RUB by 10 per cent would have an impact of EUR +0.3 (2016: +0.3, 2015: 0.0) million on the Group's profit before tax.

                 

Major translation risk positions on the balance sheet date

                 

Net investment

EUR million

       

RUB

SEK

NOK

PLN

2017

       

76.4

27.0

4.4

7.2

2016

       

99.7

25.1

7.2

7.1

2015

       

83.0

18.4

5.6

6.9

                 

The net investment positions have been unhedged on each balance sheet date presented.

Interest rate risk

The Group is exposed to interest rate risks through its investments and interest-bearing liabilities. The goal of interest rate risk management is to minimize financing costs and decrease the uncertainty that interest rate movements cause for the Group's financial result. According to the treasury policy the interest rate risk of the debt portfolio is managed by balancing the proportion of the floating and fixed rate debt in the debt portfolio, taking into account the number, the maturity and the value of the debt instruments as well as the market conditions. The proportion of the fixed interest rate debt is to be at minimum 20 % of the debt portfolio, including the interest rate derivatives. The interest rate risk of the interest bearing financial assets is managed by investing the assets into different investment classes, interest periods and maturities. In addition to diversification, interest rate risks associated with interest-bearing receivables and liabilities can be hedged through interest rate swaps, interest rate options and forward rate agreements.

                 

On the balance sheet date, the Group's interest-bearing liabilities amounted to EUR 120.0 (2016: 132.1, 2015: 290.3) million and interest-bearing receivables to EUR 163.4 (2016: 215.1, 2015: 353.8) million. On the balance sheet date, the Group had long-term floating rate loan 60.0 million euros and short-term fixed rate loan 40.0 million euros. The floating rate loan was fully hedged to fixed rate by an interest-rate swap.  The Group has applied hedge accounting to the interest-rate swap hedging the loan.

                 

The EUR 100.0 million bond issued in 2011 was paid off in its entirety on December 2017.

                 

Interest-bearing receivables and debt according to interest rate fixing

2017

               

EUR million

       

Less than

1 year

1–5 years

More than

5 years

Total

Interest-bearing receivables

       

-152.2

-11.2

 

-163.4

Loans from financial institutions

       

59.9

   

59.9

Commercial papers

       

40.0

   

40.0

Finance lease liabilities

       

9.5

9.7

0.0

19.3

Other liabilities

       

0.8

   

0.8

Net debt

       

-42.0

-1.4

0.0

-43.4

Impact of interest-rate swaps

       

-60.0

 

60.0

0.0

Total

       

-102.0

-1.4

60.0

-43.4

                 

2016

               

EUR million

       

Less than

1 year

1–5 years

More than

5 years

Total

Interest-bearing receivables

       

-192.2

-20.8

-1.6

-214.6

Bonds

       

99.9

   

99.9

Finance lease liabilities

       

12.3

19.2

0.2

31.6

Other liabilities

       

0.2

0.4

 

0.6

Net debt

       

-79.9

-1.3

-1.4

-82.5

Impact of interest-rate swaps

               

Total

       

-79.9

-1.3

-1.4

-82.5

                 

2015

               

EUR million

       

Less than

1 year

1–5 years

More than

5 years

Total

Interest-bearing receivables

       

-319.3

-33.0

-1.5

-353.8

Bonds

       

150.4

99.8

 

250.2

Finance lease liabilities

       

13.2

26.3

 

39.5

Other liabilities

       

0.0

0.5

 

0.6

Net debt

       

-155.7

93.6

-1.5

-63.6

Impact of interest-rate swaps

       

0.0

   

0.0

Total

       

-155.7

93.6

-1.5

-63.6

                 

The sensitivity analysis on interest rate risk includes interest-bearing receivables and liabilities as well as interest rate derivatives. An increase of 1 percentage point in the interest rates at the end of the financial period would affect the Group's profit before taxes for the next 12 months by EUR +0.5 (2016: +0.1, 2015: -0.1) million and equity by EUR +3.9 (2016: +0.1, 2015: -0.1) million before taxes.

Electricity price risk

The electricity price risk management aims to reduce the volatility in Group's profit and cash flows caused by electricity price fluctuations. The Group employs price-secured electricity products to reduce the price risk related to electricity procurement. Until July 2016 the Group utilized standardized listed electricity derivatives as hedging instruments to reduce this risk. The derivatives were used for hedging purposes only, but hedge accounting as defined in the IFRS was not applied.

Derivative contracts

 

2017

               

EUR million

       

Nominal

value

Net

fair value

Positive

fair value

Negative

fair value

Currency forward contracts, non-hedge accounting

10.3

-0.2

0.0

-0.2

Currency forward contracts, hedge accounting

3.1

-0.1

-

-0.1

Interest rate swaps, hedge accounting

60.0

-0.9

-

-0.9

Equity derivatives, written put option

-

-4.8

-

-4.8

                 

2016

               

EUR million

       

Nominal

value

Net

fair value

Positive

fair value

Negative

fair value

Currency forward contracts, non-hedge accounting

4.6

0.0

0.0

0.0

Currency forward contracts, hedge accounting

3.4

0.0

-

0.0

                 

2015

               

EUR million

       

Nominal

value

Net

fair value

Positive

fair value

Negative

fair value

Currency forward contracts, non-hedge accounting

8.6

0.0

0.1

0.0

Interest rate swaps, non-hedge accounting

70.0

1.9

1.9

 

Electricity forwards, non-hedge accounting

2.5

-0.9

 

-0.9

                 

Offsetting of financial instruments

 

Derivative assets

         

2017

2016

2015

Derivative assets, reported as gross amount

0.0

0.0

2.0

Related derivative liabilities subject to master netting agreements

0.0

0.0

0.0

Net amount

0.0

0.0

1.9

                 

Derivative liabilities

         

2017

2016

2015

Derivative liabilities, reported as gross amount

1.1

0.1

0.9

Related derivative assets subject to master netting agreements

0.0

0.0

0.0

Net amount

1.1

0.0

0.9

                 

Derivative agreements are subject to offsetting in the case of default, insolvency or bankruptcy of the counterparty. Derivative agreements have not been offset in the balance sheet.

                 

Terminal due assets

         

2017

2016

2015

Terminal due assets, reported as gross amount

69.8

67.0

51.7

Related terminal due liabilities suject to offsetting rules

56.9

52.6

38.0

Net amount

         

12.8

14.4

13.7

                 

Terminal due liabilities

         

2017

2016

2015

Terminal due liabilities, reported as gross amount

80.1

63.0

52.1

Related terminal due assets suject to offsetting rules

56.9

52.6

38.0

Net amount

         

23.2

10.4

14.1

                 

Terminal dues related to international mail are subject to offsetting rules defined in international multilateral contracts, such as Universal Postal Convention. Terminal dues have not been offset in the balance sheet. Terminal due assets are included in balance sheet line trade and other receivables and contain invoiced and accrued receivables as well as advances paid. Terminal due liabilities are included in balance sheet lines trade and other payables and advances received and contain invoiced and accrued payables as well as advances received. Advances paid and received are not included in financial assets and liabilities.

Liquidity risk

The liquidity and refinancing risk means that the Group’s liquidity reserve is insufficient to cover the Group’s commitments and investment possibilities or that the cost of the refinancing or additional financing need is exceptionally high. The Group places a considerable emphasis on accurate cash management and liquidity planning in order to minimize liquidity risks generated by large daily fluctuations in the Group’s cash flows. In addition to cash and cash equivalents, the Group aims to secure sufficient financing in all circumstances, and has as financial reserves, a syndicated credit facility (committed) of EUR 150.0 million, maturing in 2019, and a non-binding commercial paper program of EUR 200.0 million. In addition the Group has a committed, undrawn credit facility of EUR 60.0 million, maturing in 2022.

                 

On the balance sheet date, the Group had liquid funds and an unused committed credit facility of EUR 333.7 (2016: 309.9 , 2015: 408.8) million. Liquid funds include cash and cash equivalents and investments tradable on the secondary market whose tradability is secured by the liquid size of the issue and the creditworthiness of the issuer. In addition, the Group had an unused commercial paper program of EUR 160.0 (2016: 200.0, 2015: 200.0) million.

                 

EUR million

         

2017

2016

2015

Cash and cash equivalents

         

86.0

82.0

130.1

Money market investments and investments in bonds

37.7

77.9

128.8

Liquid funds

         

123.7

159.9

258.9

                 

Contractual cash flows from financial liabilities and derivatives including interest payments

2017

               

EUR million

   

2018

2019

2020

2021

2022–

Total

Loans from financial institutions

   

0.4

0.4

0.4

0.4

60.9

62.4

Commercial papers

   

40.0

       

40.0

Finance lease liabilities

   

9.9

9.6

0.2

0.0

0.0

19.8

Other liabilities

           

0.8

0.8

Trade payables and other liabilities

   

155.8

       

155.8

Derivatives:

               

Interest rate derivatives (net settled)

   

0.4

0.4

0.4

0.4

1.1

2.7

Currency derivatives, cash flows payable

   

13.4

       

13.4

Currency derivatives, cash flows receivable

   

-13.2

       

-13.2

Equity derivatives, cash flows payable

         

4.8

 

4.8

Total

   

206.7

10.4

1.0

5.6

62.8

286.6

                 

2016

               

EUR million

   

2017

2018

2019

2020

2021–

Total

Bonds

   

104.6

       

104.6

Finance lease liabilities

   

13.0

18.8

0.6

0.2

0.2

32.8

Other liabilities

   

0.2

0.4

     

0.5

Trade payables and other liabilities

   

121.0

       

121.0

Derivatives:

               

Currency derivatives, cash flows payable

   

8.0

       

8.0

Currency derivatives, cash flows receivable

   

-7.9

       

-7.9

Total

   

238.9

19.2

0.6

0.2

0.2

259.1

                 

2015

               

EUR million

   

2016

2017

2018

2019

2020–

Total

Bonds

   

161.2

104.6

     

265.8

Finance lease liabilities

   

14.2

27.1

0.1

0.0

0.2

41.6

Other liabilities

   

0.0

0.5

     

0.6

Trade payables and other liabilities

   

107.7

       

107.7

Derivatives:

               

Interest rate derivatives (net settled)

   

-2.2

       

-2.2

Currency derivatives, cash flows payable

   

8.6

       

8.6

Currency derivatives, cash flows receivable

   

-8.6

       

-8.6

Electricity derivatives

   

0.7

0.2

     

0.9

Total

   

281.7

132.4

0.1

0.0

0.2

414.4

                 

Finance lease liabilities are in fact secured liabilities since, in default of payment, rights to the leased property transfer back to the lessor. Other loans have no security.

Credit and counterparty risk

Pursuant to authorizations given by the Board of Directors, the Group invests its liquid funds in debt instruments and bonds issued by companies, banks and states with good creditworthiness, as well as bank deposits. Posti Group makes derivative contracts only with solvent banks and credit institutions. The book value of investments and derivative contracts corresponds to the maximum amount of the associated credit risk. Financing operations did not incur any credit losses during the financial year.  

                 

Trade receivables are subject to only minor credit risk concentrations due to the Group’s extensive customer base. The book value of trade receivables corresponds to the maximum amount of the credit risk associated with them. Trade receivables include EUR 34.5 (2106: 33.0, 2015: 22.5) million terminal due receivables subject to offsetting rules, i.e. the Group has a right to offset related terminal due liabilities and advances received. More than 180 days overdue receivables consist of terminal due receivables, which are subject to minor credit risk due to offsetting rules. Credit losses recognized were EUR 1.0 (2016: 1.0, 2015: 0.7) million.

                 

Aging of trade receivables

EUR million

         

2017

2016

2015

Not yet due

200.4

199.3

164.8

1–30 days overdue

24.4

19.0

21.4

31–60 days overdue

2.4

2.0

3.0

61–90 days overdue

0.8

1.0

1.6

91–180 days overdue

0.8

1.9

0.0

181–365 days overdue

7.1

2.3

0.0

Total

236.1

225.5

190.8

                 

Capital management

The target of the Group's capital management is to secure financing required by businesses and the Group’s ability to operate in capital markets under all circumstances. Although the Group has no public credit rating issued by a credit rating agency, it seeks to maintain a capital structure that would be required for investment grade rating. The Board of Directors assesses the capital structure on a regular basis. The covenants associated with the Group's loan agreements are standard terms and conditions that feature limitations on securities given, material changes in business activities, and changes in majority holdings. The Group has met the conditions of the covenants in 2017, 2016 and 2015. The Group’s loan agreements do not contain financial covenants.

                 

The Group monitors its capital structure by assessing equity ratio, net debt and gearing.

                 

Net debt

         

2017

2016

2015, restated

Interest-bearing liabilities

120.0

132.1

290.3

Cash and cash equivalents

86.0

82.0

130.1

Investments in maturies over 3 months

37.7

77.9

128.8

Debt certificates

39.7

54.7

95.0

Total

         

-43.4

-82.5

-63.6

                 

Equity ratio, %

48.8

54.9

46.9

Gearing, %

-8.8

-13.6

-10.9

Reconciliation of net debt

EUR million

   

Borrowings

Borrowings on finance leases

Borrowings total

Liquid funds

Debt certificates

Net debt total

Carrying amount on

 

Jan 1, 2017

100.4

31.6

132.1

159.9

54.7

-82.5

Cash flows

   

0.3

-12.7

-12.4

-34.5

-15.0

37.2

Business acquisitions

   

0.0

0.0

0.0

0.0

0.0

0.0

Effect of exchange rate changes

   

0.0

0.0

0.0

-0.7

0.0

0.7

Other non-cash items

   

0.0

0.3

0.3

-1.0

0.0

1.2

Carrying amount on

 

Dec 31, 2017

100.7

19.3

120.0

123.7

39.7

-43.4

Fair value on

 

Dec 31, 2017

101.0

19.3

120.3

     
                 

EUR million

   

Borrowings

Borrowings on finance leases

Borrowings total

Liquid funds

Debt certificates

Net debt total

Carrying amount on

 

Jan 1, 2016

250.8

39.5

290.3

258.8

95.0

-63.6

Cash flows

   

-159.6

-11.6

-171.2

-100.2

-40.3

-30.7

Business acquisitions

   

9.8

2.2

12.1

1.0

0.0

11.1

Effect of exchange rate changes

   

0.1

0.0

0.1

0.8

0.0

-0.7

Other non-cash items

   

-0.7

1.4

0.7

-0.5

0.0

1.2

Carrying amount on

 

Dec 31, 2016

100.4

31.6

132.1

159.9

54.7

-82.5

Fair value on

 

Dec 31, 2016

104.3

31.6

135.9

     
                 

EUR million

   

Borrowings

Borrowings on finance leases

Borrowings total

Liquid funds

Debt certificates

Net debt total

Carrying amount on

 

Jan 1, 2015

251.6

43.9

295.5

184.5

12.0

98.9

Cash flows

   

4.3

-12.2

-8.0

75.4

83.0

-166.3

Business acquisitions

   

-3.5

0.0

-3.5

0.0

0.0

-3.5

Effect of exchange rate changes

   

0.0

0.0

0.0

-0.3

0.0

0.3

Other non-cash items

   

-1.5

7.9

6.3

-0.9

0.0

7.1

Carrying amount on

 

Dec 31, 2015

250.8

39.5

290.3

258.9

95.0

-63.6

Fair value on

 

Dec 31, 2015

258.1

39.5

297.7