Business News

Norske Skog: Depreciation and changes in value of energy contracts in 2008

Wednesday 23. January 2008 - As a result of changed useful life assessments and write-downs made in the fourth quarter of 2007, annual depreciation in 2008 will be reduced by about NOK 50 million.

This is allocated as follows in the various segments:

For European newsprint, depreciation is reduced by about NOK 60 million as a result of changed useful life assessments, mostly shorter remaining useful life for Skogn and an increase in remaining useful life for other mills.  For European magazine paper, depreciation is reduced by about NOK 185 million as a result of write-downs at the Norwegian mills.  In Asia, depreciation is increased by about NOK 155 million, in Australasia there is an increase of about NOK 45 million, while there is a reduction in South America of about NOK 5 million.
 
The above figures are based on currency exchange rates as at year end.
 
In the fourth quarter of 2007, the group’s energy contracts in Norway were recorded in the accounts at actual value and recognised as income with about NOK 4.5 billion.  All other factors being equal, this amount will be booked as cost over the years 2008 – 2020.  The amount in the individual quarter will vary among other things as a result of changes in forward prices. Norske Skog will communicate this effect on the result every quarter, as has previously been done for the result effect from built-in derivatives. The amount has no cash effect and will be included in the group’s income statement under IFRS, but will not be included in the underlying operating result of the individual segments.