UPM Annual Report 2016

Accounts

In brief

Strategy

Businesses

Stakeholders

Governance

Financial assets and liabilities by category at the end of 2016

Leased assets included in property, plant and equipment

Leases UPM has a sale and leaseback agreement and three finance lease agreements regarding power plant machinery outstanding at the end of 2016. The group uses the energy generated by these plants for its own production. The group also has a finance lease arrangement over the usage of a waste water treatment plant. In addition, the group leases certain production assets and buildings under long term lease arrangements. In 2016, one new finance lease agreement was made with present value of EUR 2 million.

FAIR VALUE THROUGH PROFIT AND LOSS

AVAILABLE-FOR- SALE FINANCIAL ASSETS

DERIVATIVES USED FOR HEDGING

FINANCIAL LIABILITIES AT AMORTISED COST

EURm

2016

2015

LOANS AND RECEIVABLES

Accumulated costs

154 –59

153 –46 107

EURm

TOTAL 1,932

Accumulated depreciation and impairments

Energy shareholdings

–

1,932

–

–

–

Carrying value, at 31 December

95

Other non-current financial assets: Loans and receivables

–

– –

19

–

– –

19

The group also leases office, manufacturing and warehouse space through various non-cancellable operating leases. Certain contracts contain renewal options for various periods of time.

Derivatives

18

–

218

236 255

Trade and other receivables Other current financial assets: Loans and receivables

–

–

1,726

–

–

1,726

–

– –

6 –

–

– –

6

Future minimum lease payments

Derivatives

47

56

103 109

Finance leases

Operating leases

Total financial assets Non-current debt: Loans

65

1,932

1,751

274

–

4,022

EURm

2016

2015

2016

2015

Within 1 year

94 73 40

37

74

65

– –

– –

– –

–

1,800

1,800 34 1,835

Between 1 and 5 years

152

189 185 448

165 190 420

Derivatives

34

–

Later than 5 years

24

Total

207 –12 195

213 –15 198

Other non-current financial liabilities: Other liabilities 1)

Of which interest

– –

– –

–

– –

– –

– 6

94

94

Present value of future minimum lease payments

Derivatives

10

–

16 110

Current debt: Loans

–

– –

– –

– –

502

502 82 584

5.3 Financial assets and liabilities by category

Derivatives

82

–

Accounting policies

Trade and other payables

–

–

–

–

1,594

1,594

Leases Leases of property, plant and equipment where the group, as a lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognised as assets and liabilities in the balance sheet at the commencement of lease term at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other non-current debt. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s useful life and the lease term. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made as a lessee under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Other current financial liabilities: Derivatives

Financial assets and liabilities recognised in the balance sheet include cash and cash equivalents, loans and other financial receivables, investments in securities, trade receivables, trade payables, loans and derivatives. Classification of financial assets into different measurement categories depends on the purpose for which the financial assets were initially acquired and is determined at the acquisition date. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

20

–

–

96

–

116 116

Total financial liabilities

112

–

–

136

3,990

4,238

Financial assets and liabilities by category at the end of 2015

FAIR VALUE THROUGH PROFIT AND LOSS

AVAILABLE-FOR- SALE FINANCIAL ASSETS

DERIVATIVES USED FOR HEDGING

FINANCIAL LIABILITIES AT AMORTISED COST

LOANS AND RECEIVABLES

EURm

TOTAL 2,085

Energy shareholdings

–

2,085

–

–

–

Other non-current financial assets: Loans and receivables

–

– –

20

–

– –

20

Derivatives

20

–

292

312 332

Trade and other receivables Other current financial assets: Loans and receivables

–

–

1,743

–

–

1,743

–

– –

5 –

–

– –

5

Derivatives

49

79

128 133

Total financial assets Non-current debt: Loans

69

2,085

1,768

371

–

4,293

–

– –

– –

–

2,726

2,726 71 2,797

Derivatives

30

41

–

Other non-current financial liabilities: Other liabilities 1)

–

– –

– –

–

103

103 71 174 248 21 269

Derivatives

30

41

–

Current debt: Loans

–

– –

– –

– –

248

Derivatives

21

–

Trade and other payables

–

–

–

–

1,463

1,463

Other current financial liabilities: Derivatives

40

–

–

116

–

156 156

Total financial liabilities

121

–

–

198

4,540

4,859

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.

CONTENTS

ACCOUNTS

134

135

UPM Annual Report 2016

UPM Annual Report 2016