UPM Annual Report 2016

Accounts

In brief

Strategy

Businesses

Stakeholders

Governance

8.2 Principal subsidiaries and joint operations

COUNTRY OF INCORPORATION

HOLDING % 2016

HOLDING % 2015

COUNTRY OF INCORPORATION

HOLDING % 2016

HOLDING % 2015

SUBSIDIARIES

JOINT OPERATIONS

Blandin Paper Company Forestal Oriental S.A.

US UY DE UA DE DE DE DE RU RU

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 91.00 99.99

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 91.00 – 99.99

Oy Alholmens Kraft Ab (Pohjolan Voima Oy, G series)

FI

27.88

27.88

EEVG Entsorgungs- und Energieverwertungs- gesellschaft m.b.H.

Gebrüder Lang GmbH Papierfabrik

AT

50.00 50.00 50.00 54.00 76.00 50.00 71.95

50.00 50.00 50.00 54.00 76.00 50.00 71.95

LLC UPM Ukraine MD Papier GmbH

Järvi-Suomen Voima Oy

FI FI FI FI

Kainuun Voima Oy

Nordland Papier GmbH

Kaukaan Voima Oy (Pohjolan Voima Oy, G9 series) Kymin Voima Oy (Pohjolan Voima Oy, G2 series)

NorService GmbH

nortrans Speditionsgesellschaft mbH

Madison Paper Industries

US

OOO UPM-Kymmene

Rauman Biovoima Oy (Pohjolan Voima Oy, G4 series)

FI

OOO UPM-Kymmene Chudovo PT UPM Raflatac Indonesia

ID

Rhein Papier GmbH

DE AT

Subsidiaries and joint operations » Refer Note 8.2 Principal subsidiaries and joint operations. Pension Funds In Finland, group has the pension foundation, Kymin Eläkesäätiö, which is a separate legal entity. Pensions for about 10% of the group’s Finnish employees are arranged through the foundation. In 2016, the contributions paid by UPM to the Foundation amounted to EUR 10 million (10 million). The Foundation manages and invests the contributions paid to the plan. The fair value of the Foundation’s assets at 31 December 2016 was EUR 347 million (357 million), of which 48% was in the form of equity instruments, 41% in the form of debt instruments and 11% was invested in property and money market. In the UK, the single UPM Pension Scheme operates under a Trust which is independent from the group. The Trust consists of various defined benefit sections, all of which are closed to future accrual and one common defined contribution section which is open to all UPM employees in the UK. The group made contributions of EUR 5 million (28 million) to the defined benefit sections of the Scheme in 2016. The fair value of the UK defined benefit fund assets at 31 December 2016 was EUR 426 million (409 million), of which 55% was invested in equity instruments, 28% in debt instruments, 9% in property and money market and 8% in other investments. 8.4 Assets held for sale Assets classified as held for sale at the end of 2016 relate to hydro power assets located at the mill site in Madison Paper Industries in the US amounting to EUR 8 million. At the end of 2015, there were no assets classified as held for sale. Accounting policies Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell, if UPM will recover their carrying amount through a sale transaction which is considered highly probable. Non-current assets classified as held for sale, or included within a disposal group that is classified as held for sale, are not depreciated after the classification.

Steyrermühl Sägewerksgesellschaft m.b.H. Nfg KG

In 2016, UPM changed its corporate structure in Finland to better match its current business structure. Three new subsidiaries were established in Finland: UPM Energy Oy, UPM Paper Asia Oy and UPM Paper ENA Oy. The personnel and assets of UPM Energy, UPM Specialty Papers and UPM Paper ENA (Europe & North America) in Finland were transferred to the new companies on 1 July 2016. UPM Raflatac and UPM Plywood already operated in their own subsidiaries in Finland. Assets and personnel of UPM Biorefining continued to remain part of UPM-Kymmene Corporation. 8.3 Related party transactions The Board of Directors and the Group Executive Team There have not been any material transactions between UPM and its members of the Board of Directors or the Group Executive Team (key management personnel) or persons closely associated with these members or organisations in which these individuals have control or significant influence. There are no loans granted to any members of the Board of Directors or the Group Executive Team at 31 December 2016 and 2015. For information concerning shares held by members of the Board of Directors and members of the Group Executive Team, as well as remuneration to members of the Board of Directors and the Group Executive Team are disclosed in » Note 3.2. Key management personnel. Associates and joint ventures In Finland, the group organises its producer’s responsibility of recovered paper collection through Paperinkeräys Oy. Austria Papier Recycling GmbH purchases recovered paper in Austria and L.C.I s.r.l. in Italy. ASD Altpapier Sortierung Dachau GmbH is a German recovered paper sorting company. The purchases from those four companies represented approximately 79% (81%) of total recovered paper purchase amount from associates and joint ventures. Transactions with associates and joint ventures are presented in the table below. The group has no individually material associates or joint ventures.

UPM (China) Co., Ltd UPM (Vietnam) Ltd

CN VN

UPM AS

EE

UPM Asia Pacific Pte. Ltd

SG

UPM Energy Oy UPM France S.A.S.

FI

–

FR DE BR

UPM GmbH

UPM Manufatura e Comércio de Produtos Florestais Ltda

UPM Paper ENA Oy UPM Plywood Oy 1) UPM Pulp Sales Oy

FI FI FI

–

UPM Raflatac (China) Co., Ltd UPM Raflatac (S) Pte Ltd UPM Raflatac Co., Ltd UPM Raflatac Iberica S.A.

CN SG TH ES US MX NZ AU AR MY ZA FI

UPM Raflatac Inc.

UPM Raflatac Mexico S.A. de C.V.

UPM Raflatac NZ Limited UPM Raflatac Oy UPM Raflatac Pty Ltd UPM Raflatac s.r.l. UPM Raflatac Sdn. Bhd.

UPM Raflatac South Africa (Pty) Ltd

UPM Raflatac Sp.z.o.o.

PL

UPM S.A.

UY DE

UPM Sales GmbH UPM Sales Oy UPM Silvesta Oy

FI FI FI FI

UPM Specialty Papers Oy 1) UPM Sähkönsiirto Oy UPM-Kymmene (UK) Ltd

GB SE AT NL US IN

UPM-Kymmene AB

UPM-Kymmene Austria GmbH

UPM-Kymmene B.V. UPM-Kymmene Inc.

UPM-Kymmene India Private Limited

UPM-Kymmene Japan K.K.

JP TR EE ES

UPM-Kymmene Kagit Urunleri Sanayi ve Ticaret Ltd. Sti.

UPM-Kymmene Otepää AS

UPM-Kymmene S.A.

EURm

2016

2015

UPM-Kymmene Seven Seas Oy

FI IT

Dividends received

3 –

1 1

UPM-Kymmene S.r.l.

Sales

Werla Insurance Company Ltd

MT

Purchases of raw materials and services

90

89

Loan receivables

9 1 3

9 1 1

1) UPM-Kymmene Wood Oy’s legal company name has changed to UPM Plywood Oy and UPM Paper Asia Oy’s legal company name has changed to UPM Specialty Papers Oy as of 1 February 2017.

Trade and other receivables Trade and other payables

The table includes subsidiaries with sales exceeding EUR 2 million in 2016.

CONTENTS

ACCOUNTS

144

145

UPM Annual Report 2016

UPM Annual Report 2016