UPM Annual Report 2017

Accounts

In brief

Strategy

Businesses

Stakeholders

Governance

8.2 Principal subsidiaries and joint operations

COUNTRY OF INCORPORATION

HOLDING % 2017

HOLDING % 2016

JOINT OPERATIONS

COUNTRY OF INCORPORATION

HOLDING % 2017

HOLDING % 2016

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

FI

27.88

27.88

SUBSIDIARIES

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

Blandin Paper Company Forestal Oriental S.A.

US UY DE UA DE DE DE DE RU RU

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.60 91.00 99.99

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.60 91.00 99.99

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

Järvi-Suomen Voima Oy

FI FI FI FI

Gebrüder Lang GmbH Papierfabrik

Kainuun Voima Oy

LLC UPM Ukraine MD Papier GmbH

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

Nordland Papier GmbH

Madison Paper Industries

US

NorService GmbH

Rauman Biovoima Oy (Pohjolan Voima Oy, G4 series)

FI

nortrans Speditionsgesellschaft mbH

OOO UPM-Kymmene

OOO UPM-Kymmene Chudovo PT UPM Raflatac Indonesia

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 2017 and 2016. 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 81% (79%) 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.

ID

Rhein Papier GmbH

DE AT

Pension Funds In Finland, group has the pension foundation, Kymin Eläkesäätiö, which is a separate legal entity. Pensions for about 18% (10%) of the group’s Finnish employees are arranged through the foundation. In 2017, the contributions paid by UPM to the Foundation amounted to EUR 14 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 2017 was EUR 504 million (347 million), of which 45% was in the form of equity instruments, 38% in the form of debt instruments and 17% 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 25 million (5 million) to the defined benefit sections of the Scheme in 2017. The fair value of the UK defined benefit fund assets at 31 December 2017 was EUR 450 million (426 million), of which 46% was invested in equity instruments, 33% in debt instruments, 14% in property and money market and 7% in other investments. 8.4 Assets held for sale Assets classified as held for sale at the end of 2017 amounting to EUR 1 million include hydro power assets located in Schongau and Ettringen mill sites in Germany. 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 United States amounting to EUR 8 million. 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

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 BE

UPM GmbH

UPM Manufatura e Comércio de Produtos Florestais Ltda

UPM NV

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

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 SAS UPM Raflatac Sdn. Bhd.

FI

AU AR

FR

MY ZA

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

EURm

2017

2016

FI FI FI FI

Dividends received

2

3

Purchases of raw materials and services

94

90

UPM Specialty Papers Oy 1)

Loan receivables

6 1 8

9 1 3

UPM Sähkönsiirto Oy

Trade and other receivables Trade and other payables

UPM Wood Materials SAS UPM Kymmene (Korea) Ltd UPM-Kymmene (UK) Ltd

FR KR GB SE AT NL DE US IN

UPM-Kymmene AB

Subsidiaries and joint operations » Refer Note 8.2 Principal subsidiaries and joint operations.

UPM-Kymmene Austria GmbH

UPM-Kymmene B.V.

UPM-Kymmene Beteiligungs GmbH

UPM-Kymmene Inc.

UPM-Kymmene India Private Limited

UPM-Kymmene Japan K.K.

JP TR EE

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

UPM-Kymmene Otepää AS UPM-Kymmene Pty Limited

AU

UPM-Kymmene S.A.

ES

UPM-Kymmene Seven Seas Oy

FI IT

UPM-Kymmene S.r.l.

Werla Insurance Company Ltd 100.00 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. The table includes subsidiaries with sales exceeding EUR 2 million in 2017. MT

CONTENTS

ACCOUNTS

154

155

UPM Annual Report 2017

UPM Annual Report 2017