UPM Annual Report 2018
UPM AT A GLANCE
STRATEGY
BUSINESSES
SOCIETY AND ENVIRONMENT
GOVERNANCE AND COMPLIANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
AUDITOR’S REPORT
OTHER FINANCIAL INFORMATION
Change in net debt 2017
Leases UPM has three finance lease agreements regarding power plant machinery outstanding at the end of 2018. 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 finance lease arrangements.
Reported in financing activities in cash flow statement
NON-CURRENT LOANS INCL. REPAYMENTS
OTHER FINANCIAL ASSETS
CASH AND CASH EQUIVALENTS NET DEBT
FINANCE LEASES
CURRENT LOANS
NET DERIVATIVES
EURm
Carrying value, at 1 January Change in net debt, cash Proceeds from non-current debt Payments of non-current debt
–2,082
–195
–26
112
68
992 –1,131
–1
– 7 – –
– –
– – –
– – – –
– – – –
–1
957
964
Change in current liabilities Net cash flows from derivatives Change in other financial assets in operating cash flow Change in other financial assets in investing cash flow Change in cash and cash equivalents
– –
21
21 97
Leased assets included in property, plant and equipment
–
97
EURm
2018
2017
–
–
–
–
2
–
2
Accumulated costs
153 –66
152 –58
– –
– – 7 – 2 –
– –
– –
–5
–
–5
Accumulated depreciation
–
–268 –268
–268
Carrying value, at 31 December
88
94
956
21
97
–3
810
Change in net debt, non-cash Fair value gains and losses Exchange gains and losses
50 90 –5
– – – – –
–66
–
–
–16
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.
– – –
–1
–7
84 –5 84
Effective interest rate adjustment
– 3 2
– –
Other non-cash changes
–
81 83
135
–66 143
–7
148
Carrying value, at 31 December
–991
–105
–5
68
716
–174
Future minimum lease payments
Finance leases
Operating leases
Free cash flow Free cash flow is primarily a liquidity measure. It is an important indicator of UPM’s overall operational performance as it reflects the cash generated from operations after investing activities. UPM’s free cash flow has enabled payment of dividends as well as repayments of debt reducing net debt significantly.
EURm
2018
2017
2018
2017
Within 1 year
8
8
90
77
Between 1 and 5 years
66 28
69 32
226 238 554
203 183 463
Later than 5 years
Total
102
110
Of which interest
–5 98
–6
– –
– –
Present value of future minimum lease payments
105
EURm
2018
2017
Operating cash flow Investing cash flow
1,391 1,558
–260
–222
EURm Free cash flow
Free cash flow Dividends paid
1,131 1,336
–613
–507
5.3 Financial assets and liabilities by category 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, bank overdrafts and derivatives. Classification of financial assets into different measurement categories depends on the contractual cash flow characteristics and the business model for managing the financial asset. The measurement category of each financial asset is determined at inception. In the comparison period, classification was dependent on the purpose for which the financial assets were acquired. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right in all circumstances 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.
1,500
Accounting policies
Other financing cash flow
–19
–17
Change in other financial assets in operating cash flow Change in other financial assets in investing cash flow Change in net debt, cash Change in net debt, non-cash
1,200
–7
2
900
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 finance 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. UPM will apply IFRS 16 Leases from 1 January, 2019. » Refer Note 10.1 Forthcoming new standards, amendments and accounting policy changes for more information.
600
3
–5
495 –10 485
810 148 957
300
0
Decrease in net debt
14 15 16
18 17
Opening net debt Closing net debt
174
1,131
–311
174
Bonds
NOMINAL VALUE ISSUED, MILLION
CARRYING VALUE 2018 EURm
CARRYING VALUE 2017 EURm
INTEREST RATE, % CURRENCY
FIXED RATE PERIOD
1997–2027 2003–2018
7.450 5.500
USD USD
375 250
405
405 208 613 208 405
–
Value, at 31 December
405
Current portion
–
Non-current portion
405
156
157
CONTENTS
ACCOUNTS
UPM ANNUAL REPORT 2018
UPM ANNUAL REPORT 2018
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