UPM annual report 2014

18 Property, plant and equipment

19 Investment property

21 Investments in associated companies and joint ventures

As at 31 December

2014 –752

2013 –770

EURm

As at 31 December

As at 31 December

Accumulated depreciation and impairment at 1 Jan.

2014

2013

2014

2013

EURm

EURm

Depreciation

–17

–19

As at 31 December

Land and water areas Acquisition cost at 1 Jan.

Acquisition cost at 1 Jan.

71

67

Impairment charges

–2

–

2014

2013

EURm

670

683

Additions

1

5

Disposals

2

43 –7

At 1 Jan. Additions

22

20

Additions Disposals

2

11 –5 –3

Reclassifications

–14

–1 71

Reclassifications

–6 –8

1 3

1 2

–15

Acquisition cost at 31 Dec.

58

Translation differences

1

Share of results after tax (Note 9)

Reclassifications

3

Accumulated depreciation and impairment at 31 Dec.

–783

–752

Dividends received Translation differences

–2

–1

Translation differences Acquisition cost at 31 Dec.

48

–16 670

Accumulated depreciation and impairment at 1 Jan.

1

–

–31

–28

708

Carrying value at 1 Jan. Carrying value at 31 Dec.

121 114

140 121

At 31 Dec.

25

22

Depreciation

–4

–3

Reclassifications

8

–

Accumulated depreciation and impairment at 1 Jan.

–34

–34

Investments in associated companies at 31 December 2014 include good- will of EUR 1 million (1 million).

Impairment charges Translation differences

–1

– –

Accumulated depreciation and impairment at 31 Dec.

–27

–31

Advance payments and construction in progress Acquisition cost at 1 Jan.

1

240 225

161 216 –66 –70

Accumulated depreciation and impairment at 31 Dec.

–34

–34

Carrying value at 1 Jan. Carrying value at 31 Dec.

40 31

39 40

Additions Disposals

–

Associated companies and joint ventures

Carrying value at 1 Jan. Carrying value at 31 Dec.

636 674

649 636

Reclassifications

–103

As at 31 December

The fair value of investment property is determined annually on 31 December by the Group. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature of the specific asset. The fair value of investment property in Finland at 31 December 2014 was EUR 31 million (31 million) and fair value of investment prop- erty in other countries at 31 December 2014 was EUR 0 (11 million).

Translation differences Acquisition cost at 31 Dec.

4

–1

2014

2013

EURm

366

240

Associated companies

17

16

Buildings Acquisition cost at 1 Jan.

Joint ventures

8

6

Carrying value at 1 Jan. Carrying value at 31 Dec.

240 366

161 240

3,489

3,598

At 31 Dec.

25

22

Additions Disposals

22

17

–17

–105

Property, plant and equipment, total

4,707

4,757

Reclassifications

43 74

9

UPM has no individually material associated companies or joint ven- tures.

Translation differences Acquisition cost at 31 Dec.

–30

The amounts recognised in the income statement

3,611

3,489

Finance lease arrangements Property, plant and equipment includes property that is acquired under finance lease contracts: As at 31 December EURm 2014 2013 Buildings Acquisition cost 2 3 Accumulated depreciation –1 –2 Carrying value at 31 Dec. 1 1

Year ended 31 December

Transactions and balances with associated companies and joint ventures

2014

2013

Accumulated depreciation and impairment at 1 Jan.

–2,333 –2,352

EURm

Depreciation

–81 –42

–81

Rental income

4

5

Impairment charges

–

Year ended 31 December

Direct operating expenses arising from invest- ment properties that generate rental income

Disposals

17 –8

101 –14

2014

2013

EURm Sales

–3

–3

Reclassifications

2

2

Translation differences 13 Accumulated depreciation and impairment at 31 Dec. –2,478 –2,333 –31

There were no contractual obligations for future repair and maintenance or purchase of investment property. All assets under investment property are leased to third parties under operating leasing contracts.

Purchases

83

80

Non-current receivables Trade and other receivables Trade and other payables

8 1 2

8 1 2

Carrying value at 1 Jan. Carrying value at 31 Dec.

1,156 1,133

1,246 1,156

Machinery and equipment Acquisition cost Accumulated depreciation Carrying value at 31 Dec.

265 –95 170

330 –126 204

Loan receivables from associated companies and joint ventures At 1 Jan.

Machinery and equipment Acquisition cost at 1 Jan.

20 Biological assets

14,504 15,184

8 1

7 1 – 8

Additions Disposals

115

84

As at 31 December

Loans granted Repayments

–374

–691

2014 1,458

2013 1,476

EURm

Leased assets, total

171

205

–1

Reclassifications

50

32

At 1 Jan. Additions Disposals

At 31 Dec.

8

Translation differences Acquisition cost at 31 Dec.

303

–105

8

8

Capitalised borrowing costs In 2014, the borrowing costs capitalised as part of non-current assets amounted to EUR 5 million (2 million). In 2014, amortisation of capi- talised borrowing was EUR 3 million (4 million). The average interest rate used was 2.34% (2.33%), which represents the costs of the loan used to finance the projects.

14,598 14,504

–65 –91 120

–38 –88 108

22 Available-for-sale investments

Wood harvested

Accumulated depreciation and impairment at 1 Jan. –11,900 –12,291 Depreciation –373 –390 Impairment charges –93 –6 Disposals 369 684 Reclassifications 19 32 Translation differences –200 71 Accumulated depreciation and impairment at 31 Dec. –12,178 –11,900

Change in fair value

As at 31 December

Reclassifications

–

2

2014 2,661

2013 2,587

EURm

Translation differences

39

–10

At 31 Dec.

1,469

1,458

At 1 Jan. Additions Disposals

31 –1

31 –1

The Group owns approximately 765,000 and 75,000 hectares forests in Finland and in the United States, respectively, and 235,000 hectares plantations in Uruguay. Biological assets (living trees) are measured at fair value less costs to sell. The fair value is determined using discounted cash flow models. Main factors used in the valuation are estimates for growth and wood harvested, stumpage prices and discount rates. Stump- age price forecasts are based on the current prices adjusted by the man- agement’s estimates for the full remaining productive lives of the trees, up to 100 years for forests in Finland and in the US and up to 10 years for plantations in Uruguay. The cash flows are adjusted by selling costs and risks related to the future growth. Young saplings are valued at cost. The pre-tax discount rates used in to determine fair value in 2014 were 7.50% (7.50%) for Finnish forests and 10% (10%) for Uruguayan plantations. A decrease (increase) of one percentage point in discount rate would increase (decrease) the fair value of biological assets by approximately EUR 200 million.

Reclassification

–10

1

Changes in fair values Translation differences

–173

43

Carrying value at 1 Jan. Carrying value at 31 Dec.

2,604 2,420

2,893 2,604

2

–

At 31 Dec.

2,510

2,661

Other tangible assets Acquisition cost at 1 Jan.

At 31 December 2014 and 2013, the available-for-sale investments in- clude only investments in unlisted shares.

873

910

Additions Disposals

5

5

–3 10 12

–44

Reclassifications

5

Translation differences Acquisition cost at 31 Dec.

–3

897

873

CONTENTS

ACCOUNTS

103

104

UPM Annual Report 2014

UPM Annual Report 2014