UPM annual report 2015

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

Redemption clause Under § 12 of UPM-Kymmene Corporation’s Articles of Association, a shareholder who, alone or jointly with another shareholder owns 33 1/3 percent or 50 percent or more of all the company’s shares or their associated voting rights shall, at the request of other shareholders, be liable to redeem their shares and any securities that, under the Companies Act, carry the right to such shares, in the manner pre- scribed in § 12. A resolution of a general meeting of shareholders to amend or delete this redemption clause must be carried by shareholders repre- senting not less than three-quarters of the votes cast and shares repre- sented at the meeting.

Non-controlling interests On 11 December 2014, the Group acquired the remaining 10% of the issued shares of Wisapower Oy for a purchase consideration of EUR 4 million. The carrying amount of the non-controlling interests in Wisapower Oy on the date of acquisition was EUR 3 million. The Group derecognised non-controlling interests of EUR 3 million and recorded a decrease in equity attributable to owners of the parent of EUR 1 million. The effect of changes in the ownership interest of Wisapower Oy on the equity attributable to owners of the parent company during the year is summarised as follows:

Main items included in prepayments and accrued income

Year ended 31 December

2015

2014

EURm

As at 31 December

2015

2014

EURm

Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests Excess of consideration paid recognised in equity attributable to owners of the parent company

– –

3

Personnel expenses

9 3

14

–4

Interest income

5

Energy and other excise taxes

66 56

70 54

Other items At 31 Dec.

–

–1

134

143

27 Equity and reserves Share capital

Fair value and other reserves

Number of shares (1,000)

Share capital

EURm

As at 31 December

2015 1,582 –104

2014 1,988 –128

EURm

At 1 Jan. 2014

529,302

890

Fair value reserve of available-for-sale investments

Exercise of share options

4,434

–

Hedging reserve

At 31 Dec. 2014 At 31 Dec. 2015

533,736 533,736

890 890

Share-based compensation

8

7

At 31 Dec.

1,486

1,867

28 Deferred income taxes Reconciliation of the movements of deferred tax asset and liability balances during the year 2015

Shares At 31 December 2015, the number of the company’s shares was 533,735,699. Each share carries one vote. The shares do not have any nominal counter value. The shares are included within the book entry system for securities. Reserve for invested non-restricted equity Reserve for invested non-restricted equity includes, under the Compa- nies’ Act, the exercise value of shareholders’ investments in the compa- ny unless otherwise decided by the company. Treasury shares The Annual General Meeting held on 9 April 2015 authorised the Board of Directors to acquire no more than 50,000,000 of the compa- ny's own shares. The authorisation is valid for 18 months from the date of the decision. As at 31 December 2015, the company held 230,737 (230,737) of its own shares, 0.04% (0.04%) of the total number of shares. 211,481 of the shares were returned upon their issue in 2011 to UPM without consideration as part of the contractual arrangements relating to the Myllykoski transaction and 19,256 shares in accordance with the Group’s share reward scheme due to the termination of employ- ment contracts in 2012. Authorisations to increase the number of shares The Annual General Meeting, held on 4 April 2013, authorised the Board of Directors to decide on the issuance of shares and/or the transfer of the company’s own shares held by the company and/or the issue of special rights entitling holders to shares in the company as follows: (i) the maximum number of new shares that may be issued and the company’s own shares held by the company that may be trans- ferred is, in total, 25,000,000 shares. This figure also includes the number of shares that can be received on the basis of the special rights. (ii) new shares and special rights to shares in the company may be issued and the company’s own shares held by the company may be transferred to the company’s shareholders in proportion to their exist- ing shareholdings or in a directed share issue, deviating from the shareholder’s pre-emptive subscription rights. This authorisation is valid until 4 April 2016. Aside from the above, the Board of Directors has no current authorisation to issue shares, convertible bonds or share options. The shares available for subscription under the Board’s share issue authorisation may increase the total number of the company’s shares by 4.68%, i.e. by 25,000,000 shares, to 558,735,699 shares.

Changes in hedging reserve

Year ended 31 December

As at 1 Jan. 2015

Charged to the income statement

As at 31 Dec. 2015

2015 –128

2014

EURm

Charged to OCI

Translation differences

At 1 Jan.

–21

EURm

Gains and losses on cash flow hedges

–85

–102

Deferred tax assets Intangible assets and property, plant and equipment

Transfers to sales

26 81

–85

160

–27

– –

–1

132

Transfers to costs and expenses Transfers to financial costs

51

Inventories

35

2

– – – –

37

8

3

Retirement benefit obligations and provisions

158

–1 13

–28

129

Tax on gains and losses on cash flow hedges

17

20

Other temporary differences

37

– –

50

Tax on transfers to income statement

–23

6

Tax losses and tax credits carried forward

241 631

–

241 589

At 31 Dec.

–104

–128

Deferred tax assets, total

–13

–28

–1

Deferred tax liabilities Intangible assets and property, plant and equipment

Components of other comprehensive income

211 205

6

– –

– – – – –

217 256

Year ended 31 December

Biological assets

51 –2 –4 51

2015

2014

EURm

Retirement benefit obligations and provisions

9

12

19 87

Actuarial gains and losses on defined benefit obligations

Other temporary differences Deferred tax liabilities, total

102 527

–11

113 221 –28

–181

1

579

Translation differences Net investment hedge

291 –41

The amounts recognised in the balance sheet Deferred tax assets

532 428

–37

–28

–1

466 456 –10

Cash flow hedges Fair value gains/losses arising during the year

Deferred tax liabilities

27 64

1

– 1

–68

–82 –25 –107

Deferred tax liabilities, less deferred tax assets

–104

29

Reclassification adjustments

92 24

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

Available-for-sale investments Fair value gains/losses arising during the year

–405 –405

–164 –164

Other comprehensive income

–75

–202

contents

accounts

115

116

UPM Annual Report 2015

UPM Annual Report 2015