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UPM Annual Report 2014
UPM Annual Report 2014
103
104
CONTENTS
ACCOUNTS
18 Property, plant and equipment
As at 31 December
EURm
2014
2013
Land and water areas
Acquisition cost at 1 Jan.
670
683
Additions
2
11
Disposals
–15
–5
Reclassifications
3
–3
Translation differences
48
–16
Acquisition cost at 31 Dec.
708
670
Accumulated depreciation and impairment at 1 Jan.
–34
–34
Impairment charges
–1
–
Translation differences
1
–
Accumulated depreciation and impairment at 31 Dec.
–34
–34
Carrying value at 1 Jan.
636
649
Carrying value at 31 Dec.
674
636
Buildings
Acquisition cost at 1 Jan.
3,489
3,598
Additions
22
17
Disposals
–17
–105
Reclassifications
43
9
Translation differences
74
–30
Acquisition cost at 31 Dec.
3,611
3,489
Accumulated depreciation and impairment at 1 Jan.
–2,333 –2,352
Depreciation
–81
–81
Impairment charges
–42
–
Disposals
17
101
Reclassifications
–8
–14
Translation differences
–31
13
Accumulated depreciation and impairment at 31 Dec. –2,478 –2,333
Carrying value at 1 Jan.
1,156
1,246
Carrying value at 31 Dec.
1,133
1,156
Machinery and equipment
Acquisition cost at 1 Jan.
14,504 15,184
Additions
115
84
Disposals
–374
–691
Reclassifications
50
32
Translation differences
303
–105
Acquisition cost at 31 Dec.
14,598 14,504
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
Carrying value at 1 Jan.
2,604
2,893
Carrying value at 31 Dec.
2,420
2,604
Other tangible assets
Acquisition cost at 1 Jan.
873
910
Additions
5
5
Disposals
–3
–44
Reclassifications
10
5
Translation differences
12
–3
Acquisition cost at 31 Dec.
897
873
As at 31 December
EURm
2014
2013
Accumulated depreciation and impairment at 1 Jan.
–752
–770
Depreciation
–17
–19
Impairment charges
–2
–
Disposals
2
43
Reclassifications
–6
–7
Translation differences
–8
1
Accumulated depreciation and impairment at 31 Dec.
–783
–752
Carrying value at 1 Jan.
121
140
Carrying value at 31 Dec.
114
121
Advance payments and construction in progress
Acquisition cost at 1 Jan.
240
161
Additions
225
216
Disposals
–
–66
Reclassifications
–103
–70
Translation differences
4
–1
Acquisition cost at 31 Dec.
366
240
Carrying value at 1 Jan.
240
161
Carrying value at 31 Dec.
366
240
Property, plant and equipment, total
4,707
4,757
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
Machinery and equipment
Acquisition cost
265
330
Accumulated depreciation
–95
–126
Carrying value at 31 Dec.
170
204
Leased assets, total
171
205
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.
19 Investment property
As at 31 December
EURm
2014
2013
Acquisition cost at 1 Jan.
71
67
Additions
1
5
Reclassifications
–14
–1
Acquisition cost at 31 Dec.
58
71
Accumulated depreciation and
impairment at 1 Jan.
–31
–28
Depreciation
–4
–3
Reclassifications
8
–
Accumulated depreciation and impairment at 31 Dec.
–27
–31
Carrying value at 1 Jan.
40
39
Carrying value at 31 Dec.
31
40
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).
The amounts recognised in the income statement
Year ended 31 December
EURm
2014
2013
Rental income
4
5
Direct operating expenses arising from invest-
ment properties that generate rental income
–3
–3
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.
20 Biological assets
As at 31 December
EURm
2014
2013
At 1 Jan.
1,458
1,476
Additions
8
8
Disposals
–65
–38
Wood harvested
–91
–88
Change in fair value
120
108
Reclassifications
–
2
Translation differences
39
–10
At 31 Dec.
1,469
1,458
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.
21 Investments in associated companies
and joint ventures
As at 31 December
EURm
2014
2013
At 1 Jan.
22
20
Additions
1
1
Share of results after tax (Note 9)
3
2
Dividends received
–2
–1
Translation differences
1
–
At 31 Dec.
25
22
Investments in associated companies at 31 December 2014 include good-
will of EUR 1 million (1 million).
Associated companies and joint ventures
As at 31 December
EURm
2014
2013
Associated companies
17
16
Joint ventures
8
6
At 31 Dec.
25
22
UPM has no individually material associated companies or joint ven-
tures.
Transactions and balances
with associated companies and joint ventures
Year ended 31 December
EURm
2014
2013
Sales
2
2
Purchases
83
80
Non-current receivables
8
8
Trade and other receivables
1
1
Trade and other payables
2
2
Loan receivables from associated companies
and joint ventures
At 1 Jan.
8
7
Loans granted
1
1
Repayments
–1
–
At 31 Dec.
8
8
22 Available-for-sale investments
As at 31 December
EURm
2014
2013
At 1 Jan.
2,661
2,587
Additions
31
31
Disposals
–1
–1
Reclassification
–10
1
Changes in fair values
–173
43
Translation differences
2
–
At 31 Dec.
2,510
2,661
At 31 December 2014 and 2013, the available-for-sale investments in-
clude only investments in unlisted shares.