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UPM Annual Report 2014
UPM Annual Report 2014
117
118
CONTENTS
ACCOUNTS
35 Derivative financial instruments
Net fair values of derivative financial instruments
2014
2013
EURm
Positive
fair
values
Nega-
tive fair
values
Net fair
values
Positive
fair
values
Nega-
tive fair
values
Net
fair
values
Interest rate swaps
Cash flow hedges
– –23 –23
–
–
–
Fair value hedges
201
– 201 183 –1 182
Held for trading
31 –2 29 32
–
32
Forward foreign
exchange contracts
Cash flow hedges
49 –77 –28 60 –18 42
Net equity hedges
– –30 –30 18
–
18
Held for trading
24 –18
6 23 –31 –8
Currency options
Held for trading, bought
–
–
–
–
–
–
Held for trading, written
–
–
–
–
–
–
Cross currency swaps
Cash flow hedges
– –26 –26
– –24 –24
Fair value hedges
78
–
78 46
– 46
Held for trading
6 –90 –84
– –135 –135
Commodity Contracts
Cash flow hedges
52 –81 –29 101 –104 –3
Held for trading
1 –23 –22
2 –20 –18
Interest rate forward
contracts
Held for trading
–
–
–
–
–
–
Total
442 –370 72 465 –333 132
No derivative financial instruments are subject to offsetting in the
Group's financial statements. All derivative financial instruments are
under ISDA or similar master netting agreement.
Net fair values calculated by counterparty
As at 31 December 2014
EURm
Positive fair
values
Negative fair
values
Net fair
values
Derivative financial instruments
219
–147
72
Notional amounts of derivative financial instruments
As at 31 December
EURm
2014
2013
Interest rate swaps
2,134
1,609
Forward foreign exchange contracts
4,465
4,973
Currency options
38
33
Cross currency swaps
617
804
Commodity contracts
442
490
Interest rate forward contracts
2,310
2,332
Cash collaterals pledged for derivative contracts totalled EUR 8 million
of which EUR 6 million relate to commodity contracts and EUR 2
million to interest rate forward contracts.
36 Principal subsidiaries and joint operations
as at 31 December 2014
Subsidiaries, country of incorporation
Group
holding %
Blandin Paper Company, US
100.00
Forestal Oriental S.A., UY
100.00
Gebrüder Lang GmbH Papierfabrik, DE
100.00
LLC UPM Ukraine, UA
100.00
MD Papier GmbH, DE
100.00
Nordland Papier GmbH, DE
100.00
NorService GmbH, DE
100.00
Subsidiaries, country of incorporation
Group
holding %
nortrans Speditionsgesellschaft mbH, DE
100.00
OOO UPM-Kymmene, RU
100.00
OOO UPM-Kymmene Chudovo, RU
100.00
PT UPM Raflatac Indonesia, ID
100.00
Rhein Papier GmbH, DE
100.00
Steyrermühl Sägewerksgesellschaft m.b.H. Nfg KG, AT
100.00
Tilhill Forestry Ltd, GB
100.00
UPM (China) Co., Ltd, CN
100.00
UPM (Vietnam) Ltd, VN
100.00
UPM AS, EE
100.00
UPM Asia Pacific Pte. Ltd, SG
100.00
UPM France S.A.S., FR
100.00
UPM GmbH, DE
100.00
UPM Manufatura e Comércio de Produtos Florestais Ltda, BR
100.00
UPM Raflatac (Changshu) Co., Ltd, CN
100.00
UPM Raflatac (S) Pte Ltd, SG
100.00
UPM Raflatac Co., Ltd, TH
100.00
UPM Raflatac Iberica S.A., ES
100.00
UPM Raflatac Inc., US
100.00
UPM Raflatac Mexico S.A. de C.V., MX
100.00
UPM Raflatac NZ Limited, NZ
100.00
UPM Raflatac Oy, FI
100.00
UPM Raflatac Pty Ltd, AU
100.00
UPM Raflatac s.r.l., AR
100.00
UPM Raflatac Sdn. Bhd., MY
100.00
UPM Raflatac South Africa (Pty) Ltd, ZA
100.00
UPM Raflatac Sp.z.o.o., PL
100.00
UPM S.A., UY
91.00
UPM Sales GmbH, DE
100.00
UPM Sales Oy, FI
100.00
UPM Silvesta Oy, FI
100.00
UPM Sähkönsiirto Oy, FI
100.00
UPM-Kymmene (UK) Ltd, GB
100.00
UPM-Kymmene AB, SE
100.00
UPM-Kymmene Austria GmbH, AT
100.00
UPM-Kymmene B.V., NL
100.00
UPM-Kymmene Inc., US
100.00
UPM-Kymmene India Private Limited, IN
100.00
UPM-Kymmene Japan K.K., JP
100.00
UPM-Kymmene Kagit Urunleri Sanayi ve Ticaret Ltd. Sti, TR
99.99
UPM-Kymmene Otepää AS, EE
100.00
UPM-Kymmene S.A., ES
100.00
UPM-Kymmene Seven Seas Oy, FI
100.00
UPM-Kymmene S.r.l., IT
100.00
UPM-Kymmene Wood Oy, FI
100.00
Werla Insurance Company Ltd, MT
100.00
Wisapower Oy, FI
100.00
The table includes subsidiaries with sales exceeding EUR 2 million.
Group
Joint operations, country of incorporation holding %
Oy Alholmens Kraft Ab (Pohjolan Voima Oy, G serie), FI
27.88
EEVG Entsorgungs- und Energieverwertungs-
gesellschaft m.b.H., AT
50.00
Järvi-Suomen Voima Oy (Pohjolan Voima Oy, G3 serie), FI
50.00
Kainuun Voima Oy, FI
50.00
Kaukaan Voima Oy (Pohjolan Voima Oy, G9 serie), FI
54.00
Kymin Voima Oy (Pohjolan Voima Oy, G2 serie), FI
76.00
Madison Paper Industries, US
50.00
Rauman Biovoima Oy (Pohjolan Voima Oy, G4 serie), FI
71.95
37 Share-based payments
Share options
The Annual General Meeting held on 27 March 2007 approved the
Board of Directors’ proposal to issue share options to the Group’s key
personnel. The number of options was no more than 15,000,000,
entitling subscription for a total of no more than 15,000,000 UPM-
Kymmene Corporation shares. Of the share options, 5,000,000 were
marked with the symbol 2007A, 5,000,000 are marked with the symbol
2007B and 5,000,000 are marked with the symbol 2007C. The
subscription periods were 1 October 2010 to 31 October 2012 for share
options 2007A, 1 October 2011 to 31 October 2013 for share options
2007B, and 1 October 2012 to 31 October 2014 for share options 2007C.
The Deferred Bonus Plan is targeted at other selected key employees of
the Group and it consists of annually commencing plans. Each plan
consists of a one-year earning period and a two-year restriction period.
Prior to share delivery, the share rewards earned are adjusted with divi-
Changes in the numbers of share options granted
2014
2013
Weighted average
exercise price, EUR
Number of
share options
Weighted average
exercise price, EUR
Number of
share options
Outstanding 1 Jan.
10.49
4,501,500
8.71
7,734,478
Share options granted
–
–
–
–
Share options forfeited
–
–
–
–
Share options exercised
10.49
–4,433,802
6.24
–3,177,487
Share options expired
10.49
–67,698
6.24
–55,491
Outstanding 31 Dec.
–
10.49
4,501,500
Exercisable share options 31 Dec.
–
4,501,500
Weighted average remaining contractual life was 10 months as at 31 December 2013.
Share-based rewards
The Group's long-term incentives consist of the Performance Share Plan
(PSP) for senior executives and the Deferred Bonus Plan (DBP) for other
key employees.
The Performance Share Plan consists of annually commencing
three-year plans. The plan is targeted at Group Executive Team (GET)
The share subscription price was the trade volume weighted average
quotation of the share on the NASDAQ OMX Helsinki Ltd, from 1
April to 31 May 2008 for share option 2007A i.e. EUR 12.40 per share,
from 1 April to 31 May 2009 for share option 2007B i.e. EUR 6.24 per
share and from 1 April to 31 May 2010 for share option 2007C i.e.
EUR 10.49 per share.
The share subscription period for share options 2007A ended on
31 October 2012. During the entire share subscription period 300 shares
were subscribed with share options 2007A.
The share subscription period for share options 2007B ended on
31 October 2013. During the entire share subscription period 4,330,009
shares were subscribed with share options 2007B.
The share subscription period for share options 2007C ended on
31 October 2014. During the entire share subscription period 4,435,302
shares were subscribed with share options 2007C.
members and other selected members of the management and it consists
of a three-year earning period. The earned shares are delivered after the
earning period has ended. Under the plans, UPM shares are awarded
based either on group-level performance or total shareholder return dur-
ing a three-year earning period. Total shareholder return takes into
account share price appreciation and paid dividends. The number of
shares delivered to participants under Performance Share Plans as well
as other key figures of the plans are presented in the table below.
Performance share plans
PSP 2011-2013
PSP 2012-2014
PSP 2013-2015
PSP 2014-2016
No. of participants (31 Dec. 2014)
30
32
35
26
Actual achievement
0%
22.3%
–
–
Max no. of shares to be delivered
1)
:
to the President and CEO
–
48,837
219,000
125,000
to other members of GET
–
103,695
470,000
410,000
to other key individuals
–
85,855
465,000
347,500
Total max no. of shares to be delivered
–
238,387
1,154,000
882,500
Share delivery (year)
2014
2015
2016
2017
Earning criteria (weighting)
Operating cash flow
(60%) and EPS (40%)
Operating cash flow
(60%) and EPS (40%)
Operating cash flow
(60%) and EPS (40%)
Total shareholder
return (100%)
1)
For PSP 2011-2013 and PSP 2012-2014 actual no. of shares delivered.
dends and other capital distribution, if any, paid to all shareholders
during the restriction period. The shares earned on the basis of DBP
2011 were delivered in the spring of 2014 and shares earned on the basis
of DBP 2012 in the spring of 2015. Key figures related to the Deferred
Bonus Plans are presented in the table below.