UPM annual report 2015

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UPM Annual Report 2015 UPM Annual Report 2015 117 118
contents accounts
IN BRIEF STRATEGY BUSINESSES STAKEHOLDERS GOVERNANCE ACCOUNTS
Reconciliation of the movements of deferred tax asset and liability balances during the year 2014
EURm
As at
1 Jan.
2014
Charged to
the income
statement
Charged to
OCI
Translation
differences
As at
31 Dec.
2014
Deferred tax assets
Intangible assets and property, plant and equipment 213 –53 – – 160
Inventories 27 8 – – 35
Retirement benefit obligations and provisions 135 –23 46 – 158
Other temporary differences 30 7 – – 37
Tax losses and tax credits carried forward 252 –12 – 1 241
Deferred tax assets, total 657 –73 46 1 631
Deferred tax liabilities
Intangible assets and property, plant and equipment 239 –28 – – 211
Biological assets 198 3 – 4 205
Retirement benefit obligations and provisions 18 –1 –8 – 9
Other temporary differences 139 8 –45 – 102
Deferred tax liabilities, total 594 –18 –53 4 527
The amounts recognised in the balance sheet
Deferred tax assets 564 –79 46 1 532
Deferred tax liabilities 501 –24 –53 4 428
Deferred tax liabilities, less deferred tax assets –63 55 –99 3 –104
Post-employment and other long-term benefits as at 31 December 2015
EURm Pension benefits
Other post-
employment
benefits
Other long-term
employee
benefits Total
Present value of funded obligations 888 – – 888
Present value of unfunded obligations 551 31 – 582
Fair value of plan assets –851 – – –851
Net defined benefit liability 588 31 – 619
Other long-term employee benefits – – 35 35
Defined benefit asset reported in the assets (Note 24) 93 – – 93
Total liability in the balance sheet 681 31 35 747
Post-employment and other long-term benefits as at 31 December 2014
EURm Pension benefits
Other post-
employment
benefits
Other long-term
employee
benefits Total
Present value of funded obligations 923 – – 923
Present value of unfunded obligations 625 33 – 658
Fair value of plan assets –794 – – –794
Net defined benefit liability 754 33 – 787
Other long-term employee benefits – – 40 40
Defined benefit asset reported in the assets (Note 24) 40 – – 40
Total liability in the balance sheet 794 33 40 867
The net liability of pension and other post-employment benefits by country as at 31 December 2015
EURm Finland Germany UK
Other
countries Total
Present value of funded obligations 314 29 504 41 888
Present value of unfunded obligations – 490 – 92 582
Fair value of plan assets –406 –2 –409 –34 –851
Net liability –92 517 95 99 619
The net liability of pension and other post-employment benefits by country as at 31 December 2014
EURm Finland Germany UK
Other
countries Total
Present value of funded obligations 355 33 494 41 923
Present value of unfunded obligations – 559 – 99 658
Fair value of plan assets –394 –2 –363 –35 –794
Net liability –39 590 131 105 787
At 31 December 2015, net operating loss carry-forwards for which
the Group has recognised a deferred tax asset amounted to EUR 797
million (782 million), of which EUR 665 million (630 million) was
attributable to German subsidiaries and EUR 0 million (39 million) to
a Canadian subsidiary. In Germany the net operating loss carry-
forwards do not expire. In other countries net operating loss carry-
forwards expire at various dates and in varying amounts. The net
operating loss carry-forwards for which no deferred tax is recognised
due to uncertainty of their utilisation amounted to EUR 1,071 million
(1,088 million) in 2015. These net operating loss carry-forwards are
mainly attributable to a Canadian subsidiary and certain German
and French subsidiaries.
No deferred tax liability has been recognised for the undistrib-
uted profits of Finnish subsidiaries and associated companies as such
earnings can be distributed without any tax consequences.
In addition, the Group does not recognise a deferred tax liability
in respect of undistributed earnings of non-Finnish subsidiaries to the
extent that it is probable that the temporary difference will not reverse
in the foreseeable future.
29 Retirement benefit obligations
The Group operates a number of defined benefit and contribution
plans in accordance with local conditions and practices in the coun-
tries of those respective plans. About 90% of the Group's defined
benefit arrangements exist in Finland, in the UK and in Germany. The
Group has defined benefit obligations also in Austria, Holland,
France, Canada and in US. One quarter of Group´s employees are
active members of defined benefit arrangement plans.
In Finland employers have to insure their employees for statutory
benefits, as determined in Employee’s Pension Act (TyEL). TyEL
provides the employee with insurance protection for old age, disability
and death. The benefits can be insured with an insurance company or
the employer can establish a fund or a foundation to manage the
statutory benefits. Approximately 90% of Group´s Finnish employees
are insured with an insurance company and these arrangements are
regarded as defined contribution plans. In addition, the Group
operates a TyEL Foundation to fulfil the requirement for approximately
10% of employees. The TyEL Foundation, Kymin Eläkesäätiö, is
regarded as a defined benefit plan for the benefits that are based on
employee's average salary. The TyEL Foundation is administered by
the representatives of both the employer and the employees. The
Foundation has named an authorised representative to take care of its
regular operations. The Plan is supervised by Financial Supervisory
Authority.
In Finland there will be reform to the Employee´s Pension Act
(TyEL) that will come into effect as of beginning of 2017. The effect of
the reform to Group´s defined benefit obligation in TyEL Foundation,
Kymin eläkesäätiö, in 2015 is EUR 4 million, which is recognised as
past service cost.
In the UK, the Group operates a legacy defined benefit scheme,
which is closed both to new members and future accrual. A defined
contribution section also exists and is open to all current employees.
The UK Pension Scheme operates under a single Trust which is inde-
pendent from the Group.
In Germany employees within defined benefit arrangements are
entitled to annual pensions on retirement based on their service and
final salary. The members also receive benefits on disability and on
death.