UPM annual report 2015

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UPM Annual Report 2015 UPM Annual Report 2015 129 130
contents accounts
IN BRIEF STRATEGY BUSINESSES STAKEHOLDERS GOVERNANCE ACCOUNTS
Income statement
Year ended 31 Dec.
EURm Note 2015 2014
Sales 1 3,298 3,395
Change in inventories of finished goods and work
in progress 2 –33
Production for own use 4 5
Other operating income 2 169 186
Materials and services
Materials and consumables
Purchases during the financial period –1,992 –2,079
Change in inventories –26 –7
External services –38 –36
–2,056 –2,122
Personnel expenses 3
Wages and salaries –363 –361
Social security expenses
Pension expenses –64 –59
Other social security expenses –18 –22
–445 –442
Depreciation and value adjustments 4
Depreciation according to plan –220 –227
Value adjustments to goods held as
non-current assets – –50
–220 –277
Other operating costs and expenses 3 –163 –499
Operating profit 589 213
Financial income and expenses
Income from investments held as non-current
assets
Dividends from Group companies 182 559
Interest income from Group companies 6 8
Other interest and financial income
Other interest income from Group companies 3 3
Other interest income from other companies – 11
Other financial income from Group
companies 29 8
Other financial income from other companies – 1
Value adjustments on investments – –10
Interest and other financial expenses
Interest expenses to Group companies –34 –37
Interest expenses to other companies –26 –37
Other financial expenses to other companies –97 –101
Total financial income and expenses 63 405
Profit before extraordinary items 652 618
Extraordinary items 5
Extraordinary income 4 70
Extraordinary expenses –6 –9
Total extraordinary items –2 61
Profit before appropriations and taxes 650 679
Appropriations
Increase or decrease in accumulated
depreciation difference –44 117
Income taxes 6 –61 –86
Profit for the financial period 545 710
Cash flow statement
Year ended 31 Dec.
EURm Note 2015 2014
Operating activities
Profit before extraordinary items 652 618
Financial income and expenses –63 –405
Adjustments to operating profit 1 –39 384
Change in working capital 2 108 99
Interest paid –60 –75
Dividends received 182 560
Interest received 12 23
Other financial items –25 25
Income taxes paid 3 –90 –63
Net cash generated from operating activities 677 1,166
Investing activities
Investments in tangible and intangible assets –180 –181
Proceeds from sale of tangible and intangible
assets 135 100
Investments in shares and holdings –69 –29
Proceeds from sale of shares and holdings 818 59
Increase in other investments –71 –9
Decrease in other investments 15 39
Net cash used in investing activities 648 –21
Financing activities
Decrease in non-current liabilities –386 –766
Increase or decrease in current liabilities –614 –223
Share options exercised – 47
Dividends paid –373 –319
Group contributions received and paid 61 4
Net cash used in financing activities –1,312 –1,257
Cash and cash equivalents
Cash and cash equivalents at beginning of year 464 576
Change in cash and cash equivalents 13 –112
Cash and cash equivalents at end of year 477 464
Notes to the cash flow statement
1 Adjustments to operating profit
Depreciation 220 227
Gains and losses on sale of non-current assets –251 102
Value adjustments on non-current assets – 50
Change in provisions –8 5
Total –39 384
2 Change in working capital
Inventories 30 37
Current receivables 27 77
Current non-interest-bearing liabilities 51 –15
Total 108 99
3 Taxes from sales of non-current assets are reported here on a net basis.
Parent company accounts
(Finnish Accounting Standards, FAS)
In December 2008 the Supplier initiated the International Cham-
ber of Commerce (ICC) arbitration proceedings and submitted a claim
concerning the delay at the OL3 project and related costs. According
to TVO, the Supplier’s monetary claim, as updated in July 2015, is in
total approximately EUR 3.4 billion. The claim covers events occurred
during the construction period until the end of June 2011. The sum
includes penalty interest (until 31 July 2015) and payments allegedly
delayed by TVO under the plant contract together amounting to
approximately EUR 1.4 billion as well as approximately EUR 140 mil-
lion in alleged lost of profit. Having considered and found the earlier
claims by the Supplier to be without merit, TVO will scrutinize the
updated claim and respond to it in due course. According to TVO, the
quantification estimate of its costs and losses related to its claim in the
arbitration proceedings is approximately EUR 2.6 billion until the end
of 2018, which is the estimated start of the regular electricity produc-
tion of OL3 according to the schedule submitted by the Supplier in
September 2014. TVO´s current estimate was submitted to the tribunal
in the arbitration proceedings in July 2015. The Supplier consortium
companies (AREVA GmbH, AREVA NP SAS and Siemens AG) are
jointly and severally liable for the plant contract obligations. The arbi-
tration proceedings may continue for several years, and the claimed
amounts may change. No receivables or provisions have been
recorded by TVO on the basis of claims presented in the arbitration
proceedings.
Commitments
In the normal course of business, UPM enters into various agreements
providing financial or performance assurance to third parties. The
maximum amounts of future payments for which UPM is liable is dis-
closed in the table below under “Other commitments”.
Commitments
As at 31 December
EURm 2015 2014
On own behalf
Mortgages and pledges 220 289
On behalf of others
Guarantees 4 5
Other commitments, own
Operating leases, due within 12 months 65 60
Operating leases, due after 12 months 355 339
Other commitments 180 160
Total 824 853
Mortgages and pledges 220 289
Guarantees 4 5
Operating leases 420 399
Other commitments 180 160
Total 824 853
Property under mortgages given as collateral for own commitments
include property, plant and equipment, industrial estates and forest
land.
In addition, UPM has committed to participate in the share issue
from Pohjolan Voima Oy to finance the Olkiluoto 3 nuclear power
plant project. UPM’s total commitment of the share issue is EUR 119
million, of which EUR 31 million was paid in 2015, EUR 31 million in
2014 and EUR 31 million in 2013. The remaining part of the share
issue will be implemented during the coming years based on the
financing needs of the project.
Operating lease commitments,
where a Group company is the lessee
The Group leases office, manufacturing and warehouse space through
various non-cancellable operating leases. Certain contracts contain
renewal options for various periods of time.
The future aggregate minimum lease payments under
non-cancellable operating lease contracts
As at 31 December
EURm 2015 2014
No later than 1 year 65 60
1–2 years 50 47
2–3 years 45 39
3–4 years 36 35
4–5 years 34 31
Later than 5 years 190 187
Total 420 399
Capital commitments at the balance sheet date but not recognised
in the financial statements; major commitments under construction
listed below
EURm
Total
cost
Commitment
as at 31 December
2015 2014
Debottlenedking / Kaukas pulp mill 52 49 –
Mill expansion / Otepää 42 30 –
40 Events after the balance sheet date
The Group’s management is not aware of any significant events occur-
ring after 31 December 2015.