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UPM Annual Report 2015

UPM Annual Report 2015

77

78

contents

Independent Practitioner’s Assurance Report

To theManagement ofUPM-KymmeneCorporation

We have been engaged by the Management of

UPM-Kymmene Corporation (hereinafter also

the Company) to perform a limited assurance

engagement on selected corporate responsibility

information for the reporting period 1 January

2015 to 31 December 2015, disclosed in UPM-

Kymmene Corporation’s Annual Report 2015 and

on its website in section “Responsibility” (here-

inafter CR Reporting). The assured information

is indicated in the Company’s GRI Content Index

2015 on the Company’s website.

Furthermore, the assurance engagement has

covered UPM-Kymmene Corporation’s adher-

ence to the AA1000 AccountAbility Principles

with moderate (limited) level of assurance.

Management’s responsibility

TheManagement of UPM-Kymmene Corporation

is responsible for preparing the CRReporting in

accordance with the Reporting criteria as set out in

the Company’s reporting instructions and the G4

Sustainability Reporting Guidelines of the Global

Reporting Initiative. TheManagement of UPM-

Kymmene Corporation is also responsible for such

internal control as themanagement determines is

necessary to enable the preparation of CRReport-

ing that is free frommaterial misstatement, wheth-

er due to fraud or error.

The Management of UPM-Kymmene Corpo-

ration is also responsible for the Company’s

adherence to the AA1000 AccountAbility Princi-

ples of inclusivity, materiality and responsiveness

as set out in AccountAbility’s AA1000 Account-

Ability Principles Standard 2008.

Practitioner’s responsibility

Our responsibility is to express a limited assur-

ance conclusion on the CR Reporting and on the

Company’s adherence to the AA1000 Account-

Ability Principles based on the procedures

we have performed and the evidence we have

obtained. We conducted our limited assurance

engagement in accordance with the International

Standard on Assurance Engagements (ISAE)

3000 (Revised) “Assurance Engagements Other

than Audits or Reviews of Historical Financial

Information”. That Standard requires that we

plan and perform the engagement to obtain

limited assurance about whether the CR Report-

ing is free frommaterial misstatement.

In addition, we have conducted our work in

accordance with the AA1000 Assurance Standard

2008. For conducting a Type 2 assurance engage-

ment as agreed with the Company, the AA1000AS

(2008) requires planning and performing of the

assurance engagement to obtain moderate (lim-

ited) assurance on whether any matters come to

our attention that cause us to believe that UPM-

Kymmene Corporation does not adhere, in all

material respects, to the AA1000 AccountAbility

Principles and that the CR Reporting is not reli-

able, in all material respects, based on the Report-

ing criteria.

In a limited assurance engagement the evi-

dence-gathering procedures are more limited

than for a reasonable assurance engagement, and

therefore less assurance is obtained than in

a reasonable assurance engagement. An assur-

ance engagement involves performing proce-

dures to obtain evidence about the amounts

and other disclosures in the CR Reporting, and

about the Company’s adherence to the AA1000

AccountAbility Principles. The procedures

selected depend on the practitioner’s judge-

ment, including an assessment of the risks of

material misstatement of the CR Reporting

and an assessment of the risks of the Com-

pany’s material nonadherence to the AA1000

AccountAbility Principles.

Our work consisted of, amongst others,

the following procedures:

• Interviewing senior management of the

Company.

• Interviewing employees from various organi-

sational levels of the Company with regards

to materiality, stakeholder expectations,

meeting of those expectations, as well as

stakeholder engagement.

• Assessing stakeholder inclusivity and respon-

siveness based on the Company’s documenta-

tion and internal communication.

• Assessing the Company’s defined material

corporate responsibility topics as well as

assessing the CR Reporting based on these

topics.

• Visiting the Company’s Head Office as well

as two sites in the United Kingdom.

• Interviewing employees responsible for

collecting and reporting the information

presented in the CR Reporting at the Group

level and at the different sites where our

visits took place.

• Assessing how Group employees apply the

reporting instructions and procedures of

the Company.

• Testing the accuracy and completeness of

the information from original documents

and systems on a sample basis.

• Testing the consolidation of information and

performing recalculations on a sample basis.

Limited assurance conclusion

Based on the procedures we have performed

and the evidence we have obtained, nothing

has come to our attention that causes us to

believe that UPM-Kymmene Corporation does

not adhere, in all material respects, to the

AA1000 AccountAbility Principles.

Furthermore nothing has come to our atten-

tion that causes us to believe that UPM-

Kymmene Corporation’s CR Reporting for the

reporting period ended 31 December 2015 is not

properly prepared, in all material respects, in

accordance with the Reporting criteria, or that

the CR Reporting is not reliable, in all material

respects, based on the Reporting criteria.

When reading our assurance report, the

inherent limitations to the accuracy and com-

pleteness of sustainability information should

be taken into consideration.

Our assurance report has been prepared in

accordance with the terms of our engagement.

We do not accept, or assume responsibility to

anyone else, except to UPM-Kymmene Corpo-

ration for our work, for this report, or for the

conclusions that we have reached.

Observations and recommendations

Based on the procedures we have performed

and the evidence we have obtained, we provide

the following observations and recommendations

in relation to UPM-Kymmene Corporation’s

adherence to the AA1000 AccountAbility Princi-

ples. These observations and recommendations do

not affect the conclusions presented earlier.

• Regarding Inclusivity:

UPM-Kymmene Corpo-

ration has processes in place for stakeholder

inclusivity and engagement. Stakeholder Rela-

tions coordinates stakeholder engagement at the

group level, while businesses are responsible for

local activity. Diverse stakeholder engagement

activities have been undertaken both at the

group level and at the local level in 2015. We

recommend that the Company continues to

develop the coordination of stakeholder engage-

ment activities by ensuring Stakeholder Func-

tions’ awareness of the local issues as well as the

related action plans.

Regarding Materiality:

UPM-Kymmene

Corporation has a systematic process in place to

evaluate and determine the materiality of corpo-

rate responsibility topics. In 2015, the Company

conducted a materiality analysis in association

with the update of its responsibility focus areas,

targets and performance indicators. We recom-

mend that the Company pays particular atten-

tion to business area specific characteristics in

implementing the responsibility activities in the

responsibility focus areas.

• Regarding Responsiveness:

UPM-Kymmene

Corporation has processes in place for respond-

ing to stakeholder needs and concerns. In future,

we recommend that the Company considers the

possibility to increase the disclosures onmaterial

sustainability topics at the business area level.

This would provide stakeholders further opportu-

nities to assess the Company’s performance in the

responsibility focus areas.

Practitioner’s independence,

qualifications and quality control

We have compliedwith the independence and other

ethical requirements of the

Code of Ethics for

Professional Accountants

issued by the Interna-

tional Ethics Standards Board for Accountants,

which is founded on fundamental principles of

integrity, objectivity, professional competence and

due care, confidentiality and professional behaviour.

Our multi-disciplinary team of corporate

responsibility and assurance specialists possesses

the requisite skills and experience within financial

and non-financial assurance, corporate responsi-

bility strategy and management, social and envi-

ronmental issues, as well as the relevant industry

knowledge, to undertake this assurance engage-

ment.

PricewaterhouseCoopers Oy applies Interna-

tional Standard on Quality Control 1 and accord-

ingly maintains a comprehensive system of quality

control including documented policies and proce-

dures regarding compliance with ethical require-

ments, professional standards and applicable legal

and regulatory requirements.

Helsinki, 19 February 2016

PricewaterhouseCoopers Oy

Merja Lindh

Maj-Lis Steiner

Authorised Public

Authorised Public

Accountant

Accountant

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

79 Report of the Board of Directors 89 Board of Directors’ proposal for the distribution of profits 90 Consolidated financial statements, IFRS 90 Consolidated income statement and statement of comprehensive income 91 Consolidated balance sheet 92 Consolidated statement of changes in equity 93 Consolidated cash flow statement 94 Notes to the consolidated financial statements 130 Parent company accounts 136 Information on shares 140 Key figures 2006–2015 142 Quarterly figures 2014–2015 144 Auditor’s report

1 Accounting policies

2 Critical judgements in applying accounting

policies and key sources of estimation uncertainty

3 Financial risk management

4 Segment information

5 Acquisitions and disposals and notes to the

cash flow statement

6 Other operating income

7 Costs and expenses

8 Change in fair value of biological assets

and wood harvested

9 Share of results of associated companies

and joint ventures

10 Depreciation, amortisation and impairment charges

11 Gains on available-for-sale investments, net

12 Finance costs

13 Income taxes

14 Earnings per share

15 Dividend per share

16 Goodwill

17 Other intangible assets

18 Property, plant and equipment

19 Investment property

20 Biological assets

21 Investments in associated companies

and joint ventures

22 Available-for-sale investments

23 Other non-current financial assets

24 Other non-current assets

25 Inventories

26 Trade and other receivables

27 Equity and reserves

28 Deferred income taxes

29 Retirement benefit obligations

30 Provisions

31 Interest-bearing liabilities

32 Other liabilities

33 Trade and other payables

34 Financial instruments by category

35 Derivative financial instruments

36 Principal subsidiaries and joint operations

37 Share-based payments

38 Related party transactions

39 Commitments and contingencies

40 Events after the balance sheet date

Accounts for 2015