UPM Annual Report 2016

134-135 / 176

ACCOUNTS
UPM Annual Report 2016 UPM Annual Report 2016 134 135
In brief Strategy Businesses Stakeholders Governance Accounts
CONTENTS
Leases
UPM has a sale and leaseback agreement and three finance lease
agreements regarding power plant machinery outstanding at the end
of 2016. The group uses the energy generated by these plants for its
own production. The group also has a finance lease arrangement
over the usage of a waste water treatment plant. In addition, the
group leases certain production assets and buildings under long term
lease arrangements. In 2016, one new finance lease agreement was
made with present value of EUR 2 million.
The group also leases office, manufacturing and warehouse space
through various non-cancellable operating leases. Certain contracts
contain renewal options for various periods of time.
Finance leases Operating leases
EURm 2016 2015 2016 2015
Within 1 year 94 37 74 65
Between 1 and 5 years 73 152 189 165
Later than 5 years 40 24 185 190
Total 207 213 448 420
Of which interest –12 –15 – –
Present value of future minimum lease payments 195 198 – –
Accounting policies
Leases
Leases of property, plant and equipment where the group, as a
lessee, has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are recognised as assets
and liabilities in the balance sheet at the commencement of lease
term at the lower of the fair value of the leased property and the
present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance
charges. The corresponding rental obligations, net of finance
charges, are included in other non-current debt. The interest element
of the finance cost is charged to the income statement over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. Property, plant
and equipment acquired under finance leases are depreciated over
the shorter of the asset’s useful life and the lease term.
Leases where the lessor retains substantially all the risks and
rewards of ownership are classified as operating leases. Payments
made as a lessee under operating leases are charged to the income
statement on a straight-line basis over the period of the lease.
EURm 2016 2015
Accumulated costs 154 153
Accumulated depreciation and impairments –59 –46
Carrying value, at 31 December 95 107
5.3 Financial assets and liabilities
by category
Financial assets and liabilities recognised in the balance sheet include
cash and cash equivalents, loans and other financial receivables,
investments in securities, trade receivables, trade payables, loans and
derivatives.
Classification of financial assets into different measurement
categories depends on the purpose for which the financial assets
were initially acquired and is determined at the acquisition date.
Financial assets and liabilities are offset and the net amount reported
in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously.
EURm
FAIR VALUE
THROUGH PROFIT
AND LOSS
AVAILABLE-FOR-
SALE FINANCIAL
ASSETS
LOANS AND
RECEIVABLES
DERIVATIVES
USED FOR
HEDGING
FINANCIAL
LIABILITIES AT
AMORTISED COST TOTAL
Energy shareholdings – 1,932 – – – 1,932
Other non-current financial assets:
Loans and receivables – – 19 – – 19
Derivatives 18 – – 218 – 236
255
Trade and other receivables – – 1,726 – – 1,726
Other current financial assets:
Loans and receivables – – 6 – – 6
Derivatives 47 – – 56 – 103
109
Total financial assets 65 1,932 1,751 274 – 4,022
Non-current debt:
Loans – – – – 1,800 1,800
Derivatives – – – 34 – 34
1,835
Other non-current financial liabilities:
Other liabilities 1) – – – – 94 94
Derivatives 10 – – 6 – 16
110
Current debt:
Loans – – – – 502 502
Derivatives 82 – – – – 82
584
Trade and other payables – – – – 1,594 1,594
Other current financial liabilities:
Derivatives 20 – – 96 – 116
116
Total financial liabilities 112 – – 136 3,990 4,238
EURm
FAIR VALUE
THROUGH PROFIT
AND LOSS
AVAILABLE-FOR-
SALE FINANCIAL
ASSETS
LOANS AND
RECEIVABLES
DERIVATIVES
USED FOR
HEDGING
FINANCIAL
LIABILITIES AT
AMORTISED COST TOTAL
Energy shareholdings – 2,085 – – – 2,085
Other non-current financial assets:
Loans and receivables – – 20 – – 20
Derivatives 20 – – 292 – 312
332
Trade and other receivables – – 1,743 – – 1,743
Other current financial assets:
Loans and receivables – – 5 – – 5
Derivatives 49 – – 79 – 128
133
Total financial assets 69 2,085 1,768 371 – 4,293
Non-current debt:
Loans – – – – 2,726 2,726
Derivatives 30 – – 41 – 71
2,797
Other non-current financial liabilities:
Other liabilities 1) – – – – 103 103
Derivatives 30 – – 41 – 71
174
Current debt:
Loans – – – – 248 248
Derivatives 21 – – – – 21
269
Trade and other payables – – – – 1,463 1,463
Other current financial liabilities:
Derivatives 40 – – 116 – 156
156
Total financial liabilities 121 – – 198 4,540 4,859
1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.
Leased assets included in property, plant and equipment
Future minimum lease payments
Financial assets and liabilities by category at the end of 2016
Financial assets and liabilities by category at the end of 2015