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Financial Statements

Notes to the Financial Statements 2016

The 2016 financial statements have been prepared in accordance with the Act on Metsähallitus (234/2016) and Government decree (1368/2016).

The financial statements of the enterprise and Group cover the period 15 April to 31 December 2016. The former enterprise was terminated on 14 April 2016 and the new Metsähallitus enterprise, compliant with the new Act, began operating on 15 April 2016.

Financing for public administrative duties from the state budget

In the enterprise's profit and loss account, financing received from the Budget is reported as income on an accrued basis, so that it corresponds to expenses (excluding depreciations), expense adjustments and the acquisition costs of fixed assets subject to wear and tear for the accounting period. Financing received during the financial period for incomplete buildings and other fixed assets is entered as acquisition cost deductions. The notes on public administrative duties give an account of financing received from the State budget.

Valuation and allocation principles

NON-CURRENT ASSETS
By a Government decision (27 October 2016), state-owned land and water assets were transferred into the possession of Metsähallitus’ business operations on 15 April 2016, as defined in the new Act. Other assets related to business operations and assets managed in relation to public administrative duties were transferred at book value. Simultaneously, the basic equity of business operations was raised and the losses associated with public administrative duties from the previous financial year, and the loss for the first part of the year 2016, were transferred as a reduction in other equity related to public administrative duties.

Areas dedicated to traditional sources of livelihood and most public water areas were transferred into a separate, other equity item on the accounts.

Following this, all assets transferred into or out of the possession of business operations without a consideration were measured at fair value, upon the transfer. Once the enterprise has received a decision on the transfer of assets and an auditor's report, the assets will be recorded as having been added to or deducted from the asset account of the balance sheet. The counter item is “Equity adjustment” under “Other liabilities” on the balance sheet, from which the transfer to or from basic equity is performed after the ministry has issued its decision, as necessary, on the change in basic equity.

Assets transferred to or away from public administrative duties are remeasured at the book value of the releasing party. The transfer of assets is recorded on the basis of the received decision on transfer in or out of the asset account of the balance sheets. The counter item is “Other equity” of public administrative duties.

Other non-current assets that can be depreciated are recorded in the acquisition cost, from which depreciations are deducted according to plan. Asset items are depreciated using the straight-line method, over their estimated useful life. Depreciations, for a decrease in substance, have been performed for the remeasured gravel resources.

During the financial period, the enterprise wrote down EUR 5.0 million of a subordinated loan made to a subsidiary, based on the profit performance outlook of the company.

The Group recorded a total of EUR 3.0 million in expenses and statutory provisions in relation to the restructuring of the sapling business.

VALUATION OF CURRENT ASSETS
Inventories
The immediate acquisition cost of inventories remaining at the end of the accounting period has been activated. If the probable acquisition cost or net realisable value of the inventories is less than the acquisition cost during the accounting period, the difference is recorded as an expense.

Financial assets
Securities held as financial assets have been measured at the acquisition cost or a lower probable net realisable value.

Comparability with the previous year

In accordance with the new Act, Metsähallitus and Metsähallitus Group began operating on 15 April 2016.

The Group’s and enterprise’s profit and loss account and balance sheet with notes, and the cash flow statement for the financial period 15 April-31 December, do not include comparative data for the previous year.

The result and balance sheet of Metsähallitus Group, Business Operations Group and public administrative duties for the entire year are presented as business information with comparison figures for the previous year. No results for the enterprise and business operations are presented for the entire year, due to the reorganisation.

Separate pro forma financial statements and an annual report for the calendar year 2016 were prepared in relation to the public administrative duties.

ADJUSTMENTS TO RESULTS, BALANCE SHEET AND DATA FOR THE PREVIOUS FINANCIAL YEAR
During the financial year, no adjustments were made to the results, balance sheet or data for the previous financial year.

STRUCTURAL CHANGES IN THE ORGANISATION
During the period, the forestry business was incorporated into a fully-owned subsidiary.

Notes to the consolidated financial statements 2016

All companies owned at the end of the year are included in the consolidated financial statements. The consolidated financial statements have been prepared using the purchase method. The difference between the acquisition cost of subsidiaries and equity corresponding to the acquired holdings is presented as goodwill, which is depreciated over a period of five years.

The results for subsidiaries are included in the consolidated financial statements for the period 15 April to 31 December 2016.

Internal Group transactions, as well as internal Group receivables and liabilities, have been eliminated.

Minority shares have been separated from equity and profit for the financial year and presented as separate items in the consolidated profit and loss account and balance sheet.