Stora Enso Oyj – Annual report – 31 December 2020
Industry: forestry, manufacturing
Note 1 Accounting principles (extract)
Consolidation principles (extract)
Joint control is the contractually agreed sharing of control of the joint arrangement, which exists only when decisions on relevant activities require the unanimous consent of the parties sharing control.
Joint operations are joint arrangements whereby the partners who have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the partners who have joint control of the arrangement have rights to the net assets of the joint arrangement.
The Group has two joint operations: Veracel and Montes del Plata. In relation to its interest in joint operations, as a joint operator, the Group recognises its share of assets, liabilities, revenues and expenses of the joint operation. The share is determined based on rights to the assets and obligations for the liabilities of each joint operator.
- Veracel is a joint owned (50%/50%) company of Stora Enso and Suzano located in Brazil. The pulp mill produces 1.2 million tonnes of bleached eucalyptus hard wood pulp per year and both owners are entitled to half of the mill’s output. The eucalyptus is sourced mostly from the company’s own forestry plantations. The mill commenced production in May 2005.
- Montes del Plata is a joint owned (50%/50%) company of Stora Enso and Arauco located in Uruguay. The Montes del Plata Pulp Mill’s annual capacity is 1.4 million tonnes of bleached eucalyptus hard wood pulp and Stora Enso’s part, 0.7 million tonnes, is sold entirely as market pulp. The eucalyptus is sourced mostly from the company’s own forestry plantations. The mill commenced production in June 2014.
Note 2 Critical accounting estimates and judgements (extract)
Control assessment of joint operations and associates
Note 1 Accounting principles describe Veracel and Montes del Plata as joint operations. In both companies Stora Enso’s ownership is 50%. The interpretations as joint operations are based on shareholders’ agreements which give Stora Enso rights to a share of returns and make the Group liable indirectly for the liabilities, as our ability to pay for the pulp is used to finance debts. The Group recognises its share of assets, liabilities, revenues and expenses of the joint operation, based on rights and obligations.
Associate companies are accounted for using the equity method. Stora Enso does not control the companies alone or jointly with other parties, but has significant influence and thus retains its significant non-controlling interest as equity accounted investments. These companies are presented in Note 13 Equity accounted investments.