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The fair value of Tornator's Finnish forests increases and will exceed two billion euros
Tornator Oyj - Stock exchange release, 23 November at 9:00 AM
The fair value of Tornator's Finnish forests increases and will exceed two billion euros
The fair value (IFRS) of Tornator’s Finnish forests increases and will exceed two billion euros. The company owns an area of approximately 643,000 hectares in Finland, with a balance sheet value of approximately EUR 1,671 million (biological assets) in the Financial statements at 31 December 2020, and approximately EUR 2,008 million after the valuation update, i.e. approximately EUR 3,120 per hectare. The fair value is determined by an external evaluator Indufor Oy.
There are several factors affecting the increase in the fair value of forests. In the verification of stand growth, the company adopted MOTTI growth models developed by Natural Resources Institute Finland on the basis of the latest research results. New growth models show that increase in the stem volume of trees was faster than the previous estimate made 5 years ago. In addition, successful acquisition of new forests has increased future felling volumes and the increase in market prices for wood had a positive effect on forecasted future cash flows.
Tornator's forests are an excellent example of how sustainable forestry can increase positive climate impacts, promote biodiversity and improve the company's ability to generate economic added value. In the words of the President of Finland: “Forests are a good investment in many ways”.
Tornator continues to use the discounted cash flow method to value its forests. The real discount rate used to discount future cash flows remained unchanged at 3.25%.
The more detailed accounting principles for the fair value of the forest are described in the notes to the company's financial statements for 2020 under accounting principles for consolidated financial statements and accounting policies that require management judgement.
The increase in the fair value of forests will significantly improve the 2021 income measured at fair value but will have no cash flow effect in 2021.
For more information, please contact:
Henrik Nieminen, CEO, tel. +358 40 869 7613
Antti Siirtola, CFO, tel. +358 40 773 0975
Tornator is a leading company specialised in sustainable forestry in Europe. It owns forests in Finland, Estonia and Romania. In 2020, the Group’s net sales were some €118 million, and the balance sheet value was about €2.0 billion. The Group has around 180 employees. Tornator's own employees, and other companies and their employees working on its forestland, add up to around 1,000 person/years of employment. The owners of the parent company are Finnish, mainly institutional investors. Tornator's mission is to generate sustainable well-being from forests.
