International technology Group ANDRITZ has received an order from Guangxi Sun Paper to supply two tissue machines for its new mill in Beihai City, Guangxi Province, China. Start-up is planned for 2021. The ANDRITZ tissue machines are of the type PrimeLineTM W 2000, with a design speed of 2,000 m/min and a working width of 5.65 m. They are equipped with a large suction press roll, an 18 ft. PrimeDry Steel Yankee with head insulation, and a re-evaporation system, thus enabling energy savings. The scope of supply also includes FibreSolve FSV pulpers, the paper machine approach flow systems, broke handling and fiber recovery, and automation systems (QCS, DCS).
Stora Enso has decided to start using a valuation method for its forest assets in the Nordics based on market transaction data and change the accounting policy from the fourth quarter of 2020 onwards. Preliminary estimations, based on transactions in those areas in which Stora Enso has forest land, indicate that the value of the Group’s forest assets, including leased land, will be between EUR 6.5 billion and EUR 7.0 billion, compared with the end of Q3/2020 book value of EUR 5.4 billion.
The review of the fair value will be completed during the fourth quarter and will take into account also the latest transaction prices. Deferred tax liability will be recognised based on the difference between the forest assets’ book value and their value for tax purposes in the same manner as currently.
Forest assets are defined as standing growing trees and the related forest land. From the fourth quarter of 2020 onwards, forests assets in Sweden will be valued by using a market approach method based on the forest market transactions in the areas where Stora Enso’s forests are located. Therefore, forest land, currently accounted at cost, will be measured using the revaluation method and this is considered as a change in accounting policy. In Sweden, reliable market transaction data is available and provides a more transparent and observable valuation basis.
For the Finnish forest assets (through Stora Enso’s 41% ownership in Tornator), the market approach is not considered a reliable valuation method as the market data is not available with enough details, for example in terms of forest cubic meters of the traded estates. As a result, there is no change in valuation method for biological assets. However, Stora Enso’s share of the forest land, currently accounted at cost, will be measured in Stora Enso’s books by using the revaluation method.
For the plantation forests, there will not be any change in the valuation method as there is no reliable market transaction data available. Plantation forest land will continue to be accounted at cost and will be classified as a separate asset class as compared to Nordic forest land to reflect the different nature, usage and characteristics. The main difference is the short-term growing cycle of 6–12 years in plantations versus the long-term growing cycle of 60–100 years in Nordic forests. There are also differences in regeneration methods, forest management and use of the assets for other purposes.
Most of the change in the value of forest assets relates to land. The revaluation of land, net of deferred taxes, will be reported in Other Comprehensive Income. The revaluation of biological assets is expected to be recognised as a positive non-operational fair valuation item, together with the related deferred tax impact, in the Income Statement of the fourth quarter of 2020.