The fair value (IFRS) of Tornator’s Finnish forests increases and will exceed Euro 2 billion. The company owns an area of approximately 643,000 hectares in Finland, with a balance sheet value of approximately Euro 1,671 million (biological assets) in the Financial statements at 31 December 2020, and approximately Euro 2,008 million after the valuation update, i.e. approximately Euro 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 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 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.
Tornator is a leading company specialised in sustainable forestry in Europe. It owns forests in Finland, Estonia and Romania.
