UPM Annual Report 2017

Accounts

In brief

Strategy

Businesses

Stakeholders

Governance

Information on shares Disclosures below form part of the Report of the Board of Directors.

Other reporting requirements Appointment

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Changes in number of shares

We have been acting as auditors appointed by the annual general meeting since 30 April 1996. Our appointment represents a total period of uninterrupted engagement of 22 years. The Company arranged the latest audit tendering process in 2013. Authorised Public Accountant (KHT) Merja Lindh has acted as the responsible auditor since 8 April 2014, representing a total uninterrupted period of four years. Other information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises information included in the report of the Board of Directors and in the Annual Report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion • the information in the report of the Board of Directors is consistent with the information in the financial statements • the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Other Statements We support the proposal that the financial statements are adopted. The proposal by the Board of Directors regarding the distribution of profits is in compliance with the Limited Liability Companies Act. We support that the members of the Board of Directors and the Managing Director of the parent company should be discharged from liability for the financial period audited by us.

2017

2016

2015

2014

2013

Number of shares 1 January

533,735,699 533,735,699 533,735,699 529,301,897 526,124,410

Options exercised

–

–

–

4,433,802

3,177,487

Number of shares at 31 December

533,735,699 533,735,699 533,735,699 533,735,699 529,301,897

Major shareholders at 31 December 2017

NUMBER OF SHARES 7,039,000 4,600,000 4,121,749 4,070,000 3,292,024 3,074,488 2,523,797 2,376,454 1,696,230 1,603,690 376,066,407 123,271,860 533,735,699

HOLDING %

IImarinen Mutual Pension Insurance Company

1.32 0.86 0.77 0.76 0.62 0.58 0.47 0.45 0.32 0.30

The State Pension Fund

The Local Government Pensions Institution ELO Mutual Pension Insurance Company The Society of Swedish Literature in Finland Varma Mutual Pension Insurance Company

OP-Suomi investment fund

Swiss National Bank

Kymin Osakeyhtiön 100-vuotissäätiö The Social Insurance Institution of Finland Nominees & registered foreign owners

70.46 23.10

Others

Total

100.00

Shareholders by category at 31 December, %

2017

2016

2015

2014

2013

Companies

2.1 2.4 5.1 4.8

2.2 3.1 5.8 4.8

2.3 3.4 6.0 5.0

2.8 4.3 8.0 5.3

3.2 4.1 7.8 5.7

Financial institutions and insurance companies

Public bodies

Non-profit organisations

Households

15.1 70.5

15.3 68.8

15.8 67.5

17.2 62.4

18.7 60.5

Non-Finnish nationals

Total

100.0

100.0

100.0

100.0

100.0

Share distribution at 31 December 2017

NUMBER OF SHARES,

NUMBER OF SHAREHOLDERS

% OF SHAREHOLDERS

SIZE OF SHAREHOLDINGS

MILLION % OF SHARES

1 – 100

25,133 47,443 15,292

28.18 53.19 17.15

1.4

0.2 3.6 7.9 5.4

101 – 1,000

19.4 41.6 29.0 72.6

1,001 – 10,000 10,001 – 100,000

1,197

1.34 0.14

Helsinki 15 February 2018

100,001 –

124

13.6 30.7 69.3

Total

89,189

100.00

163.9 369.8

PricewaterhouseCoopers Oy Authorised Public Accountants

Nominee-registered

Not registered as book entry units

–

0.0

Total

533.7

100.0

Merja Lindh Authorised Public Accountant (KHT)

Under the provisions of the Securities Markets Act, changes in holdings must be disclosed when the holding reaches, exceeds or falls below 5, 10, 15, 20, 25, 30, 50 or 66.7 (2/3) per cent of the voting rights or the number of shares of the company. The stock exchange releases on notifications of changes in holdings pursuant to Chapter 9, Section 5 of the Securities Market Act are available in UPM website: www.upm.com/ investors.

CONTENTS

ACCOUNTS

174

175

UPM Annual Report 2017

UPM Annual Report 2017