UPM Annual Report 2018

UPM AT A GLANCE

STRATEGY

BUSINESSES

SOCIETY AND ENVIRONMENT

GOVERNANCE AND COMPLIANCE

REPORT OF THE BOARD OF DIRECTORS

FINANCIAL STATEMENTS

AUDITOR’S REPORT

OTHER FINANCIAL INFORMATION

5.2 Net debt

Maturity table of debt at the end of 2018

EURm Bonds

2019

2020

2021

2022

2023

2024+

TOTAL

Net debt is defined as the total of current and non-current debt less cash and cash equivalents and interest-bearing current and non- current financial assets. In 2018, the group reduced net debt by EUR 485 million. Net debt totalled EUR –311 million at the end of 2018 (174 million).

– 4 7 1 9

–

– 8 5 1 –

– 3 5 1 – 9

–

328

328

Loans from financial institutions

13 49

15

2

44 98

Finance leases Other loans Current loans

4 1 –

27

4 –

169

176

–

9

Principal payments Interest payments

22 36

66 32

13 32

20 32

525 137

654 302

32

Net debt

The difference between the above nominal values and carrying value of total debt arise from fair value adjustments increasing carrying value by EUR 133 million and other non-cash adjustments decreasing carrying value by EUR 10 million.

EURm Net debt

Gearing %

EURm Bonds

2018

2017

35

2,500

405

405

28

2,000

Loans from financial institutions

39 90

78 97

Maturity table of debt at the end of 2017

21

1,500

Finance leases

14

1,000

Other loans

219 753

209 789 306

EURm Bonds

2018

2019

2020

2021

2022

2023+

TOTAL

Non-current debt

7

500

208

–

–

–

– 8 – 5 1 –

313

521

Repayments of non-current debt

13

Loans from financial institutions

14 74

18

26

10

13

91 74

0

0

Derivatives

3 9

13

14 15 16

18 17

Pension loans Finance leases Other loans Current loans

– 7 4 –

–

– 5 1 –

–

Other liabilities Current debt

5

7 2 5

49

31

105 165

25

324

1 –

158

Total debt

778

1,114

–

5

Accounting policies

Principal payments Interest payments

310

29 35

76 31

17 31

15 31

515 162

961 329

Loan receivables

7

7

39

Derivatives

134

148

Debt Debt comprising of bonds, bank and pension loans and other loans is recognised initially at fair value, net of transaction costs and subsequently measured at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the estimated life of the borrowing. UPM classifies debt as non-current unless due for settlement within a year. Most of the debt is hedged in a fair value hedge relationship as described in » Note 6.1 Financial risk management.

Other receivables

31

34

The difference between the above nominal values and carrying value of total debt arise from fair value adjustments increasing carrying value by EUR 151 million and other non-cash adjustments decreasing carrying value by EUR 11 million.

Non-current interest-bearing assets

171

189

Loan receivables

8 4

5 8

Derivatives

Other receivables

18

21

Cash and cash equivalents

888 918

716 751 940

Current interest-bearing assets Total interest-bearing assets

Maturity table of derivatives included in net debt and guarantees at the end of 2018

1,089

Net debt

–311

174

EURm

2019

2020

2021

2022

2023

2024+

TOTAL

Net settled interest rate swaps Net inflow

11 –2

11

11

11

11

40

95 –2

Net outflow

–

–

–

–

–

Gross settled derivatives Gross currency swaps Total inflow

Change in net debt 2018

10 –1

7

7

7

7

205

242

Reported in financing activities in cash flow statement

Total outflow

–1

–2

–2

–3

–187

–195

Forward foreign exchange contracts Total inflow

NON-CURRENT LOANS INCL. REPAYMENTS

OTHER FINANCIAL ASSETS

CASH AND CASH EQUIVALENTS NET DEBT

409

– – –

– – –

– – –

– – –

– – –

409

FINANCE LEASES

CURRENT LOANS

NET DERIVATIVES

EURm

Total outflow Guarantees

–410

–410

2

2

Carrying value, at 1 January Change in net debt, cash Proceeds from non-current debt Payments of non-current debt

–991

–105

–5

143

68

716 –174

–

– 7 –

– –

– – –

– – –

– – –

–

Maturity table of derivatives included in net debt and guarantees at the end of 2017

324

331

Change in current liabilities

–

–4

–4

EURm

2018

2019

2020

2021

2022

2023+

TOTAL

Change in other financial assets in operating cash flow Change in other financial assets in investing cash flow Change in cash and cash equivalents

–

–

–

–

–7

–

–7

Net settled interest rate swaps Net inflow

21

12 –2

11

11

11

53

119

– –

– – 7

– –

– – –

3 –

–

3

Net outflow

–

–

–

–

–

–2

172 172

172 495

Gross settled derivatives Gross currency swaps Total inflow

324

–4

–4

Change in net debt, non-cash Fair value gains and losses Exchange gains and losses

89

8

7

7

7

198

315

19

–

– – – –

–8

– – – –

– – – –

10

Total outflow

–78

–1

–2

–2

–3

–192

–278

–19

–1

– –

–20

Forward foreign exchange contracts Total inflow

Effective interest rate adjustment

–1 –1

–

–1

356

– – –

– – –

– – –

– – –

– – –

356

–1

–8

–10 311

Total outflow Guarantees

–356

–356

Carrying value, at 31 December

–669

–98

–9

135

64

888

2

2

154

155

CONTENTS

ACCOUNTS

UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018