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

5.4 Financial income and expenses

5.5 Share capital and reserves The company has one series of shares and each share carries one vote. There are no specific terms related to the shares. At 31 December 2018, the number of the company’s shares was 533,735,699. The shares do not have any nominal counter value. The shares are included within the book entry system for securities.

EURm

2018

2017

Exchange rate gains and losses Derivatives

7

–46

Exchange gains and losses on financial liabilities measured at amortised costs Exchange gains and losses on financial assets measured at amortised costs

–20

89

14

–51

Other exchange rate gains and losses

1 2

–

–8

Fair value changes Fair value gains and losses on derivatives designated as fair value hedges

Accounting policies Transaction costs directly relating to the issue of new shares or share options are recognised, net of tax, in equity as a reduction in the proceeds. Where any group company purchases the parent company’s shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of tax), is deducted from equity attributable to the owners of the parent company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the parent company.

Share capital

–15

–54

Fair value adjustment of debt attributable to interest rate risk

19 –2

50

2018

2017

Fair value adjustment of firm commitments attributable to foreign exchange risk

–

Number of shares (1,000)

533,736 533,736

1 3

–4

Share capital, EURm

890

890

Total

–12

Interest and other finance costs, net Interest expense on financial liabilities measured at amortised cost

–44

–76

Treasury shares At 31 December 2018, the company held 411,653 (411,653) of its own shares, 0.08% (0.08%) of the total number of shares.

Interest income on derivatives

22

35

Interest income on loans and receivables Dividend income from energy shareholdings Losses on sale of associates and joint ventures

2 – –

2 8

–1

Other financial expenses, net

–40 –60 –56

–26 –57 –70

Reserves

Total

EURm

2018

2017

Fair value reserve Hedging reserve

1,646 1,462

104

91 10

Share-based payments reserve

28

Total other reserves

1,778 1,564 1,273 1,273

Net gains and losses on derivatives included in the operating profit

Reserve for invested non-restricted equity

Translation reserve

232

184

Total reserves

3,282 3,021

EURm

2018

2017

Cash flow hedges reclassified from hedging reserve Cash flow hedges recognised directly in operating profit

19 –4

–1

6

Fair value reserve This reserve represents the cumulative net change in the fair value of investments in equity securities comprising mainly of the fair value change of the energy shareholdings. Amounts are recycled only within equity upon the disposal of the asset. Hedging reserve This reserve comprises the cumulative net change in the fair value of the effective portion of cash flow hedging instruments related to hedged transactions that have not yet occurred and the cost of hedging when recognised in OCI. Amounts are recognised in profit or loss when the associated hedged transactions affect profit or loss or as part of the acquisition cost of property, plant and equipment. There were no reclassifications from the cash flow hedge reserve to profit or loss during the period resulting from inefficiency.

Share-based payments reserve The share-based payments reserve is used to recognise the fair value of the share incentive plans, Performance Share Plan and Deferred Bonus Plan, over their vesting period. Reserve for invested non-restricted equity Reserve for invested non-restricted equity includes, under the Companies’ Act, the exercise value of shareholders’ investments in the company unless otherwise decided by the company. Translation reserve This reserve includes the foreign currency differences arising from the translation of foreign operations, and the effective result of transactions that hedge the group’s net investments in foreign operations. There were no reclassifications from the translation reserve to profit or loss during the period resulting from inefficiency of net investment hedges.

Non-qualifying hedges

–11

14 18

Total

5

Foreign exchange gains and losses in the operating profit excluding non-qualifying hedges

EURm Sales

2018

2017

19

26

Other operating income

–10

–30

Total

9

–4

Hedging reserve

ELECTRICITY PURCHASE AND SALES HEDGES

CURRENCY CASH FLOW HEDGES

COST OF HEDGING

EURm

TAX

TOTAL

2018 Hedging reserve, at 1 January Amounts reclassified to profit and loss

38

76

– 4

–23

91

–23 –34 –19

3

3

–13

Change in fair value of hedging instruments recognised in OCI

75

–9 –5

–6

25

Hedging reserve, at 31 December

154

–26

104

160

161

CONTENTS

ACCOUNTS

UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018