UPM Annual Report 2019

5.2 Net debt 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 2019, the group reduced net debt by EUR 142 million. Net debt totalled EUR -453 million (-311 million) at the end of 2019. UPM has adopted IFRS 16 Leases standard on 1 January 2019 without restating prior years. The change in lease accounting policy has resulted in an increase in net debt by EUR 491 million on 1 January 2019.

Change in net debt 2019

Reported in financing activities in cash flow statement

NON-CURRENT LOANS INCL. REPAYMENTS

OTHER FINANCIAL ASSETS

CASH AND CASH EQUIVALENTS NET DEBT

LEASE LIABILITIES

CURRENT LOANS

NET DERIVATIVES

EURm

Carrying value, at 31 December 2018 Impact of adoption of IFRS 16 Carrying value, at 1 January 2019 Change in net debt, cash Proceeds from non-current debt Payments of non-current debt

669

98

9

-135

-64

-888

-311

— 491

—

—

—

— 491

669

588

9

-135

-64

-888

179

13 -6

— —

— —

— —

— —

— —

13 -6

Net debt

Lease repayments

-82

-82

Change in current liabilities Net cash flows from derivatives

— —

— —

-7 —

— 11

— —

— —

-7 11

EURm Bonds

2019

2018 405

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

431

—

—

—

—

6

—

6

Loans from financial institutions

35

39 90

Lease liabilities

504 225

— —

— —

— — -7 — — — — —

— — 11

5

—

5

Other loans

219 753

Change in cash and cash equivalents

—

-649 -649

-649 -710

1,195

Non-current debt

Accounting policies

7

-82

10

Repayments of non-current debt Repayments of lease liabilities

17 83

6 7 3 9

Change in net debt, non-cash New contracts and subsequent additions

Debt Debt comprising of bonds, bank and pension loans, lease liabilities 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.

—

76

—

— — -1 — -1

—

76

Derivatives

3 2

Fair value gains and losses Exchange gains and losses

20 12

—

-35

— -15

Other liabilities Current debt

5

— —

1

17

104

25

Effective interest rate adjustment

1

—

—

1

1,299

778

Total debt

32

81

-35

1

78

Carrying value, at 31 December 2019

708

586

2

-159

-54

-1,536

-453

Loan receivables

7

7

Derivatives

154

134

Other receivables

19

31

Change in net debt 2018

180

171

Non-current interest-bearing assets

Loan receivables

8 8

8 4

Reported in financing activities in cash flow statement

Derivatives

NON-CURRENT LOANS INCL. REPAYMENTS

OTHER FINANCIAL ASSETS

CASH AND CASH EQUIVALENTS NET DEBT

Other receivables

20

18

LEASE LIABILITIES

CURRENT LOANS

NET DERIVATIVES

Cash and cash equivalents Current interest-bearing assets Total interest-bearing assets

1,536 1,571 1,752 -453

888 918

EURm

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

991

105

5

-143

-68

-716

174

1,089

-311

Net debt

-324

— -7 —

— —

— — —

— — —

— -324

Lease repayments

— —

— —

-7

Change in current liabilities

4

4

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

—

—

—

—

7

—

7

—

—

—

—

-3

—

-3

Change in cash and cash equivalents

—

— -7

—

— —

—

-172 -172

-172 -495

-324

4

4

Change in net debt, non-cash Fair value gains and losses Exchange gains and losses Effective interest rate adjustment

-19

—

— — — —

8

— — — —

— -10

19

1

— —

— — —

20

1 1

—

1

1

8

10

669

98

9

-135

-64

-888

-311

Carrying value, at 31 December

180

181

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS

ACCOUNTS

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS