UPM Annual Report 2020

Maturity table of derivatives included in net debt and guarantees at the end of 2019

Repayments of debt and maturities of unused committed credit lines at the end of 2020

EURm

2020 2021 2022 2023 2024 2025+ TOTAL

Net settled interest rate swaps Net inflow

1,200

14

15

15

15

14

40

112

Leases Loans Unused committed credit lines

Net outflow

—

—

—

—

—

—

-1

800

Gross settled derivatives Gross currency swaps Total inflow

EURm

400

7

7

7

7

7

204 -175

239 -181

Total outflow

-1

-1

-1

-1

-2

Forward foreign exchange contracts Total inflow

0

21

22

23

24

25

26+

325 -326

— — —

— — —

— — —

— — —

— — —

325 -326

Total outflow Guarantees

2

2

Maturity table of debt at the end of 2020

EURm Bonds

2021 2022 2023 2024 2025 2026+ TOTAL

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 2020, the group increased net debt by EUR 509 million. Net debt totalled EUR 56 million (-453 million) at the end of 2020. In October 2020 UPM established a EUR 3 billion Euro Medium Term Note (EMTN) programme and launched a Green Finance Framework. The independent second opinion concerning the framework was provided by CICERO Shades of Green. UPM’s framework was rated with the highest-grade, CICERO Dark Green. In November 2020 UPM successfully issued its first Green Bond under the EMTN programme with a nominal value of EUR 750 million. The bond matures in November 2028 and pays a fixed coupon of 0.125%. There are no financial covenants connected to the bond. The net proceeds from the bond will be used for financing and/or refinancing Eligible Projects and Assets under UPM’s Green Finance Framework. Then bond is listed on the Irish Stock Exchange plc, trading as Euronext Dublin.

Net debt

—

—

—

—

—

1,056

1,056

Loans from financial institutions

4

4

17 53

8

16 54

77

126 544 171

EURm Bonds

2020 2019

Lease liabilities Other loans Current loans

75

63

50

248 168

1 2

— —

— —

— —

— —

1,153

431

—

2

Loans from financial institutions

121 469 210

35

Principal payments Interest payments

82 44

67 40

71 39

59 38

70 37

1,550

1,898

Lease liabilities

504 225

127 325 The difference between the above nominal values and carrying value of total debt arise from fair value adjustments increasing carrying value by EUR 157 million and other non-cash adjustments decreasing carrying value by EUR 18 million. Maturity table of debt at the end of 2019

Other loans

Non-current debt

1,952

1,195

Repayments of non-current debt Repayments of lease liabilities

5

17 83

75

Derivatives

8 2

3 2

Other liabilities Current debt

EURm Bonds

2020 2021 2022 2023 2024 2025+ TOTAL

90

104

—

—

—

—

—

334

334

Total debt

2,042

1,299

Loans from financial institutions

16 83

10 68

6

18 49

1

1

53

Loan receivables

4

7

Lease liabilities Other loans Current loans

53

43

290 174

586 179

Derivatives

157

154

1 2

1

1

1

1

Other receivables

20

19

—

—

—

—

—

2

Non-current interest-bearing assets

181

180

Principal payments Interest payments

102

79 43

60 42

68 41

45 40

799 168

1,154

Loan receivables

8

8 8

Net debt

45

379

Derivatives

12 66

Other receivables

20

The difference between the above nominal values and carrying value of total debt arise from fair value adjustments increasing carrying value by EUR 152 million and other non-cash adjustments decreasing carrying value by EUR 9 million. Maturity table of derivatives included in net debt and guarantees at the end of 2020

1,500

15

Cash and cash equivalents

1,720 1,805 1,986

1,536 1,571 1,752

Current interest-bearing assets Total interest-bearing assets

1,000

10

Gearing ratio, %

Net debt

56

-453

EURm

2021 2022 2023 2024 2025 2026+ TOTAL

500

5

Net settled interest rate swaps Net inflow

Accounting policies

EURm

19

19

19

17

16

29

120

0

0

Net outflow

—

—

—

—

—

-3

-4

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.

Gross settled derivatives Gross currency swaps Total inflow

-500

-5

6

6

6

6

6

188 -170

220 -173

16 17 18 19 20

Total outflow

-1

-1

-1

-1

-1

Forward foreign exchange contracts Total inflow

715 -711

— — —

— — —

— — —

— — —

— — —

715 -711

Total outflow Guarantees

2

2

180

UPM ANNUAL REPORT 2020 UPM FINANCIAL REPORT 2020 65 181

UPM ANNUAL REPORT 2020

UPM FINANCIAL REPORT 2020 64