UPM Annual Report 2021

ACCOUNTS FOR 2021

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Information on shares Shares UPM has one class of shares. Each share entitles the holder to one vote at the General Meeting of UPM. On 31 December 2021, the total number of UPM shares was 533,735,699. Through the issuance authorisation described below, the number of shares may increase to a maximum of 558,735,699. On 31 December 2021, UPM held 411,653 treasury shares, representing approximately 0.08% of the total number of UPM shares and voting rights. There are no specific terms related to the shares. In 2021, UPM shares worth a total of EUR 8,435 million (9,921 million) were traded on the Nasdaq Helsinki stock exchange. This is estimated to represent more than 70% of the total trading volume in UPM shares. The highest listing was EUR 35.37 in September and the lowest was EUR 29.11 in January.

R&D’s role in different businesses BUSINESS AREA DESCRIPTION UPM Biorefining UPM Pulp

In 2021, special effort was placed on supporting UPM’s growth strategy and implementing the right solutions for our state-of-the-art pulp mill in Uruguay, scheduled to start up by the end of Q1 2023. To ensure good communication, cooperation and fast development at exceptional times with restrictions like during the COVID-19 pandemic, new operational models were brought in. Having structured processes and Technical Customer Service, Development and Research experts in all our targeted continents led to both successfully implementing better own solutions and meeting current needs as well as those of target customers. Good results were achieved in several end-use areas and regions, resulting in improved production efficiency both on our side and on the customers’ side. Our improved level of digitalisation implementation throughout the value chain enabled more automated traceability and new cost-efficient ways to deliver the right pulp for right products. Collaboration for the development of new applications for renewable plastics based on UPM BioVerno naphtha continued. Piloting, research and process development continued to take place at the UPM Biorefinery Development Centre (BrDC). UPM was also studying and testing the use of several new feedstocks that meet sustainability criteria, such as wood residues and feedstocks from carbon farming for our possible growth plans. The focus was on improving the cost-competitiveness and environmental performance of hydropower production assets and on developing competencies and business operations related to the optimisation of industrial energy consumption and demand-side flexibility. UPM Energy participated in several research programmes and undertook development work with the aim of improving UPM’s power generation and consumption operations in a changing electricity market, as well as developing means to mitigate the impact of hydro power operations on rivers and migratory fish. Research centres located at four sites (Finland, Poland, China, USA) support the product range expansion of paper, film and special products for global self-adhesive labelling business operations. Cost efficiency and product customisation requirements for various end-use segments were taken into account during the customer and market-orientated development phase. Global R&D continues to focus on technology platform development for coatings and polymer development. There was an increase in product safety and sustainable label material alternatives and new requirements were set for solutions supporting plastic recycling. Ongoing quality improvement remained an essential part of product and process development. Alternative solutions for raw materials and support meant that supply was a further compulsory top-priority topic. R&D and product development initiatives aim to enable high performance and efficiency in the value chain and to develop fibre-based alternatives for non-renewable materials. These initiatives also support growth targets by driving the innovation of products for new applications. In 2021, we added new barrier and Kraft paper grades to our portfolio. Looking towards the future, we continue to focus on co-creating sustainable packaging papers for increasingly demanding end-uses, together with the packaging value network; we currently have several ongoing co-creation initiatives. UPM Specialty Papers continues to develop release liner base papers to further improve efficiency and minimise the environmental impact of the value chain by, for example, downgauging and developing our offering of grades with recycled content. In 2021, the renewed Asian R&D centre “UPM Biofore Base” was inaugurated in Changshu, China. It is the first UPM Biofore base pilot outside Europe, providing seamless research, testing and laboratory analysis services. The new centre will cooperate closely with customers, universities, research institutions and suppliers. The Northern European Research Centre in Lappeenranta continues to strengthen its R&D capabilities for specialty papers, including packaging paper and release liner development. Research & development centres in Lappeenranta, Finland and Augsburg, Germany, continued to focus on investigating fibre concepts for various paper grades. RCF quality controls also took place. Product portfolio development focused on the needs of key customer groups, as well as broadening the approach to address new and profitable end uses. Alongside its value chain partners, UPM Communication Papers has continued to conduct projects designed to explore and develop solutions that can replace and decrease the amount of plastic used in packaging. In the area of energy, the focus was on technological innovations that help minimise energy needs at the production sites. Paper mills also developed intelligent operations to enable increasing demand-side management towards the electricity markets and networks to support system stability and decrease emissions at peak times. In terms of operations efficiency, our R&D efforts concentrated on improving the efficiency of several mills for pinpointed efficiency supporting actions as well as safety-improving areas. Digital solutions were developed, built and tested to optimise RCF delivery flows and machine performance measurement, as well as improve order information machine reading. Contributions from the R&D teams contributed to helping meet the 2030 targets in the areas of energy, water consumption, effluent treatment and resource efficiency. UPM Plywood product management and development provides competitive products within selected end-use areas in collaboration with our customers, superior technical expertise and support for customers, as well as support for the commercialisation of newly developed products and applications. For example, further expanding the use of lignin-based WISA BioBond gluing solution to new product lines.

Authorisations held by the Board of Directors The Annual General Meeting held on 30 March 2021 authorised the Board of Directors to decide on the repurchase of a maximum of 50,000,000 of the Company’s own shares. The authorisation will be valid for 18 months from the date of the AGM resolution. The Annual General Meeting held on 30 March 2021 authorised the Board of Directors to decide on the issuance of new shares, the transfer of treasury shares and the issuance of special rights entitling to shares in proportion to the shareholders’ existing holdings in the Company, or in a directed share issue, deviating from the shareholder’s pre-emptive subscription right. The Board of Directors may also decide on a share issue without payment to the Company itself. The aggregate maximum number of new shares that may be issued and treasury shares that may be transferred is 25,000,000, including the number of shares that can be received on the basis of special rights. The authorisation will be valid for 18 months from the date of the AGM resolution. Aside from the above, the Board of Directors has no current authorisation to issue shares, convertible bonds or share options.

UPM Biofuels

UPM Energy

UPM Raflatac

Changes in number of shares

UPM Specialty Papers

2021

2020

2019

2018

2017

Number of shares 1 January

533,735,699 533,735,699 533,735,699 533,735,699 533,735,699 533,735,699 533,735,699 533,735,699 533,735,699 533,735,699

Number of shares at 31 December

Major shareholders at 31 December 2021

UPM Communication Papers

NUMBER OF SHARES

HOLDING %

Ilmarinen Mutual Pension Insurance Company Varma Mutual Pension Insurance Company ELO Mutual Pension Insurance Company The Society of Swedish Literature in Finland

11,601,000 8,169,340 5,224,719 2,877,070 2,550,000 2,350,000 2,252,652 1,857,589 1,760,000 1,696,360 355,786,834 137,610,135 533,735,699

2.17 1.53 0.98 0.54 0.48 0.44 0.42 0.35 0.33 0.32

Holding Manutas Oy The State Pension Fund OP-Suomi Investment fund

Mandatum Life Insurance Company

UPM Plywood

SECURITY TRADING OY

Kymin Osakeyhtiön 100-vuotissäätiö Nominees & Registered foreign owners

66.66 25.78

Others

Total

100.00

146

UPM FINANCIAL REPORT 2021 147 UPM ANNUAL REPORT 2021 147

UPM ANNUAL REPORT 2021

UPM FINANCIAL REPORT 2021 146