UPM Annual Report 2021








Other operating income Other operating income mainly includes gains on the disposal of non current assets and rental income. Further, other operating income includes foreign exchange gains and losses in respect of UPM’s normal business activities. Gains and losses on derivatives not qualifying hedge accounting are also recognised in other operating income. Emission rights The group participates in the European Emissions Trading Scheme aimed at reducing greenhouse gas emissions. Emission rights received from governments free of charge to emit a fixed tonnage of carbon dioxide in a fixed period of time give rise to an intangible asset for the emission rights, a government grant and a liability for the obligation to deliver emission rights equal to the emissions that have been made during the compliance period. Emission rights are initially recognised as intangible assets based on market value at the date of initial recognition. Emission rights are not amortised. If the market price of emissions rights at the balance sheet date is less than the recognised costs, any surplus emission rights that are not required to cover actual and estimated emissions during the financial year, are impaired to the market price. Government grants are recognised as deferred income in the balance sheet at the same time as emission rights and are recognised in other operating income in the income statement, systematically, over the compliance period to which the corresponding emission rights relate. The liability to deliver emission rights is recognised based on actual emissions. The emissions realised are expensed under other operating costs and expenses in the income statement and presented as a provision in the balance sheet. The liability is settled using emission rights on hand, measured at the carrying amount of those emission rights. Emission rights and associated provisions are derecognised when disposed. Any profit or loss represents the costs of purchasing additional rights to cover excess emissions, the sale of unused rights in the case realised emission are under emission rights received free of charge or the impairment of unused emission rights. 2.4 Earnings per share and dividend According to UPM dividend policy, the company aims to pay an attractive dividend amounting to 30-40% of the group annual operating cash flow per share. The dividend paid in 2021 were EUR 693 million (EUR 1.30 per share) which is 69% of the operating cash flow per share and in 2020 EUR 693 million (EUR 1.30 per share). The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 693 million, EUR 1.30 per share, will be paid in respect of 2021. The proposed dividend represents 55% of UPM’s operating cash flow per share for the year 2021.

Earnings per share

Germany, EUR 1 million (3 million) to Austria and EUR 5 million (5 million) to UK. Other operating income

Cost structure 2021 EUR 8,104 million


2021 2020

Profit attributable to owners of the parent company, EURm Weighted average no. of shares (1,000)

Delivery of own products 11%



Other fixed costs 8%


2021 2020

533,324 533,324

2.41 2.41

1.05 1.05

Basic earnings per share, EUR Diluted earnings per share, EUR

Gains on sale of non-current assets


25 13 57 24 -30 26

Employee costs 13%

Rental income

13 75 -22

Emission rights received

Wood and fibre 30%

Derivatives, non-qualifying hedges Exchange rate gains and losses

Other variable costs 17%


Accounting policies

Other Total




Fillers, coating and chemicals 11%

Energy 10%

Earnings per share Earnings per share (EPS) is the amount of profit for the period attributable to each ordinary share. The basic earnings per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of shares outstanding during the period plus the dilutive effect of share options. The group did not have share option schemes at the end of 2021 and 2020. Dividend Dividend distribution to the owners of the parent company is recognised as a liability in the group’s consolidated financial statements in the period in which the dividends are approved by the parent company’s shareholders.

In 2021, gains on sale of non-current assets include an EUR 133 millon gain from the disposal of Shotton Mill LTd. » Refer Note 8.1 Business acquisitions and disposals for further information. In 2020, gains on sale of non-current assets include an EUR 12 million gain from the disposal of UPM's 50 % share in the joint operation Kainuun Voima Oy. Emission rights The group has recognised EUR 75 million (57 million) of income in Other operating income and EUR 106 million of income (10 million of expense) under Other operating costs and expenses relating to CO 2 emissions. The liability to cover the obligation to return emission rights amounted to EUR 39 million (21 million) and is recognised in provisions. The emission rights recognised in intangible assets are specified below:

Cost structure 2020 EUR 7,371 million

Delivery of own products 11%

Other fixed costs 12%

Employee costs 16%

Wood and fibre 24%


2021 2020

Other variable costs 20%

Energy 7% Fillers, coating and chemicals 10%

Earnings and dividend per share

Carrying value, at 1 January

95 86 -78

80 57 -42 95 96

Emission rights received and purchased

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Deliveries and disposals

Carrying value, at 31 December

104 105

Auditor’s fees

Accumulated costs

Accumulated impairments





2021 2020

Carrying value, at 31 December



Audit fee

3.4 0.2 0.4 0.2 4.2

3.8 0.1 0.4 0.2 4.5

Audit related services






Tax services Other services

Accounting policies

Earnings per share Dividend per share (2021: proposal)


Research and development costs Research and development costs are expensed as incurred, except for certain development costs, which are capitalised as they generate future economic benefits, and UPM can the measure the cost reliably. Capitalised development costs are amortised on a systematic basis over their expected useful lives, usually not exceeding five years. Government grants Government grants are recognised at fair value where there is a reasonable assurance that the grant will be received and the group will comply with the attached conditions. Government grants relating to the purchase of property, plant and equipment are deducted from the acquisition cost of the asset and accordingly directly reduce the annual depreciation of the underlying asset. Other government grants are recognised in the income statement in the period necessary to match them with the costs they are intended to compensate.

In 2021, auditor's fees include EUR 0.2 (0.1) million related to audit services, EUR 0.0 (0.0) million related tax services and EUR 0.2 (0.2) million related to other services paid to PwC Oy. Research and development costs The research and development costs included in operating expenses were EUR 46 million (41 million) in 2021. The focus was on new technologies and developing businesses. Government grants In 2021, government grants recognised as deduction of operating expenses totalled to EUR 9 million (7 million) of which EUR 3 million (4 million) relates to Finland. EUR 4 million is related to COVID relief in Austria. In addition, the group received emission rights from governments amounting to EUR 75 million (57 million) of which EUR 22 million (21 million) relates to Finland, EUR 46 million (25 million) to





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