UPM Annual Report 2021

ACCOUNTS FOR 2021

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Maturity table of derivatives included in net debt and guarantees at the end of 2020 EURm 2021 2022 2023

Change in net debt 2021

Reported in financing activities in cash flow statement

2024

2025 2026+ TOTAL

NON CURRENT

Net settled interest rate swaps Net inflow

NET

INVEST

OTHER FINANCIAL ASSETS

CASH AND CASH EQUIVALENTS NET DEBT

19

19

19

17

16

29

120

LOANS INCL. REPAYMENTS

LEASE LIABILITIES

CURRENT LOANS

DERIVA

MENT FUNDS

EURm

TIVES

Net outflow

—

—

—

—

—

-3

-4

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

1,489

544

2

-161

—

-97

-1,720

56

Gross settled derivatives Gross currency swaps Total inflow

600

— —

— — — — —

— — — —

— — — — —

— — — — —

— — — — —

600

6

6

6

6

6

188 -170

220 -173

-16

-16 -84

Total outflow

-1

-1

-1

-1

-1

— — —

-84

Lease repayments

Forward foreign exchange contracts Total inflow

— —

—

Change in current liabilities Net cash flows from derivatives

715 -711

— — —

— — —

— — —

— — —

— — —

715 -711

34

34

Total outflow Guarantees

Transaction costs and discounts in operating cash flow Change in other financial assets in operating cash flow Change in other financial assets in investing cash flow

2

2

-7

—

—

—

—

—

—

-7

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 2021, net debt increased by EUR 591 million. Net debt totalled EUR 647 million (56 million) at the end of 2021. 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 March 2021, UPM successfully issued a new EUR 500 million Green Bond under its EMTN (Euro Medium Term Note) programme and its Green Finance Framework. The bond matures in March 2031 and pays a fixed coupon of 0.50%. In November 2020 UPM 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 bonds. The net proceeds from the bonds are used for financing and/or refinancing Eligible Projects and Assets under UPM’s Green Finance Framework. Both bonds are listed on the Irish Stock Exchange plc, trading as Euronext Dublin.

Net debt EURm

—

—

—

—

—

-224

—

-224

2021 2020

— — —

— — —

— — — — — — — — — —

— — —

—

5

— —

5

-100

— —

-100 268 476

Bonds

1,624

1,153

Change in investment funds

Loans from financial institutions

213 504

121 469

Change in cash and cash equivalents

—

268 268

577

-84

34

-100

-219

Lease liabilities

Derivatives Other loans

23

—

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

10

93

— —

— — — — — —

— — — — — —

— — —

103

201

210

Non-current debt

—

1

1

2,566

1,952

Lease liability reassessments Fair value gains and losses Exchange gains and losses Effective interest rate adjustment

-53 21

—

28

-25 33

Repayments of non-current debt Repayments of lease liabilities

7

5

70

75

21

— —

-8

Derivatives

8 2

8 2

3

—

—

3

Other liabilities Current debt

-20

115 574

28 -99

-8

114 647

Carrying value, at 31 December

2,046

2

-100

-317

-1,460

86

90

Total debt

2,652

2,042

Loan receivables

4

4

Derivatives

126

157

Other receivables

19

20

Non-current interest-bearing assets

148

181

Loan receivables

3 4

8

Derivatives

12 66

Other receivables Investment funds

292 100

Net debt

—

10

1,000

Cash and cash equivalents

1,460 1,858 2,006

1,720 1,805 1,986

Current interest-bearing assets Total interest-bearing assets

750

Gearing ratio, %

Net debt

647

56

5

500

250

Accounting policies

EURm

0

0

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.

-250

-5

-500

17 18 19 20 21

186

UPM FINANCIAL REPORT 2021 187 UPM ANNUAL REPORT 2021 187

UPM ANNUAL REPORT 2021

UPM FINANCIAL REPORT 2021 186