UPM Annual Report 2021

ACCOUNTS FOR 2021

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Change in net debt 2020

Free cash flow Free cash flow is primarily a liquidity measure. It is an important indicator of UPM’s overall operational performance as it reflects the cash generated from operations after investing activities.

Free cash flow

Reported in financing activities in cash flow statement

NON CURRENT

1,500

OTHER FINANCIAL ASSETS

CASH AND CASH EQUIVALENTS

LOANS INCL. REPAYMENTS

LEASE LIABILITIES

CURRENT LOANS

NET DERIVATIVES

1,200

EURm

NET DEBT

EURm

2021 2020

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

708

586

2

-159

-54

-1,536

-453

1,250 -1,323

1,005

Operating cash flow Investing cash flow

900

-879 126 -693

861

— —

— — —

— — — —

— — — — —

— — — — —

861

Free cash flow

-74

600

EURm

-31

-31 -86

-693

Dividends paid to owners of the parent company Dividends paid to non-controlling interests Contributions paid by non-controlling interests 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 Other financing cash flow

— — —

-86

Lease repayments

300

-12 82

-23 67

— —

-2

-2

Change in current liabilities Net cash flows from derivatives

0

—

-17

-17

-5

-4

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 Change in cash and cash equivalents

17 18 19 20 21

-10

—

—

—

—

—

-10

7

10

—

—

—

—

-47

—

-47

224

47

— —

— —

— —

— —

3

—

3

-5

-3

—

-197 -197

-197 473

Change in net debt, cash Change in net debt, non-cash

476 114 590

473

820

-86

-2

-17

-44

36

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

Change in net debt Opening net debt Closing net debt

509 -453

1

64

— — — — —

— —

— — — — —

— — —

65

56

—

5

5

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

647

56

4

—

15

20 -46

-35

-25

— —

13

1

—

—

1

Bonds

Reclassification between non-current and current loans Liabilities related to assets classified as held for sale

-3

—

3

—

—

—

—

NOMINAL VALUE ISSUED, MILLION

CARRYING VALUE 2021 EURm

CARRYING VALUE 2020 EURm

-8

—

—

—

— —

—

-8

INTEREST RATE, %

FIXED RATE PERIOD

CURRENCY

-39

44

3 2

15

13

36 56

1997-2027 2020-2028 2021-2031

7.450 0.125 0.500

USD EUR EUR

375 750 500

413 718 494

411 741

Carrying value, at 31 December

1,489

544

-161

-97

-1,720

—

Value, at 31 December

1,624

1,153

Current portion

—

—

Non-current portion

1,624

1,153

Leases Leases of property, plant and equipment where UPM, as a lessee, obtains substantially all of the economic benefits from the use of the identified asset and where UPM has the right to direct the use of the identified asset, are classified as leases. Approximately 36 % (33%) of leased assets recognised on the balance sheet consists of land areas in Uruguay, which the group uses for eucalyptus plantations. Approximately 30% (34%) of the leased assets on the balance sheet consist of five power plants. UPM uses the energy generated by these plants for its own production. In addition, the group has leased one waste water treatment plant as well as several warehouses, terminals, offices, railcars and vessels. UPM also leases some production machinery and equipment like forklifts and vehicles that are insignificant to the total leased assets portfolio.

In 2021, the total cash outflow for leased assets was EUR 84 (86) million. The expenses related to short-term leases recognised in the income statement in 2021 amounted to EUR 3 (7) million. The group had no significant variable lease payments in 2021. The lease commitments for leases not commenced at year-end 31 December 2021 totalled approximately EUR 409 (412) million, which are mostly related to long-term charter agreements, railway service agreement in Uruguay and service agreements related to wood handling, waste water treatment and other utilities in Leuna, Germany.

188

UPM FINANCIAL REPORT 2021 189 UPM ANNUAL REPORT 2021 189

UPM ANNUAL REPORT 2021

UPM FINANCIAL REPORT 2021 188