UPM Annual Report 2021








Other financial information Alternative performance measures

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Requirements Appointment We have been acting as auditors appointed by the annual general meeting since 30 April 1996. Our appointment represents a total period of uninterrupted engagement of 26 years. The Company arranged the latest audit tendering process in 2013. Authorised Public Accountant (KHT) Mikko Nieminen has acted as the responsible auditor since 4 April 2019, representing a total uninterrupted period of three years. Other Information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion • the information in the report of the Board of Directors is consistent with the information in the financial statements • the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Other Statements We support the proposal that the financial statements are adopted. The proposal by the Board of Directors regarding the distribution of profits is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director of the parent company should be discharged from liability for the financial period audited by us.

UPM presents certain performance measures of historical performance, financial position and cash flows, which in accordance with the “Alternative Performance Measures” guidance issued by the European Securities and Markets Authority (ESMA) are not accounting measures defined or specified in IFRS and are therefore considered as alternative performance measures. These alternative performance measures are described below:


Profit before income tax expense, finance expenses and finance income and net gains on sale of energy shareholdings as presented on the face of the IFRS income statement. Gains on sale of energy shareholdings are not recorded to the income statement from 2018 onwards.

Comparable EBIT Comparable EBITDA

Operating profit adjusted for items affecting comparability.

Operating profit before depreciation, amortisation and impairments, change in fair value of forest assets and wood harvested, share of results of associates and joint ventures and items affecting comparability.

Comparable profit before tax Comparable profit for the period

Profit before income tax expense excluding items affecting comparability. Profit for the period excluding items affecting comparability and their tax impact.

Comparable EPS, EUR

Earnings per share calculated in accordance with IFRS excluding items affecting comparability and their tax impact. Total of current and non-current debt less cash and cash equivalents and interest-bearing current and non-current financial assets. Certain non-operational or non-cash valuation transactions with significant income statement impact are considered as items affecting comparability, if they arise from asset impairments, restructuring measures, asset sales, fair value changes of forest assets resulting from changes in valuation parameters or estimates or changes in legislation or legal proceedings. In addition, the changes in fair value of unrealised cash flow and commodity hedges are classified as items affecting comparability. Numerical threshold for items to be considered as significant in UPM’s business areas UPM Biorefining, UPM Specialty Papers and UPM Communication Papers is determined as one cent (EUR 0.01) after tax per share or more. In other business areas, the impact is considered to be significant if the item exceeds EUR 1 million before tax.

Net debt

Items affecting comparability

Free cash flow

Cash generated from operations after cash used for investing activities. Profit for the period as a percentage of average equity. Return on equity (ROE) excluding items affecting comparability.

Return on equity (ROE), %

Comparable ROE, %

Return on capital employed (ROCE), %

Profit before taxes, interest expenses and other financial expenses as a percentage of average capital employed.

Comparable ROCE, %

Return on capital employed (ROCE) excluding items affecting comparability.

Capital employed

Group total equity and total debt.

Business area’s comparable ROCE, %

Business area’s operating profit adjusted for items affecting comparability as a percentage of business area’s average capital employed. Business area’s operating assets less its operating liabilities. Operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in associates and joint-ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received. Capitalised investments in property, plant and equipment, intangible assets including goodwill arising from business combinations, energy shareholdings and other shares, associates and joint ventures.

Business area’s capital employed

Capital expenditure

Capital expenditure excluding acquisitions and shares

Capital expenditure excluding investments in shares and participations.

Operating cash flow per share, EUR

Operating cash flow divided by adjusted average number of shares during the period excluding treasury shares.

Gearing ratio, % Net debt to EBITDA

Net debt as a percentage of total equity Net debt divided by comparable EBITDA

Helsinki 15 February 2022 PricewaterhouseCoopers Oy Authorised Public Accountants

Equity to assets ratio, %

Equity expressed as a percentage of total assets less advances received.

Mikko Nieminen Authorised Public Accountant (KHT)





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