UPM Annual Report 2022

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ACCOUNTS FOR 2022

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

The group as a lessor At inception of a lease contract, the group makes an assessment whether the lease is a finance lease or an operating lease. If the lease transfers substantially all of the risks and rewards incidental to ownership of the asset, it is considered to be a finance lease; if not, the lease is considered to be an operating lease. The group has only a minor amount of operating lease contracts, whereby the lease payments are recognised on a straight-line basis over the term of the lease.

Financial assets and liabilities by category at the end of 2021

payments are recognised within the operating costs and expenses based on the nature of the payment. The interest expense on the lease liability is recognised as a component of finance costs in income statement. In cash flow statement, payments for the principal portion of the lease liability are recognised as financing cash flow while payments for interest portion of lease liability, short-term leases, and variable amounts not included in the measurement of the lease liability, are classified within operating cash flow. 5.3 Financial assets and liabilities by category Financial assets and liabilities recognised in the balance sheet include cash and cash equivalents, loans and other financial receivables, investments in securities, trade receivables, trade payables, loans, bank overdrafts and derivatives. Classification of financial assets into different measurement categories depends on the contractual cash flow characteristics and the business model for managing the financial asset. The measurement category of each financial asset is determined at inception. Financial

EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OCI

FINANCIAL ASSETS AND LIABILITIES AT AMORTISED COST

FAIR VALUE THROUGH PROFIT AND LOSS

DERIVATIVES UNDER HEDGE ACCOUNTING

EURm

TOTAL 2,579

Energy shareholdings

—

2,579

—

Other non-current financial assets Loans and receivables

— — — —

— — — — — — — — — — — — — — — — — — — — — —

—

Derivatives

126 126

—

126 133

Trade and other receivables Other current financial assets Loans and receivables

—

2,024

assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right in all circumstances to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred, and the group has transferred substantially all the risks and rewards of ownership.

—

Derivatives

— —

Investment funds

100 113

—

100 139

Cash and cash equivalents Total financial assets Non-current debt Interest-bearing liabilities

—

1,460 3,494

1,460 6,335

113

2,579

149

Financial assets and liabilities by category at the end of 2022

— — — — — —

—

2,543

FINANCIAL ASSETS AND LIABILITIES AT AMORTISED COST

EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OCI

Derivatives

23 23

—

FAIR VALUE THROUGH PROFIT AND LOSS

DERIVATIVES UNDER HEDGE ACCOUNTING

2,543

2,566

EURm

TOTAL 3,652

Other non-current financial liabilities Other liabilities 1)

Energy shareholdings

—

3,652

—

107

Other non-current financial assets Loans and receivables

Derivatives

2 2

—

— — — —

— — — — — — — — — — — — — — — — — — — — —

—

107

109

Derivatives

62 62

—

63 70

Current debt Loans

—

— — — —

Trade and other receivables Other current financial assets Derivatives

—

2,696

Derivatives

8 8

—

100

— — —

117

Trade and other payables

—

2,254

Investment funds

—

Other current financial liabilities Derivatives

100

118

12 12 20

83 83

— —

95 95

Cash and cash equivalents Total financial assets Non-current debt Interest-bearing liabilities

—

2,067 4,771

2,067 8,602

3,652

162

Total financial liabilities

108

4,982

5,111

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months. The carrying amounts of financial assets and financial liabilities except for non-current loans approximate their fair value. The fair value of non-current loans amounted to EUR 3,607 million (2,573 million) at the end of 2022. For quoted bonds, the fair values are based on the quoted market value as of 31 December. At the end of 2022, all bonds were quoted. For other non-current borrowings fair values are estimated using the expected contractual future payments discounted at market interest rates and are categorised within level 2 of the fair value hierarchy.

— — — — — —

—

4,340

Derivatives

137 137

—

137

4,340

4,476

Other non-current financial liabilities Other liabilities 1)

—

90 13

Derivatives

13 13

—

103

» Refer Note 5.2 Net debt, for further information on net debt and bonds.

Current debt Interest-bearing liabilities

—

— — — —

534

Derivatives

24 24

—

534

558

Trade and other payables

—

2,720

Other current financial liabilities Derivatives

14 14 37

88 88

— —

102 102

Total financial liabilities

238

7,683

7,959

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.