UPM Annual Report 2023

ACCOUNTS FOR 2023

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

5.4 Financial income and expenses

Treasury shares At 31 December 2023, the company held 411,653 (411,653) of its own shares, 0.08% (0.08%) of the total number of shares. Reserves EURm 2023 2022 Fair value reserve 1,713 3,062 Hedging reserve -88 -627 Share-based payments reserve 31 25 Total other reserves 1,655 2,460 Reserve for invested non-restricted equity 1,273 1,273 Translation reserve 347 449 Total reserves 3,276 4,182 Fair value reserve This reserve represents the cumulative net change in the fair value of investments in equity securities comprising mainly of the fair value change of the energy shareholdings. Amounts are recycled only within equity upon the disposal of the asset. Hedging reserve This reserve comprises the cumulative net change in the fair value of the effective portion of cash flow hedging instruments related to hedged transactions that have not yet occurred and the cost of hedging when recognised in OCI. Amounts are recognised in profit or loss when the associated hedged transactions affect profit or loss or as part of the acquisition cost of property, plant and equipment. In 2023, a gain of EUR 0 million (5) was reclassified from the hedging reserve to other financial income and expenses as a result of discontinuation of hedge accounting.

Share-based payments reserve The share-based payments reserve is used to recognise the fair value at the grant date of the share incentive plans, Performance Share Plan and

EURm

2023

2022

Deferred Bonus Plan, over their vesting period. Reserve for invested non-restricted equity

Exchange rate gains and losses Derivatives

4

8

Reserve for invested non-restricted equity includes, under the Companies’ Act, the exercise value of shareholders’ investments in the company unless otherwise decided by the company. Translation reserve This reserve includes the foreign currency differences arising from the translation of foreign operations, and the effective result of transactions that hedge the group’s net investments in foreign operations. There were no reclassifications from the translation reserve to profit or loss during the period resulting from inefficiency of net investment hedges. Accounting policies Transaction costs directly relating to the issue of new shares or share options are recognised, net of tax, in equity as a reduction in the proceeds. Where any group company purchases the parent company’s shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of tax), is deducted from equity attributable to the owners of the parent company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the parent company.

Exchange gains and losses on financial liabilities measured at amortised costs Exchange gains and losses on financial assets measured at amortised costs

29 -32 -73 -72

-37 22 29 22

Other exchange rate gains and losses 1)

Fair value changes Fair value gains and losses on derivatives designated as fair value hedges

32 -33

-177 180

Fair value adjustment of debt attributable to interest rate risk

-2

3

Total

-74

25

Interest and other finance income and costs, net Interest expense on lease liabilities

-21 -38 -28 37 -20 -70

-14 -49 26 -27 -55 -30 9

Interest expense on other financial liabilities measured at amortised cost

Interest income (expense) on derivatives Interest income on loans, receivables and cash Other financial income and expenses, net

Total

-144

1) Other exchange rate gains and losses include EUR 71 million exchange rate losses relating to the sale of Russian subsidiaries in 2023. Net gains and losses on derivatives included in the operating profit

EURm

2023

2022

Cash flow hedges reclassified from hedging reserve

-117

-475

Non-qualifying hedges

4

3

Total

-113

-472

Hedging reserve

ELECTRICITY PURCHASE AND SALES HEDGES

Foreign exchange gains and losses in the operating profit excluding non-qualifying hedges

CURRENCY CASH FLOW HEDGES

COST OF HEDGING

EURm

TAX

TOTAL

EURm

2023 2022

2023 Hedging reserve, at 1 January Amounts reclassified to profit and loss

Sales

61 -35 26

-59 -47

42 -74

-814 178

-11 13

155

-627

Other operating income

-23

94

Total

-106

Amounts reclassified to acquisition cost of a fixed assets Change in fair value of hedging instruments recognised in OCI

—

—

1

—

1

44 13

516 -120

-5 -3

-111

444

Hedging reserve, at 31 December

21

-88

5.5 Share capital and reserves The company has one series of shares and each share carries one vote. There are no specific terms related to the shares. At 31 December 2023, the number of the company’s shares was 533,735,699. The shares do not have any nominal counter value. The shares are included within the book entry system for securities.

ELECTRICITY PURCHASE AND SALES HEDGES

Share capital

CURRENCY CASH FLOW HEDGES

COST OF HEDGING

2023 2022

EURm

TAX

TOTAL

Number of shares (1,000)

533,736

533,736

2022 Hedging reserve, at 1 January Amounts reclassified to profit and loss

Share capital, EURm

890

890

-32 65 24 -15 42

-84

-1

22 -94

-96

401

4 1

376

Amounts reclassified to acquisition cost of a fixed assets Change in fair value of hedging instruments recognised in OCI

—

—

25

-1,131

-15 -11

228 155

-932 -627

Hedging reserve, at 31 December

-814

208

209

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023

UPM FINANCIAL REPORT 2023

208

UPM FINANCIAL REPORT 2023

209