UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

Defined contribution plans For defined contribution plans, contributions are paid to pension insurance companies. Once the contributions have been paid, there are no further payment obligations. Contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate. Other post-employment obligations Some group companies provide post-employment medical and other benefits to their retirees. The entitlement to healthcare benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment, using an accounting methodology similar to that for defined benefit pension plans. Valuations of these obligations are carried out by independent qualified actuaries.

used may differ materially from actual results due to, among others, changing market and economic conditions, or changes in service period of plan participants. Significant differences in actual experience or significant changes in assumptions may affect the future amounts of the defined benefit obligation and future expense.

Key estimates and judgements

Accounting policies

Defined benefit pension plans Plan benefits depend on salary and length of service. The defined benefit obligations are calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the term of the related pension liability. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The cost of providing pensions is charged to the income statement as employee costs so as to spread the cost over the service lives of employees. Changes in actuarial assumptions and actuarial gains and losses arising from experience adjustments are charged or credited in other comprehensive income in the period in which they arise. Past service costs and gains or losses on settlement are recognised immediately in income when they occur. 4. Capital employed UPM’s capital employed primarily relates to its production facilities and both forest and energy assets. UPM aims to capture growth opportunities in its existing business portfolio and invest in projects with attractive and

Several actuarial assumptions are used in calculating the expense and liability related to the defined benefit plans. Statistical information

Actuarial assumptions The weighted average principal assumptions used in the valuations of the defined benefit obligations are detailed below:

FINLAND

UK

GERMANY

OTHER COUNTRIES

2024 2.85 1.90 1.89

2023 3.11 2.13 1.89 1.44

2024 5.45 3.20

2023 4.55 3.10

2024 3.22 2.00 2.31 2.31

2023 3.26 2.00 2.50 2.00

2024 4.30 2.02 2.50 2.50

2023 4.16 2.28 2.50 2.50

Discount rate % Inflation rate %

Rate of salary increase % Rate of pension increase %

—

—

—

3.10

3.00

Expected average remaining working years of participants

0.0

1.0

8.3

8.8

7.8

8.1

8.6

11.5

Sensitivity analysis of defined benefit obligations The sensitivity analysis shows the effect of the change in assumption. The analysis assume that all other assumptions remain unchanged. The projected unit credit method has been applied when calculating the obligation as well as these sensitivities.

EURm

0.5% INCREASE 0.5% DECREASE 2024 2023 2024 2023

Discount rate %

-46

-50

50

54

Rate of salary increase % Rate of pension increase % Life expectancy +1 year

5

6

-5

-6

33 28

40 29

-32

-37

—

—

Plan assets by categories 2024

A negative change indicates a decrease in the defined benefit obligation. A positive change indicates an increase in the defined benefit obligation.

sustainable returns. Capital employed

Assets held by insurance companies 5%

Other assets 6%

Money market 17%

Plan assets by categories at 31 December

Property 7%

EURm

2024 2023

EURm

2024 2023 Quoted Unquoted Quoted Unquoted

Property, plant and equipment

7,085

7,053

Equity instruments 17%

Leased assets Forest assets

847

683

2,517 2,247

2,355 2,283

Money market Debt instruments Equity instruments

49

—

49

2

Energy shareholdings

131

9

129

32 45 21

Debt instruments 48%

Goodwill and other intangible assets

754

998

50

—

3

Operating working capital

2,161

1,883

Property

—

21

—

Provisions

-253 -496 892 -154 -146

-266 -501 632

Assets held by insurance companies

Net retirement benefit assets and liabilities

— —

14 19 63

— —

30 15

Plan assets by categories 2023

Cash and cash equivalents Other assets and liabilities

Other assets

-69

Total

230

182

145

Net deferred tax assets and liabilities Assets classified as held for sale, net

-185

Assets held by insurance companies 9%

Other assets 5%

In 2024, plan assets include the company's ordinary shares with a fair value of EUR 0 million (0 million). In 2025, contributions of EUR 25 million are expected to be paid to group’s defined benefit plans. In 2024, contributions of EUR 23 million were paid to group’s defined benefit plans.

0

50

Total

15,452

14,916

Money market 16%

Property 6%

Debt instruments 49%

Equity instruments 15%

UPM FINANCIAL REPORT 2024 280

280

UPM FINANCIAL REPORT 2024

281

281

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024