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

8. Group structure

expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date. The group measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any non controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets of the subsidiary acquired is recorded as goodwill.

The assets, liabilities, income and expenses of subsidiaries with non controlling interests are consolidated line by line into the UPM consolidated financial statements. The proportion of the profit for the period, as well as the accumulated share of total equity belonging to non-controlling interests are presented separately in the consolidated income statement and consolidated balance sheet.

8.1 Business acquisitions and disposals In 2024, UPM completed the sale of UPM Kymmene-Austria GmbH. The transaction comprises the UPM Steyrermühl site and the Steyrermühl sawmill operations. UPM Communication Papers ended the newspaper production at Steyrermühl paper mill in June 2023. The group also sold its 50.00% holding in joint venture ASD Altpapier Sortierung Dachau GmbH. UPM made also several minor sales of equity investments accounted at fair value through OCI. In 2023, UPM sold all its business operations in Russia to Gungnir Wooden Products Trading. The group also sold its holding in ASK Altpapier Sortierung Kinsau GmbH and its 20.00% holding in the associated company Northern SC Paper Corporation. UPM made also several minor investments and sales of equity investments accounted at fair value through OCI. Reconciliation of gain on sale and net cash arising from the disposal of UPM Kymmene-Austria GmbH

EURm Cash paid

29

Deferred consideration

0

Total purchase consideration

29

EURm

23 JUL 2024

8.2 Principal subsidiaries and joint operations

Other intangible assets

5

Property, plant and equipment

16

HOLDING % 2024

HOLDING % 2023

COUNTRY OF INCORPORATION

Leased assets

0

SUBSIDIARIES

Inventories

14

Blandin Paper Company

US UY UY UY DE GB

100.00

100.00

Trade and other receivables Cash and cash equivalents

5 1

Blanvira S.A. Cuecar S.A.

91.00 91.00

91.00 91.00

Total assets

42

Forestal Oriental S.A.

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

100.00 100.00

Gebr. Lang GmbH Papierfabrik

Deferred tax liabilities

4 2 3 6 0

Grafityp (UK) Limited 1)

— — —

Non-current debt

Grafityp Engineering Europe NV 1) Grafityp Selfadhesive Products NV 1)

BE BE

Current debt

EURm

Q1-Q4/2024

Trade and other payables

Reconciliation of gain on sale Consideration paid in advance Consideration paid in cash

LLC UPM Ukraine Myllykoski Oyj

UA

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 91.00 91.00

Income tax payables

15 56 -50

FI

Total liabilities

15

Nordland Papier GmbH

DE DE DE

Net assets sold

NorService GmbH

Net identifiable assets acquired Goodwill arising from acquisition

27

Transaction and other costs, net

0

Nortrans Speditionsgesellschaft mbH

3

Gain on disposal

21

Print Inform Japan K.K. PT UPM Raflatac Indonesia

JP ID

80.00

100.00 100.00

The fair value of trade and other receivables included trade receivables with a fair value of EUR 5 million. At the date of acquisition, the gross contractual amount for trade receivables was EUR 5 million, of which EUR 0 million was expected to be uncollectible. Acquisition-related costs of EUR 1 million are included in other operating expenses and are reported as items affecting comparability in UPM Raflatac business area. Information on the amounts of revenue and profit or loss of the acquiree since the acquisition date included in the consolidated income statement for the reporting period is not disclosed because it would be impracticable. The acquired business has been included in the group since 23 July 2024, and the effects of the revenues and profit or loss thereof are not considered material for disclosure purposes. The fair values of net identifiable assets acquired are provisional and dependent on final fair valuations. Transactions with non-controlling interests In 2024 and 2023, UPM did not have any change in its non-controlling interests.

Consideration paid in cash Cash in company disposed

56 -39 17

Rhein Papier GmbH

DE AT UY UY

Steyrermühl Sägewerksgesellschaft m.b.H. Nfg KG 2)

—

Net cash arising from disposal

Tebetur S.A.

91.00 91.00

Tile Forestal S.A.

Business combinations On 23 July 2024, it was announced that UPM Raflatac has acquired Grafityp, a Belgian-based company to further accelarate its growth in graphics solutions. Merging UPM Raflatac’s existing Graphics business with Grafityp will strengthen UPM Raflatac’s overall competitive positioning in this attractive product segment, expand its portfolio and give access to high-value new technologies. If the transaction had occurred on 1 January 2024, UPM’s sales for January–December 2024 would have been EUR 10,356 million and profit for the period EUR 461 million. These amounts have been calculated using the group’s accounting policies and by adjusting the results of the subsidiaries to reflect the depreciation and amortisation that would have been charged assuming application of fair value adjustments to other intangible assets, property plant and equipment and inventories from 1 January 2024, together with the consequential tax effects. Details of the purchase consideration, the net assets acquired and goodwill are as follows:

UPM (China) Co. Ltd UPM (Vietnam) Limited UPM Asia Pacific Pte. Ltd. UPM Biochemicals GmbH

CN VN SG

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

DE DE UY

UPM Biochemicals Sales GmbH

UPM Biofuels S.A.

UPM Communication Papers Oy

FI FI

UPM Energy Oy

UPM GmbH

DE BE EE

UPM NV UPM OÜ

UPM Plywood Oy UPM Pulp Sales Oy

FI FI

UPM Pulp, Inc.

US

Accounting policies

UPM Raflatac (China) Co., Ltd.

CN SG GB CA

UPM Raflatac (S) Pte Ltd UPM Raflatac (UK) Ltd.

UPM consolidates acquired entities at the acquisition date which is when it gains control using the acquisition method. Consideration transferred is determined as the fair value of the assets transferred, the liabilities incurred and equity instruments issued including the fair value of a contingent consideration. Acquisition-related transaction costs are

UPM Raflatac Canada Holdings Inc.

UPM Raflatac Chile SpA UPM Raflatac Co. Ltd.

CL TH

UPM FINANCIAL REPORT 2024

314

UPM FINANCIAL REPORT 2024

315

314

315

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024