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

9. Unrecognised items 9.1 Commitments and contingencies

10. Other notes

10.1 Forthcoming new standards, amendments and accounting policy changes Certain new accounting standard amendments and interpretations have been published that come into effect only after the reporting period started on 1 January 2024. These standards and amendments are not expected to have a material impact on the group in the current or future reporting periods and on foreseeable future transactions and have not been early adopted. IFRS 18 Presentation and Disclosure in Financial Statements IFRS 18 will replace IAS 1 Presentation of financial statements, introducing new requirements that will help to achieve comparability of the financial performance of similar entities and provide more relevant information and transparency to users. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but its impacts on presentation and disclosure are expected to be pervasive, in particular those related to the statement of financial performance and providing management-defined performance measures within the financial statements. Management is currently assessing the detailed implications of applying the new standard on the group’s consolidated financial statements. Although the adoption of IFRS 18 will have no impact on the group’s net profit, the group expects that grouping items of income and expenses in the statement of profit or loss into the new categories will impact how operating profit is calculated and reported. From the high level impact assessment that the group has performed, the following items might potentially impact operating profit: • The group currently recognises some foreign exchange gains or losses in operating profit and others in financial income and expenses. There might be a change to where these gains or losses are recognised, and the group is currently evaluating the need for change. • The group currently recognises some derivative gains or losses in operating profit and others in financial income and expenses. There might be a change to where these gains or losses are recognised, and the group is currently evaluating the need for change. The line items presented on the primary financial statements might change as a result of the application of the concept of ‘useful structured summary’ and the enhanced principles on aggregation and disaggregation. The group does not expect there to be a significant change in the information that is currently disclosed in the notes because the requirement to disclose material information remains unchanged; however, the way in which the information is grouped might change as a result of the aggregation/disaggregation principles. In addition, there will be new disclosures required for management-defined performance measures. There will also be changes to how interest received and interest paid are presented in the consolidated cash flow statement. Interest paid will be presented as financing cash flows and interest received as investing cash flows, which is a change from current presentation as part of operating cash flows.

The group will apply the new standard from its mandatory effective date of 1 January 2027. Retrospective application is required, and the comparative information for the financial year ending 31 December 2026 will be restated in accordance with IFRS 18. For the first annual period of application of IFRS 18, a reconciliation for each line item in the statement of profit or loss between the restated amounts presented by applying IFRS 18 and the amounts previously presented applying IAS 1 is required.

In the normal course of business, UPM enters into various agreements providing financial or performance assurance to third parties. The maximum amounts of future payments for which UPM is liable is disclosed in the table below under “Other commitments”. Property under mortgages given as collateral for own commitments include property, plant and equipment, industrial estates and forest land.

EURm

2024 2023

Other own commitments Leasing commitments for the next 12 months in accordance with IFRS 16

1

2

Other commitments

106 107

99

Total

101

The lease commitments for leases not commenced at the end of 2024 amounted to EUR 24 million (EUR 176 million at the end of 2023). The decrease during the reporting period is due to the commencement of the Uruguay railway lease in 2024. The 2023 commitments relate to a railway service agreement in Uruguay and a service agreement related to wastewater treatment in Leuna, Germany.

9.2 Litigation Contingent liabilities

The group is defendant or plaintiff in a number of legal proceedings incidental to its operations. These lawsuits primarily involve claims arising from commercial law issues. Group companies The Group’s management is not aware of any significant litigation at the end of 2024. 9.3 Events after the balance sheet date On 2 January 2025, UPM announced that it has been listed as the only forest and paper industry company in the Dow Jones Global and European Sustainability Indices (DJSI) for the years 2024–2025. The indices cover environmental, social and governance aspects of responsibility. On 5 February 2025, UPM announced the acquisition of Metamark, a UK-based company to further accelerate UPM Raflatac's growth in Graphics business. The transaction will bring attractive synergies and make UPM Raflatac a significant player in the fast-growing, high value added Graphics segment. The Enterprise Value of the transaction is GBP 146 million. On 5 February 2025, the Board decided to commence UPM's first buy-back program of UPM's own shares. The maximum number of shares to be repurchased is 6,000,000, corresponding to approximately 1.1% of the total number of shares. The maximum monetary amount to be used for the program is EUR 160 million.

UPM FINANCIAL REPORT 2024

318

UPM FINANCIAL REPORT 2024

319

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024