UPM Annual Report 2025

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Governance

Accounts and performance

Financial Statements

Report of the Board of Directors

Sustainability Statement

Auditor's Report

Sustainability Assurance Reports

on hand, measured at the carrying amount of those emission rights. Emission rights and associated provisions are derecognized when disposed. Any profit or loss represents the costs of purchasing additional rights to cover excess emissions, the sale of unused rights in the case realized emission are under emission rights received free of charge or the impairment of unused emission rights. 2.4 Earnings per share and dividend According to UPM dividend policy, the company aims to pay attractive dividends, targeting at least half of the comparable earnings per share over time. The dividend paid in 2025 was €792 million (€1.50 per share) which was 59% of the operating cash flow per share in 2024 and the dividend paid in 2024 €800 million (€1.50 per share). The Board of Directors proposes to the Annual General Meeting that a dividend of €791 million, €1.50 per share, will be paid in respect of 2025. The proposed dividend represents 113% of UPM's comparable earnings per share for the year 2025.

3. Employee rewards

Accounting policies

Research and development costs Research and development costs are expensed as incurred, except for certain development costs, which are capitalized as they generate future economic benefits, and UPM can the measure the cost reliably. Capitalized development costs are amortized on a systematic basis over their expected useful lives, usually not exceeding five years. Government grants Government grants are recognized at fair value where there is a reasonable assurance that the grant will be received and the Group will comply with the attached conditions. Government grants relating to the purchase of property, plant and equipment are deducted from the acquisition cost of the asset and accordingly directly reduce the annual depreciation of the underlying asset. Other government grants are recognized in the income statement in the period necessary to match them with the costs they are intended to compensate. A government grant can also become receivable by the Group as compensation for expenses incurred in a previous period. Such a grant is recognized in profit or loss of the period in which it becomes receivable. Other operating income Other operating income mainly includes emission rights received from governments, gains on disposal of non-current assets and rental income. Further, other operating income includes foreign exchange gains and losses in respect of UPM’s normal business activities. Gains and losses on derivatives not qualifying hedge accounting are also recognized in other operating income. Emission rights The Group participates in the European Emissions Trading Scheme aimed at reducing greenhouse gas emissions. In addition, the Group participates in the Chinese national emissions trading scheme. Emission rights received from governments free of charge to emit a fixed tonnage of carbon dioxide in a fixed period of time give rise to an intangible asset for the emission rights, a government grant and a liability for the obligation to deliver emission rights equal to the emissions that have been made during the compliance period. Emission rights are initially recognized as intangible assets based on market value at the date of initial recognition. Emission rights are not amortized. If the market price of emissions rights at the balance sheet date is less than the recognized costs, any surplus emission rights that are not required to cover actual and estimated emissions during the financial year, are impaired to the market price. Government grants are recognized as deferred income in the balance sheet at the same time as emission rights and are recognized in other operating income in the income statement, systematically, over the compliance period to which the corresponding emission rights relate. The liability to deliver emission rights is recognized based on actual emissions. The emissions realized are expensed under other operating costs and expenses in the income statement and presented as a provision in the balance sheet. The liability is settled using emission rights

3.1 Employee costs

€ million

2025

2024

Salaries and fees

930

937

Share-based payments

11

16

Pension and other post-employment benefits, defined benefit plans

17

19

Pension costs, defined contribution plans

98

101

Other indirect employee costs 1)

100

106

Total

1,155

1,179

1) Other indirect employee expenses primarily include other statutory social expenses, excluding pension expenses.

3.2 Key management personnel The remuneration of the Chair of the Board of Directors was resolved to be raised so that the Chair of the Board was paid an annual base fee of €240,000, the Deputy Chair of the Board €150,000 and the other members of the Board €120,000. The annual base fee was paid in company shares and cash so that approximately 40% of the fee was paid in the company shares purchased on the Board members’ behalf, and the rest in cash. The company paid any costs and transfer tax related to the purchase of the company shares.

Earnings per share

The remuneration of the Audit Committee was resolved to be raised and other annual committee fees remained unchanged. The Chair of Audit Committee received annual committee fee of €50,000, the Chair of Nomination and Governance Committee €20,000 and the Chair of Remuneration Committee €27,500. The members of the Audit Committee received an annual committee fee of €30,000 and members of other committees €10,000. The annual committee fees were paid in cash. In 2025, 4,170 (2,816) company shares were purchased to the Chair, 2,606 (1,767) to the Deputy Chair and 2,085 (1,462) to other members of the Board.

€ million

2025

2024

Profit attributable to owners of the parent company, € million

480

436

Weighted average no. of shares (1,000)

528,554

533,324

Basic earnings per share, €

0.91

0.82

Diluted earnings per share, €

0.91

0.82

Accounting policies

Shareholdings (no. of shares) and fees of the Board of Directors

Annual committee fee (€ 1,000)

Earnings per share Earnings per share (EPS) is the amount of profit for the period attributable to each share. The basic earnings per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of shares outstanding during the period plus the dilutive effect of share options. The Group did not have share-option schemes at the end of 2025 and 2024. Dividend Dividend distribution to the owners of the parent company is recognized as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the parent company’s shareholders.

Shareholdings December 31

Annual base fee (€ 1,000)

2025

2024

2025

2024

2025

2024

Board members Henrik Ehrnrooth, Chair

34,474

30,304

240

231

20

20

Kim Wahl, Deputy Chair

32,335

29,729

150

145

10

10

Pia Aaltonen-Forsell

5,213

3,128

120

120

50

45

Melanie Maas-Brunner

3,547

1,462

120

120

10

10

Jari Gustafsson

8,049

5,964

120

120

30

25

Piia-Noora Kauppi

29,248

27,163

120

120

10

10

Topi Manner

10,014

7,929

120

120

10

10

Marjan Oudeman

14,807

12,722

120

120

30

25

Martin à Porta

30,057

27,972

120

120

28

28

Total

167,744

146,373

1,230

1,216

198

183

UPM Financial Report 2025

278

UPM Financial Report 2025

279

278

279

UPM Annual Report 2025

UPM Annual Report 2025