UPM Annual Report 2025

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Impairment testing Carrying values of individual items included in property, plant and equipment are reviewed at each closing date to determine whether there is any indication of impairment. The carrying value is written down immediately to the asset’s recoverable amount if the carrying value exceeds the estimated recoverable amount. Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. The recoverable amount is determined as the higher of an asset’s fair value less costs to sell and its value in use. Value in use is determined by discounting future cash flows expected to be generated by the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but the increased carrying amount will not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. The estimations of useful lives, residual value as well as depreciation and amortization methods require significant management judgment and are reviewed annually. Management makes estimates on the future cash flows expected to result from the use of the asset and its eventual disposal. While management believes that estimates of future cash flows are reasonable, different assumptions regarding such cash flows could materially affect valuations. The long useful lives of assets, changes in estimated future sales prices of products, changes in product costs and changes in the discount rates used could lead to significant impairment charges. Estimates are also made in an acquisition when determining the fair values and remaining useful lives of acquired intangible and tangible assets. Key estimates and judgments

test of UPM Biochemicals CGU resulting to impairment of the entire goodwill of €5 million and impairment of €373 million of property, plant and equipment. Refer to » Note 4.4 Goodwill and other intangible assets.

4.2 Forest assets UPM is both a major forest owner and a purchaser of wood. The value of forest assets, i.e. standing trees, amounted to €2,605 million (2,517 million) at the end of 2025.

Accounting policies

The Group divides all its forest assets for accounting purposes into growing forests, which are recognized as forest assets at fair value less costs to sell, and land. The Group applies IAS 41 to account its forest assets. Own land is stated at cost whereas leased land is valued at cost less accumulated depreciation. Any changes in the fair value of the growing forests are recognized in the operating profit in the income statement. The fair value is calculated on the basis of discounted future expected cash flows considering existing, sustainable harvesting plans and assessments regarding growth, timber prices, harvesting and silviculture costs and selling expenses. Forest renewal costs are capitalized during the growth cycle as part of the forest assets value. The fair value of forest assets is a level 3 measure in terms of the fair value measurement hierarchy. Fair valuation The valuation process of forest assets is complex and requires management estimates and judgment on assumptions that have a significant impact on the valuation of the Group’s forest assets. The main factors used in the fair valuation of forest assets are estimates for growth and wood harvested, stumpage prices and discount rates. Stumpage price forecasts are based on the current prices adjusted by the management’s estimates for the full remaining productive lives of the trees, up to 150 years or until next regeneration cutting for forests in Finland and in the U.S. and up to 10 years for plantations in Uruguay. The cash flows are adjusted by selling costs and costs related to future risks. Felling revenues and maintenance costs are estimated on the basis of actual costs and prices, taking into account the Group’s projection of future price and costs development. In addition, calculations take into account future forest growth and environmental restrictions. The pre-tax discount rate used to determine the fair value of the Finnish forests in 2025 was 9.4% (9.7%) and for Uruguayan plantations 10.3% (11.2%). A decrease (increase) of one percentage point in discount rate would increase (decrease) the fair value of forest assets by approximately €239 million (221 million), of which the impact for fair value of forest assets for Finland is €213 million and for Uruguay €25 million. Key estimates and judgments

Accounting policies

€ million

2025

2024

Property, plant and equipment Property, plant and equipment is stated at historical cost. Costs of assets of acquired in business combinations are determined at fair value at the acquisition date. Depreciation is calculated on a straight-line basis and the carrying value is adjusted for impairment charges, if any. The carrying value of property, plant and equipment on the balance sheet represents the cost less accumulated depreciation and any impairment charges. Borrowing costs incurred for the construction of any qualifying assets are capitalized during the period of time required to complete and prepare the asset for its intended use. Other borrowing costs are expensed. Major renovations are capitalized and depreciated over the useful lives of the related asset. Ordinary expenses for repairs and maintenance are expensed as incurred. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in other operating income and other operating expenses, respectively.

Carrying value, at January 1

2,517

2,355

Additions

61

54

Disposals

-21

-21

Wood harvested

-178

-218

Net change in fair value

322

299

Translation differences

-96

48

Carrying value, at December 31

2,605

2,517

Change in fair value, change due to harvesting and gains or losses on sale of forest assets are recognized in the income statement as a net amount amounting to €144 million (80 million) in 2025. In 2025, the fair value of forest assets in Finland were impacted by the decrease in the discount rate and higher long term stumpage price estimates. In 2024, the fair value of forest assets in Finland was impacted by higher long-term stumpage price estimates.

Assessed useful lives

Number of years

Forest assets

Land, not subject to depreciation

-

Buildings

20-50 20-30 15-20

Power plants

€ million

2025

2024

Heavy machinery Light machinery

Forest assets in Finland

1,777

1,695

10-15

Forest assets in Uruguay

814

807

Equipment

5

Forest assets in United States

14

15

Carrying value, at December 31

2,605

2,517

Forest land Forest land is included in land and water areas within property, plant and equipment. Refer to » Note 4.1 Property, Plant and equipment . At the end of 2025, carrying value of own forest land amounted to €722 million (€801 million) and leased forest land €225 million (€249 million). UPM's own and leased forest land areas are summarized in below table.

Productive forest land Forested land

1,000 ha

Forest land

Finland

522

427

415

Uruguay

319

190

177

Uruguay, leased land

177

142

136

United States

76

56

56

Total

1,094

814

784

UPM Financial Report 2025

288

UPM Financial Report 2025

289

288

289

UPM Annual Report 2025

UPM Annual Report 2025