UPM Annual Report 2025

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Sustainability Statement

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Impairment testing Goodwill and other intangible assets that are deemed to have an indefinite life are tested at least annually for impairment. For goodwill impairment testing purposes the Group identifies its cash-generating units (CGUs), which is the smallest identifiable group of assets that generate cash inflows largely independent of the cash inflows of other assets or other groups of assets. Each CGU is no larger than a business area. The carrying amount for the CGU includes goodwill, non-current assets and working capital. If the balance sheet carrying amount of the

Provisions for emissions include liability to cover the obligation to return emission rights. The Group possesses emission rights amounting to €201 million (€264 million) as intangible assets.

conditions, and can take place many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take into account of any such changes. The discount rate applied is reviewed annually. The Group aims to operate in compliance with regulations related to the treatment of waste water, air emissions and landfill sites. However, expected events during production processes and waste treatment could cause material losses and additional costs in the Group’s operations. Legal contingencies Management judgment is required in measurement and recognition of provisions related to pending litigation. Provisions are recorded when the Group has a present legal or constructive obligation as a result of past event, an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Due to inherent uncertain nature of litigation, the actual losses may differ significantly from the originally estimated provision.

CGU unit exceeds its recoverable amount, an impairment loss is recognized. Impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. Other intangible assets with indefinite useful lives are impaired if the recoverable amount of the asset is less than the carrying amount. The carrying amount of the asset is then reduced to the recoverable amount which is the higher of the asset’s net selling price and its value in use.

Refer to » Note 2.3 Operating expenses and other operating income , for further information on emission rights.

Accounting policies

4.5 Provisions

A provision is recognized when a present legal or constructive obligation exists as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are split between amounts expected to be settled within 12 months of the balance sheet date (current) and amounts expected to be settled later (non-current). Restructuring and termination provisions A restructuring provisions is recognized when a detailed plan for the implementation of the measures is complete and when the plan has been communicated to those who are affected. Employee termination provisions are recognized when the Group has communicated the plan to the employees. caused by past operations that do not contribute to future earnings are expensed. The recognition of environmental provisions is based on current interpretations of environmental laws and regulations. Such provisions are recognized when the Group has an obligation to dismantle and remove a facility or an item of plant and to restore the site on which it is located. The amount recognized is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding item of property, plant and equipment of an amount equivalent to the provision is also recognized and subsequently depreciated as part of the asset. Provisions do not include any third-party recoveries. Emission provisions Emission obligations are recognized in provisions based on realized emissions. The provision is measured at the carrying amounts of the corresponding emission rights held, which are recognized as intangible assets. In case of deficit in emission rights, the shortage is valued at the market value at the balance sheet date. Environmental provisions Environmental expenditures that relate to an existing condition

€ million

Restructuring Termination Environmental

Emissions

Other

Total

2025 Provisions at January 1

55 56

79 73

26

66 60 -61

28

253 214 -155

Provisions made during the year Provisions utilized during the year

5

21

-29

-53

-1

-11

Refer to » Note 9.2 Litigation for details of legal contingencies.

Unused provisions reversed

-12

-9

0 0

-2

-7

-31

Translation differences

0

0

-1

0

-1

Provisions at December 31

70

89

29

63

30

280 101 179 280

Non-current

Current

Total

2024 Provisions at January 1

59 27

117 58

27

56 78

6

266 189 -189

Provisions made during the year Provisions utilized during the year

0

26

-29

-90

-1 -1

-68

-1

Unused provisions reversed

-4

-5

-1

-3

-14

Reclassifications

1

-1

0 0

0 0

0 0

0

Translation differences

0

0

1

Provisions at December 31

55

79

26

66

28

253

Non-current

89

Current

165 253

Total

UPM has undergone several restructuring programs in recent years including mill closures and profit improvement programs. Restructuring provisions recognized include various restructuring activities including dismantling costs. Termination provisions include severance payments, unemployment compensations or other arrangements for employees leaving the company. In Finland, termination provisions include also unemployment arrangements and disability pensions. Unemployment provisions in Finland are recognized 2–3 years before the granting and settlement of the compensation. At December 31, 2025, restructuring and termination provisions mainly relate to capacity closures and optimization of operations in UPM Communication Papers and UPM Adhesive Materials business areas. At December 31, 2024, restructuring and termination provisions relate mainly to capacity closures and optimizations of operations in UPM Communication Papers.

In 2025, additions to restructuring and termination provisions of €99 million relate to the closures of Ettringen paper mill in Germany and Kaukas paper machine 1 in Finland in UPM Communication Papers and the discontinuation of production at Nancy factory in France in UPM Adhesive Materials. In 2024, additions to restructuring and termination provisions of €71 million relate to closures of Hürth newsprint mill and Nordland fine paper machine 3 and the closure of Adhesive Materials Kaltenkirchen factory. The Group recognizes provisions for normal environmental remediation costs expected to be incurred in a future period upon a removal of non-current assets and restoring industrial landfills where a legal or constructive obligation exists. Other provisions mainly include other short-term obligations related to emission rights.

Key estimates and judgments

Environmental provisions The estimates used in determining the provisions are based on the expenses incurred for similar activities in the current reporting period taking into account the effect of inflation, cost-base development and discounting. Because actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and

UPM Financial Report 2025

294

UPM Financial Report 2025

295

294

295

UPM Annual Report 2025

UPM Annual Report 2025