UPM Annual Report 2025

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contracts of company cars. The Group does not apply portfolio approach of leases with similar characteristics. Leased assets are presented in the balance sheet as a separate financial statement line item. Lease liabilities are presented as part of non-current debt and current debt line items in the balance sheet. Lease liabilities are part of net debt calculation of the Group. Short-term lease payments are reported as rents and lease expenses. Variable lease payments are recognized within the operating costs and expenses based on the nature of the payment. The interest expense on the lease liability is recognized as a component of finance costs in income statement. In cash flow statement, payments for the principal portion of the lease liability are recognized as financing cash flow while payments for interest portion of lease liability, short-term leases, and variable amounts not included in the measurement of the lease liability, are classified within operating cash flow. The Group as a lessor At inception of a lease contract, the Group makes an assessment whether the lease is a finance lease or an operating lease. If the lease transfers substantially all of the risks and rewards incidental to ownership of the asset, it is considered to be a finance lease; if not, the lease is considered to be an operating lease. The Group has only a minor amount of operating lease contracts, whereby the lease payments are recognized on a straight-line basis over the term of the lease.

5.3

Financial assets and liabilities by category

Financial assets and liabilities recognized in the balance sheet include cash and cash equivalents, loans and other financial receivables, investments in securities, trade receivables, trade payables, loans, bank overdrafts and derivatives. Classification of financial assets into different measurement categories depends on the contractual cash flow characteristics and the business model for managing the financial asset. The measurement category of each financial asset is determined at inception. Financial

assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right in all circumstances to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred, and the Group has transferred substantially all the risks and rewards of ownership.

Financial assets and liabilities by category at the end of 2025

Equity instruments at fair value through OCI

Financial assets and liabilities at amortized cost

Fair value through profit and loss

Derivatives under hedge accounting

€ million

Total

Financial assets at FVOCI

—

2,193

—

—

2,193

Other non-current financial assets Loans and receivables

— — — —

— — — — — — — — — — — — — — — — — — — — — —

—

6 — 6

6

Derivatives

18 18

18

24

Trade and other receivables Other current financial assets Loans and receivables

—

1,481

1,481

— 8

—

1

1

Derivatives

67

— —

75

Investment funds

1

—

1

9 — 9 — — — — — —

67

1

78

Cash and cash equivalents

—

715

715

Total financial assets

2,193

85

2,203

4,490

Non-current debt Interest-bearing liabilities

—

3,528

3,528

Derivatives

111 111

—

111

3,528

3,638

Other non-current financial liabilities Other liabilities 1)

— 4 4

86

86

Derivatives

—

4

86

90

Current debt Interest-bearing liabilities

—

—

152

152

Derivatives

1 1

2 2

—

3

152

156

Trade and other payables

—

—

1,839

1,839

Other current financial liabilities Derivatives

4 4 6

33 33

— —

37 37

Total financial liabilities

150

5,605

5,761

1) Consists mainly of non-current advances received and a put liability that is not estimated to mature within 12 months.

UPM Financial Report 2025

306

UPM Financial Report 2025

307

306

307

UPM Annual Report 2025

UPM Annual Report 2025