UPM Annual Report 2025

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We are UPM

Governance

Accounts and performance

Financial Statements

Report of the Board of Directors

Sustainability Statement

Auditor's Report

Sustainability Assurance Reports

Financial assets and liabilities by category at the end of 2024

Fair value measurement hierarchy for financial assets and liabilities

€ million

2025

2024

Equity instruments at fair value through OCI

Financial assets and liabilities at amortized cost

Fair value through profit and loss

Derivatives under hedge accounting

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

€ million

Total

Financial assets Investment funds

Financial assets at FVOCI

—

2,247

—

2,247

— — — — —

— — —

— —

— — —

Other non-current financial assets Loans and receivables

Derivatives, non-qualifying hedges Derivatives under hedge accounting

—

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

—

Derivatives

1 1

27 27

—

28 44

Financial assets at FVOCI

—

2,193 2,193

2,193 2,287

—

2,247 2,247

2,247 2,343

Total

Trade and other receivables Other current financial assets Loans and receivables

—

1,929

Financial liabilities Derivatives, non-qualifying hedges Derivatives under hedge accounting

— 9

—

— — —

Derivatives

— —

150 155

195

Investment funds

—

Total

211

Cash and cash equivalents

— 11

—

892

There have been no transfers between levels in 2025 and 2024.

Total financial assets

2,247

2,838

5,181

Non-current debt Interest-bearing liabilities

Accounting policies

Financial liabilities measured at amortized cost This category includes debt, trade payables and other financial liabilities. Refer to » Note 5.2 Net debt, for further information.

— — — — — —

—

3,662

Derivatives

84 84

—

Fair value through profit or loss This category includes derivatives that do not qualify for hedge accounting and investments funds. They are measured at fair value and any gains or losses from subsequent measurement are recognized in the income statement. Equity instruments at fair value through OCI This category includes mainly UPM’s energy shareholdings. These assets are measured at fair value through other comprehensive income. Refer to » Note 4.3 Financial assets at FVOCI Financial assets at amortized cost This category comprises loan receivables with fixed or determinable payments that are not quoted in an active market, as well as trade and other receivables, and cash and cash equivalents. They are included in non-current assets unless they mature within 12 months of the balance sheet date. Cash and cash equivalents are always classified as current assets. Loan receivables that have a fixed maturity are measured at amortized cost using the effective interest method. Loan receivables without fixed maturity date are measured at amortized cost. As soon as a loan receivables or cash and cash equivalents are originated or purchased, a loss allowance for 12-month expected credit losses are recognized in profit or loss. If credit risk increases significantly, full lifetime expected credit losses are recognized in profit or loss. The credit loss model applied to trade receivables is described in » Note 4.6 Working capital . Derivatives under hedge accounting All derivatives are initially and continuously recognized at fair value in the balance sheet. Gains and losses on remeasurement of derivatives used for hedging purposes are recognized in accordance with the accounting principles described in » Note 6.2 Derivatives and hedge accounting.

3,662

3,747

The different levels of fair value hierarchy used in fair value estimation are defined as follows:

Other non-current financial liabilities Other liabilities 1)

— 5 5 — 5 5 —

153

Derivatives

—

Fair values under level 1 Quoted prices (unadjusted) traded in active markets for identical assets or liabilities. Derivatives include futures and commodity forwards traded in exchange. Fair values under level 2 Observable inputs are used as basis for fair value calculations either directly (prices) or indirectly (derived from prices). If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. For investment funds, the valuation is based on quoted prices (unadjusted) for identical assets in markets that are not active. For derivatives, level 2 include OTC derivatives like forward foreign exchange contracts, foreign currency options, interest and currency swaps and commodity swaps. Specific valuation techniques used to value financial instruments at level 2 include the following methods: Interest forward rate agreements (FRA) are fair valued based on quoted market rates on the balance sheet date. Forward foreign exchange contracts are fair valued based on the contract forward rates at the balance sheet date. Foreign currency options are fair valued based on quoted market rates and market volatility rates on the balance sheet date by using the Black&Scholes option valuation model. Interest and currency swap instruments are fair valued as present value of the estimated future cash flows based on observable yield curves. Commodity swaps are fair valued based on quoted forward prices on the balance sheet date. An embedded derivative that is by nature a foreign currency forward contract is valuated at market forward exchange rates and is included in level 2. Embedded derivatives are monitored by the Group and the fair

153

158

Current debt Loans

—

152

Derivatives

10 10

—

152

166

Trade and other payables

—

1,938

Other current financial liabilities Derivatives

7 7

101 101 195

— —

108 108

Total financial liabilities

5,905

6,116

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

The carrying amounts of financial assets and financial liabilities approximate their fair value except for interest-bearing liabilities in non current debt. Their fair value amounted to €2,754 million (€2,898 million) at the end of 2025. For quoted bonds, the fair values are based on the quoted market value as of December 31. At the end of 2025, all bonds were quoted.

For other non-current debt in interest-bearing liabilities fair values are estimated using the expected contractual future payments discounted at market interest rates and are categorized within level 2 of the fair value hierarchy.

Refer to » Note 5.2 Net debt, for further information on net debt and bonds.

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

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