UPM annual report 2014

Auditor’s report (Translation from the Finnish Original)

Calculation of key indicators

Formulae for calculation of finan- cial indicators

Formulae for calculation of adjust- ed share-related indicators

To the Annual General Meeting of UPM-Kymmene Corporation

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assess- ments, the auditor considers internal control relevant to the entity’s preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by manage- ment, as well as evaluating the overall presentation of the financial state- ments and the report of the Board of Directors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion on the Consolidated Financial Statements In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. Opinion on the Company’s Financial Statements and the Report of the Board of Directors In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements. Other Opinions We support that the financial statements and the consolidated financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director of the parent company should be discharged from liability for the financial period audited by us.

Return on equity, %: Profit before tax – income taxes

Earnings per share: Profit for the period attributable to owners of the parent company Adjusted average number of shares during the period excluding treasury shares Equity per share: Equity attributable to owners of the parent company Adjusted number of shares at end of period Dividend per share: Dividend distribution Adjusted number of shares at end of period

We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of UPM-Kymmene Corpo- ration for the year ended 31 December, 2014. The financial statements com- prise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow state- ment and notes to the financial statements. Responsibility of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accor- dance with the laws and regulations governing the preparation of the finan- cial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Auditor’s Responsibility Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the compa- ny or whether they have violated the Limited Liability Companies Act or the articles of association of the company.

x 100

Total equity (average)

Return on capital employed, %: Profit before tax + interest expenses and other financial expenses

x 100

Total equity + interest-bearing liabilities (average)

Equity to assets ratio, %: Total equity

x 100

Balance sheet total – advances received

Dividend to earnings ratio, %: Dividend per share

Net interest-bearing liabilities: Interest-bearing liabilities – interest-bearing assets

x 100

Earnings per share

Gearing ratio, %: Net interest-bearing liabilities

Effective dividend yield, %: Adjusted dividend per share Adjusted share price at 31.12. P/E ratio: Adjusted share price at 31.12. Earnings per share

x 100

Total equity

x 100

EBITDA: Operating profit + depreciation + impairment +/– change in value of biological assets +/– share of results of associated companies and joint ventures +/– special items Return on capital employed (ROCE) for the segments (operating capital), %: Operating profit – special items

Market capitalisation: Total number of shares x share price at end of period Adjusted share price at end of period: Share price at end of period Share issue coefficient Adjusted average share price: Total value of shares traded Adjusted number of shares traded during period Operating cash flow per share: Cash from operating activities Adjusted average number of shares during the period excluding treasury shares

x 100

Non-current assets + inventories + trade receivables – trade payables (average)

Helsinki 13 February 2015

PricewaterhouseCoopers Oy Authorised Public Accountants

Key exchange rates for the euro at end of period

31.12.2014 30.9.2014 30.6.2014 31.3.2014 31.12.2013 30.9.2013 30.6.2013 31.3.2013

USD CAD

1.2141 1.4063 145.23 0.7789 9.3930

1.2583 1.4058 138.11 0.7773 9.1465

1.3658 1.4589 138.44 0.8015 9.1762

1.3788 1.5225 142.42 0.8282 8.9483

1.3791 1.4671 144.72 0.8337 8.8591

1.3505 1.3912 131.78 0.8361 8.6575

1.3080 1.3714 129.39 0.8572 8.7773

1.2805 1.3021 120.87 0.8456 8.3553

Merja Lindh Authorised Public Accountant

JPY

GBP SEK

CONTENTS

ACCOUNTS

135

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UPM Annual Report 2014

UPM Annual Report 2014