UPM Annual Report 2016

148-149 / 176

ACCOUNTS
UPM Annual Report 2016 UPM Annual Report 2016 148 149
In brief Strategy Businesses Stakeholders Governance Accounts
CONTENTS
10.2 Alternative performance measures
UPM presents certain performance measures of historical performance,
financial position and cash flows, which in accordance with the
“Alternative Performance Measures” guidance issued by the European
Securities and Markets Authority (ESMA) are not accounting measures
defined or specified in IFRS and are therefore considered as alternative
performance measures. These alternative performance measures are
described below:
ALTERNATIVE PERFORMANCE MEASURE DEFINITION
Operating profit Profit before income tax expense, finance expenses and finance income and net gains on sale of energy
shareholdings as presented on the face of the IFRS income statement.
Comparable EBIT Operating profit adjusted for items affecting comparability.
Comparable EBITDA Operating profit before depreciation, amortisation and impairments, change in fair value of forest assets
and wood harvested, share of results of associates and joint ventures and items affecting comparability.
Comparable profit before tax Profit before income tax expense excluding items affecting comparability.
Comparable profit for the period Profit for the period excluding items affecting comparability and their tax impact.
Comparable EPS, EUR Earnings per share calculated in accordance with IFRS excluding items affecting comparability and their
tax impact.
Net debt Total of current and non-current debt less cash and cash equivalents and interest-bearing current and
non-current financial assets.
Items affecting comparability Certain non-operational or non-cash valuation transactions with significant income statement impact are
considered as items affecting comparability, if they arise from asset impairments, restructuring measures,
asset sales, fair value changes of forest assets resulting from changes in valuation parameters or estimates
or changes in legislation or legal proceedings. In addition, the changes in fair value of unrealised cash
flow and commodity hedges are classified as items affecting comparability. Numerical threshold for items
to be considered as significant in UPM’s business areas UPM Biorefining, UPM Specialty Papers and UPM
Paper ENA is determined as one cent (EUR 0.01) after tax per share or more. In other business areas, the
impact is considered to be significant if the item exceeds EUR 1 million before tax.
Free cash flow Cash generated from operations after cash used for investing activities.
Return on equity (ROE), % Profit for the period as a percentage of average equity.
Comparable ROE, % Return on equity (ROE) excluding items affecting comparability.
Return on capital employed (ROCE), % Profit before taxes, interest expenses and other financial expenses as a percentage of average capital
employed.
Comparable ROCE, % Return on capital employed (ROCE) excluding items affecting comparability.
Capital employed Group total equity and total debt.
Business area’s comparable ROCE, % Business area’s operating profit adjusted for items affecting comparability as a percentage of business
area’s average capital employed.
Business area’s capital employed Business area’s operating assets less its operating liabilities. Operating assets include goodwill, other
intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in
associates and joint-ventures, inventories and trade receivables. Operating liabilities include trade
payables and advances received.
Capital expenditure Capitalised investments in property, plant and equipment, intangible assets including goodwill arising
from business combinations, energy shareholdings and other shares, associates and joint ventures.
Capital expenditure excluding acquisitions
and shares
Capital expenditure excluding investments in shares and participations.
Operating cash flow per share, EUR Operating cash flow divided by adjusted average number of shares during the period excluding treasury
shares.
Gearing ratio, % Net debt as a percentage of total equity
Net debt to EBITDA Net debt divided by EBITDA
Equity to assets ratio, % Equity expressed as a percentage of total assets less advances received.
Reconciliation of key figures to IFRS
EURm, OR AS INDICATED Q4/16 Q3/16 Q2/16 Q1/16 Q4/15 Q3/15 Q2/15 Q1/15 Q1-Q4/16 Q1-Q4/15
Items affecting comparability
Impairment charges –24 – 1 –12 – –1 1 – –35 –
Restructuring charges –31 – – –18 –2 4 –6 –1 –48 –5
Change in fair value of unrealised cash flow and
commodity hedges 2 3 –3 25 –22 2 8 –6 27 –18
Capital gains and losses on sale of non-current
assets 2 47 – – – 3 3 – 49 6
Fair value changes of forest assets resulting from
changes in estimates – – – – – 265 – – – 265
Other non-operational items – – – – –3 – –19 – – –22
Total items affecting comparability in operating
profit –51 50 –2 –4 –27 273 –13 –7 –7 226
Total items affecting comparability in financial
items – –2 – – – – – – –2 –
Changes in tax rates 4 – – – – – – – 4 –
Taxes relating to items affecting comparability 14 –14 – 6 5 –54 3 2 7 –44
Items affecting comparability in taxes 18 –14 – 6 5 –54 3 2 11 –44
Items affecting comparability, total –33 34 –2 2 –22 219 –10 –5 1 182
Comparable EBITDA
Operating profit 232 364 262 277 220 513 206 203 1,135 1,142
Depreciation, amortisation and impairment
charges excluding items affecting comparability 120 118 134 138 132 131 130 131 510 524
Change in fair value of forest assets and wood
harvested excluding items affecting
comparability –53 –7 –11 –16 –16 –24 –31 –16 –88 –87
Share of results of associates and joint ventures –1 –2 –2 – – –2 –1 – –5 –3
Items affecting comparability in operating profit 51 –50 2 4 27 –273 13 7 7 –226
Comparable EBITDA 349 423 385 403 363 345 317 325 1,560 1,350
% of sales 14.1 17.3 15.8 16.5 14.1 13.6 12.4 13.1 15.9 13.3
Comparable EBIT
Operating profit 232 364 262 277 220 513 206 203 1,135 1,142
Items affecting comparability in operating profit 51 –50 2 4 27 –273 13 7 7 –226
Comparable EBIT 283 314 264 281 247 240 219 210 1,143 916
% of sales 11.4 12.8 10.8 11.5 9.6 9.5 8.6 8.4 11.6 9.0
Comparable profit before tax
Profit before tax 231 336 250 263 214 498 182 181 1,080 1,075
Items affecting comparability in operating profit 51 –50 2 4 27 –273 13 7 7 –226
Items affecting comparability in financial items – 2 – – – – – – 2 –
Comparable profit before tax 282 288 252 267 241 225 195 188 1,089 849
Comparable ROCE, %
Comparable profit before tax 282 288 252 267 241 225 195 188 1,089 849
Interest expenses and other financial expenses 17 13 15 10 13 12 20 12 55 57
300 301 266 277 254 237 215 200 1,144 906
Capital employed, average 10,560 10,433 11,701 11,005 11,079 11,080 11,059 11,025 10,833 10,977
Comparable ROCE, % 11.4 11.5 10.0 10.1 9.2 8.6 7.8 7.3 10.6 8.3
Comparable profit for the period
Profit for the period 187 268 198 227 193 408 160 155 880 916
Items affecting comparability, total 33 –34 2 –2 22 –219 10 5 –1 –182
Comparable profit for the period 220 234 200 225 215 189 170 160 879 734
Comparable EPS, EUR
Comparable profit for the period 220 234 200 225 215 189 170 160 879 734
Profit attributable to non-controlling interest – – –1 – – – – – –1 –
220 234 199 225 215 189 170 160 878 734
Average number of shares basic (1,000) 533,505 533,505 533,505 533,505 533,505 533,505 533,505 533,505 533,505 533,505
Comparable EPS, EUR 0.41 0.44 0.37 0.42 0.41 0.35 0.32 0.30 1.65 1.38
Comparable ROE, %
Comparable profit for the period 220 234 200 225 215 189 170 160 879 734
Profit attributable to non-controlling interest – – –1 – – – – – –1 –
220 234 199 225 215 189 170 160 878 734
Total equity, average 8,054 7,767 7,819 7,959 7,944 7,788 7,718 7,642 8,091 7,712
Comparable ROE, % 10.9 12.1 10.2 11.3 10.8 9.7 8.8 8.4 10.9 9.5
Quarterly key figures are unaudited