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2016-04-14

UPM: Alternative performance measures (APMs) used in UPM's financial reporting

UPM-Kymmene Corporation Stock Exchange Release 14 April 2016 at
9:30 EET

Alternative performance measures (APMs) used in UPM's financial reporting

New ESMA (European Securities and Markets Authority) guidelines on Alternative
Performance Measures (APMs) *) are effective for the financial year 2016.
Accordingly, UPM publishes the explanation of use, definitions as well as
reconciliations of its APMs to IFRS financial statements.

UPM presents APMs to reflect the underlying business performance and to
enhance comparability from period to period. APMs should not be considered as
a substitute for measures of performance in accordance with the IFRS.

From Q1 2016, UPM relabels the previously referenced "excluding special items"
non-GAAP financial measures with "Comparable" performance measures.
Comparable performance measures exclude the income statement impacts of
certain non-operational or non-cash valuation items affecting comparability.

The items affecting comparability and APMs used by UPM are defined below:

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 biological assets resulting from changes in valuation
parameters or estimates or
· changes in legislation or legal proceedings.

In the UPM Biorefining, UPM Paper Asia and UPM Paper ENA the transaction
(income or expense) is considered to be significant, if the impact is one
cent (EUR 0.01) after tax per share or more. In other business areas the
impact is considered to be significant if it exceeds EUR 1 million pre-tax.

In addition, the changes in fair value of unrealised cash flow and commodity
hedges are classified as items affecting comparability.

Comparable EBITDA:

Operating profit - depreciation - impairment charges - change in fair value of
biological assets and wood harvested - share of results of associated
companies and joint ventures - items affecting comparability.

Definition of Comparable EBITDA is unchanged.

Comparable EBIT:

Operating profit - items affecting comparability in operating profit

Comparable profit
:
Profit - Items affecting comparability

Comparable ROE, %:

Profit before tax - income taxes - items affecting comparabilityx 100
Total equity (average)

Comparable ROCE, %:

Profit before tax - interest expenses and other financial expenses - items
affecting comparabilityx 100
Total equity + interest-bearing liabilities (average)

Comparable EPS:

Profit attributable to owners of the parent company
- items affecting comparability______________________________________
Adjusted average number of shares during the period excluding treasury shares

From Q1 2016, changes in fair value of unrealised cash flow and commodity
hedges and significant fair value changes of biological assets resulting from
changes in valuation parameters or estimates with related tax effects are
excluded from Comparable EBIT and Comparable profit. Otherwise the
definitions are unchanged from the previously reported "Operating profit,
excluding special items" and "Profit for the period, excluding special
items". Corresponding prior year measures have been revised accordingly. This
change has an effect also on Comparable EPS, Comparable ROE and Comparable
ROCE of prior years.

Net interest-bearing liabilities:

Interest-bearing liabilities - interest-bearing financial assets

Interest-bearing financial assets include loan receivables, interest-bearing
derivative financial instruments, cash and cash-equivalents and other
interest-bearing receivables. Definition of Net interest-bearing liabilities
remains unchanged.

In addition to above described APMs, UPM reports a number of key figures that
are not defined under IFRS. The definitions and names of these measures
remain unchanged and are published in Annual Report 2015.

The tables below present the reconciliation of APMs to the most comparable
IFRS measures

---------------------------------------------------------------------------------------------------------------------------------------
| Items affecting comparability |
| EURm Q4/15 Q3/15 Q2/15 Q1/15 2015 2014 |
| Impairment charges - -1 1 - - -137 |
| Restructuring charges -2 4 -6 -1 -5 -86 |
| Change in fair value of unrealised cash flow and commodity hedges -22 2 8 -6 -18 -19 |
| Capital gains and losses on sale of non-current assets - 3 3 - 6 50 |
| Fair value changes of biological assets resulting from changes in estimates - 265 - - 265 - |
| Other non-operational items -3 - -19 - -22 - |
| Total items affecting comparability in operating profit -27 273 -13 -7 226 -192 |
| Gain related to the sale of Metsä-Fibre Oy shares in 2012 - - - - - 66 |
| Total items affecting comparability in financial items - - - - - 66 |
| Total items affecting comparability in taxes 5 -54 3 2 -44 - |
| Total items affecting comparability -22 219 -10 -5 182 -126 |
| |
| Comparable EBITDA |
| EURm Q4/15 Q3/15 Q2/15 Q1/15 2015 2014 |
| Operating profit (loss) 220 513 206 203 1,142 674 |
| Less: |
| Depreciation, amortisation and impairment charges1) 132 131 130 131 524 521 |
| Change in fair value of biological assets and wood harvested1) -16 -24 -31 -16 -87 -78 |
| Share of results of associated companies and joint ventures - -2 -1 - -3 -3 |
| Items affecting comparability in operating profit 27 -273 13 7 -226 192 |
| Comparable EBITDA 363 345 317 325 1,350 1,306 |
| % of sales 14.1 13.6 12.4 13.1 13.3 13.2 |
| 1)excluding items affecting comparability |
| Comparable EBIT |
| EURm Q4/15 Q3/15 Q2/15 Q1/15 2015 2014 |
| Operating profit (loss) 220 513 206 203 1,142 674 |
| Less: |
| Items affecting comparability in operating profit 27 -273 13 7 -226 192 |
| Comparable EBIT 247 240 219 210 916 866 |
| % of sales 9.6 9.5 8.6 8.4 9.0 8.8 |
| |
| Comparable profit (loss) before tax |
| EURm Q4/15 Q3/15 Q2/15 Q1/15 2015 2014 |
| Profit (loss) before tax 214 498 182 181 1,075 667 |
| Less: |
| Items affecting comparability in operating profit 27 -273 13 7 -226 192 |
| Items affecting comparability in financial items - - - - - -66 |
| Comparable profit (loss) before tax 241 225 195 188 849 793 |
| Less: |
| Interest expenses and other financial expenses 13 12 20 12 57 67 |
| 254 237 215 200 906 860 |
| Capital employed, average 11,079 11,080 11,059 11,025 10,977 11,264 |
| Comparable ROCE, % 9.2 8.6 7.8 7.3 8.3 7.6 |
| |
| Comparable profit (loss) for the period |
| EURm Q4/15 Q3/15 Q2/15 Q1/15 2015 2014 |
| Profit (loss) for the period 193 408 160 155 916 512 |
| Less: |
| Items affecting comparability, total 22 -219 10 5 -182 126 |
| Comparable profit (loss) for the period 215 189 170 160 734 638 |
| |
| Average number of shares basic (1000) 533,505 533,505 533,505 533,505 533,505 533,505 |
| Comparable EPS, EUR 0.41 0.35 0.32 0.30 1.38 1.20 |
| |
| Total equity, average 7,944 7,788 7,718 7,642 7,712 7,468 |
| Comparable ROE, % ...

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