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 comparability x 100
Total equity (average)
Comparable ROCE, %:
Profit before tax - interest expenses and other financial expenses - items affecting comparability x 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 charges 1) | 132 | 131 | 130 | 131 | 524 | 521 | ||
| Change in fair value of biological assets and wood harvested 1) | -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, % | 10.8 | 9.7 | 8.8 | 8.4 | 9.5 | 8.5 | ||
| Net interest-bearing liabilities | ||||||||
| EURm | Q4/15 | Q3/15 | Q2/15 | Q1/15 | 2015 | 2014 | ||
| Non-current interest-bearing liabilities | 2,797 | 2,742 | 2,844 | 2,952 | 2,797 | 3,058 | ||
| Current interest-bearing liabilities | 269 | 461 | 537 | 350 | 269 | 406 | ||
| Interest-bearing liabilities | 3,066 | 3,203 | 3,381 | 3,302 | 3,066 | 3,464 | ||
| Non-current interest-bearing financial assets | 318 | 325 | 313 | 362 | 318 | 321 | ||
| Cash and cash equivalents | 626 | 394 | 409 | 469 | 626 | 700 | ||
| Other current interest-bearing financial assets | 22 | 19 | 24 | 52 | 22 | 42 | ||
| Interest-bearing financial assets | 966 | 738 | 746 | 883 | 966 | 1,063 | ||
| Net interest-bearing liabilities | 2,100 | 2,465 | 2,635 | 2,419 | 2,100 | 2,401 | ||
*) Alternative performance measure (APM) = financial measure other than financial measure defined or specified in IFRSs
For further information please contact:
Mika Mikkola, VP, UPM Investor relations tel. +358 40 595 3202
UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations
UPM, Media Relations
9.00-16.00 EET
tel. +358 40 588 3284
media@upm.com
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UPM
Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Paper Asia, UPM Paper Europe and North America and UPM Plywood. Our products are made of renewable raw materials and are recyclable. We serve our customers worldwide. The group employs around 19,600 people and its annual sales are approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore Company - www.upm.com