Arctic Paper SA
2022 ANNUAL
REPORT
Annual report 2021 of Arct ic Paper S.A.
Translatorʼs Explanatory Note: the following document is a free translation of the report of the above -mentioned Company. In the event
of any discrepancy in interpreting the terminology in Polish version is binding.
Table of contents
Selected standalone financial data 4
Letter from the President of the Management
Board of Arctic Paper S.A. 6
Description of the business of Arctic Paper 7
Summary of financial results 11
Relevant information and factors affecting the
financial results and the assessment of the
financial standing 16
Factors affecting the development of the
Company 18
Supplementary information 20
Statement on the application of the Corporate
Governance Rules 25
Information compliant with the requirements of
Swedish regulations concerning corporate
governance. 38
Information by the Management Board of Arctic
Paper S.A. on selection of the audit firm 40
Statements of the Management Board 41
Standalone financial statements 43
Accounting principles (policies) and additional
explanatory notes 48
1. General information 48
2. Identification of the consolidated financial statements 48
3. Composition of the Company’s Management Board 48
4. Approval of the financial statements 48
5. Investments by the Company 49
6. Material values based on professional judgement and
estimates 50
7. Basis of preparation of the financial statements 50
8. Changes in the applied accounting principles 51
9. New standards and interpretations that have been
published and are not yet effective 51
10. Significant accounting principles (policies) 52
11. Sales revenues 60
12. Other revenues and expenses 60
13. Income tax 62
14. Earnings/(loss) per share 64
15. Dividend paid and proposed 64
16. Other assets 65
17. Trade and other receivables 69
18. Cash and cash equivalents 69
19. Share capital and reserve capital/other reserves 70
20. Interest-bearing loans and borrowings 71
21. Long-term employee liabilities 72
22. Trade and other payables and other financial liabilities 73
23. Contingent liabilities 73
24. Information on related entities 75
25. Information on the remuneration of the statutory auditor or
entity authorised to audit financial statements 77
26. Financial risk management objectives and policies 77
27. Financial instruments 81
28. Capital management 83
29. Employment structure 84
30. Events after the balance sheet date 84
SELECTED STANDALONE
FINANCIAL DATA
Annual repor t 2022 of Arctic P aper S. A.
Selected standalone financial data
Period
from
01.01.2022
to 31.12.2022
Period
from
01.01.2021
to 31.12.2021
Period
from
01.01.2022
to 31.12.2022
Period
from
01.01.2021
to 31.12.2021
PLN '000
PLN '000
EUR '000
EUR '000
Sales revenues
Operating profit/(loss)
224 463
7 208
Gross profit/(loss)
218 975
4 771
Net profit/(loss) from continuing
operations
222 906
4
771
Net profit/(loss) for the financial year
222 906
4 771
Net cash flows from operating activities
220 455
(15 320)
(3 354)
Net cash flows from investing activities
(50)
(2 498)
(11)
(547)
Net cash
flows from financing activities
(22 099)
(7 364)
(4 714)
(1 612)
Change in cash and cash equivalents
198 306
(25 182)
(5 514)
Weighted average number of ordinary shares
69 287 783
69 287 783
69 287 783
69 287 783
Diluted weighted average number of ordinary shares
69 287 783
69 287 783
69 287 783
69 287 783
EPS (in PLN/EUR)
3,22
0,31
0,69
0,07
Diluted EPS (in PLN/EUR)
3,22
0,31
0,69
0,07
Mean PLN/EUR exchange rate*
As at
31 December
2022
As at
31 December
2021
As at
31 December
2022
As at
31 December
2021
PLN '000
PLN '000
EUR '000
EUR '000
Total assets
1 144 888
857 299
244 118
186 394
Long
-
term liabilities
105 398
15
999
Short
-
term liabilities
292 883
174 841
Equity
776 970
577 059
165 669
125 464
Share capital
Number of ordinary shares
69 287 783
69 287 783
69 287 783
69 287 783
Diluted number of
ordinary shares
69 287 783
69 287 783
69 287 783
69 287 783
Book value per share (in PLN/EUR)
11,21
8,33
2,39
1,81
Diluted book value per share (in PLN/EUR)
11,21
8,33
2,39
1,81
Declared or paid dividend (in PLN/EUR)
27 715 113
20 786
335
5 909 532
4 519 358
Declared or paid dividend per share (in PLN/EUR)
0,40
0,30
0,09
0,07
PLN/EUR exchange rate at the end of the period**
* - Profit and loss account and cash flow statement items have been translated at the mean arithmetic exchange rates published by the National Bank of
Poland, prevailing in the period that the presented data refers to.
** - Balance sheet items have been translated at the mean arithmetic exchange rates published by the National Bank of Poland, prevailing on the balance
sheet date.
MANAGEMENT BOARD’S REPORT ON
THE OPERATIONS OF ARCTIC
PAPER S.A. to the report for 2022
Annual repor t 2022 of Arctic P aper S. A. 6
Management Board’s Report
Letter from the
President of the
Management Board of
Arctic Paper S.A.
Dear Sirs,
I am pleased to report that last year was another year in which the Arctic Paper group achieved very good results. It was a t ime
of very dynamic change, with many factors having a significant impact on our business. We have modified our activities on an
ongoing basis to suit the business environment.
The war in Ukraine has affected our activities to some extent. We have ceased trade with countries involved in this conflict. We
were forced to find new sources of supply of raw materials. In previous years, w e sold less than 1.5% of our total paper volume to
these countries. The high demand in Europe allowed us to redirect this volume to other countries in Western Europe. On the
humanitarian aspect, we joined in helping Ukrainian children by donating funds to buy medicine, clothing and food. As a paper
manufacturer, we have donated more than 150,000 notebooks to Ukrainian schools.
The consistent implementation of the 4P strategy and the results achieved as a result confirm that Arctic Paper is a reliable and
solid partner for its customers and meets the expectations of its shareholders.
I would like to thank the entire Arctic Paper Group team for their consistency in achieving the tasks set before them.
Sincerely yours,
Michał Jarczyński
President of the Management Board of Arctic Paper S.A.
Annual repor t 2022 of Arctic P aper S. A. 7
Management Board’s Report
Description of the business of Arctic Paper
General information
Arctic Paper S.A. is a holding company set up in April 2008. As a result of capital restructuring carried out in 2008, the Pa per
Mills Arctic Paper Kostrzyn (Poland) and Arctic Paper Munkedals (Sweden), Distribution Companies and Sales Offices have
become the properties of Arctic Paper S.A. Previously they were owned by Trebruk AB (formerly Arctic Paper AB), the Parent
Entity of the Issuer In addition, under the expansion, the Group acquired the Paper Mill Arctic Paper Mochenwangen (Germany)
in December 2008 and the Paper Mill Grycksbo (Sweden) in March 2010.
In 2012 and 2013 Arctic Paper S.A. acquired shares in Rottneros AB, a company listed at NASDAQ in Stockholm, Sweden,
holding 100% shares in two Pulp Companies, Procurement Office and a company manufact uring food packaging.
Since 23 October 2009, Arctic Paper S.A. has been listed on the primary market of the Warsaw Stock Exchange and since 20
December 2012 on the NASDAQ stock exchange in Stockholm, Sweden.
The main statutory activity of the Company is th e activity of a holding company, consisting in managing of entities belonging to
the controlled Capital Group. The operations are conducted through Paper Mills and Pulp Mills as well as Sales Offices and
Procurement Office. The description of the Arctic Pa per Capital Group was provided in the Management Board’s Report from
operations of the Arctic Paper Capital Group for the year ended on 31 December 2022.
The Company is entered in the register of entrepreneurs of the National Court Register maintained by t he District Court in Zielona
Góra – 8th Commercial Division of the National Court Register, under KRS number 0000306944. The Parent Entity holds
statistical number REGON 080262255. The Company has a foreign branch in Göteborg, Sweden.
Business activity
The core business of Arctic Paper S.A. covers holding activities.
Subsidiaries
As at 31 December 2022, Arctic Paper S.A. held investments in the following subsidiary companies:
— Arctic Paper Kostrzyn S.A. – Paper Mill in Kostrzyn nad Odrą (Poland);
— Arctic Paper Munkedals AB – Paper Mill in Munkedal (Sweden);
— Arctic Paper Sverige AB – a sales office operating in Sweden;
— Arctic Paper Norge AS – a sales office operating in Norway;
— Arctic Paper Danmark A/S – a sales office operating in Denmark ;
— Arctic Paper UK Limited – a sales office in the United Kingdom;
— Arctic Paper Baltic States SIA – a sales office covering the Baltic States;
— Arctic Paper Benelux S.A. – a sales office covering the Benelux countries;
— Arctic Paper Schweiz AG – a sales office in Switzerland;
— Arctic Paper Italia srl – a sales office in Italy;
— Arctic Paper France SAS – a sales office in France;
— Arctic Paper Espana SL – a sales office in Spain;
— Arctic Paper Papierhandels GmbH – a sales office in Austria;
— Arctic Paper Deutschland GmbH – a sales office in Germany;
— Arctic Paper Polska Sp. z o.o. – a sales office in Poland;
— Arctic Power Sp. z o.o. – an energy production company;
— Kostrzyn Packaging Spółka z o.o. – a packaging production company ;
— Arctic Paper Investment GmbH – a holding company established to acquire shares in the Paper Mill in Mochenwangen;
— Arctic Paper Investment AB – a holding company established for the purpose of acquisition of Grycksbo Paper Holding AB;
— Rottneros AB – a holding company with shares in the Paper Mil ls of Rottneros Bruk AB, Rottneros Vallvik AB and indirectly in
Arctic Paper Grycksbo AB, in the procurement office and in the company manufacturing food packaging;
Annual repor t 2022 of Arctic P aper S. A. 8
Management Board’s Report
— Arctic Paper Finance AB – a holding company involved in attracting financing.
Information on percentage holdings in each subsidiary company is provided in the Company’s financial statements (note 5).
Changes in the capital structure of the Arctic Paper Group
In 2022, there were no changes to the capital structure of the Group.
Provided services
As a holding company, Arctic Paper S.A. receives dividend, interest on loans granted and revenues for the management services
it provides for related entities operating within the Arctic Paper Capital Group.
In connection with restructuring a ctivities in the Arctic Paper Group, at the beginning of 2016 a centralised logistics department
started to operate within the structures of Arctic Paper S.A. The logistics department provides services in planning and
coordinating transport to the Paper Mi lls in Kostrzyn, Grycksbo and Munkedals.
The range of products manufactured by the Arctic Paper Group’s paper mills is described in the Management Board’s Report from
operations of the Arctic Paper Capital Group for 2022.
Modifications to the core management principles
In 2022, there were no material modifications to the core management principles.
Shareholding structure
Nemus Holding AB, a company under Swedish law (a company owned indirectly by Mr Thomas Onstad), is the majority
shareholder of Arctic Paper S.A., holding (as at 31 December 2022) 40,381,449 shares of our Company, which constitutes
58.28% of its share capital and corresponds to 58.28% of the total number of votes at General Meetings. Thus Nemus Holding AB
is the Parent Entity of the Issuer.
Additionally, Mr Thomas Onstad, an indirect shareholder of Nemus Holding AB, holds directly 6,223,658 shares representing
8.98% of the total number of shares in the Company, and via another entity – 600,000 shares accounting for 0.87% of the total
number of shares of the Issuer. Mr Thomas Onstad’s total direct and indirect holding in the capital of Arctic Paper S.A. as a t 31
December 2022 was 68.13% and has not changed until the date hereof.
as of 28.03.2023
Shareholder
Number of
shares
Share in the
share
capital
[%]
Number of
votes
Share in the
total number
of votes
[%]
Thomas Onstad
47
205
107
68.13%
47
205
107
68.13%
-
indirectly via
40
989
59.15%
40
981
449
59.15%
Nemus Holding
AB 40 381 449
58.28%
40 381 449
58.28%
other entity
600
000
0.87%
600 000
0.87%
- directly 6 223 658
8.98%
6 223 658
8.98%
Other
22
082
676
31.87%
22
082
676
31.87%
Total
69
287
783
100.00%
69
287
783
100.00%
Treasury shares
-
0.00%
-
0.00%
Total
69
287
783
100.00%
69
287
783
100.00%
Annual repor t 2022 of Arctic P aper S. A. 9
Management Board’s Report
The data in the above table are shown as at the date of approval of this report. The shareholder structure has not changed
compared to the balance sheet date and the date of publication of the quarterly report for Q3 2022.
Market environment
The Company provides no services directly to external entities. The Company’s financial condition and its ability to distribu te
dividend is primarily affected by the market environment in which the Paper and Pulp Mills controlled by the Company operate.
Information on the core products offered by the Group with details of their value and quantities and the share of each produc t in
total sales of the Group as well as information on markets with a split into domestic and foreign markets and information on
procurement sources of materials for production and services, are all provided in the consolidated annual report for 2022.
Development directions and strategy
On 4 October 2021, the Company’s Supervisory Board approved the “Arctic Paper Group Strategy for 2022 -2030” presented by
the Issuer’s Management Board. With the Group’s new strategy to 2030, Arctic Paper will accelerate its transformation into a
more comprehensive company, leveraging the synergies and competencies of its existing businesses. The Company’s strategic
directions are reflected in its 4 pillars: packaging, energy, graphic paper and pulp.
With its strong position as a premium paper producer and o wner of the recognisable Graphic Paper and Pulp brands, as part of
its Four Pillars(4P) strategy, the Group will invest in two new business areas where sustainability and renewable resources –
packaging and energy – play a key role.
The Group’s main strategic objectives in the 2030 perspective are:
revenue growth by 25 per cent,
an increase in EBITDA of around 70 per cent,
an increase in EBITDA margin to 15 per cent.
The total investment between 2022 and 2030 in all four pillars is planned at over PLN 1.5 billion, of which around 40 per cent of
this amount will be allocated to new business areas. The Group assumes that it will achieve carbon neutrality by 2035 at the
latest.
Sales structure
In 2022, the sales structure by main sources of the Company’s revenues was as follows:
PLN ‘000
2022
% share
2021
% share
Services
12
754
18%
22
402
35%
Dividend
57 416
79%
38 724
61%
Interest income on
loans
2
290
3%
2
710
4%
Total
72
460
100%
63
836
100%
Annual repor t 2022 of Arctic P aper S. A. 10
Management Board’s Report
The Company provides management services to companies pursuant to agreements signed with those entities.
PLN ‘000
2022
% share
2021
% share
Arctic Paper Kostrzyn S.A.
38
713
53%
30
065
47%
Rottneros
A
B
21
160
29%
15
989
25%
Arctic Paper Munkedals AB
4
888
7%
3
691
6%
Arctic Paper Grycksbo AB
6
882
9%
12
247
19%
Other
817
1%
1
843
3%
Total
72
460
100%
63
836
100%
Information on the seasonal or cyclical nature of business
The demand for the Group’s products is subject to slight variations throughout the year. Reduced demand for paper occurs each
year during summer holidays and around Christmas when some printing houses, in particular in Western Europe are closed.
Changes in the demand for paper are not material versus the demand for paper in other periods of the year. Changes in the
demand for paper affect largely changes in demand for pulp.
Research and development
The Company has no direct expenses on research and development.
The Arctic Paper Group conducts primarily development works aimed at enhancing and modernising production processes and
improving the quality of products on offer and expanding the assortment thereof. In the period covered with this report, the Paper
Mills carried out development works to improve production processes, in particular to shorten the idle time of paper machines as
well as works aimed at improving the paper quality and extending the assortment and to improve paper quality properties.
New product development was an important aspect of the development works in 2022.
Environment
The description of the impact of environmental regulations on the operations of the Paper and Pulp Mills controlled by the
Company is provided in the consolidated annual report.
Annual repor t 2022 of Arctic P aper S. A. 11
Management Board’s Report
Summary of financial results
Selected items of the statement of profit and loss
PLN ‘000
2022
2021
Change %
2022/2021
Sales revenues
72 460
63 836
13,5
of which:
Revenues from sales of services
12 754
22 402
(43)
Interest income on loans
2 290
2 710
(15)
Dividend income
57 416
38 724
48
Profit on sales
65 109
58 664
11
% of sales revenues
89,86
91,90
(2,0)
Administrative expenses
(17 938)
(25 144)
(29)
Other operating income
180 733
488
36 931
Other operating expenses
(3 441)
(1 087)
216
EBIT
224 463
32 920
582
% of sales revenues
309,78
51,57
258,2 p.p.
EBITDA
224 692
33 309
574,6
% of sales revenues
310,09
52,18
257,9 p.p.
Financial income
3 316
3 899
(15)
Financial expenses
(8 804)
(15 031)
(41)
Gross profit
218 975
21 787
905
Income tax
3 931
-
-
Net profit
222 906
21 787
923
% of sales revenues 307,63
34,13
273,5 p.p.
Revenues, costs of sales and profit on sales
The main statutory activity of the Company is the activity of a holding company, consisting in managing of entities belonging to
the controlled Capital Group. The operations of the Group are conducted through Paper Mills and Pulp Mills as well as Sales
Offices and Procurement Office. In 2022, the standalone sales revenues reached PLN 72,460 thousand and comprised: dividend
income (PLN 57,416 thousand), services provided to Group comp anies (PLN 12,754 thousand) and interest income on loans (PLN
2,290 thousand). In 2021, the Company’s standalone revenues amounted to PLN 63,836 thousand and included: dividend income
(PLN 38,724 thousand), services provided to Group companies (PLN 22,402 thousand) and interest income on loans (PLN 2,710
thousand).
In 2022 and in 2021, the Company did not render services to the Pulp Mills of the Rottneros Group.
Costs of sales cover internal costs of providing logistics services to the Company by its relate d entities (PLN -7,350 thousand).
Administrative expenses
In 2022, the administrative expenses amounted to PLN 17,938 thousand. They cover costs of the administration of the Company
operation, costs of services provided to the companies in the Group and a ll costs incurred by the Company for the purposes of
pursuing holding company activities. The above costs include a group of costs that are related solely to statutory activities and
cover, inter alia: audit costs of financial statements, functioning costs of the Supervisory Board, costs of periodic owners’
inspections in the Company, etc.
Selling and distribution costs
The company has not recognised any selling and distribution costs in 2022 and 2021.
Other operating income and expenses
Other operating income amounted to PLN 180,773 thousand in 2022, an increase compared with the same period of the previous
year. The increase in income in 2022 was due to the reversal of an impairment allowance on the shares in Arctic Paper
Investment AB in the amount of PLN 178,805 thousand.
Annual repor t 2022 of Arctic P aper S. A. 12
Management Board’s Report
At the same time there was an increase of other operating expenses that reached the level of PLN -3,441 thousand (in 2021 it
was PLN -1,087 thousand). The increase in costs in 2022 was due to the recognition of additional of an impairment allowance on
the shares in Arctic Paper Danmark AS in the amount of PLN 2,592 thousand.
Financial income and financial expenses
In 2022, the financial income amounted to PLN 3,316 thousand and was by PLN 583 thousand lower than generated in the
equivalent period last year. At the same time, there was a decreas e of financial expenses from PLN 15,031 thousand in 2021
down to PLN 8,804 thousand.
The changes in finance expenses are mainly due to realised interest rate swaps, bank commissions and fees related to financin g,
interest on loans and FX differences. In 2022 the Company incurred significant costs of refinancing process.
Profitability analysis
EBITDA in 2022 was PLN 224,692 thousand, while in 2021 it was PLN 33,309 thousand.
EBIT in 2022 amounted to PLN 224,463 thousand as compared to PLN 32,920 thousand in the previous year.
The net profit in 2022 amounted to PLN 222,906 thousand as compared to the net profit of PLN 21,787 thousand in 2021.
PLN ‘000
2022
202
1
Change % 2022/2021
Profit on sales
65 109
58 664
11,0
% of sales revenues 89,86
91,90
(2,0) p.p.
EBITDA
224 692
33 309
574,6
% of sales revenues 310,09
52,18
257,9 p.p.
EBIT
224 463
32 920
581,8
% of sales revenues 309,78
51,57
258,2 p.p.
Net profit
222 906
21 787
923,1
% of sales revenues 307,63
34,13
- p.p.
Return on equity / ROE (%) 28,7
3,8
24,9 p.p.
Return on assets / ROA (%) 19,5
2,5
16,9 p.p.
When describing the financial situation of the Capital Group, the Company uses alternative performance measures. In the opinion
of the Management Board, these selected ratios are a source of additional (in addition to the data provided by the Company in
the financial statements) valuable information on the financial and operating situation, as well as facilitate the analysis and
assessment of the Group's financial results over the individual reporting periods.
The company presents alternative performance measures because they are standard measures and ratios commonly used in
financial analysis, however, these ratios may be calculated and presented differently by different companies. Therefore, the
Issuer provides precise definitions used by the Group in the reporting process. The selection of alternative performance
measures was preceded by a thorough analysis of thei r usefulness in terms of providing shareholders, analysts and investors
with useful information on the financial situation and financial performance, which in the Company's opinion allows for an op timal
assessment of the financial results achieved.
The ratios presented by the Company were calculated according to the formulas described below.
*EBITDA – Operating profit from continuing operations plus depreciation and amortisation and impairment allowances
* Return on equity, return on equity, ROE – net profit/(loss) to equity
* Return on assets, return on assets, ROA – the ratio of net profit/(loss) to total assets
In 2022, return on equity was 2 8.7% while in 2021 it was 3.8%. Return on assets increased from 2.5% in 2021 to 1 9.5% in 2022.
Annual repor t 2022 of Arctic P aper S. A. 13
Management Board’s Report
Selected items from the statement of financial position
PLN ‘000
2022
-
12
-
31
2021
-
12
-
31
Change
31/12/2022
-
31/12/2021
Fixed assets
894 074
686 451
207 623
Receivables
18 997
31 903
(12 907)
Other current assets
18 545
123 978
(105 433)
Cash and cash equivalents
213 272
14 966
198 306
Total assets
1 144 888
857 299
287 589
Equity
776 970
577 059
199 910
Short
-
term liabilities
292 883
174 841
118 042
w tym:
interest-bearing debt
263 752
145 648
118 105
Long
-
term liabilities
75 036
105 398
(30 363)
w tym:
interest-bearing debt
73 022
101 546
(28 524)
Total equity and liabilities
1 144 888
857 299
287 589
As at 31 December 2022, total assets amounted to PLN 1,144,888 thousand as compared to PLN 857,299 thousand at the end of
2021.
Fixed assets
At the end of December 2022 fixed assets accounted for about 7 8.1% of total assets and their share in total assets decreased
versus December 2021 (80.1%).
Current assets
As at the end of December 2022, current assets amounted to PLN 2 50,814 thousand as compared to PLN 170,848 thousand at
the end of 2021.
Equity
At the end of December 2022, the equity amounted to PLN 778,970 thousand as compared to PLN 577,059 thousand at the end of
2021.
The increase in equity is mainly due to the net profit generated in 2022 and the valuation of derivatives recognised in equit y.
Short-term liabilities
As at the end of September 2022, current liabilities amounted to PLN 292,883 thousand ( 25.6% of balance sheet total) as
compared to PLN 174,841 thousand as at the end of 2021 (20.4% of balance sheet total).
The significant increase in short-term liabilities is due to an increase in cash -pool liabilities.
Long-term liabilities
As at the end of December 2022, long-term liabilities amounted to PLN 75,036 thousand (6. 6% of balance sheet total) as
compared to PLN 105,398 thousand as at the end of 2021 (12.3% of balance sheet total).
Debt analysis
2022
2021
Change %
2022/2021
Debt to equity ratio (%)
47,4
48,6
(1,2) p.p.
Equity to fixed assets ratio (%)
86,9
84,1
2,8 p.p.
Interest-bearing debt-to-equity ratio (%)
43,3
42,8
0,5 p.p.
Annual repor t 2022 of Arctic P aper S. A. 14
Management Board’s Report
* Equity debt ratio (%) – total liabilities to equity ratio
* Equity to fixed assets ratio – equity to non-current assets ratio
* Equity debt to interest-bearing debt – the ratio of interest-bearing debt and other financial liabilities to equity
As at the end of December 2022, the equity debt ratio was 47.4% and was lower by 1.2 p.p. versus the end of December 2021.
The equity to asset ratio increased from 84.1% as at the end of 2021 to 86.9% as at the end of December 2022. The equity debt
to interest-bearing debt stood at 43.3% at the end of 2022, and was higher by 0.5 p.p. versus to 2021.
Liquidity analysis
2022
2021
Change %
2022/2021
Current ratio
0.8
6
x
0.98x
(0.1)
Quick ratio
0.8
6
x
0.98x
(0.1)
Cash solvency ratio
0.73x
0.09x
0.6
* Current ratio – the ratio of current assets to short -term liabilities
* Quick ratio – the ratio of current assets minus inventory and short -term accruals and deferred income to short -term liabilities
* Cash solvency ratio – the ratio of the sum of cash assets and other cash assets to short -term liabilities
The current ratio and the quick ratio at the end of December 2022 amounted to 0.8 6 and were by 0.1 lower than at the end of
December 2021. The cash ratio increased versus December 2021 and was 0.73 at the end of 2022.
Annual repor t 2022 of Arctic P aper S. A. 15
Management Board’s Report
Selected items from the cash flow statement
PLN ‘000
2022
2021
Change % 2022/2021
Cash flows from operating activities
220 455
(15 319,9)
(1 539,0)
of which:
Gross profit
218 975
21 787,5
905,1
Depreciation/amortisation
228
389,0
(41,4)
Changes to working capital
5 905
1 537,5
284,1
Net interest and dividends
(54 595)
5 367,6
(1 117,1)
Increase/decrease of loans granted to subsidiaries
218 086
(52 357,1)
(516,5)
Impairment of shares (reversal)
(175 745)
-
-
Other adjustments
7 600
7 955,6
(4,5)
Cash flows from investing activities
(50)
(2 497,6)
(98,0)
Cash flows from financing activities
(22 099)
(7 364,0)
200,1
Cash flows from operating activities
In 2022, net cash flows from operating activities amounted to PLN 220,455 thousand as compared to PLN -15,320 thousand in
2021. The biggest impact on the positive cash flow from operating activities in 2022 was the change in cash pooling.
Cash flows from investing activities
In 2021, flows amounted to minus PLN 2,498 thousand and were related to the increase in shares in Arctic Paper P ower Sp. z
o.o., in 2022, cash flows from investing activities amounted to minus PLN 50 thousand and were related to the increase in sh ares
in Kostrzyn Packaging Sp. z o.o.
Cash flows from financing activities
In 2022, cash flows from financing activities amounted to minus PLN 22,099 thousand as compared to minus PLN 7,364 thousand
in 2021. In 2022, flows from financing activities were related to the repayment of existing bank loans.
Annual repor t 2022 of Arctic P aper S. A. 16
Management Board’s Report
Relevant information and factors affecting the financial results and
the assessment of the financial standing
Key factors affecting the performance results
The operations of the Company are indirectly affected by factors that have direct impact on the business of the Group’s
operational units – Paper Mills and the factors include:
— macroeconomic and other economic factors,
— demand growth for products based on natural fibres,
— reduced demand for certain paper types,
— fluctuations of paper prices,
— pulp price fluctuations for Paper Mills, timber for Pulp Mills and energy prices,
— FX rates fluctuation.
The impact of the factors on the Group’s business was described in detail in the consolidated annual report for 2022.
Unusual events and factors
In the period under the report there were no unusual events and/or other factors affecting Arctic Paper S.A.
Other material information
Joint investment by Arctic Paper and Rottneros- conclusion of a joint-venture agreement
On February 17th, 2023 the Company and Rottneros AB (“Rottneros”) concluded an agreement to establish a joint -venture
("Joint-Venture Agreement") and a joint-venture agreement under the name of Kostrzyn Pack aging Sp. z o. o. ("Joint Venture").
The initial share capital of the Joint -Venture will amount to PLN 460,000.00 and will be divided into 46 equal and indivisible
shares with a nominal value of PLN 10,000.00 each. The company and Rottneros will each hold 50% of its share capital.
The subject of the Joint-Venture's business will be: (i) production of packaging from molded cellulose fibre, (ii) sale of finished
packaging, (iii) conducting development research and technical analysis of manufactured products.
The source of financing the Joint-Venture's activities will be shareholders' own contributions and bank loans.
Under the decision of the Ministry of Transport and Development, the Joint -Venture, under the Polish Investment Zone program,
will benefit from support in the form of an income tax exemption up to PLN 97.2 million of eligible costs.
The conditions for the granted income tax exemption are: the minimum value of the investment (PLN 97.2 million), the creation
and maintenance of an appropriate number of jobs in the production plant and the investment completion date – no later than by
December 31, 2025.
The Joint-Venture is also obliged to incur eligible costs of a certain minimum value during the implementation of the investment
and to meet the quality criteria (including the criterion of sustainable economic and social development) within 5 years from the
date of completion of the investment.
The purpose of the Joint-Venture is to build a moulded cellulose fiber packaging factory in Kostrzyn nad Odrą in Poland, which is
scheduled to be launched at the end of 2023. The estimated value of the investment will amount to PLN 100 million, including the
Issuer's share of 50%. According to the Issuer's estimates, the inv estment will generate an annual revenue of approximately PLN
60 million.
Annual repor t 2022 of Arctic P aper S. A. 17
Management Board’s Report
The joint venture of the Company and Rottneros AB will enable the synergy of Rottneros Packaging AB's know -how in the field of
commercialization of biodegradable packaging production technology, operational experience and the advantageous location of
the Joint-Venture in Kostrzyn nad Odrą. The expansion of the Arctic Paper Group's product portfolio will allow it to strengthen its
position on the fast-growing market of ecological packaging and is an important element of the implementation of the Arctic Paper
4P strategy.
Adoption by the Management Board of Arctic Paper S.A. of a dividend policy
On 11 July 2022, the dividend policy of Arctic Paper S.A. ("the Policy") was adopted by a resolution of the Management Board.
The dividend policy will apply from the financial year ending 31 December 2022.
In accordance with the adopted Policy, the Management Board intends to submit to the Company’s General Meeting a proposal
for the payment of dividends of between 20% and 40% of the consolidated net profit of the Company’s Group generated for the
financial year, subject to the current provisions of the loan agreements regarding financial covenants and the related restri ctions
on profit distribution.
The dividend will be paid annually, after the General Meeting has approved the Company’s financial statements . In recommending
to the General Meeting the distribution of profit and setting the value of the dividend, the Company’s Management Board wil l take
into account the financial and liquidity situation, existing and future liabilities (including potential restrictions related to loan
agreements) and an assessment of the prospects of the Company’s Group in certain market and macroeconomic condition s.
The intention of the Company’s Management Board is to create and maintain a predictable dividend policy and for Arctic Paper
S.A. to be perceived by the market as a dividend company.
Annual repor t 2022 of Arctic P aper S. A. 18
Management Board’s Report
Factors affecting the development of the Company
Information on market trends and in factors affecting the Company’s financial results over the next year is provided in the
consolidated annual report. Below is a description of risk factors that directly affect the Company’s business, other risk fa ctors
affecting the Company via its subsidiary companies, are described in detail in the consolidated annual report.
Risk factors
Risk factors related to the environment in which the Company operates
The sequence in which the risk factors are presented below does not reflect the li kelihood of occurrence, extent or materiality of
the risks.
Risk of changing legal regulations
The Company operates in a legal environment characterised with a high level of uncertainty. The regulations affecting our
business have been frequently amended and there are no consistent interpretations which generates a risk of violating the
existing regulations and the resultant consequences even if such breach was unintentional.
Risk related to disadvantageous global economic situation
The global economic situation is affected by the effects of the recent financial crisis, in particular the continued loss of trust on
the part of consumers and entrepreneurs, concerns related to the availability and increasing costs of loans, decrease in cons umer
and investment spending, volatility and strength of capital markets. We anticipate that the difficult global economic conditions
may result in an overall decreased of demand and average prices of high quality paper which in turn may adversely affect the
dividends received from subsidiary companies.
FX risk
The Company’s revenues, expenses and results are exposed to the FX risk, in particular of PLN to EUR, SEK and other
currencies since the Company has been paid dividend partly in EUR and in SEK. Thus FX rate fluctuations may have an adverse
effect on the results, financial conditions and prospects of the Group.
Interest rate risk
The Company is exposed to interest rate risk in view of the existing interest -bearing debt. The risk is due to fluctuations of the
reference interest rates WIBOR for debt in PLN. Unfavourable changes of interest rates may adversely affect the results, financial
condition and prospects of the Company.
The objectives and methods of financial risk management in the Company along with hedging methods of major transactions are
detailed in note 26 to the standalone financial statements.
Risk factors relating to the business of the Company
The sequence in which the risk factors are presented below does not reflect the likelihood of occurrence, extent or materiali ty of
the risks.
Risk related to retention and attraction of management staff and qual ified personnel
The achievement of strategic objectives by the Company is subject to the know -how and experience of the professional
management staff and the ability to hire and retain qualified specialists. The Company may not be able to retain its manage ment
staff and other key specialists or to attract new specialists. If the Company is not able to attract and retain management st aff and
personnel, this may adversely affect its business, operational results and financial condition.
Risk related to the debt of the Company
Arctic Paper has mainly debt under a loan agreement with a consortium of banks (Pekao SA, Santander Bank S.A. and BNP
Paribas S.A. of 2 April 2021) and under leasing agreements.
Annual repor t 2022 of Arctic P aper S. A. 19
Management Board’s Report
Failure to meet the Company’s obligations, including the level of agreed financial ratios (covenants) under the loan agreemen ts,
results in an event of default. Events of default may in particular result in demand for repayment of our debt, banks taking control
over important assets like Paper Mills or Pulp Mills and loss of other assets which serve as collateral, deterioration of
creditworthiness and lost access t o external funding which will be converted into lost liquidity and which in turn may materially
adversely affect our business and development prospects and our stock prices.
Risk related to the capacity of the Company to pay dividend
The Issuer is a holding company and therefore its capacity to pay dividend is subject to the level of potential disbursements from
its subsidiary companies involved in operational activity, and the level of cash balances. Certain subsidiaries of the Group
involved in operational activity may be subject to certain restrictions concerning disbursements to the Issuer. No certainty exists
that such restrictions will have no material impact on the business, results on operations and capacity of the Company to
distribute dividend.
In connection with the term and revolving loan agreements, and the agreement between creditors signed on 2 April 2021, the
Company’s ability to pay dividends is subject to the Group meeting certain financial ratios in the period prior to payment (a s that
term is defined in the term and revolving credit facility agreement) and there being no event of default (as that term is def ined in
the term and revolving loan agreement).
Annual repor t 2022 of Arctic P aper S. A. 20
Management Board’s Report
Supplementary information
The Management Board position on the possibility to achieve the projected financial results
published earlier
The Management Board of Arctic Paper S.A. did not publish projections of financial results for 2022 and has not published and
does not intend to publish projections of financial results for 2023.
Principles of preparation of annual consolidated financial statements
The Company’s financial statements for the period from 1 January 2022 to 31 December 2022 were prepared on the basis of the
International Financial Reporting Standards and related interpretations announced in the form of regulations of the European
Commission. The financial statements have been prepared with the assumption of going concern in the foreseeable future. As at
the date of preparation of the financi al statements, there are no circumstances indicating a threat to the continuation of business
activity by the Issuer. Detailed rules for the preparation of the standalone financial statements are presented in the note 10 to the
Standalone Financial Statements for 2022.
Dividend information
Dividend is paid based on the net profit disclosed in the standalone annual financial statements of Arctic Paper S.A. after
covering losses carried forward from the previous years.
In accordance with provisions of the Code of Commercial Companies, the Parent Entity is obliged to establish reserve capital to
cover potential losses. At least 8% of the profit for the financial year disclosed in the standalone financial statements of the
Parent Entity should be transferred to the category of capital until the capital has reached the amount of at least one third of the
share capital of the Parent Entity. The use of reserve capital and reserve funds is determined by the General Meeting; howeve r, a
part of reserve capital equal to one third of the share capital can be used solely to cover the losses disclosed in the standalone
financial statements of the Parent Entity and cannot be distributed to other purposes.
As on the date hereof, the Company had no preferred shares.
The possibility of disbursement of potential dividend by the Company to its shareholders depends on the level of payments
received from its subsidiaries. The risk associated with the Company’s ability to disburse dividend was described in the part “Risk
factors” of the annual report for 2022.
On 15 February 2023, the Management Board of the Company, taking into account the preliminary financial results of the
Company and the Arctic Paper S.A. Capital Group for the year 202 2, made a decision to recommend to the Ann ual General
Meeting of the Company to pay a dividend from the Company’s net profit for the financial year 202 2, in the total amount of PLN
187,077,014.10, i.e. PLN 2.70 gross per share.
Changes to the bodies of Arctic Paper S.A.
As at 31 December 2022, the Parent Entity’s Supervisory Board was composed of:
— Per Lundeen – Chairman of the Supervisory Board appointed on 22 September 2016 (appointed to the Supervisory Board on
14 September 2016);
— Roger Mattsson – Deputy Chairman of the Supervisory Board appointed on 22 September 2016 (appointed as a Member of the
Supervisory Board on 14 September 2014);
— Thomas Onstad – Member of the Supervisory Board appointed on 22 October 2008;
— Zofia Dzik – Member of the Supervisory Board appointed on 22 June 2021;
— Anna Jakubowski – Member of the Supervisory Board appointed on 22 June 2021;
Annual repor t 2022 of Arctic P aper S. A. 21
Management Board’s Report
Until the date hereof, there were no changes to the composition of the Supervisory Board of the Parent Entity.
As at 31 December 2022, the Parent Entity’s Management Board was composed of:
— Michał Jarczyński – President of the Management Board appointed on 10 December 2018, effective in 1 February 2019;
— Göran Eklund – Member of the Management Board appointed on 30 August 2017.
Until the date hereof, there were no changes in the composition of the Management Board of the Parent Entity.
Changes to the share capital of Arctic Paper S.A.
In 2022 there were no changes to the Company’s share capital.
Purchase of treasury shares
In 2022 and 2021 the Company did not acquire any treasury stock.
Remuneration paid to Members of the Management Board and the Supervisory Board
The table below presents information on the total amount of remuneration and other benefits paid or payable to members of the
Management Board and of the Supervisory Board of the Parent Entity in the period from 1 January 2022 to 31 December 2021
(data in PLN).
Managing and supervising
persons
Remuneration
(base salary and
surcharges)
for the functions
performed at
Arctic Paper S.A.
Retirement
plan
Other
Total
Management Board
Michał Jarczyński
803
375
316
250
1
119
625
Göran Eklund
873
020
334
814
288
056
1
495
890
Supervisory Board
Per Lundeen
340
057
340
057
Roger Mattsson
227
010
227
010
Thomas Onstad
161
970
161
970
Zofia Dzik
199
326
199
326
Anna Jakubowski
169
999
169
999
Agreements with Members of the Management Board guaranteeing financial compensation
As at 31 December 2022 and as at the approval date of this annual report, Members of the Management Board are entitled to
compensation in case of their resignation or dismissal from their respective posi tions with no valid reason or when they are
dismissed or their employment is terminated as a result of a merger of the Issuer by take -over. The amount of such compensation
will correspond to their remuneration for 6 to 24 months.
Annual repor t 2022 of Arctic P aper S. A. 22
Management Board’s Report
Changes in holdings of the Issuer’s shares or rights to shares by persons managing and
supervising Arctic Paper S.A.
Managing and supervising
persons
Number of shares
or rights to
shares
as at 28.03.2023
Number of
shares
or rights to
shares
as at
31.12.2022
Number of
shares
or rights to
shares
as at
7.11.2022
Change
Management Board
Michał Jarczyński
5
572
5
572
5
572
-
Göran Eklund
-
-
-
-
Supervisory Board
Per Lundeen
34
760
34
760
34
760
-
Thomas Onstad
6
223
658
6
223
658
6
223
658
-
Roger Mattsson
-
-
-
-
Zofia Dzik
-
-
-
-
Anna Jakubowski
-
-
-
-
Management of financial resources
As of the date hereof, the Company held sufficient funds and creditworthiness to ensure financial liquidity of Arctic Paper S.A.
Capital investments
In 2022, the Company did place short-term deposits.
Information on financial instruments
Information on financial instruments on:
a) the risks of: price changes, credit, material disruption of cash flows and loss of liquidity to which the Company is exposed; and
b) the entity’s financial risk management objectives and policies, including its methods of hedging significant types of fore cast
transactions for which hedge accounting is used, are disclosed in the consolidated financial statements in notes 26 and 27.
Information on sureties, guarantees and contingent liabilities
In connection with the term and revolving loan agreements signed on 2 April 2021, on 11 May 2021 the Company signed
agreements and declarations pursuant to which collateral for the above receivables and other claims was established in favour of
Bank Santander Bank Polska S.A. acting as Security Agent, i.e.
1. under Polish law – Collateral Documents establishing the following Collateral:
› financial and registered pledges on all shares held by the Company and the Guarantors (Arctic Paper Kostrzyn SA, Arctic
Paper Munkedals AB, Arctic Paper Grycksbo AB) that are registered in Poland and belong to companies in the Company’s
group (except Rottneros AB, Arctic Paper Mochenwangen GmbH, Arctic Paper Investment GmbH and Munkedals Kraft AB),
with the exception of the Company’s shares;
› mortgages on all real properties located in Poland a nd owned by the Guarantors;
› registered pledges on all material rights and movable assets owned by the Company and the Guarantors, constituting an
organised part of enterprise, located in Poland (with the exception of the assets listed in the Loan Agreement );
› assignment of (existing and future) insurance policies covering the assets of the Company and the Guarantors (with the
exception of insurance policies listed in the Loan Agreement);
Annual repor t 2022 of Arctic P aper S. A. 23
Management Board’s Report
› declaration by the Company and the Guarantors on voluntary submission t o enforcement, in the form of a notary deed;
› financial pledges and registered pledges on the Company’s and the Guarantors’ bank accounts registered in Poland (the
pledges relate to current and future bank accounts; in the event of an event of default, in t he event that the pledged
receivable or part thereof becomes due, the Company may not draw funds from the pledged receivable, nor may it instruct
the bank maintaining the account to disburse the funds);
› powers of attorney to Polish bank accounts of the Com pany and the Guarantors, registered in Poland;
2. under Swedish law – Collateral Documents establishing the following Collateral:
› pledges on all shares held by the Company and the Guarantors, registered in Poland, belonging to the companies of the
group, with the exception of the Company’s shares
› mortgages on all real properties located in Sweden and owned by the Company and the Guarantors as long as such
collateral covers solely the existing mortgage deeds;
› corporate mortgage loans granted by the Guarantors registered in Sweden as long as such collateral covers solely the
existing mortgage deeds;
› assignment of (existing and future) insurance policies covering the assets of the Company and the Guarantors (with the
exception of insurance policies listed in the Loan Agreement);
› pledges on Swedish bank accounts of the Company and the Guarantors as long as such collateral is without prejudice to
free management of funds deposited on bank accounts until an event of default specified in the Loan Agreement.
In the period covered with this report, Arctic Paper S.A. and its subsidiary companies did not grant or receive any guarantee to
loans or borrowings, and did not grant – totally to one entity or a subsidiary of such entity – guarantees with the total value
exceeding equivalent of 10% of the Company’s equity.
Material off-balance sheet items
Information on off-balance sheet items is provided in the Company’s standalone financial statements for 2022 in note 23.
Assessment of the feasibility of investment pla ns
Arctic Paper S.A. plans no material investments to be made in 2023. Material investments are carried out by the Issuer’s
subsidiary entities, in particular the Paper Mills as described in the Consolidated Annual Report for 2022.
Information on material court and arbitration proceedings and proceedings pending before
public administrative authorities
During the period under report, Arctic Paper S.A. and its subsidiaries were not a party to any material proceedings pending
before a court, arbitration or public administrative authority .
Information on transactions with related parties executed on non -market terms and
conditions
During the period under report, Arctic Paper S.A. and its subsidiaries did not execute any material transactions wi th related
entities on non-market terms and conditions.
Information on agreements resulting in changes to the proportions of share holdings
The Issuer is not aware of any agreements that may in the future generate changes to the proportions of shareholdings by the
existing shareholders and bond holders.
Annual repor t 2022 of Arctic P aper S. A. 24
Management Board’s Report
Information on remuneration of the entity authorised to audit the financial statements
On 16 September 2022, Arctic Paper S.A. signed an annex to the agreement of January 20th 2021 with KPMG Audyt Spółka z
ograniczoną odpowiedzialnością sp.k. for audit of the Company’s financial statements and consolidated financial statements of
the Group for the year ended on 31 December 2022. The contract was concluded for the time required to perform the above
services. The Company used the services of KPMG Audyt Spółka z ograniczoną odpowiedzialniością sp.k. in the same scope for
2018-2021.
Other information on the entity authorised to audit the financial statements, including remuneration paid or due for 2022 and
2021, is provided in note 33to the consolidated financial statements.
On 22 February 2023 the Supervisory Board of the Company based on the recommendation of Audit Committee on selection of an
audit firm conducting an audit of the financial statements, took a decision to select PricewaterhouseCoopers Polska Spółka z
ograniczoną odpowiedzialnością Audyt Sp.k. as an auditor for the Company and the Group for the period 2023 -2024. The Audit
Committee’s recommendation was made pursuant to the selection procedure in line with the “Policy and procedure of selecting an
audit firm to conduct a statutory and voluntary audit of consolidated and separate financial statements of Arctic Paper S.A. with
its registered office in Kostrzyn nad Odrą”.
Headcount
Information on the headcount is provided in note 29 to the standalone financial statements for 2022.
Information on the preparation of a separate report of the capital group on non -financial
information
Non-financial information referred to in Art. 49b sec. 2 -8 of the Accounting Act, Company prepared in the form of a separate
document entitled "Sustainability Report 2022", in accordance with the requirements set out in this Act. This document, after its
publication together with the Annual Report and the Consolidated Annu al Report for 2022, will be posted on the Company's
website in accordance with Art. 49b sec. 6 above Acts" .
Annual repor t 2022 of Arctic P aper S. A. 25
Management Board’s Report
Statement on the application of the Corporate Governance Rules
Corporate Governance Rules
On 29 March 2021, the Supervisory Board of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) by
Resolution No. 13/1834/2021 adopted new corporate governance rules for companies listed on the WSE Main Market – “Best
Practice of GPW Listed Companies (Best Practice 2021, DPSN2021).
Best Practice 2021 came into force on 1 July 2021.
Application by companies of the p rinciples of corporate governance contained in the Best Practice is voluntary, but reporting on
their application is an obligation of every listed company, enshrined in the Regulations of the WSE. Companies had to publish
their reports on the application o f DPSN2021 by 31 July 2021.
The text of the “Best Practice of GPW Listed Companies 2021” is available at Warsaw Stock Exchange and Company’s webpage:
https://www.gpw.pl/pub/GPW/files/PDF/dobre_praktyki/DPSN21_BROSZURA.pdf
https://www.arcticpapergroup.com/globalassets/arcticpapergroup.com/02 -about/04-corporate-
governance/dpsn21_broszura_wersja_do_druku_en -2021.pdf
Information on the extent the Issuer waived the provisions of the Corporate Governance
Rules
Arctic Paper S.A. was striving at applying corporate governance rules as set forth in the document “Best Practice of GPW List ed
Companies 2021”. In 2022, Arctic Paper S.A. did not apply the following rules:
Good practice – Information Policy, Communication with Investors
Rule 1.3.2
“The company also includes ESG topics in its business strategy, in particular covering:
social and labour matters, concerning, inter alia, measures taken and planned to ensure gender equality, soun d working
conditions, respect for employees’ rights, dialogue with local communities, customer relations.”
Explanation: A detailed development of ESG issues covering the entire capital group is presented by the Company in the CSR
reports published each year. CSR reports take into account environmental, social, employee and sustainable development issues,
including, among others, measures and established goals, description of undertaken and planned actions in the ESG area.
Rule 1.4.2
“In order to ensure proper communication with stakeholders regarding the business strategy adopted, the company publishes on
its website information on the assumptions of its strategy, measurable objectives, including in particular long -term objectives,
planned activities and progress in its implementation, defined by means of metrics, financial and non -financial. Information on
ESG strategies should, inter alia:
present the value of the pay equity ratio paid to its employees, calculated as a percentage of the difference between the average
monthly pay (including bonuses, prizes and other allowances) of women and men for the last year, and present information on t he
actions taken to eliminate possible inequalities in this respect, together with a presentation of the risks involve d and the time
horizon over which equality is planned to be achieved.
Explanation: A detailed development of ESG issues covering the entire capital group is presented by the Company in the CSR
reports published each year. CSR reports take into account env ironmental, social, employee and sustainable development issues,
including, among others, measures and established goals, description of undertaken and planned actions in the ESG area.
Annual repor t 2022 of Arctic P aper S. A. 26
Management Board’s Report
Good practice – Systems and internal functions
Rule 3.3
“A company included in the WIG20, mWIG40 or sWIG80 index shall appoint an internal auditor heading the internal audit function,
who shall act in accordance with internationally recognised standards of professional practice for internal auditing. In othe r
companies where no internal auditor meeting the aforementioned requirements has been appointed, the audit committee (or the
supervisory board if it performs the functions of an audit committee) shall annually assess whether there is a need to appoin t
such a person.”
Explanation:
Given the size of the Company and the structure and nature of its business, the appointment of an internal auditor is not jus tified
by the assessments carried out by the Management Board and the Supervisory Board. Audit functions responsible f or auditing the
various divisions of the operating companies have been established in the Company’s group entities.
Rule 3.10
“At least every five years, a company included in the WIG20, mWIG40 or sWIG80 index shall have its internal audit function
reviewed by an independent auditor selected with the participation of the audit committee.”
Explanation:
Given the size of the Company and the structure and nature of its business, the Management Board, the Supervisory Board and
the Audit Committee acting within it will consider the need for an independent audit in the future.
Best Practice – General Meeting and Relations with Shareholders
Rule 4.1
“The company should enable shareholders to participate in a general meeting using electronic means of communicati on (e-
meeting) if this is justified by the expectations of shareholders communicated to the company, as long as it is able to provi de the
technical infrastructure necessary for holding such a general meeting.”
Explanation:
Given the need for many technical and organisational steps and the associated costs and legal risks, the Company has not
decided to hold an electronic general meeting at this time.
Rule 4.3
“The company shall provide a publicly available real -time broadcast of the general meeting.”
Explanation:
Taking into account the costs and legal risks, the Company has not decided at this time to carry out a general broadcast of t he
General Meeting. The Company will consider this possibility in the future.
Internal control and risk management systems with reference to the development processes
of financial statements
The Management Board of Arctic Paper S.A. is responsible for the internal control system in the Company and in the Group and
for its efficiency in the development process of consolid ated financial statements and interim reports, prepared and published in
compliance with the rules of the Regulation of the Minister of Finance on current and periodical disclosure by issuers of sec urities
and conditions to recognise as equivalent the info rmation that is required by the law in Non -Member States of 29 March 2018.
The Company’s financial division headed by the Chief Financial Officer is responsible for the preparation of the Group’s
consolidated financial statements and interim reports. The C ompany prepares its financial statements and periodic reports on the
basis of the procedures of making and publishing periodic reports and consolidated reports, in force at Arctic Paper S.A. The
financial data underlying the Group’s consolidated financial statements comes from monthly reporting packages and extended
Annual repor t 2022 of Arctic P aper S. A. 27
Management Board’s Report
quarterly packages sent to the Issuer by Group member companies. After closing of the books for each calendar month, top
management of the Group member companies analyse the financial results of the companies versus their budgets and the results
generated in the previous reporting period.
The Group performs an annual review of its strategy and development prospects. The budgeting process is supported by medium -
and top-level management of the Group member companies. The budget drafted for the next year is accepted by the Company’s
Management Board and approved by the Supervisory Board. During the year, the Company’s Management Board compares the
generated financial results to the adopted budget .
The Company’s Management Board systematically assesses the quality of internal control and risk management systems with
reference to the preparation process of consolidated financial statements. On the basis of such review, the Company’s
Management Board found that as at 31 December 2022 there were no weaknesses that could materially affect the effectiveness
of internal control with respect to financial reporting.
Shareholders that directly or indirectly hold significant packages of shares
Information on the shareholders that directly or indirectly hold large packages of shares is presented in the table below – the
table presents the situation as of the publication date of the annual report.
as of 28.03.2023
Shareholder
Number of
shares
Share in the
share capital
Number of
votes
Share in the total
number of votes
[%]
[%]
Thomas Onstad 47 205 107
68.13%
47 205 107
68.13%
- indirectly via 40 981 449
59.15%
40 981 449
59.15%
Nemus Holding
AB
40 381 449
58.28%
40 381 449
58.28%
other entity 600 000
0.87%
600 000
0.87%
- directly 6 223 658
8.98%
6 223 658
8.98%
Other 22 082 676
31.87%
22 082 676
31.87%
Total 69 287 783
100.00%
69 287 783
100.00%
Treasury shares -
0.00%
-
0.00%
Total 69 287 783
100.00%
69 287 783
100.00%
Securities with special control rights
There are no securities in the Company with special control rights – in particular, no shares in the Company are privileged.
Information on major restrictions on transfer of title to the Issuer’s securities and all
restrictions concerning the exercising of voting rights
The Company’s Articles of Association do not provide for any restrictions concerning transfer of title to the Issuer’s securi ties.
With the exception of restrictions on the transfer and acquisition of the Company’s shares that arise unde r common law, there are
no restrictions on the transfer of ownership of the Company’s securities.
The Company’s Articles of Association do not provide for any restrictions on the exercise of voting rights on Arctic Paper S. A.
shares.
Annual repor t 2022 of Arctic P aper S. A. 28
Management Board’s Report
Description of the principles of amending the Issuer’s Articles of Association
Changes to the Company’s Articles of Association fall within the sole competences of the General Meeting.
Unless the Code of Commercial Companies or the Articles of Association of the Company provide otherwise, resolutions of the
General Meeting require an absolute majority of votes;
Description of the functioning of the General Meeting
The rules of procedure of the General Meeting and i ts core competences result straight from applicable laws and are partly
incorporated in the Company’s Articles of Association.
The text of the “Best Practice of GPW Listed Companies 2021” is available at Warsaw Stock Exchange and Company’s webpage:
https://www.gpw.pl/pub/GPW/files/PDF/dobre_praktyki/DPSN21_BROSZURA.pdf
https://www.arcticpapergroup.com/globalassets/arcticpapergroup.com/02 -about/04-corporate-
governance/dpsn21_broszura_wersja_do_druku_en -2021.pdf
General Meetings are held in accordance with the following basic rules:
— General Meetings are held in the Compa ny’s offices or in Warsaw;
— General Meetings may be ordinary or extraordinary;
— Ordinary General Meetings shall be held within six months after the end of the financial year;
— General Meetings are opened by the Chairperson of the Supervisory Board or a person designated by him/her which is
followed by election of the Chairperson of the General Meeting;
— Voting shall be open unless a Shareholder demands a secret ballot or a secret ballot is required by the provisions of the
Code of Commercial Companies;
— Unless the Code of Commercial Companies or the Articles of Association of the Company provide otherwise, resolutions of
the General Meeting require an absolute majority of votes;
— In compliance with the Company’s Articles of Association, the following matters fall within the exclusive competences of the
General Meeting:
› review and approval of the Management Board’s report from operations of the Company and financial statements of the
Company for the previous financial year;
› granting a vote of approval to members of the Management Board and members of the Supervisory Board for the
performance of their duties;
› decisions concerning distribution of profit or coverage of losses;
› changes to the business objects of the Company;
› changes to the Articles of Association of the Company;
› increase or decrease in the Company’s share capital;
› merger of the Company with another company or other companies, split of the Company or transformation of the Company;
› dissolution and liquidation of the Company;
› issues of convertible bonds or pre-emption bonds and issues of subscription warrants;
› purchase and sale of real properties ;
› disposal and lease of the entire enterprise or an organised part thereof or establishment of limited rights in rem thereon;
› all other issues for which these Articles of Association or the Code of Commercial Companies require a resolution of the
General Meeting.
General Meetings may approve resolutions in the attendance of minimum one half of the Company’s share capital.
General Meetings approve resolutions with an absolute majority of votes unless the Articles of Association or applicable
regulations require a qualified majority.
Annual repor t 2022 of Arctic P aper S. A. 29
Management Board’s Report
The shareholders’ rights and the way to enforce them result explicitly from law that has been partly incorporated in the
Company’s Articles of Association.
Operation of the Issuer’s managing and supervising bodies and its committees as well as
information on the composition of those bodies
Management Board
Composition of the Management Board
— The Management Board is composed of one to five members, including President of the Management Board;
— The Management Board is appointed and dismissed by the Supervisory Board for a joint term of office;
— The term of office of members of the Management Board is 3 (three) years;
— When the Management Board is composed of more than one person, the Supervisory Board – upon a proposal by the
President – may appoint up to three Deputy Presidents from among members of the Management Board. Deputy Presidents
may be dismissed subject to a resolution of the Supervisory Board;
— A member of the Management Board may be dismissed by the Supervisory Board at any time;
— A member of the Management Board may be dismissed or suspended in their duties at any time by the General Meeting.
Core competences of the Management Board
— The Management Board directs the affairs of the Company and represents the Company;
— If the Management Board is composed of more than one person, declarations of intent on the Company’s behalf shall be
made by the President of the Management Board individually or two Members of the Management Board acting jointly or a
Member of the Management Board acting jointly with a Proxy;
— The Management Board is obliged to exercise their duties with due diligence and comply with law, the Company’s Articles of
Association, approved regulations and resolutions of the Company’s bodies; decisions shall be taken in line with reasonable
economic risk with a view to the interests of the Company and its shareholders;
— The Management Board is obliged to manage the assets and business of the Company and perform its duties subject to due
diligence required in business operations and subject to strict compliance with applicable laws, provisions of the Articles o f
Association and internal regulations as well as resolutions approved by the General Meeting and the Supervisory Board;
— The Company’s Management Board shall not be entitled to take decisions on share issues and redemption.
— Each member of the Management Board shall be liable for any damage inf licted upon the Company as a result of their
actions or omissions breaching the provisions of law or the Company’s Articles of Association;
— The responsibilities of the Management Board include – in compliance with the Code of Commercial Companies – all affairs
of the Company not reserved to the General Meeting of the Supervisory Board;
— Guided with the interests of the Company, the Management Board defines the strategy and core objectives of the Company’s
business;
— The Management Board shall comply with the regulations relating to confidential information within the meaning of the Act
on Trading and to comply with all the duties resulting therefrom.
Otherwise, the individual members of the Management Board shall be responsible for their running of the affair s of the Company
as resulting from the internal delegation of duties and functions approved by a decision of the Management Board.
The Management Board may approve resolutions at meetings or outside meetings in writing or with the use of direct means of
remote telecommunications. The Management Board approves resolutions with a majority of votes cast. Resolutions shall be valid
if minimum one half of members of the Management Board are present at the meeting. In case of equal number of votes, the
President of the Management Board shall have the casting vote.
The detailed mode of operation of the Management Board is set forth in the Regulations of the Management Board with its
updated version available at:
https://www.arcticpapergroup.pl/globalassets/arcticpapergroup.com/02 -about/04-corporate-governance/corporate-
documents/pl/regulamin-zarzadu-ap-sa.pdf
Annual repor t 2022 of Arctic P aper S. A. 30
Management Board’s Report
The Management Board of the Company as at the publication hereof was composed as follows:
— Michał Jarczyński – President of the Management Board appointed on 1 February 2019;
— Göran Eklund – Member of the Management Board appointed on 30 August 2017.
Supervisory Board
Composition and organisation of the Supervisory Board
— The Supervisory Board is composed of 5 (five) to 7 (seven) members elected by the General Meeting for a joint three -year
term of office. A member of the Supervisory Board may be dismissed at any time;
— The Supervisory Board is composed of the Chairperson, Deputy Chairpersons and other members. The Chairperson of the
Supervisory Board and Deputy Chairperson are elected by the Supervisory Board from among its members at the first
meeting and – if so required – during the term of office in by-elections;
— Since the General Meeting approved resolutions on the first public issue of shares and having them listed, two members of
the Supervisory Board have to be independent;
— When an independent member of the Supervisory Board is nominated, resolutions on the following matters require consent
of minimum one independent member of the Supervisory Board:
› any benefits to be provided by the Company and any enti ty related to the Company for members of the Management Board;
› consent to the Company or its subsidiary entity to enter into a material agreement with a member of the Supervisory Board
or the Management Board and with their related entities, other than agr eements concluded in the normal course of the
Company’s business subject to normal terms and conditions applied by the Company;
› election of auditor to perform audits of the Company’s financial statements;
— For the avoidance of doubt, it is assumed that loss of the independent status by a member of the Supervisory Board and
failure to appoint an independent member of the Supervisory Board shall not invalidate the decisions approved by the
Supervisory Board. Loss by an Independent Member of their independent s tatus during the performance of their function of a
member of the Supervisory Board shall not affect the validity or expiry of their mandate;
— In case of expiry of the mandate of a Member of the Supervisory Board before the term of office, the other Members of the
Supervisory Board shall be entitled to co -opt a new Member of the Supervisory Board is such vacated position by way of a
resolution approved with an absolute majority of the other Members of the Supervisory Board. The mandate of such co -opted
Member of the Supervisory Board shall expire if the first Ordinary General Meeting to be held after such Member has been
co-opted, fails to approve such Member. At any time, only two persons elected as Members of the Supervisory Board in the
co-option procedure and who were not approved as candidates by the Ordinary General Meeting, may act as Members of the
Supervisory Board. Expiry of the mandate of a co -opted Member of the Supervisory Board as a result of failure to approve
such candidate by the Ordinary General Meeting may not be treated as finding any resolution approved with the participation
of such Member as invalid or ineffective.
— Chairperson and Deputy Chairperson of the Supervisory Board:
› maintain contact with the Company’s Management Board;
› manage the operations of the Supervisory Board;
› represent the Supervisory Board in external contacts and in contacts with the other bodies of the Company, including in
contacts with members of the Company’s Management Board;
› approve the presentation of initiatives a nd proposals submitted for meetings of the Supervisory Board;
› take other actions as specified in the Company’s Regulations and Articles of Association;
› Members of the Supervisory Board should not resign from their function during the term of office if that could prevent the
operation of the Supervisory Board, in particular prevent timely approval of major resolutions;
› Members of the Supervisory Board shall be loyal to the Company. Should a conflict of interests arise, members of the
Supervisory Board shall report it to other members of the Supervisory Board and refrain from participating in discussions and
from voting on the issue to which the conflict of interests is related;
› Members of the Supervisory Board shall comply with law, the Company’s Articles of Association and Regulations of the
Supervisory Board.
Annual repor t 2022 of Arctic P aper S. A. 31
Management Board’s Report
Competences of the Supervisory Board:
— The Supervisory Board performs overall supervision over the business of the Company in all areas of its operation;
— The Supervisory Board approves resolutions, issues recommendations and opinions and submits proposals to the General
Meeting;
— The Supervisory Board may not issue binding instructions to the Management Board concerning the management of the
Company’s affairs;
— Disputes between the Supervisory Board and the Management Board shall be resolved by the General Meeting;
— In order to exercise their rights, the Supervisory Board may review the business of the Company in any respect, request the
presentation of any documents, reports and clarificati on from the Management Board and issue opinions on issues related to
the Company and submit proposals and initiatives to the Management Board;
— Apart from other issues specified in law or in the Company’s Articles of Association, the competences of the Supe rvisory
Board include, inter alia:
› review of the financial statements of the Company;
› review of the Management Board’s report from operations of the Company and proposals of the Management Board
concerning profit distribution and coverage of losses;
› submission to the General Meeting of an annual report from results of the above reviews;
› appointment and dismissal of members of the Management Board, including the President and Deputy Presidents, and
setting the remuneration of members of the Management Board;
› appointment of the auditor of the Company;
› suspension of Members of the Management Board in their functions for valid reasons;
› approval of annual financial plans for the capital group of which the Company and its subsidiary companies are members;
› approving terms and conditions of bond issues by the Company (other than convertible bonds or bonds with priority rights,
referred to in Article 393.5 of the Code of Commercial Companies) and issues of other debt securities, provision of consent
to contract financial liabilities or taking actions resulting in contracting any financial liabilities, such as borrowings, loans,
overdraft facilities, conclusion of factoring, forfaiting, lease contracts and other generating liabilities in excess of PLN
10,000,000;
› approving the principles and amounts of remuneration of members of the Management Board and other persons in key
management functions in the Company as well as approval of any incentive programme, including incentive programmes for
members of the Management Board, persons in key management functions in the Company or any persons cooperating with
or related to the Company, including incentive programmes for employees of the Company;
— Annually the Supervisory Board submits to the General Meeting a brief assessment o f the Company’s condition ensuring that
it is made available to all shareholders at a time that they are able to review it before the Ordinary General Meeting;
— The Supervisory Board concludes contracts with members of the Management Board on behalf of the Company and
represents the Company in disputes with members of the Management Board. The Supervisory Board may authorise by way
of a resolution one or more of its members to perform such legal actions.
The Supervisory Board may approve resolutions in writ ing or with the use of direct means of remote telecommunications.
Resolutions approved as specified above shall be valid if all members of the Supervisory Board were notified of the content o f the
draft resolution. The approval date of the resolution appro ved as above shall be equivalent to the date of signing by the last
member of the Supervisory Board;
Resolutions of the Supervisory Board may be approved when all members have been notified by registered letter, fax or e -mail
message, sent minimum 15 days in advance and the meeting is attended by a majority of members of the Supervisory Board.
Resolutions may be approved without formal convening a meeting when all members of the Supervisory Board agreed to vote on
the specific issue or to the content of th e resolution to be approved;
Resolutions of the Supervisory Board require a simple majority of votes; in case of equal votes, the Chairperson of the
Supervisory Board shall have the casting vote;
The detailed mode of operation of the Supervisory Board is set forth in the Regulations of the Supervisory Board with its updated
version available at:
Annual repor t 2022 of Arctic P aper S. A. 32
Management Board’s Report
https://www.arcticpapergroup.pl/globalassets/arcticpapergroup.com/02 -about/04-corporate-governance/corporate-
documents/pl/1_11_2016_appendix-pl_ap-sa---regulamin-rady-nadzorczej_fin.pdf
The Supervisory Board of the Company as at the publication hereof was composed as follows:
— Per Lundeen – Chairman of the Supervisory Board appointed on 14 September 2016;
— Roger Mattsson – Deputy Chairman of the Supervisory Board appointed on 16 September 2014;
— Thomas Onstad – Member of the Supervisory Board appointed on 22 October 2008;
— Zofia Dzik – Member of the Supervisory Board appointed on 22 June 2021 (independent member);
— Anna Jakubowski – Member of the Supervisory Board appointed on 22 June 2021 (independent member).
In 2022, the Supervisory Board held meetings on: 10 February, 20 April, 8 July, 8 September, 13 December.
Audit Committee
Composition and organisation of the Audit Committee
— The Audit Committee is composed of minimum three members of the Supervisory Board, including the Chairperson of the
Committee, elected by the Supervisory Board from among its members in compliance with the Articles of Association and
Regulations of the Supervisory Board.
— Members of the Audit Committee shall be appointed for three -year terms of office, however no longer than the term of office
of the Supervisory Board;
— The Chairperson of the Audit Committee, elected with a majority of votes from among its members, shall be an independent
member;
— The Audit Committee operates on the basis of the Act on Statutory Auditors, Best Practice of GPW Listed Companies,
Regulations of the Supervisory Board and the Regulations of the Audit Committee;
— The Audit Committee performs advisory and consulting functions, operates as a collective body within the Company’s
Supervisory Board;
— The Audit Committee carries out its tasks by providing the Supervisory Board with its proposals, opinions and reports on its
scope in the form of resolutions;
— At least one member of the audit committee shall have knowledge and skills in terms of accounting or auditing financial
statements. The Supervisory Board is of the opinion that the requirement of competences in the sphere accounting and
financial audit is recognised as satisfied if a member of the Audit Committee has a major experience in financial
management in commercial partnerships, internal audit or audit of financial statements, and additionally:
› has the title of a certified auditor or equivalent international certificate, or
› has an academic degree in the field of accounting or financial audit, or
› has long-term experience as a financial director in public companies or in working in an audit committee of such companies;
— Members of the Audit Committee shall have knowledge and skills relating to the industry in which the Issuer operates. This
condition is recognised as satisfied if at least one member of the Audit Committee has knowledge and skills relating to that
industry or individual members within specific scopes have knowledge and skills relating to the scope of that industry. The
Supervisory Board is of the opinion that the requirement of competences relating to the industry is recognised as satisfied i f
a member of the Audit Committee has information on the characteristics of the sector, that allows him to obtain a complete
picture of the sector’s complexity or has knowledge on part of the chain of activities carried out by the Company.
Competences of the audit committee
— The basic task of the Audit Committee is advisory to the Supervisory Board on issues of proper implementation and control
of the financial reporting processes in the Company, effectiveness of the internal control and risk management systems and
cooperation with statuto ry auditors;
— The tasks of the Audit Committee resulting from supervising the Company’s financial reporting process, ensuring the
effectiveness of the Company’s internal control systems and monitoring of internal audit operations, include in particular:
Annual repor t 2022 of Arctic P aper S. A. 33
Management Board’s Report
› control if the financial information provided by the Company is correct, including the accuracy and consistency of the
accounting principles applied in the Company and its Capital Group as well as the consolidation principles of financial
statements;
› assessment minimum once a year of the internal control and management systems in the Company and its Capital Group in
order to ensure adequate recognition and management of the Company;
› ensuring the effective functioning of internal control, in particular by pr oviding recommendations to the Supervisory Board
with respect to:
› - strategic and operational internal audit plans and material modifications to such plans;
› - internal audit policies, strategy and procedures, developed in compliance with the approved int ernal audit standards;
› audits of specific areas of the Company’s operations;
— The tasks of the Audit Committee resulting from monitoring the independence of the statutory auditor and the entity
authorised to audit financial statements, include in particul ar:
› issue of recommendations to the Supervisory Board relating to the election, appointment and re -appointment and dismissal
of the entity acting as the statutory auditor;
› control of independence and impartiality of the statutory auditor, in particular w ith a view to replacing the statutory auditor,
the level of its remuneration and other relationships with the Company;
› verification of the effectiveness of the works performed by the statutory auditor;
› review of reasons of resignation by the statutory au ditor;
— The Audit Committee may resort to advisory services and assistance by external legal, accounting or other advisers if it find s
it necessary to perform its duties;
— The Audit Committee is obliged to file annual reports from its operations to the Super visory Board by 30 September in each
calendar year.
Meetings of the Audit Committee shall be held minimum twice a year.
In 2022, the Audit Committee held 3 meetings on: 14 March and 3 August and 13 December.
As of 5 August 2021, the Audit Committee is composed of the following persons:
— Anna Jakubowski – Chairperson of the Audit Committee. Member meeting the criteria for independence. According to the
declaration submitted by Ms Anna Jakubowski, she meets the condition of knowledge and skills in accounting or auditing. Ms
Anna Jakubowski has several years of experience as a member of the Audit Committee of financial institutions, including
Bank Millennium.
— Zofia Dzik – Member of the Audit Committee meeting the independence criteria. Acco rding to the declaration submitted by
Ms Zofia Dzik, she meets the condition of knowledge and skills in accounting or auditing. Ms Zofia Dzik has several years of
experience working for Arthur Andersen and Andersen Business Consulting, where she was respon sible, among others, for
the area of auditing financial statements and consulting in the area of finance.
— Roger Mattsson – Member of the Audit Committee – due to his long-standing experience as the financial controller of the
Arctic Paper Group and his par ticipation in the Audit Committee for more than three years, Mr Roger Mattsson fulfils the
condition for the Audit Committee member to have knowledge and skills in the Company’s business. Additionally, he has
knowledge and skills in the sphere of accountin g or auditing financial statements;
The detailed mode of operation of the Audit Committee is set forth in the Regulations of the Audit Committee.
Core assumptions underlying the policy of selecting an audit firm to conduct audits
— According to the regulations applicable to the Company, the Company’s Supervisory Board shall select – by way of a
resolution and acting under a recommendation of the Audit Committee – the auditor authorised to carry out the audit;
— The selection is made taking into account the principles of impartiality and independence of the audit firm and the analysis of
the audit firm’s work carried out in the Company which falls beyond the scope of the audit of financial statements, in order to
avoid any conflict of interest (observance of impartiality and independence);
— A request for proposals concerning the selection of an audit firm for statutory audit of the Company’s financial statements i s
developed by the Audit Committee in cooperation with the Company’s Chief Financial Officer;
Annual repor t 2022 of Arctic P aper S. A. 34
Management Board’s Report
— After analysing the submitted offers, the Audit Committee shall develop a recommendation with conclusions from the
selection procedure to be approved by the Audit Committee and shall submit a recommendation on the selection of the audit
firm to the Supervisory Board within such time that will support a resolution on audit firm selection;
— The Supervisory Board shall select the audit firm on the basis of the submitted offers and after becoming acquainted with the
Audit Committee’s opinion and recommendation;
— If the Supervisory Board’s decision differs from the recommendation of the Audit Committee, the Supervisory Board shall
justify the reasons for its failure to comply with the Audit Committee’s recommendation and shall submit such justification t o
the body approving the financial statements.
— The Company’s Management Board shall enter into a contract with the selected audit firm for the audit of financial
statements of the Company.
— The first contract is concluded for minimum 2 years and it may be extended for ano ther two or three years. The duration of
the cooperation shall be counted from the first financial year covered by the audit contract, in which the authorised auditor
was appointed for the first time to carry out the consecutive statutory audits of the Com pany.
— After expiry of the maximum period of the cooperation, the authorised auditor or, where applicable, any member of its
network, may not undertake a statutory audit of the Company’s financial statements for further 4 years.
— The key statutory auditor may not perform a statutory audit in the Company for a period longer than 5 years. The key
statutory auditor may conduct a statutory audit again after the expiry of 3 years.
— The maximum period of uninterrupted performance of statutory audits by the same au dit firm or an audit firm related to that
audit firm or any member of the network operating in the European Union of which the audit firms are members, may not
exceed 5 years.
Core assumptions underlying the policy of the provision of permitted services o ther than audit services by the audit firm
performing the audit, by entities related to the audit firm and by a member of the audit firm’s network;
— The Audit Committee of Arctic Paper S.A. shall be responsible for the policy covering the provision of permi tted services
other than audit services by the audit firm performing the audit, by entities related to the audit firm and by a member of th e
audit firm’s network;
— The Audit Committee of Arctic Paper S.A. controls and monitors the independence of the auditor and the audit firm, in
particular if the audit firm provides other services than audit of statutory financial statements to Arctic Paper S.A.
— The Audit Committee of Arctic Paper S.A., when so requested by a competent body or person, approves the pr ovision of
permitted services by the auditor that are not an audit of Arctic Paper S.A.
— The prohibited services do not include:
› carrying out due diligence procedures for economic and financial condition,
› issue of letters of support,
› attestation services related to pro forma financial information, forecast of results, or estimation of results, contained in the
issue prospectus of the audited entity;
› review of historic financial information for projects referred to in the Commission Regulation (EC) No 809/200 4 of 29 April
2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in
prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of
advertisement;
› verifying consolidation packages;
› confirming the fulfilment of terms and conditions of concluded loan agreements on the basis of the analysis of financial
information from the financial statements audited by the audit firm;
› attestation services related to reporting on corporate governance, risk management, and corporate social responsibility;
› services consisting in assessing the conformity of information disclosed by financial institutions and investment firms with
requirements for disclosure of information on capital adequacy and variable remuneration components;
› certifying financial statements or other financial information intended for supervisory authorities, supervisory board or oth er
supervisory body of the Company or owners, which falls beyond the scope of statutory audit and helps these bodies to fulfil
their statutory obligations.
— Provision of the above services is possible solely to the extent not related to the entity’s tax policies after a review by t he
Audit Committee of hazards and mitigants of the audit firm’s independence as referred to in Article 69 -73 of the Act on
Certified Auditors, Audit Firms and Public Supervision.
Annual repor t 2022 of Arctic P aper S. A. 35
Management Board’s Report
On 23 October 2019, the Supervisory Board of Arctic Paper S.A., by way of resolution, selected audit firm KP MG Audyt Spółka z
ograniczoną odpowiedzialnością sp.k. to audit the Company’s financial statements for the financial years 2020 -2022.
The Supervisory Board selected the audit firm on the basis of a recommendation by the Audit Committee. The recommendation of
the Audit Committee was issued as a result of the selection procedure in compliance with the “Policy and selection procedure of
the audit firm to perform statutory and voluntary audit of consolidated and standalone financial statements of Arctic Paper S .A.
with its registered office in Poznań”.
KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k., entities related to the audit firm and members of its audit firm
network, in the period covered by the audit did not provide any permitted services to the issuer that are not a statutory audit. The
audit firm and members of its team performing the audit comply with the requirements to make an impartial and independent
report from the audit of the annual consolidated and standalone financial statements of the Arctic Paper Group and of the
Company in compliance with the applicable regulations, professional standards and the rules of professional ethics. The
recommendation of the Audit Committee was free of third party impact and was developed on the basis of th e “Policy and
selection procedure of the audit firm to perform statutory and voluntary audit of consolidated and standalone financial state ments
of Arctic Paper S.A.”
On 22 February 2023 the Supervisory Board of the Company based on the recommendation of A udit Committee on selection of an
audit firm conducting an audit of the financial statements, took a decision to select PricewaterhouseCoopers Polska Spółka z
ograniczoną odpowiedzialnością Audyt Sp.k. as an auditor for the Company and the Group for the pe riod 2023-2024. The Audit
Committee’s recommendation was made pursuant to the selection procedure in line with the “Policy and procedure of selecting a n
audit firm to conduct a statutory and voluntary audit of consolidated and separate financial statements of Arctic Paper S.A. with
its registered office in Kostrzyn nad Odrą”.
Remuneration Committee
Composition and organisation of the Remuneration Committee
— The Remuneration Committee is composed of minimum two members of the Supervisory Board, including the Chairperson of
the Committee, elected by the Supervisory Board from among its members in compliance with the Articles of Association and
Regulations of the Supervisory Board;
— Members of the Remuneration Committee shall be appointed for three -year terms of office, however no longer than the term
of office of the Supervisory Board;
— The Chairperson of the Remuneration Committee shall be elected with a majorit y of votes of its members;
— The Remuneration Committee operates pursuant to the Regulations of the Supervisory Board and the Regulations of the
Remuneration Committee;
— The Remuneration Committee performs advisory and consulting functions, operates as a coll ective body within the
Company’s Supervisory Board;
— The Remuneration Committee carries out its tasks by providing the Supervisory Board with its proposals, opinions and
reports in the form of resolutions.
Competences of the Remuneration Committee
— The basic task of the Remuneration Committee is advisory support to the Supervisory Board on issues related to
remuneration policy, bonus policy and other issues related to the remuneration of the employees, members of the
Company’s authorities and the authorities of Capital Group companies;
— The tasks of the Remuneration Committee resulting from supervision over the Company’s remuneration policy and ensuring
the effective functioning of the Company’s remuneration policy, is to provide recommendations to the Supervi sory Board in
particular with respect to:
› approval and changes to the remuneration principles of members of the Company’s bodies;
› the amount of total remuneration to members of the Company’s Management Board;
› legal disputes between the Company and Members of the Management Board with respect to the tasks of the Committee;
› proposing remuneration and approving additional benefits to individual members of the Company’s bodies, in particular
under management option plans (convertible into shares of the Company );
Annual repor t 2022 of Arctic P aper S. A. 36
Management Board’s Report
› strategy of the Company’s remuneration and bonus policies and HR policies;
— The Remuneration Committee may resort to advisory services and assistance by external legal or other advisers if it finds it
necessary to perform its duties;
— The Remuneration Committee is obliged to file annual reports from its operations to the Supervisory Board by 30 September
in each calendar year.
On 31 August 2020, the General Meeting of the Company, bearing in mind Art. 90d.1 in connection with Art. 90c.2.1 of the Act of
29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public
Companies (i.e. Journal of Laws of 2019, item 623 as amended) adopted the “Remuneration Policy for Members of the
Management Board and Members of the Supervisory Board of Arctic Paper SA”. Under the above -mentioned Acts of public
companies, including the Company, were obliged to adopt, by resolution, the Remuneration Policy of Management Board and
Supervisory Board Members, which is the rules for determining the remuneration of Members of the Management Board and
Supervisory Board, by the General Meeting of Shareholders, and to publish a remuneration report. The Company shall pay
remuneration to the Members of the Management Board an d the Supervisory Board solely in compliance with the adopted Policy.
The policy prepared by the Company was drawn up in accordance with the principles set out in the above -mentioned Act and
refers to the required elements related to remuneration and other terms of employment for Members of the Management Board
and Members of the Supervisory Board. The policy received an opinion from the Remuneration Committee operating at the
Supervisory Board, as well as by the Supervisory Board.
on 22 June 2022, the General Meeting of the Company gave a positive opinion on the remuneration report for 2021 prepared by
the Supervisory Board. The resolution of the General Meeting on the aforementioned issue is advisory in nature. The report wa s
reviewed by the auditor. The independent auditor’s report on the performance of a service providing reasonable assurance
regarding the assessment of the remuneration report was attached as Appendix 2 to current report No. 8/2022 – “Content of draft
resolutions for the Annual General Meeting convened for 22 June 2022”.
The Remuneration Committee held meetings on 3 February, 10 February and 7 July 2022.
Since 9 February 2017 the Remuneration Committee has been operating in the following composition:
— Per Lundeen – Chairman of the Remuneration Committee
— Thomas Onstad – Member of the Remuneration Committee
— Roger Mattsson – Member of the Remuneration Committee
The detailed mode of operation of the Remuneration Committee is set forth in the Regulations of the Remuneration Committee.
Risk Committee
Composition and organisation of the Risk Committee
— The Risk Committee is composed of minimum three members of the Supervisory Board, including the Chairperson of the
Committee, elected by the Supervisory Board from among its members. Minimum one member of the Risk Committee shall
be independent and hold qualifications and experience in the sphere of finances;
— Members of the Risk Committee shall be appointed for three -year terms of office, however no longer than the term of office
of the Supervisory Board;
— The Chairperson of the Risk Committee shall be elected with a majority of votes of its members;
— The Risk Committee operates on the basis of commonly accepted corporate risk management models (e.g. COSO -ERM);
— The Risk Committee performs adviso ry and consulting functions, operates as a collective body within the Company’s
Supervisory Board;
— The Risk Committee carries out its tasks by providing the Supervisory Board with its proposals, opinions and reports in the
form of resolutions;
Annual repor t 2022 of Arctic P aper S. A. 37
Management Board’s Report
Competences of the Risk Committee
— The basic task of the Risk Committee is advisory support to the Supervisory Board on issues related to the proper
identification, assessment and control of potential risks, i.e. opportunities and threats to realization of the Company ’s
strategic goals, with particular consideration for financial risk, related to both external factors (such as volatility of ex change
rates, interest rates, general international economic condition) and internal factors (such as cash flows, liquidity
management, variation of budget and financial forecasts);
— The tasks of the Risk Committee resulting from the supervision over the risk management process, include in particular:
› Supervision over correct identification, analysis and assigning priority to types of risk inherent in the operational strateg y
and business pursued;
› Confirmation to the identified risk appetite of the Company;
› Verification if actions used to mitigate risk are planned and implemented so that the risk is mitigated to a level acceptable by
the Company;
› Monitoring verifying correct risk assessment by the Management Board and the effectiveness of control tools;
› Supervision over correct notification of stakehol ders on the risks, risk strategies and control tools.
— The Risk Committee may resort to advisory services and assistance by external advisers if it finds it necessary to perform it s
duties;
Since 05 August 2021 the Risk Committee has been operating in the following composition:
— Per Lundeen – Chairman of the Risk Committee
— Zofia Dzik – Independent Member of the Risk Committee
— Roger Mattsson – Member of the Risk Committee
The Risk Committee held a meeting on 08 September 2022.
Annual repor t 2022 of Arctic P aper S. A. 38
Management Board’s Report
Information compliant with the
requirements of Swedish regulations
concerning corporate governance.
Arctic Paper S.A. is a company registered in Poland which stock has been admitted to trading at the Warsaw Stock Exchange and
at NASDAQ in Stockholm. The Company’s primary market is in Warsaw with a parallel market in Stockholm. Companies not
registered in Sweden which shares have been admitted to trading at NASDAQ in Stockholm are obliged to comply with:
— the corporate governance rules in force in the country of their r egistration or
— the corporate governance rules in force in the country where they have their primary trading market, or
— the Swedish corporate governance code (hereinafter the “Swedish Code”).
Arctic Paper S.A. follows the principles set forth in the “Best Practice of GPW Listed Companies 2016” (hereinafter the “Best
Practice”) that may be applied by companies listed at th e Warsaw Stock Exchange and not the Swedish Code. As a result, the
conduct of Arctic Paper S.A. is different from the one set forth in the Swedish Code in the following material aspects.
General Meeting of Shareholders
The core documents related to General Meetings of Shareholders, such as notices, reports and approved resolutions, are made in
Polish and in English instead of Swedish.
Appointment of governing bodies of the company
The Polish corporate governance model provides for a two -tier system of the Company’s bodies which is composed of the
Management Board being the executive body appointed by the Management Board which in turns supervises the Company’s
operations and is appointed by the General Meeting of Shareholders. Auditors are selected by th e Supervisory Board.
Neither the Best practice, nor any other Polish regulations require the establishment of a commission in the Company to elect
candidates and therefore such commission does not exist among the bodies of the Company. Each shareholder ma y propose
candidates to the Supervisory Board. Appropriate information on candidates proposed to the Supervisory Board is published on
the Company’s website with appropriate advance so that all shareholders could take an informed decision when voting on th e
resolution appointing a new member of the Supervisory Board.
Tasks of the bodies of the Company
In compliance with the two-tier system of the Company’s bodies, the tasks usually performed by the management of Swedish -
registered companies are performed by the Management Board or the Supervisory Board of companies subject to Polish law.
In accordance with the Polish applicable regulations, members of the Management Board, including its General Director who is
the President of the Management Board, may no t get involved in competitive activities outside the Company. Pursuing of other
business outside the Company is not regulated either in the Best Practice or other Polish regulations; however, certain
restrictions are usually incorporated in individual empl oyment contracts.
Size and composition of the Company’s bodies
The composition of the Supervisory Board should reflect the independence criteria, just like those specified in the Swedish C ode.
However, the Management Board being the executive body is comp osed of persons in executive positions at Arctic Paper S.A.,
and these members may not be treated as independent of the Company. The terms of office of members of the Management
Board – just like the members of the Supervisory Board – lasts three years.
Annual repor t 2022 of Arctic P aper S. A. 39
Management Board’s Report
Chairpersons of the bodies of the Company
It is the Supervisory Board and not the General Meeting that elects the chairperson and the deputy chairperson from its membe rs.
Procedures of the bodies of the Company
The Regulations of the Management Board are approved by the Supervisory Board, and the Regulations of the Supervisory Board
are approved by the Supervisory Board. The Regulations are not reviewed each year – they are reviewed and modified as need
arises. The same principles apply to regulations of co mmittees operating within the Supervisory Board that are approved by the
Supervisory Board. The operation of the General Director is not regulated separately since he/she also acts as the president of
the Management Board.
Remuneration of members of the bodies of the Company and management staff
The Company shall pay remuneration to the Members of the Management Board and the Supervisory Board solely in com<