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Management Board’s Report 2024
Arctic Paper Group
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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
Letter from the President of the Management Board of Arctic Paper SA ......................................................................................................... 3
Information on the report ................................................................................................................................................................................ 4
Forward-looking statements ........................................................................................................................................................................... 7
Forward-looking statements relating to risk factors ......................................................................................................................................... 8
Selected consolidated financial data ............................................................................................................................................................. 10
Description of the business of the Arctic Paper Group .................................................................................................................................. 12
Summary of the consolidated financial results .............................................................................................................................................. 19
Factors influencing the development of the Arctic Paper Group .................................................................................................................... 25
Supplementary information ........................................................................................................................................................................... 29
Statement on the application of the Corporate Governance Rules ................................................................................................................ 33
Information compliant with the requirements of Swedish regulations concerning corporate governance. ...................................................... 42
Sustainability statement ................................................................................................................................................................................ 43
1. General information ................................................................................................................................................................................ 43
2. Environmental information ...................................................................................................................................................................... 90
3. Social information................................................................................................................................................................................. 118
4. Governance information. ...................................................................................................................................................................... 138
Information by the Management Board of Arctic Paper SA on selection of the audit firm ............................................................................ 142
Statements of the Management Board ....................................................................................................................................................... 142
Management Board’s Report 2024
Arctic Paper Group
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Letter from the President of the Management Board of Arctic Paper SA
Dear Sirs,
I am pleased to present to you the Arctic Paper Group’s annual report for 2024.
The past 12 months have been a time of investment for the Arctic Paper Group, preparing us for new challenges. Taking advantage of our strong
balance sheet and lack of debt, we have accelerated our investments in new segments. The investment outlay in 2024 was twice as much as the
average annual outlay in previous years. One third of all investments are projects in the energy and packaging segment. We are building our own
photovoltaic sources, have purchased an operational PV farm and are investing in energy storage. Recognising renewable energy as one of the
key factors in building a competitive advantage, we will continue to invest in this segment. We plan for the total capacity of our own PV sources
to exceed 30 MW by mid-2025.
The expected recovery of the European economy did not take place last year. This was reflected in a weak market for paper products. Despite
the low demand for our products and the high costs of energy and raw materials (primarily wood), the achieved EBITDA of around PLN 300 million
is higher than the pre-2021 results. Capacity utilisation reached 75%, which, if the economy improves, will allow both paper and pulp production
to increase significantly in the short term.
In a rapidly changing economic environment, it becomes even more important to maintain a strong balance sheet and low debt. Despite significant
investments in excess of PLN 400 million and the declaration of a dividend of approximately 30% of the profit achieved, the Arctic Paper Group
still has a strong balance sheet and no net debt.
I would like to thank the entire Arctic Paper Group team for the effort they put into the tasks set before them.
Michał Jarczyński
President of the Management Board of Arctic Paper SA
Management Board’s Report 2024
Arctic Paper Group
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Information on the report
This Management Board’s Report, which is a component of the Consolidated Annual Report for 2024, has been prepared in accordance with the
Regulation of the Minister of Finance of 29 March 2018 on current and periodical information disclosed by issuers of securities and conditions of
recognition as equivalent of information required by the law of non-member states (Journal of Laws of 2018, item 757).
Certain selected information contained in this report comes from the Arctic Paper Group management accounting system and statistics systems.
This Management Board’s Report presents data in PLN, and all figures, unless otherwise specified, are disclosed in PLN ‘000.
Definitions and abbreviations
Unless the context requires otherwise, the following definitions and abbreviations are used in the whole document:
Abbreviations applied to business entities, institutions and authorities of the Company
Arctic Paper, Company, Issuer, Parent Company, AP
Arctic Paper Spółka Akcyjna with its registered office in Kostrzyn nad Odrą,
Poland
Capital Group, Group, Arctic Paper Group, AP Group
Capital Group comprised of Arctic Paper Spółka Akcyjna and its subsidiaries
as well as joint ventures
Arctic Paper Kostrzyn, AP Kostrzyn, APK
Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in Kostrzyn
nad Odrą, Poland
Arctic Paper Munkedals, AP Munkedals, APM
Arctic Paper Munkedals AB with its registered office in Munkedal
Municipality, Västra Götaland County, Sweden
Arctic Paper Mochenwangen, AP Mochenwangen, APMW
Arctic Paper Mochenwangen GmbH with its registered office in
Mochenwangen, Germany
Arctic Paper Grycksbo, AP Grycksbo, APG
Arctic Paper Grycksbo AB with its registered office in Kungsvagen, Grycksbo,
Sweden
Paper Mills
Arctic Paper Kostrzyn, Arctic Paper Munkedals, Arctic Paper Grycksbo
Arctic Paper Investment AB, API AB
Arctic Paper Investment AB with its registered office in Göteborg, Sweden
Arctic Paper Investment GmbH, API GmbH
Arctic Paper Investment GmbH with its registered office in Wolpertswende,
Germany
Arctic Paper Verwaltungs
Arctic Paper Verwaltungs GmbH with its registered office in Wolpertswende,
Germany
Arctic Paper Immobilienverwaltungs
Arctic Paper Immobilienverwaltungs GmbH & Co. KG with its registered office
in Wolpertswende, Germany
Kostrzyn Group
Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in Kostrzyn
nad Odrą and EC Kostrzyn Sp. z o.o. with its registered office in Kostrzyn
nad Odrą
Mochenwangen Group
Arctic Paper Investment GmbH, Arctic Paper Mochenwangen GmbH, Arctic
Paper Verwaltungs GmbH, Arctic Paper Immobilienverwaltungs GmbH &
Co.KG
Grycksbo Group
Arctic Paper Grycksbo AB and Arctic Paper Investment AB, Arctic Paper
Finance AB
Sales Offices
Arctic Paper Papierhandels GmbH with its registered office in Vienna
(Austria)
Arctic Paper Benelux SA with its registered office in Oud-Haverlee (Belgium)
Arctic Paper Danmark A/S with its registered office in Greve (Denmark)
Arctic Paper France SA with its registered office in Paris (France)
Arctic Paper Deutschland GmbH with its registered office in Hamburg,
Germany
Arctic Paper Italia Srl with its registered office in Milan (Italy)
Arctic Paper Baltic States SIA with its registered office in Riga (Latvia)
Management Board’s Report 2024
Arctic Paper Group
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Arctic Paper Norge AS with its registered office in Oslo (Norway)
Arctic Paper Polska Sp. z o.o. with its registered office in Warsaw (Poland)
Arctic Paper España SL with its registered office in Barcelona (Spain)
Arctic Paper Finance AB with its registered office in Munkedal (Sweden)
Arctic Paper Schweiz AG with its registered office in Derendingen
(Switzerland)
Arctic Paper UK Ltd with its registered office in London (UK)
Arctic Power Sp. z o.o.
(formerly Arctic Paper East Sp. z o.o.)
Arctic Power Sp. z o.o. with its registered office in Kostrzyn nad Odrą
(Poland)
Kostrzyn Packaging Spółka z o.o.
Arctic Paper East Sp. z o.o. with its registered office in Kostrzyn nad Odrą
(Poland)
Rottneros, Rottneros AB
Rottneros AB with its registered office in Sunne (Sweden)
Rottneros Group, Rottneros AB Group
Rottneros AB with its registered office in Söderhamn, Sweden; Rottneros
Bruk AB with its registered office in Rottneros, Sweden; Utansjo Bruk AB with
its registered office in Söderhamn, Sweden, Vallviks Bruk AB with its
registered office in Vallvik, Sweden; Rottneros Packaging AB with its
registered office in Sunne, Sweden; SIA Rottneros Baltic with its registered
office in Kuldiga, Latvia; since 1 January 2020 Nykvist Skogs AB with its
registered office in Gräsmark, Sweden
Pulp Mills
Rottneros Bruk AB with its registered office in Rottneros, Sweden; Vallviks
Bruk AB with its registered office in Vallvik, Sweden
Rottneros Purchasing Office
SIA Rottneros Baltic with its registered office in Kuldiga, Latvia
Office Kalltorp
Kalltorp Kraft Handelsbolaget with its registered office in Trollhattan, Sweden
Nemus Holding AB
Nemus Holding AB with its registered office in Göteborg, Sweden
Thomas Onstad
The Issuer’s core shareholder, holding directly and indirectly over 50% of
shares in Arctic Paper SA; a member of the Issuer’s Supervisory Board
Management Board, Issuer’s Management Board, Company’s
Management Board, Group’s Management Board
Management Board of Arctic Paper SA
Supervisory Board, Issuer’s Supervisory Board, Company’s
Supervisory Board, Group’s Supervisory Board, SB
Supervisory Board of Arctic Paper SA
AGM, GM, Issuer’s General Meeting, Company’s General Meeting
Annual General Meeting of Arctic Paper SA
EGM, Extraordinary General Meeting, Issuer’s Extraordinary
General Meeting, Company’s Extraordinary General Meeting
Extraordinary General Meeting of Arctic Paper SA
Articles of Association, Issuer’s Articles of Association, Company’s
Articles of Association
Articles of Association of Arctic Paper SA
SEZ
Kostrzyńsko-Słubicka Special Economic Zone
Registration Court
District Court in Zielona Góra
Warsaw Stock Exchange, WSE
Giełda Papierów Wartościowych w Warszawie Spółka Akcyjna
KDPW, Depository
Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna with its registered
office in Warsaw
PFSA
Polish Financial Supervision Authority
SFSA
Swedish Financial Supervisory Authority, equivalent to PFSA
NASDAQ in Stockholm, Nasdaq
Stock Exchange in Stockholm, Sweden
CEPI
Confederation of European Paper Industries
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Arctic Paper Group
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EURO-GRAPH
The European Association of Graphic Paper Producers
Eurostat
European Statistical Office
GUS
Central Statistical Office of Poland
NBSK
Northern Bleached Softwood Kraft
BHKP
Bleached Hardwood Kraft Pulp
Definitions of selected terms and financial indicators and abbreviations of currencies
Sales profit margin
Ratio of profit/(loss) on sales to sales revenue from continuing operations
EBIT
Profit on continuing operating activities (Earnings Before Interest and Taxes)
EBIT profitability, operating profitability, operating profit margin
Ratio of operating profit/(loss) to sales revenue from continuing operations
EBITDA
Operating profit from continuing operations plus depreciation and
amortisation and impairment allowances (Earnings Before Interest, Taxes,
Depreciation and Amortisation)
EBITDA profitability, EBITDA margin
Ratio of operating profit plus depreciation and amortisation and impairment
allowances to sales income from continuing operations
Gross profit margin
Ratio of gross profit/(loss) to sales revenue from continuing operations
Sales profitability ratio, net profit margin
Ratio of net profit/(loss) to sales revenue
Return on equity, ROE
Ratio of net profit/(loss) to equity income
Return on assets, ROA
Ratio of net profit/(loss) to total assets
EPS
Earnings Per Share, ratio of net profit to the weighted average number of
shares
BVPS
Book Value Per Share, Ratio of book value of equity to the number of shares
Debt-to-equity ratio
Ratio of total liabilities to equity
Equity to non-current assets ratio
Ratio of equity to non-current assets
Interest-bearing debt-to-equity ratio
Ratio of interest-bearing debt and other financial liabilities to equity
Net debt-to-EBITDA ratio
Ratio of interest-bearing debt minus cash to EBITDA from continuing
operations
EBITDA-to-interest coverage ratio
Ratio of EBITDA to interest expense from continuing operations
Current ratio
Ratio of current assets to current liabilities
Quick ratio
Ratio of current assets minus inventory and short-term accruals and deferred
income to current liabilities
Cash solvency ratio
Ratio of total cash and similar assets to current liabilities
DSI
Days Sales of Inventory, ratio of inventory to cost of sales multiplied by the
number of days in the period
DSO
Days Sales Outstanding, ratio of trade receivables to sales income from
continuing operations multiplied by the number of days in the period
DPO
Days Payable Outstanding, Ratio of trade payables to cost of sales from
continuing operations multiplied by the number of days in the period
Operating cycle
DSI + DSO
Cash conversion cycle
Operating cycle DPO
Management Board’s Report 2024
Arctic Paper Group
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FY
Financial year
Q1
1st quarter of the financial year
Q2
2nd quarter of the financial year
Q3
3rd quarter of the financial year
Q4
4th quarter of the financial year
H1
First half of the financial year
H2
Second half of the financial year
YTD
Year-to-date
Like-for-like, LFL
Analogous, with respect to operating result.
p.p.
Percentage point, difference between two amounts of one item given in
percentage
PLN, zł, złoty
Monetary unit of the Republic of Poland
gr
grosz 1/100 of one zloty (the monetary unit of the Republic of Poland)
Euro, EUR
Monetary unit of the European Union
GBP
Pound sterling, monetary unit of the United Kingdom
SEK
Swedish Krona monetary unit of the Kingdom of Sweden
USD
United States dollar, the legal tender in the United States of America
IAS
International Accounting Standards
IFRS
International Financial Reporting Standards
IFRS EU
International Financial Reporting Standards endorsed by the European Union
GDP
Gross Domestic Product
Other definitions and abbreviations
50,000 Shares of Arctic Paper SA A series ordinary shares of PLN 1 each.
44,253,500 Shares of Arctic Paper SA B series ordinary shares of PLN 1 each.
8,100,000 Shares of Arctic Paper SA C series ordinary shares of PLN 1 each.
3,000,000 Shares of Arctic Paper SA E series ordinary shares of PLN 1 each.
13,884,283 Shares of Arctic Paper SA F series of the nominal value of PLN 1
each
Series A, Series B, Series C, Series E, and Series F Shares jointly
Forward-looking statements
The information contained in this report which does not relate to historical facts relates to forward looking statements. Such statements may, in
particular, concern the Group’s strategy, business development, market projections, planned investment outlays, and future revenue. Such
statements may be identified by the use of expressions pertaining to the future such as, e.g., “believe”, “think”, “expect”, “may”, “will”, “should”, “is
expected”, “is assumed”, and any negations and grammatical forms of these expressions or similar terms. The statements contained in this report
concerning matters which are not historical facts should be treated only as projections subject to risk and uncertainty. Forward-looking statements
are inevitably based on certain estimates and assumptions which, although our management finds them rational, are naturally subject to known
and unknown risks and uncertainties and other factors that could cause the actual results to differ materially from the historical results or the
projections. For this reason, we cannot assure that any of the events provided for in the forward-looking statements will occur or, if they occur,
about their impact on the Group’s operating activities or financial situation. When evaluating the information presented in this report, one should
not rely on such forward-looking statements, which are stated only as at the date they are expressed. Unless legal regulations contain detailed
Management Board’s Report 2024
Arctic Paper Group
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requirements in this respect, the Group shall not be obliged to update or verify those forward-looking statements in order to provide for new
developments or circumstances. Furthermore, the Group is not obliged to verify or to confirm the analysts’ expectations or estimates, except for
those required by law.
Forward-looking statements relating to risk factors
In this report we described the risk factors that the Management Board of our Group considers specific to the sector we operate in; however, the
list may not be exhaustive. Other factors may arise that have not been identified by us and that could have material and adverse impact on the
business, financial condition, results on operations or prospects of the Arctic Paper Group. In such circumstances, the price of the shares of the
Company listed at Giełda Papierów Wartościowych w Warszawie SA (Warsaw Stock Exchange) or at NASDAQ in Stockholm may decrease,
investors may lose their invested funds in whole or in part and the potential dividend disbursement by the Company may be limited.
We ask you to perform a careful analysis of the information disclosed in ‘Risk factors’ of this report – the section contains a description of risk
factors and uncertainties related to the business of the Arctic Paper Group.