APSA 1Q 2015 Quarterly Report

7/25/2019 APSA 1Q 2015 Quarterly Report

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ARCTIC PAPER S.A. CAPITAL GROUP

Consolidated quarterly report

for the first quarter of the year 2!"

ed

TR #SL TORS$ E%PL # TOR& #OTE

The following document is a free translation of the report of theabove-mentioned Company.

In the event of any discrepancy in interpreting the terminology, thePolish version is binding.


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Consolidated quarterly report for the first quarter of 2!"

#rctic Paper $.#. Capital %roup Page 2 of &

Table of Contents

Introduction ......................................................................... . '

Information on report ....................................... ..................... '(efinitions and abbreviations ................................................. ')orward loo*ing statements .................................................. &+anag ements oard report on the operations of

#rctic Paper $.#. Capital %roup to the report for the

first quarter of the year 2!"

#rctic Paper %roup profile .................................................... . /%eneral information .................................................... ........... /$ummary of consolidated financial results ........................... !2Consolidated income statement .......................................... !20eport on financial situation ................................................ !&Consolidated cash flow statement ................... ................... 2

$ummary of standalone financial results .............................. 2!$tandalone income statement ............................................. 2!

$tatement of financial position.................................... ......... 2'Cash flows ....................................................... ................... 2"0elevant information and factors influencing financialresults and evaluation of financial standing .......................... 21ey factors affecting the performance results ...................... 213nusual events and factors ................................................. 2&Impact of changes in #rctic Paper %roups structure onthe financial result ............................................................... 2&4ther material information ................................................... 2&)actors influencing #rctic Paper %roup development .......... 2Information on mar*et tendencies ....................................... 2

)actors influencing the financial results in the perspectiveof the ne5t quarter ........................................... ................... '0is* factors ...................................................... ................... '$upplementary information ................................................. '!+anagement oard position on the possibility to achievethe pro6ected financial results published earlier .................... '!Changes in Issuers shareholding or rights to shares ofpersons managing and supervising #rctic Paper $.#. .......... '!Information on guarantees .................................................. '!$ignificant off-balance sheet items ...................................... '2Information on court and arbitration proceedings andproceedings pending before public administrative

authorities ........................................................ ................... ''

Information on transactions with related parties e5ecutedon non-mar*et terms and conditions ................................... ''

Conden sed quarterly consolidated financial statements

for the three months period ended '!st +arch 2!" '7

Consolidated financial statements and selected financialdata ................................................... .......................... '1$elected consolidated financial data .................................... '1Consolidated income statement .......................................... '&Consolidated statement of comprehensive income .............. 'Consolidated balance sheet ................................................ '/Consolidated cash flow statement ....................................... 7Consolidated statement of changes in equity....................... 7!$tandalone financial statements and selected financialdata ................................................... .......................... 7'$elected standalone financial data............. .......................... 7'

$tandalone income statement ............................................. 77$tandalone statement of comprehensive income ................. 7"

$tandalone balance sheet ................................................... 71$tandalone cash flow statement .......................................... 7&$tandalone statement of changes in equity ......................... 7#dditional e5planatory notes................................................ "!. %eneral information ................ .................................... "2. Composition of the %roup .......................................... "!'. +anagement and supervisory bodies .......................... "'7. #pproval of the financial statements ............................ "7". asis of preparation of consolidated financialstatements .......................................................................... "71. $ignificant accounting policies .................... ................ "7

&.

$easonality ................................................................. "1

. Information on business segments .............................. "1/. (ividend paid and proposed ....................................... 1!. 8arnings per share ...................................................... 1!!. Interest-bearing loans and borrowings ........................ 1!!2. 8quity securities .................................................... ...... 12!'. )inancial instruments ............................................ ...... 12!7. )inancial ris* management ob6ectives and policies ...... 11!". Capital management................................... ................ 1&!1. Contingent liabilities and contingent assets ................. 1&!&. 9egal claims .................. ............................................. 1&!. C42 emission rights ................................................... 1&

!/.

%overnment grants and operations in $pecial8conomic :one ................................................... ................ 1

2. $ignificant events after balance sheet date .................. 1/


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#rctic Paper $.#. Capital %roup Page ' of &

Introduction

Information on report

The hereby Consolidated ;uarterly 0eport for the first quarter

of 2!" was prepared in accordance with the +inister of

)inance 0egulation of !/th )ebruary 2/ concerning current

and periodical information submitted by issuers of securities

and terms and conditions of classifying as equivalent

information required by the law of a non-member state


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+ochenwangen %roup #rctic Paper Investment %mbL, #rctic Paper +ochenwangen %mbL, #rcticPaper Herwaltungs %mbL, #rctic Paper Immobilienverwaltungs %mbL MCo.%

%ryc*sbo %roup )rom th #ugust 2!7B #rctic Paper %ryc*sbo #, beforeB #rctic Paper%ryc*sbo # and %ryc*sbo Paper Lolding #,

(istribution Companies #rctic Paper $verige #, #rctic Paper (anmar* #N$ and #rctic Paper Aorge#$

$ales 4ffices #rctic Paper Papierhandels %mbL seated in Hienna O#rctic Paper enelu5 $# seated in 4ud-Laverlee O#rctic Paper (anmar* #N$ seated in Hallensbae* O#rctic Paper )rance $# seated in Paris O#rctic Paper (eutschland %mbL seated in Lamburg O#rctic Paper Ireland 9td seated in (ublin O#rctic Paper Italia $rl seated in +ilan O#rctic Paper altic $tates $I# seated in 0iga O

#rctic Paper Aorge #$ seated in Trollsen O#rctic Paper Pols*a $p. E o.o. seated in Karsaw O#rctic Paper 8spaQa $9 seated in arcelona O#rctic Paper $verige # seated in 3ddevalla O#rctic Paper $chweiE #% seated in :urich O#rctic Paper 3 9td seated in Caterham O#rctic Paper 8ast $p. E o.o. seated in ostrEyn nad 4drG .

0ottneros, 0ottneros #

0ottneros %roup, 0ottneros # %roup

Pulp mills

0ottneros Purchasing 4ffice

alltorp

Trebru* #

0ottneros # seated in $toc*holm, $weden

0ottneros # seated in Hallvi*, $wedenO 0ottneros ru* # seated in $unne,$wedenO 3tans6o ru* # seated in $weden, Hallvi*s ru* # seated in

Hallvi*, $wedenO 0ottneros Pac*aging # seated in $wedenO $I# 0ottnerosaltic seated in 9atvia

0ottneros ru* # seated in $unne, $wedenO Hallvi*s ru* # seated inHallvi*, $weden

$I# 0ottneros altic seated in 9atvia

alltorp raft Landelsbolaget seated in Trollhattan, $weden

Trebru* # seated in %Jteborg +unicipality, Hstra%Jtaland County, $weden

Aemus Lolding # Aemus Lolding # seated in %Jteborg +unicipality, Hstra %Jtaland County,$weden

+anagement oard, Issuers +anagementoard, Companys +anagement oard, %roups+anagement oard

+anagement oard of #rctic Paper $.#.

$upervisory oard, Issuers $upervisory oard,Companys $upervisory oard, %roups$upervisory oard, $

$upervisory oard of #rctic Paper $.#.

$+, $hareholders +eeting, Issuers $hareholders+eeting, Companys $hareholders +eeting

$hareholders +eeting of #rctic Paper $.#.

8$+, 85traordinary $hareholders +eeting,Issuers 85traordinary $hareholders +eeting,Companys 85traordinary $hareholders +eeting

85traordinary $hareholders +eeting of #rctic Paper $.#.

#rticles of #ssociation, Issuers #rticles of#ssociation, Companys #rticles of #ssociation

#rticles of #ssociation of #rctic Paper $.#.


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#rctic Paper $.#. Capital %roup Page " of &

$8: ostrEyFs*o-$Dubic*a $pecial 8conomic :one

Court of 0egistration (istrict Court PoEnaF-Aowe +iasto i Kilda in PoEnaF

Karsaw $toc* 85change, K$8 %ieDda Papierw KartoRciowych w KarsEawie $pD*a #*cy6na

(PK, (epository ra6owy (epoEyt Papierw KartoRciowych $pD*a #*cy6na seated in Karsaw

A) omis6a AadEoru )inansowego

$)$# $wedish )inancial $upervisory #uthority

A#$(#; in $toc*holm, Aasdaq

C8PI

$toc* 85change in $toc*holm, $weden

Confederation of 8uropean Paper Industries

8304-%0#PL The 8uropean #ssociation of %raphic Paper Producers

8urostat 8uropean $tatistical 4ffice

%3$

A$

LP

Polish Central $tatistical 4ffice

Aorthern leached $oftwood raft

leached Lardwood raft Pulp

(efinitions of selected terms and financial indicators and abbreviations of currencies

$ales profit margin 0atio of sales profit to sales income

8IT Profit on operating activity

8IT profitability, operating profitability, operatingprofit margin

0atio of operating profit to sales income

8IT(# 4perating profit plus depreciation and amortiEation and impairment charges

8IT(# profitability, 8IT(# margin 0atio of operating profit plus depreciation and amortiEation and impairmentcharges to sales income

%ross profit margin 0atio of gross profit to sales income

$ales profitability ratio, net profit margin 0atio of net profit to sales income

0eturn on equity, 048 0atio of net profit to equity

0eturn on assets, 04# 0atio of net profit to total assets

8P$ 8arnings Per $hare, ratio of net profit to the number of shares

HP$ oo* Halue Per $hare, ratio of boo* value of equity to the number of shares

(ebt-to-equity ratio 0atio of total liabilities to equity

8quity-to-non-current assets ratio 0atio of equity to non-current assets

Interest-bearing debt-to-equity ratio 0atio of interest-bearing debt and other financial liabilities to equity

Aet debt-to-8IT(# ratio 0atio of interest-bearing debt minus cash to 8IT(#

$olidity ratio 0atio of equity to value of assets

Interest coverage 0atio of interest value to 8IT(#

8IT(#-to-interest coverage ratio 0atio of 8IT(# to interest costCurrent ratio 0atio of current assets to current liabilities


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;uic* ratio 0atio of current assets minus inventory and short-term prepayments anddeferred costs to current liabilities

#cid test ratio 0atio of total cash assets and other cash assets to current liabilities

(ays inventory outstanding, ($I, (I4 (ays $ales of Inventory or (ays Inventory 4utstanding, ratio of inventory tocost of sales multiplied by the number of days in the period

(ays sales outstanding, ($4 (ays $ales 4utstanding, ratio of trade receivables to sales income multipliedby the number of days in the period

(ays payable outstanding, (P4 (ays Payable 4utstanding, ratio of trade payables to cost of sales multipliedby the number of days in the period

4perating cycle ($I S ($4

Cash conversion cycle 4perating cycle (P4

)U )inancial year

!; !st quarter of the financial year2; 2nd quarter of the financial year

'; 'rd quarter of the financial year

7; 7th quarter of the financial year

!L )irst half of the financial year

2L $econd half of the financial year

UT( Uear-to-date

9i*e-for-li*e, 9)9 #nalogous, with respect to operating result in the meaning of this reporte5cluding the effect of the purchase of #rctic Paper %ryc*sbo in +arch 2!

p.p. Percentage point difference between two amounts of one item given inpercentage

P9A, ED, EDoty +onetary unit of the 0epublic of Poland

gr grosE !N! of one Eloty

8uro, 830 +onetary unit of the 8uropean 3nion

%P Pound sterling monetary unit of the %reat ritain

$8 $wedish rona - +onetary unit of the ingdom of $weden

3$( 3nited $tates dollar, the currency being legal tender in the 3nited $tates of#merica

I#$ International #ccounting $tandards

I)0$ International )inancial 0eporting $tandards

%(P %ross (omestic Product

4ther de finitions and abb reviations

$eries # $hares ", #rctic Paper $.#. $eries # $hares with a par value of ! P9A each

$eries $hares 77,2"'," #rctic Paper $.#. $eries $hares with a par value of ! P9A each

$eries C $hares ,!, #rctic Paper $.#. $eries C $hares with a par value of ! P9A each

$eries 8 $hares ',, #rctic Paper $.#. $eries 8 $hares with a par value of ! P9A each$eries ) $hares !',7,2' #rctic Paper $.#. $eries ) shares with a par value of ! P9A each


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#rctic Paper $.#. Capital %roup Page & of &

$hares, Issuers $hares $eries #, $eries , $eries C, $eries 8, and $eries ) $hares 6ointly

)orward loo*ing statements

The information contained in the hereby report which does not

relate to historical facts relates to forward loo*ing statements.

$uch statements may, in particular, concern the %roups

strategy, business development, mar*et pro6ections, planned

investment outlays, and future revenues. $uch statements may

be identified by the use of e5pressions pertaining to the future

such as, e.g., ?believe@, ?thin*@, ?e5pect@, ?may@, ?will@,

?should@, ?is e5pected@, ?is assumed@, and any negations and

grammatical forms of these e5pressions or similar terms. The

statements contained in the hereby report concerning matters

which are not historical facts should be treated only as

pro6ections sub6ect to ris* and uncertainty. )orward-loo*ing

statements are inevitably based on certain estimates and

assumptions which, although our management finds them

rational, are naturally sub6ect to *nown and un*nown ris*s and

uncertainties and other factors that could cause the actual

results to differ materially from the historical results or the

pro6ections. )or this reason, we cannot assure that any of the

events provided for in the forward-loo*ing statements will

occur or, if they occurred, about their impact on the %roups

operating activity or financial situation. Khen evaluating the

information presented in this report, one should not rely on

such forward-loo*ing statements, which are stated only on the

date they are e5pressed. Insofar as the legal regulations do not

contain detailed requirements in this respect, the %roup shall

not be obliged to update or verify those forward-loo*ing

statements in order to provide for new developments or

circumstances. )urthermore, the %roup is not obliged to verify

or to confirm the analysts e5pectations or estimates, e5cept

for those required by law.


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'ana(e)ent$s *oard report on the operations ofAr+ti+ Paper S.A. Capital Group

to the report for the first quarter of the year 2!"


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Consolidated quarterly report for the first quarter of 2!"+anagement oards report on the operations of #rctic Paper $.#. Capital %roup

#rctic Paper Capital %roup $.#. Page / of &

#rctic Paper % roup profile

%eneral information

The #rctic Paper %roup is the second-largest 8uropean

producer of bul*y boo* paper in terms of production volume,

offering the largest product assortment in this segment, and

one of 8uropes leading producers of fine graphic paper. The

%roup produces numerous types of uncoated and coated

wood-free paper, as well as wood-containing uncoated paper

for printing houses, paper distributors, boo* and magaEinepublishing houses and the advertising industry. In connection

with acquisition of 0ottneros %roup in (ecember 2!2, our

assortment was broadened with production of pulp. #s on the

day of publishing of this report, the #rctic Paper %roup

employs app. !, people in four paper mills, two pulp mills,

fifteen companies dealing in paper distribution and sales, and a

company dealing in timber procurement for pulp production.

The %roups paper mills are located in Poland, $weden and

%ermany and have total production capacity of more than

, metric tons of paper per year. The pulp mills are

located in $weden and have total production capacity of

7, tons per year. The %roup has three (istribution

Companies which handle sales, distribution and mar*eting of

products offered by the %roup in $candinavia and twelve $ales

4ffices providing access to all 8uropean mar*ets, including

Central and 8astern 8urope. The %roups consolidated salesrevenue for the first quarter of 2!" totaled P9A '1 million.

#rctic Paper $.#. is a holding company established in #pril

2. The Parent Company is entered in the register of

entrepreneurs of the Aational Court 0egister maintained by the

(istrict Court in PoEnaF Aowe +iasto i Kilda, th

Commercial (epartment of the Aational Court 0egister, under

0$ number '1/77. The Parent Company holds

statistical number 08%4A 2122"".

%roup Profile

The principal business of #rctic Paper %roup is paper production and sales.

The %roups additional business, partly subordinate to paper production, coversB

Production and sales of pulp,

%eneration of electricity,

Transmission of electricity,

(istribution of electricity,

Production of heat,

(istribution of heat,

9ogistic services,

(istribution of paper.

4ur production units

#s on '!st +arch 2!", as well as on the day of publishing of the hereby report, the %roup has owned the following paper millsB

the paper mill in ostrEyn nad 4drG has the

production capacity of about 2&", metric tons peryear and mainly produces uncoated wood-free paper for

general printing use such as printing boo*s, brochures

and forms, and for producing envelopes and other paperproductsO


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#rctic Paper Capital %roup $.#. Page ! of &

the paper mill in +un*edal has the production

capacity of about !1, metric tons per year and

mainly produces fine uncoated wood-free paper used

primarily for printing boo*s and high-quality brochuresO

the paper mill in +ochenwangen has the

production capacity of about !!", metric tons per

year and mainly produces uncoated wood-containing

paper used primarily for printing boo*s and flyersO

paper mill in %ryc*sbo has the production

capacity of about 21", metric tons per year and

produces coated wood-free paper used for printing

maps, boo*s, magaEines, posters and printing of

advertising materials.

#s on '!st +arch 2!", as well as on the day of publishing of the hereby report, the %roup has owned the following pulp millsB

the pulp mill in 0ottneros has the annual

production capacity of app. !", tons and mainly

produces two types of fibrous mechanical pulpBgroundwood and CT+PO

the pulp mill in Hallvi* has the annual

production capacity of app. 2", tons and produces

two types of long-fiber sulphate pulpB fully bleached

sulphate pulp and unbleached sulphate pulp. The most

of Hallvi* pulp mill production is *nown as A$ pulp.

The unbleached sulphate pulp produced by the mill is

characteristic of high levels of purity. The high quality ofthis pulp, which has been achieved over the years, made

Hallvi* the global leader in deliveries of this type of pulp,

which is used, among other, in production of power

transformers and cable industry.

4ur products

The assortment of products of #rctic Paper %roup has not changed in 2!" and includesB

3ncoated wood-free paperO

Coated wood-free paperO

3ncoated wood-containing paperO

$uplhate pulpB

)ibrous mechanical pulp.

# detailed description of the %roups assortment is included in the consolidated annual report for 2!7.

Capital %roup structure

#rctic Paper Capital %roup comprises #rctic Paper $.#., as

the Parent Company, and its subsidiaries, as well as 6oint

arrangements. $ince 2'rd 4ctober 2/, #rctic Paper $.#.

has been listed on the primary mar*et of Karsaw $toc*

85change and since 2th (ecember 2!2 in A#$(#; stoc*

e5change in $toc*holm. The %roup carries out business

through its Paper +ills and Pulp +ills together with a company

producing pac*aging as well as (istribution Companies, $ales

4ffices and a Purchasing 4ffice.

(etailed information about the organiEation of #rctic Paper

$.#. Capital %roup with indication of the entities under

consolidation can be found in latter section of the hereby

quarterly report, in note 2 to the condensed consolidated

financial statements.

Changes in the capital structure of the #rctic Paper %roup

In the first quarter of 2!", no changes in capital structure of #rctic Paper %roup occurred.


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#rctic Paper Capital %roup $.#. Page !! of &

$hareholding structure

Aemus Lolding #, a company under $wedish law, is thema6ority shareholder of #rctic Paper $.#., holding


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#rctic Paper Capital %roup $.#. Page !2 of &

$um mary of conso lidated financial results

Consolidated income statement

PLN thousand

1-

!"15

4-

!"14

1-

!"14

.$/ 1-

!"15

.$/ 1-

!"14

0han*e %

1-!"152

4-!"14

0han*e %

1-!"152

1-!"14

0han*e %

.$/1-!"152

.$/1-!"14

Revenues 836 240 755 770 804 492 836 240 804 492 10,6 3,9 3,9

including:Sales of paper 643 870 589 318 66 16 643 870 66 16 9!3 !8 !8

Sales of pulp 19 370 166 45 178 76 19 370 178 76 15!6 7!9 7!9

ross profit on sales 1!5 55 93 9"! 1"3 645 1!5 55 1"3 645 34," !1,4 !1,4

Sales re"enue # 15!05 1!4 1!88 15!05 1!88 !6 p$p$ ! p$p$ ! p$p$

Sellin* epenses "" #1 5#6 #4 11 "" #4 11 !4,1 19,# 19,#

+(ministrative epenses 1# 6"! !! 4" !" "5# 1# 6"! !" "5# !1,4 1!,! 1!,!

Other operatin* income ! "49 3! !! 16 649 ! "49 16 649 13,1 6,5 6,5

Other operatin* cost 9 9! 1! 3! 6 #31 9 9! 6 #31 !!,9 46,9 46,9

EBIT 37 611 19 367 19 325 37 611 19 325 94,2 94,6 94,6

Sales re"enue # 4!50 !56 !40 4!50 !40 1!9 p$p$ !1 p$p$ !1 p$p$

EBITDA 68 815 54 778 48 389 68 815 48 389 25,6 42,2 42,2

Sales re"enue # 8!3 7!5 6!01 8!3 6!01 1!0 p$p$ ! p$p$ ! p$p$

7inancial income !"9 3! 696 !"9 696 #5,4 #"," #","

7inancial cost 14 "! 11 34 553 14 "! 553 1,5 64," 64,"

EBT 23 792 7 501 11 468 23 792 11 468 217,2 107,5 107,5

0orporate income ta 1" 946 13 9"9 ! 56" 1" 946 ! 56" 1#,# 3!#,6 3!#,6

Net po!"t# $loss 12 846 21 410 8 908 12 846 8 908 $40,0 44,2 44,2

Sales re"enue # 1!54 !83 1!11 1!54 1!11 %1!3& p$p$ 0!4 p$p$ 0!4 p$p$

3 65! 1" ##4 5 #"! 3 65! 1" ##4 na na na

Sele+ted ite)s of the +onsol idated in+o)e state)ent

Net profit2 loss for the perio(

attributable to e8uit hol(ers of the

parent

Com mentary of the President of the + anagement o ard Ko lfgang 9Wbbert to the results of the first quarter

of 2!"

In the !st quarter of 2!" the #rctic Paper %roup generated

good financial results compared to those from a year before.

8IT(# was P9A1.m ,

operating profit was over P9A'&.1m , and net profit

was P9A!2.m .

$ales revenues in !;2!" reached P9A'1.2m, as

compared to P9A7."m in !; 2!7


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#rctic Paper Capital %roup $.#. Page !' of &

posted 8IT(# of P9A!1.m , an

operating loss of P9A1."m , and a net loss of P9A2!m


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Profit on sales, selling and administrative e5penses

Profit on sales in the first quarter of 2!" amounted to P9A!2","" thousand and was 2!.7V higher compared to the

same period of the previous year and '7.V higher compared

to the fourth quarter of 2!7. $ales profit margin in the current

quarter stood at !"."V compared to !2.V in

the same period of the previous year and !2.72V in

the fourth quarter of 2!7. The main reason for the increase of

sales profit margin in the first quarter of 2!" was relatively

high sales profit margin achived by Pulp +ills on sales of pulp,

mainly due to appreciation of 3$(, in which pulp prices are

quoted. The appreciation of 3$( towards 830 as seen in2!" caused a decrease of sales profit margin on sales of

paper from our Paper +ills. 8ventually, the decrease of sales

profit margin on sales of paper was smaller than the increase

of sales profit margin on sales of pulp.

In the first quarter of 2!", selling e5penses amounted to P9A

, thousand, which represents an increase by !/.&V

compared to the costs incurred in the first quarter of 2!7 andand by 27.!V compared to the fourth quarter of 2!7. $elling

e5penses comprise particularly transportation cost. +oreover,

in the first quarter of 2!" the %roup created a write-off in the

amount of P9A !".' million for the receivables from the

companies of PaperlinX 9imited group, in connection with

commencement of restructuring procedure in these

companies.

In the first quarter of 2!", administrative e5penses amounted

to P9A !&,12 thousand compared to P9A 2,"& thousand

in the analogous period of 2!7 and P9A 22,7 thousand in

the last quarter of 2!7. The main reason of the decrease was

lower cost related to consulting services rendered to the

%roup by third parties.

4ther operating income and co st

4ther operating income in the first quarter of 2!" amountedto P9A 2,7/ thousand, which means an increase compared

to the same period of the previous year by P9A !!,7

thousand and a decrease by P9A 7,2'' thousand compared

to the last quarter of 2!7.

4ther operating income consist mainly of income from heat

and electricity sales as well as income from sales of other

materials.

In the first quarter of 2!", other operating cost amounted toP9A /,/2 thousand compared to P9A 1,&'! thousand in the

first quarter of 2!7 and P9A !2,'2 thousand in the fourth

quarter of 2!7.

4ther operating e5penses comprise mainly cost of electricity

and heat sales as well as cost of other materials sold.

)inancial income and financial cost

)inancial income in the first quarter of 2!" amounted to P9A

2/ thousand and was P9A 7& thousand lower than in the

first quarter of 2!7 and P9A 27! thousand higher compared

to financial income for the fourth quarter of 2!7.

)inancial cost in the first quarter of 2!" amounted to P9A

!7,2 thousand compared to P9A ,""' thousand incurred

in the first quarter of 2!7 and P9A !!,'7 thousand in the

last quarter of 2!7.

85change differences are presented net, i.e. the e5cess of

positive e5change differences over negative e5change

differences is presented as financial income and the e5cess of

negative e5change differences over positive e5change

differences is presented as financial cost. 0elatively high

negative e5change differences in the first quarter of 2!"

caused the increase of financial cost in this period, compared

to the first and the fourth quarter of 2!7.


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#rctic Paper Capital %roup $.#. Page !" of &

Income ta5

Income ta5 in the first quarter of 2!" amounted to P9A-!,/71 thousand, while in the analogous period of 2!7 it

amounted to P9A -2,"1 thousand and P9A S!',//

thousand in the fourth quarter of 2!7.

Current income ta5 in the analyEed period amounted to P9A

-!!,! thousand while the deferred part amounted to P9A

S!12 thousand. In the first quarter of the previous year it wasrespectively P9A -17 thousand and P9A -2,7/1 thousand. In

the last quarter of the previous year it was respectively P9A

S&,/1 thousand and P9A S",/2' thousand.

Aet p rofitNloss and ne t profitNloss attributable to shareholde rs of the Parent 8ntity

In the first quarter of 2!", the %roup achieved net profit in the

amount of P9A !2,71 thousand. # portion of net profitattributable to shareholders of #rctic Paper $.#. is a net loss of

P9A ',1"2 thousand. Aet profit of the %roup results mainly

from net profit achived by 0ottneros %roup in the first quarter

of 2!", of which "!.'V is attributable to shareholders of

#rctic Paper $.#.

$ince net profit achieved by 0ottneros %roup and attributable

to shareholders of #rctic Paper $.#. was lower than total netloss achieved by the other companies of #rctic Paper %roup,

as a result the net loss for the first quarter of 2!" is

attributable to shareholders of #rctic Paper.

Profitability a nalysis

4perating result in the first quarter of 2!" amounted to P9A

S'&,1!! thousand compared to P9A S!/,'2" thousand in the

analogous period of the previous year and S!/,'1& thousand

in the last quarter of 2!7. These changes mean there was an

increase of operating profit margin from S2.7V in the first

quarter of 2!7 and S2,"1V in the last quarter of 2!7 to

S7." in the first quarter of the current year.

8IT(# for the first quarter of 2!" amounted to P9A 1,!"

thousand, while in the same period of 2!7 it amounted to

P9A 7,'/ thousand, while in the last quarter of 2!7 it

amounted to P9A "7,&& thousand. In the reporting period

8IT(# margin amounted to .2' compared to 1.!V in the

analogous period of 2!7 and &.2"V in the last quarter of

2!7.

Aet profit in the current quarter of 2!" amounted to P9A

!2,71 thousand compared to net profit of P9A ,/

thousand in the first quarter of 2!7 and P9A 2!,7!

thousand in the last quarter of 2!7.


16/70



PLN thousand

1-

!"15

4-

!"14

1-

!"14

.$/ 1-

!"15

.$/ 1-

!"14

0han*e %1-!"152

4-!"14

0han*e %1-!"152

1-!"14

0han*e %.$/1-!"152

.$/1-!"14

ross profit on sales 1!5 55 93 9"! 1"3 645 1!5 55 1"3 645 34," !1,4 !1,4

Sales re"enue # 15!05 1!4 1!88 15!05 1!88 !6 p$p$ ! p$p$ ! p$p$

EBITDA 68 815 54 778 48 389 68 815 48 389 25,6 42,2 42,2

Sales re"enue # 8!3 7!5 6!01 8!3 6!01 1!0 p$p$ ! p$p$ ! p$p$

EBIT 37 611 19 367 19 325 37 611 19 325 94,2 94,6 94,6

Sales re"enue # 4!50 !56 !40 4!50 !40 1!9 p$p$ !1 p$p$ !1 p$p$

Net po!"t# $loss 12 846 21 410 8 908 12 846 8 908 $40,0 44,2 44,2

Sales re"enue # 1!54 !83 1!11 1!54 1!11 %1!3& p$p$ 0!4 p$p$ 0!4 p$p$

O: & eturn on e8uit % 1, 3," 1,3 1, 1,3 1,! p'p' ",4 p'p' ",4 p'p'

O+ & eturn on assets % ",# 1,! ",5 ",# ",5 ",5 p'p' ",! p'p' ",! p'p'

Profita/il ity analysis

In the first quarter of 2!", return on equity amounted to

S!.V, while in the first quarter of 2!7 it amounted to !.'V

and in the fourth quarter of 2!7 it amounted to S'.V.

In the same period, return on assets amounted to S.&V,

while in the first quarter of 2!7 it amounted to S."V and in

the fourth quarter of 2!7 it amounted to S!.2V.

(ecrease of return on equity and return of assets in the first

quarter of 2!", compared to the last quarter of 2!7 is mainly

due to the decrease of net profit in the analyEed period.


17/70


#rctic Paper Capital %roup $.#. Page !& of &

0ep ort on financial situation

PLN thousand 312"32!"15 3121!2!"14 312"32!"14

0han*e

312"32!"15

&3121!2!"14

0han*e

312"32!"15

&312"32!"14

Non&current assets "4 94 43 #45 9"3 61# 3 #9# 9 669

;nventories 39 #61 3#6 46 36! #!9 13 !#5 !# "31

eceivables 4"6 914 345 964 35 #3# 6" 95" !1 1##

including trade recei"a'les 399 51 339 440 375 856 59 811 3 395

Other current assets 39 !1 3 14 1 "!# 1 "9 !1 !55

0ash an( e8uivalents 159 956 15 41! 9# "3" 1 545 6! 9!#Total assets 1 800 860 1 762 790 1 767 140 38 070 33 721

:8uit #! !"6 #!5 "#1 6#! !64 3 136 55 943

Short&term liabilities 65 4!# 59" 56# 6#4 #56 6# 6" 16 3!9

including:

(rade and other pa)a'les 416 345 364 99 387 580 51 353 8 765

*nterest+'earing loans and 'orro,ings 19 594 10 566 199 315 9 08 %69 71&

-ther non+financial lia'ilities 11 488 105 009 87 861 7 479 4 67


18/70


#rctic Paper Capital %roup $.#. Page ! of &

8quity

8quity amounted to P9A &2,21 thousand as at the end ofthe first quarter of 2!" compared to P9A &2",&! thousand

as at the end of 2!7. 8quity represented 7.7V of total equity

and liabilities as at the end of +arch 2!" compared to 7!.!Vof total equity and liabilities as at the end of (ecember 2!7.

$hort-term liabilities

#s at the end of +arch 2!" short-term liabilities amounted to

P9A 1",72& thousand

compared to P9A 77&,!"2 thousand


19/70


#rctic Paper Capital %roup $.#. Page !/ of &

0elatively high net borrowings to 8IT(# ratio and low 8IT(#

to interest coverage ratio for the twelve months period ended

'!st +arch 2!7 results from low annualiEed 8IT(#.

9iquidity analysis

1-

!"15

4-

!"14

1-

!"14

0han*e %

1-!"152

4-!"14

0han*e %

1-!"152

1-!"14

*uent l"&u"("t' at"o 1,5+ 1,6+ 1,3+ $0,0 0,2

u"-. l"&u"("t' at"o 0,9+ 0,9+ 0,7+ 0,0 0,2

A-"( test at"o $-as/ l"&u"("t' 0,2+ 0,3+ 0,1+ $0,0 0,1

;nventor turnover /S; (as 49,4 51,! 46,6 1, !,

eceivables turnover /SO (as 43," 4",4 4!," !,5 ",9

O (as 5!,# 49,6 49, 3,1 !,9

Operatin* ccle (as 9!,3 91,6 ,6 ",# 3,#

*as/ -onves"on -'-le $(a's 39,7 42,0 38,9 $2,3 0,8

Liquidity ratios

#t the end of +arch 2!" current liquidity ratio, quic* liquidity

ratio and acid test ratio were at similar levels comapred to the

end of 2!7 and increased compared to the end of +arch

2!7.

Cash conversion cycle in the period ended '!st +arch 2!"

amounted to '/.& days


20/70


#rctic Paper Capital %roup $.#. Page 2 of &

Consolidated cash flow statement

PLN thousand

1-

!"15

4-

!"14

1-

!"14

.$/ 1-

!"15

.$/ 1-

!"14

0han*e %

1-!"152

4-!"14

0han*e %

1-!"152

1-!"14

0han*e %

.$/1-!"152

.$/1-!"14

0ash flo= from operations 3# 9# !# 45" 31 36 3# 9# 31 36 3,4 !1," !1,"

including:

./( 3 79 7 501 11 468 3 79 11 468 17! 107!5 107!5

epreciation! aorti2ation and ipairent 31 04 35 411 9 064 31 04 9 064 %11!9& 7!4 7!4

in ,oring capital %16 515& %16 04& %16 80& %16 515& %16 80& 3!1 %1!7& %1!7&

-ther corrections %503& 561 7 656 %503& 7 656 %189!5& %106!6& %106!6&

0ash flo= investin* activ ities 1! 3 !1 939 11 !51 1! 3 11 !51 41,5 14,1 14,1

0ash flo= financin* activ ities 19 "95 15 54 41 34! 19 "95 41 34! !!!, 53, 53,

Total *as/ lo 6 045 21 059 $21 206 6 045 $21 206 $71,3 $128,5 $128,5

Sele +ted ite)s of the +onsol idated +ash flo, state)e nt

Cash flows from operating activities

In the first quarter of 2!", net cash flows from operating

activities amounted to P9A S'&,/& thousand compared to

P9A S'!,'1 thousand in the corresponding period of 2!7

and P9A S2&,7" thousand in the fourth quarter of 2!7.

Profit before ta5 achieved in the first quarter of 2!" more of

amortiEation and depreciation allowances in the period

contributed to positive cash flows from operating activities.

Cash flows from investing activities

In the first quarter of 2!", cash flows from investing activities

amounted to P9A -!2,' thousand compared to P9A

-!!,2"! thousand in the corresponding period of 2!7 and

P9A -2!,/'/ thousand in the fourth quarter of 2!7. Cash

flows from investing activities in the first quarter of 2!"

resulted primarily from purchases of property, plant M

equipment, as well as intangible assets.

Cash flows from financing activities

Cash flows from financing activities in the first quarter of 2!"

amounted to P9A -!/,/" thousand compared to P9A

-7!,'72 thousand in the corresponding period of 2!7 and

P9A S!","7 thousand in the fourth quarter of 2!7. Cash

flows from financing activities in the first quarter of 2!"

related mainly to repayment of indebtedness on the grounds of

ban* loans and interest, partially balanced with increase of

overdraft debt. Positive cash flows in the fourth quarter of

2!7 were primarily due to a loan received.


21/70


#rctic Paper Capital %roup $.#. Page 2! of &

$um mary of standalone financ ial results

$tandalone income statement

PLN thousand

1-

!"15

4-

!"14

1-

!"14

.$/ 1-

!"15

.$/ 1-

!"14

0han*e %

1-!"152

4-!"14

0han*e %

1-!"152

1-!"14

0han*e %

.$/1-!"152

.$/1-!"14

Revenues 10 659 12 701 9 561 10 659 9 561 $16,1 11,5 11,5

including:

Sales of ser"ices 1" 449 1! 4#! 9 3"! 1" 449 9 3"! 16,! 1!,3 1!,3

*nterest on loans !1" !!9 !59 !1" !59 ,! 1,9 1,9

i"idend incoe & & & & & & & &

ross profit on sales 36# 1" 43! # !"3 36# # !"3 19, 16,! 16,!

Sales re"enue # 78!50 8!14 75!34 78!50 75!34 %3!6& p$p$ 6!8 p$p$ 3! p$p$

Sellin* epenses 9!" 1 3#9 9! 9!" 9! 33,3 ", ",

+(ministrative epenses 1! 11 99 5 #46 1! 5 #46 3!,! 41,4 41,4

Other operatin* income 133 6# 16 133 16 9,9 !1," !1,"

Other operatin* cost 4"4 11 449 4! 4"4 4! !6,6 9#,5 9#,5EBIT $8 952 $14 318 $145 $8 952 $145 $37,5 6 071,2 6 071,2

Sales re"enue # %83!99& %11!73& %1!5& %83!99& %1!5& 8!7 p$p$ %8!5& p$p$ %8!5& p$p$

EBITDA $8 887 $15 908 $122 $8 887 $122 $44,1 7 177,1 7 177,1


7inancial income #" !14 5"# #" 5"# !64,9 54," 54,"

7inancial cost 91 1 3! 65# 91 65# !6,1 49,5 49,5

EBT $9 153 $15 432 $295 $9 153 $295 $40,7 3 004,1 3 004,1

0orporate income ta & 34 & & & & & &

Net po!"t $9 153 $15 465 $295 $9 153 $295 $40,8 3 004,1 3 004,1


Sele+ted ite)s of the standalone in+o)e state)ent

0evenue, p rofit on sales

The main statutory activity of the Company is holding activity

consisting in managing of entities belonging to the controlled

Capital %roup. 4perating activity of #rctic Paper %roup is

conducted through Paper +ills and Pulp +ills, (istribution

Companies and $ales 4ffices.

$ales revenue for the first quarter of 2!" amounted to P9A

!,1"/ thousand and comprised services rendered for entities

belonging to the %roup and interest on

loans . In the same period of the previous

year, standalone sales revenue amounted to P9A /,"1!

thousand and comprised services rendered to the %roup

entities


22/70



rendered for entities belonging to the %roup and interest on loans granted .

In 2!" and in 2!7, the Company did not render services tothe Pulp +ills of 0ottneros %roup.

$ales cost comprises interest cost on loans received from

other %roup companies..

$ell ing e5penses

In the first quarter of 2!", the Company recogniEed P9A /2

thousand of selling e5penses .

)inancial income and cost

In the first quarter of 2!", financial income amounted to P9A

& thousand and was higher compared to financial income

achieved in the first quarter of 2!7 by P9A 2&7 thousand and

higher by P9A "11 thousand compared to the fourth quarter fo

2!7.

)inancial cost in the first quarter of 2!" amounted to P9A

/! thousand. In the analogous period of 2!7 financial cost

amounted to P9A 1"& thousand, while in the fourth quarter of

2!7 financial cost amounted to P9A !,'2 thousand.


23/70


#rctic Paper Capital %roup $.#. Page 2' of &

$tatem ent of financial position

PLN thousands 312"32!"15 3121!2!"14 312"32!"14

0han*e

312"32!"15

&3121!2!"14

0han*e

312"32!"15

&312"32!"14

Non&current assets 3" 4"3 3" "55 !9 636 34# #66

eceivables 4 414 45 4# 41 "9# 3 9!# 43 31#

Other current assets 41 5! 4! 45 !1 356 9"3 !" !!6

0ash an( e8uivalents 1! !!4 1 6"# 1! #!4 6 33 5""

Total assets 968 623 936 635 904 813 31 988 63 810

:8uit 656 ""4 664 93 69 13 9 33 "9Short&term liabilities # 961 44 63! 3# 9"4 43 3!9 5" "56


24/70



department in #rctic Paper $.#. there was also an increase of trade liabilities on the grounds of transportation services.

9ong-term liabilities

9ong-term liabilities as at the end of +arch 2!" amounted to

P9A 227,1"/ thousand


25/70


#rctic Paper Capital %roup $.#. Page 2" of &

Cash flows

PLN thousands

1-

!"15

4-

!"14

1-

!"14

.$/ 1-

!"15

.$/ 1-

!"14

0han*e %

1-!"152

4-!"14

0han*e %

1-!"152

1-!"14

0han*e %

.$/1-!"152

.$/1-!"14

0ash flo= from operations 5 "1 13 ""4 4 199 5 "1 4 199 55,4 !3,1 !3,1

including: & & &

./( %9 153& %19 01& %95& %9 153& %95& %51!9& 3 004!1 3 004!1

epreciation 65 %676& 3 65 3 %109!6& 18!9 18!9

in ,oring capital 1 843 %4 3& 563 1 843 563 %143!6& 7! 7!

*nterest and di"idend %net& 971 8 135 133 971 133 %88!1& %54!5& %54!5&-ther corrections 474 78 1 775 474 1 775 %83!0& %73!3& %73!3&

0ash flo= investin* activ ities 1#! !1 4"! 141 1#! 141 99,! !!,3 !!,3

0ash flo= financin* activ ities 41" 41 6#4 35! 41" 35! 1"1," 16,4 16,4

Total *as/ lo $6 383 7 268 3 707 $6 383 3 707 $187,8 $272,2 $272,2

Sele +ted ite)s of the standalone +ash f lo,

Cash flows statement presents a decrease in cash and cash

equivalents in the first quarter of 2!" by P9A 1,'' thousand

which includesB

negative cash flows from operating activities in the

amount of P9A -",! thousand,

negative cash flows from investing activities in the

amount of P9A -!&2 thousand,

negative cash flows from financingactivities in the

amount of P9A -7! thousand.

Cash flows from operating activities

In the first quarter of 2!", net cash flows from operating

activities amounted to P9A -",! thousand compared to P9A

S7,!// thousand in the corresponding period of 2!7. Ligher

negative cash flows from operating activities in the current year

were particularly influenced by both gross loss and the

changes of wor*ing capital.

Cash flows from investing activities

In three months of 2!", cash flows from investing activities

amounted to P9A -!&2 thousand compared to P9A

-!7! thousand in the analogous period of the previous year.

The main item of cash flows from investing activities in 2!"

was e5penses related to acquisition of tangible fi5ed assets.

Cash flows from financing activities

Cash flows from financing activities in 2!" amounted to P9A

-7! thousand compared to P9A -'"2 thousand in 2!7.

Cash flows from financing activities in 2!7 were influenced by

repayment of interest and liabilities under financial lease

agreements.


26/70



0elevant information and factors influencing financial results and

evaluation of financial standing

ey factors affecting the performance results

The %roups operating activity has been historically and will be influenced by the following *ey factorsB

macroeconomic and other economic factorsO

paper pricesO

prices of pulp for Paper +ills, timber for Pulp +ills and energy pricesO

currency e5change rates fluctuations.

+acroeconom ic and other economic factors

Ke believe that a number of macro-economic and other

economic factors have a material impact on the demand for

high-quality paper, and they may also influence the demand for

the %roup products and our operating results. Those factors

includeB

%(P growthO

net income as a measure of income and prosperity of

the populationO

production capacities oversupply lingering in the

segment of fine papers and decline of margins on paper

salesO

paper consumptionO

technological development.

Paper p rices

Paper prices undergo cyclic changes and fluctuations, dependon global changes in demand and overall macroeconomic and

other economic factors, as those indicated above. Prices of

paper are also influenced by a number of factors connected

with the supply, primarily changes in production capacities at

the worldwide and 8uropean level.

Costs of raw materials, energy and transportation

The main elements of the %roups operating e5penses are

costs of raw materials, energy and transportation. The costs of

raw materials include mainly the costs of pulp for Paper +ills,timber for Paper and Pulp +ills and chemical agents used for

paper and pulp production. 4ur energy costs, historically,

include mostly costs of electricity, natural gas, coal and fuel oil.

Costs of transportation include the costs of transportation

services rendered to the %roup mainly by e5ternal service

providers.

Ta*ing into account the share of these costs in total operating

e5penses of the %roup and the limited possibility of controlling

these costs by the Companies, their fluctuations may have a

significant impact on %roups profitability.

Part of pulp supplies to our Paper +ills is realiEed from Pulp

+ills of 0ottneros. The rest of pulp produced in Pulp +ills is

sold to e5ternal customers.

Currency e5change fluctuations

4ur operating results are significantly influenced by currency

e5change rates fluctuations. In particular, our revenues and

costs are e5pressed in different foreign currencies and are not

matched, therefore, the appreciation of currencies in which weincur costs towards currencies in which we generate revenues,

will have an adverse effect on our results. Ke sell our products

in all 8304 Eone countries, the Aordic countries, Poland and

3O therefore, our revenues are to a great e5tent e5pressed in

830, %P, $8 and P9A, while the revenues of Pulp +ills are

primarily dependent on 3$(. The %roups operating e5penses

are primarily e5pressed in 3$( ,

830 , P9A and


27/70


#rctic Paper Capital %roup $.#. Page 2& of &

$8 .

85change rates also have an important influence on resultsreported in our financial statements because of changes in

e5change rates of currencies in which we generate revenues

and incur costs, and the currency in which we report our

financial results .

3nusual events and factors

In the first quarter of 2!" there were no unusual events or factors.

Impact of changes in #rctic Paper %roups structure on the financial result

In the first quarter of 2!" there were no relevant changes in #rctic Paper %roups structure that would have material influence on

the financial result achieved.

4ther material information

Aegotiat ions w ith $w edish ban*s

4n !!th +arch 2!7, #rctic Paper $.#. and its subsidiary,

#rctic Paper %ryc*sbo #, finaliEed the ne5t stage of

negotiations with ban*s which finance the Issuers group

entities. #s a result of the negotiations, $vens*a

Landelsban*en # set new levels of solidity ratio and interest

coverage ratio for the e5isting loan agreement.

0estructuring of a client of the %roup

In connection with the fact that the +anagement oard

received the information of commencement of restructuring in

companies of PaperlinX 9imited group, having performed an

analysis of the liabilities of these entities towards #rctic Paper

%roup, on th #pril 2!" the +anagement oard decided to

create a provision on receivables from PaperlinX 3 in the

amount of P9A !".' million


28/70



)actors influencing #rctic Paper %roup developmen t

Information on mar*et tendencies

$upplies of fine papers

$upplies of fine papers to the 8uropean mar*et in the first

quarter of 2!" were lower compared to the analogous period

of 2!7 by app. 7.2V. $upplies in the segment of uncoated

wood-free paper were lower by 7.'V, while those in the

segment of coated wood-free paper were lower by7.!V.

Compared to the fourth quarter of 2!7, the supplies of fine

papers were at a very similar level. In the analyEed period,

supplies in the segment of uncoated wood-free paper

were ."V higher, while those in the segment of coated wood-

free paper were .V lower.

In !; 2!" #rctic Paper %roup paper sales volume was ./V

higher than in 7; 2!7 and 2.1V higher than in the

corresponding period of 2!7.

(ata sourceB 8uro%raph, 0I$I, #rctic Paper analysis

Paper prices

In the first quarter of 2!", fine papers prices in 8urope

remained unchanged in 3K) segment, while e5perienced a

decrease compared to prices at the end of the fourth quarter

of 2!7 in CK) segment. #verage CK) prices decreased by-!./V.

etween the end of (ecember 2!7 and +arch 2!", 3K)

prices declared by producers for the selected products and

mar*ets of %ermany, )rance, $pain, Italy and 3nited ingdom,

e5pressed in 830 and %P remained unchanged. CK) prices

in the same period changed from -2.2V to -!."V.

#t the end of the quarter, average 3K) prices increased by

app. .1V and CK) prices decreased by -!.2V, compared to

the end of the corresponding period of the previous year.

Prices invoiced by #rctic Paper in 830 of comparable

products in the segment of uncoated wood-free paper

changed from the end of (ecember 2!7 until +arch 2!" by

from -.1V to S2.V, while in the segment of coated wood-

free paper by from S."V to S!.V.

$ourceB )or mar*et data - 0I$I, price changes for chosen

mar*ets in %ermany, )rance, $pain, Italy and 3nited ingdom

in local currencies for graphic papers similar to product

portfolio of the #rctic Paper %roup. Prices are e5pressed

e5cluding specific rebates for individual clients and they include

neither additions nor price reductions in relation to publicly

available price lists. 8stimated prices for particular month

reflect orders made in that month, whereas their deliveries may

ta*e place in the future. ecause of that, 0I$I price estimations

for a particular month do not reflect real prices by which

deliveries are realiEed buy only e5press ordering prices. )or

#rctic Paper products the average invoiced sales prices for all

served mar*ets in 830.


29/70


#rctic Paper Capital %roup $.#. Page 2/ of &

Pulp prices

#t the end of the first quarter of 2!", pulp prices reached alevel of 3$( per ton for A$ and 3$( &"/ per ton for

LP. The average pulp price in !; 2!" was lower by !.!V

for A$ while lower by 2.7V for LP, compared to the

corresponding period of the previous year. In the first quarter

of 2!", average pulp price was lower by 2./V for A$ and

highwer by 2.V for LP, compared to the fourth quarter of

2!7.

The average cost of pulp per ton as calculated for #P %roup,

e5pressed in P9A, in !; 2!" increased by .7V compared

to 7; 2!7 and increased by !2.V compared to !; 2!7.

The share of pulp costs in cost of paper sales in the firstquarter of 2!" amounted to "!V and was higher compared

to the level recorded in 7; 2!7


30/70


#rctic Paper Capital %roup $.#. Page ' of &

)actors influencing the financial results in the perspective of the ne5 t quarter

+aterial factors, which have an impact on the financial results in the perspective of the ne5t quarter, includeB

(emand for fine papers in 8urope have an influence on

our financial results. (ecline of demand for fine papers in

8urope will unfavorably influence

levels of orders to our Paper +ills and, as a result, will

have an adverse impact on financial results of the %roup.

The levels of fine papers prices. In particular, the ability to

raise the prices of #rctic Paper products in local

currencies, in reference to declining suppliesNdemand in

8urope and in connection with e5change rates

fluctuations, will have a material influence on the financial

results. Paper prices are going to be of particular

importance for paper mills of %ryc*sbo and

+ochenwangen, which, in connection with mar*et

changes, e5perience the greatest adverse impact of

changes of sales volume, prices, as well as, in case of #P

%ryc*sbo, of e5change rates fluctuations.

Prices fluctuations of raw materials, including pulp for

Paper +ills and electricity for all operational entities. In

particular, financial results of Paper +ills may be adversely

influenced by increasing pulp prices, particularly LP.

4n the other hand, increasing A$ prices should

positively influence financial results of Pulp +ills.

)luctuations of electricity prices in $weden may also have

a material impact on the results achieved by the %roup. In

future, such mar*et changes may translate to changes of

sales profitability in paper mills of #P +un*edals and #P

%ryc*sbo as well as in pulp mills of 0ottneros and Hallvi*.

Currency ratesO in particular, the appreciation of P9A and

$8 in relation to 830 and %P, the appreciation of P9A

in relation to $8, and depreciation of P9A and $8 in

relation to 3$(, may have an adverse effect on the

financial results. Lowever, our Pulp +ills may benefit from

appreciation of 3$( in relation to $8.

0is* factors

In the first quarter of 2!", there were no material changes regarding ris* factors, which have been described in details in the

annual report for 2!7.


31/70


#rctic Paper Capital %roup $.#. Page '! of &

$upplementary information

+anagement oard position on the possibility to achieve the pro6ected financial results published earlier

The +anagement oard of #rctic Paper $.#. has not published pro6ections of financial results for 2!".

Changes in Issuers shareholding or rights to shares of persons managing and supervising #rctic Paper

$.#.

Number of shares

or ri*hts thereto

as at 132"52!"15

Number of shares

or ri*hts thereto

as at !32"32!"15 0han*e

anaeent Boa(

?olf*an* er SBo*lun( & & &

EaF*orGata EaHe=sBa&Ili=a + + &EichaF Sa=Ba + & &

upev"so' Boa(

olf Olof run(ber* 1! 1"! 1! 1"! &

une o*er ;n*varsson & & &

$homas Onsta( 5 4 65 5 4 65 &

o*er Eattsson & & &

/ariusG ?itBo=sBi & & &

EariusG ren(o=icG & & &

State) ent of +han(es to the holdin(s of the o) pany$s shares and

ri(hts there to /y ) ana(in( and super0is in( personnel

Eana*in* an( supervisin* personnel

Information on guarantees

#s on '!st +arch 2!", the %roup reportedB

a pledge on movables of #rctic Paper +un*edals #

resulting from a factoring contract with $vens*a

Landelsban*en # amounting to $8 !1,

thousandO

a pledge on movables of #rctic Paper %ryc*sbo #


Landelsban*en # amounting to $8 ", thousandO

a pledge on real estate of #rctic Paper %ryc*sbo #


Landelsban*en # amounting to $8 2, thousandO

a pledge on shares of #rctic Paper %ryc*sbo #


Landelsban*en # amounting to $8 !7",&7"

thousandO

a pledge on shares of #rctic Paper %ryc*sbo #

resulting from an agreement with )P% in favor of mutual


32/70


#rctic Paper Capital %roup $.#. Page '2 of &

life insurance company P0I in the amount of $8 ",

thousandO

a contingent liability on the grounds of a guarantee for

)P% in favor of mutual life insurance company )0I in the

amount of $8 !,7&& thousand in #rctic Paper %ryc*sbo

# and of $8 &7& thousand in #rctic Paper +un*edals

#O

a pledge on real estate of #rctic Paper +un*edals #

resulting from an agreement with )P% in favor of mutual

life insurance company P0I in the amount of $8 ",

thousandO

a limit of liabilities under factoring contract in #rctic Paper

+un*edals set to $8 !!,7"' thousandO a contingent liability of #rctic Paper +un*edals # on the

grounds of a guarantee for alltorp raft L liabilities in

the amount of $8 ',21" thousandO

mortgages on alltorp raft L real estate in the amount

of $8 ,1" thousandO

a ban* guarantee in favor of $*attever*et 9udvi*a in the

amount of $8 !'" thousandO

a guarantee on the ban* account of #rctic Paper

+ochenwangen %mbL on the grounds of employee

benefits in the amount of 830 2"" thousandO

a guarantee in favor of KK %mbL M Co.% a

supplier of machines for #rctic Paper +ochenwangen

%mbL in the amount of 830 ' thousand, which

e5pires on '!st +arch 2!"O

guarantees granted by the companies of 0ottneros

%roup in the total amount of $8 ', thousand,

pledges on shares of 0ottneros %roup subsidiaries in the

amount of $8 27", thousandO

a guarantee in favor of $Jdra Cell International #, the

supplier of pulp, in the amount of $8 !2, thousand,

a pledge on '/,/, 0ottneros # shares resulting

from a loan agreement for the amount of 830 7,

thousand, concluded by and between #rctic Paper $.#.

and +r. Thomas 4nstad.

+oreover, the following collaterals securing the loan

agreement dated 1th

Aovember 2!2 were establishedB

pledges on shares of #rctic Paper ostrEyn $.#., shares

of #rctic Paper Investment %mbL, #rctic Paper

+ochenwangen %mbL and on shares of holding

companies in %ermanyO

pledges on ban* accounts of all companiesO

mortgages on real estate of #rctic Paper ostrEyn $.#.O

land debt on real estate of #rctic Paper +ochenwangen

%mbLO

pledge on components of assets of #rctic Paper

ostrEyn $.#.O

lien of property as security in #rctic Paper

+ochenwangen %mbLO

cession of rights under insurance policyO

cession of receivables under loan agreements within the

%roup O

submission to enforcement on the basis of art. /&

ban*ing law - #rctic

Paper ostrEyn $.# and #rctic Paper $.#.

$ignificant off-balance sheet items

Information regarding off-balance sheet items is included in consolidated financial statements.


33/70


#rctic Paper $.#. Capital %roup Page '' of &

Information on court and a rbitration p roceedings and proceedings pe nding before public adm inistrative

authorities

(uring the period covered by this report, #rctic Paper $.#. and

its subsidiaries were not a party to any proceedings pending

before a court, arbitration or public administrative authority, the

unit or 6oint value of which would equal or e5ceed !V of the

Companys equity.

Information on transactions with related parties e5ecuted on non-mar*et terms and conditions

(uring the period covered by this report, #rctic Paper $.#. and its subsidiaries did not e5ecute any significant transactions with

related entities on non-mar*et terms and conditions.

$ignatures of the +embers of the +anagement oard

>osition Name an( surname /ate Si*nature

>resi(ent of the Eana*ement oar(

0hief :ecutive Officer?olf*an*


34/70

Condensed quarterly +onsolidated

finan+ial state)entsfor the three )onths$ period

ended !st 'ar+h 2!"


35/70

Consolidated quarterly report for the first quarter of 2!"Condensed consolidated financial statements for the three months period ended '!st +arch 2!" P9A thousand

#rctic Paper $.#. Capital %roup Page '" of &

Table of contents

Conde nsed quarterly consolidated financial statements

for the three months period ended '!st +arch 2!" '7

Consolidated financial statements and selected financialdata .......................................................... ................... '1$elected consolidated financial data ................................... '1Consolidated income statement .......................................... '&Consolidated statement of comprehensive income ............. 'Consolidated balance sheet ................................................ '/Consolidated cash flow statement ................... ................... 7Consolidated statement of changes in equity ...................... 7!$tandalone financial statements and selected financialdata .......................................................... ................... 7'

$elected standalone financial data ...................................... 7'

$tandalone income statement ............................................. 77$tandalone statement of comprehensive income ................ 7"$tandalone balance sheet ................................................... 71$tandalone cash flow statement ......................................... 7&$tandalone statement of changes in equity ......................... 7#dditional e5planatory notes ............................................... "!. %eneral information .................................................... "

2. Composition of the %roup .......................................... "!'. +anagement and supervisory bodies .......................... "'7. #pproval of the financial statements ............................ "7". asis of preparation of consolidated financialstatements .......................................................................... "71. $ignificant accounting policies .................... ................ "7&. $easonality ................................................................. "1. Information on business segments .............................. "1/. (ividend paid and proposed ....................................... 1!. 8arnings per share ...................................................... 1!!. Interest-bearing loans and borrowings ........................ 1!!2. 8quity securities .................................................... ...... 12

!'.

)inancial instruments ............................................ ...... 12!7. )inancial ris* management ob6ectives and policies ...... 11

!". Capital management................................... ................ 1&!1. Contingent liabilities and contingent assets ................. 1&!&. 9egal claims .................. ............................................. 1&!. C42 emission rights ................................................... 1&!/. %overnment grants and operations in $pecial8conomic :one ................................................... ................ 12. $ignificant events after balance sheet date .................. 1/


36/70


#rctic Paper $.#. Capital %roup Page '1 of &

Consolidated financial statements and selected financial data

$elected consolidated financial data

7or the perio(

from "1'"1'!"15

to 31'"3'!"15

7or the perio(

from "1'"1'!"14

to 31'"3'!"14

7or the perio(

from "1'"1'!"15

to 31'"3'!"15

7or the perio(

from "1'"1'!"14

to 31'"3'!"14

thousan( > rofit loss from continuin* operations 1! 46 9" 3 "64 ! 1!>rofit loss for the perio( 1! 46 9" 3 "64 ! 1!

>rofit loss for the perio( attributable to e8uit hol(ers of the parent 3 65! 5 #"! #1 1 36!

Net operatin* cash flo= 3# 9# 31 36 9 "5 # 49

Net investin* cash flo= 1! 3 11 !51 3 "6! ! 6

Net financin* cash flo= 19 "95 41 34! 4 554 9 ##

Net chan*e in cash an( cash e8uivalents 6 "45 !1 !"# 1 44! 5 "66

?ei*hte( avera*e number of shares 69 !# #3 69 !# #3 69 !# #3 69 !# #3

?ei*hte( avera*e (ilute( number of shares 69 !# #3 69 !# #3 69 !# #3 69 !# #3

:>S in >S in >


37/70


#rctic Paper $.#. Capital %roup Page '& of &

#dditional e5planatory notes to the interim condensed quarterly consolidated financial statements,

included on pages from " to 1/ are its integral part.

Consolidated income statement

3 months

perio( en(e(

31 Earch !"15

3 months

perio( en(e(

31 Earch !"14

.ear en(e(

31 /ecember !"14

unau(ite( unau(ite( au(ite(

0ontinuin* operations

Sales of pro(ucts 36 !4" "4 49! 3 "99 364

evenues 36 !4" "4 49! 3 "99 364

0ost of sales #1" 35 #"" 46 ! 66 5#1

ross profit 2 loss on sales 1!5 55 1"3 645 43" #93

Sellin* an( (istribution epenses "" #4 11 !9 419

+(ministrative epenses 1# 6"! !" "5# #4 954

Other operatin* income ! "49 16 649 1 343

Other operatin* epenses 9 9! 6 #31 31 145

Operatin* profit 2 loss 3# 611 19 3!5 116 61

7inancial income !"9 696 44

7inancial cost 14 "! 553 39 6"

>rofit 2 loss before ta !3 #9! 11 46 ## 54

;ncome ta 1" 946 ! 56" 3!"

1! 46 9" # 1#5

/iscontinue( operations

& & &

Net profit loss for the ear 1! 46 9" # 1#5

+ttributable toL

:8uit hol(ers of the parent 3 65! 5 #"! 5" 459

Non&controllin* interest 16 49 3 !"6 !# #16

1! 46 9" # 1#5:arnin*s per shareL

","5 "," ",#3

","5 "," ",#3

","5 "," ",#3

","5 "," ",#3

M basic from the profit loss for the perio(

attributable to e8uit hol(ers of the parent

M basic from the profit loss from continuin* operations


M (ilute( from the profit loss for the perio(


M (ilute( from the profit loss from the continuin* operations


Net profit loss for the ear from continuin* operations

>rofit loss for the perio( from (iscontinue( operations


38/70


#rctic Paper $.#. Capital %roup Page ' of &



Consolidated statement of comprehensive income

3 months

perio( en(e(31 Earch !"15

3 months

perio( en(e(31 Earch !"14

.ear en(e(31 /ecember !"14


Net profit 2 loss for the perio( 1! 46 9" # 1#5

;tems to be reco*niGe( in profit2loss in future perio(sL

:chan*e (ifference on translation of forei*n operations 13 #"# ! #9 14 955

/eferre( ta on valuation of financial instruments 1 "!6 1 393 ! !5

aluation of financial instruments 5 "!3 6 ##9 1" 43

;tems not to be reco*niGe( in profit2loss in future perio(sL

+ctuarial *ains2losses & & !! !"5

& & 4 911

Other comprehensive income 9 #1" 1#5 !4 63#

$otal comprehensive income 3 136 #33 53 53

"3 #!! !# 51

11 1#4 1 455 !5 66

/eferre( ta on actuarial *ains2losses

$otal comprehensive income b L

)ol(ers of the parent

)ol(ers of the non&controlin* interest


39/70


#rctic Paper $.#. Capital %roup Page '/ of &



Consolidated balance sheet

+s at

31 Earch !"15

+s at

31 /ecember !"14

+s at

31 Earch !"14

unau(ite( au(ite( unau(ite(

+SS:$S

Non&current assets

>ropert% , plant an( e8uipment #"" 193 #!6 44 ##1 593

;nvestment properties 3 9! 3 9! 11 11

;ntan*ible assets 49 "3# 5" 69! 49 41

Shares in Hoint ventures 4 9"! 5 "3# 5 "59

Other financial assets ! "1# ! " 1 161

Other non&financial assets 1 !"1 1 !3 1 591

/eferre( ta asset 43 61# 54 !59 63 551

"4 94 43 #45 9"3 61#

0urrent assets

;nventories 39 #61 3#6 46 36! #!9

$ra(e an( other receivables 399 !51 339 44" 3#5 56

;ncome ta receivables # 663 6 5!4 9 1

Other non&financial assets !6 !!3 !1 31! 934

Other financial assets 13 "5 16 #! 1# "93

0ash an( cash e8uivalents 159 956 15 41! 9# "3"

995 91! 919 "45 63 5!3

$O$+< +SS:$S 1 "" 6" 1 #6! #9" 1 #6# 14"

rov isions 9# 369 1"" 1#9 #9 "94

Other financial liabilities 33 96" 3# !41 4# 1!4

/eferre( ta liabilities 15 "6 13 959 ! 36!

+ccruals an( (eferre( income !5 954 !6 634 ! 6#3

414 !!# 44# 15! 4!" 1!"

0urrent liabilities

;nterest&bearin* loans, borro=in*s an( bon(s 6# #56 59 #!# 13" 456

>rov isions # 5#5 #94 4 61#

Other financial liabilities 61 39 6" 39 6 59

$ra(e an( other pa%ables 415 95 364 46 36 6!3

;ncome ta pa%able 45" 5!4 95#

+ccruals an( (eferre( income 1"4 913 96 !15 3 !44

65 4!# 59" 56# 6#4 #56

$O$+<


40/70





Consolidated cash flow statement

3 months

perio( en(e(

31 Earch !"15

3 months

perio( en(e(

31 Earch !"14

.ear en(e(

31 /ecember !"14


*as/ !lo1 !o5 opeat"n4 a-t"v"t"es

>rofit loss before taation !3 #9! 11 46 ## 54

+(Hustments forL

/epreciation2amortiGation 31 !"4 !9 "64 1!1 9!!

7orei*n echan*e (ifferences profit2loss 1 #69 1 !#1 5 149

Net interest an( (iv i(en(s 5 61! "3" 3" ##6

ain2loss from investin* activ ities 63! 1 6 !1 5##

#" 19# 55 66 ! 6!#

;ncrease 2 (ecrease in inventories !1 9"4 33 43! 11 "#

;ncrease 2 (ecrease in pa%ables ecept for loans an( borro=in*s 61 ## !" #"1 !51

0han*e in accruals an( prepa%ments 13 #99 15 "6 ! 519

0han*e in prov isions 1 1!" 1 5!3 !4

;ncome ta pai( ! #31 1 6"3 551

/ereco*nition of emission ri*ths i(entifie( in a business combination ## !#1 165

0o*eneration certificates 1 9"4 & 4 36#

Other 699 5" !33

Net cash flo= from operatin* activities 3# 9# 31 36 !"6 433

*as/ !lo1 !o5 "nvest"n4 a-t"v"t"es

>rocee(s from sale of propert%, plant an( e8uipment an( intan*ible asstes 56 1 9"4 !" 359

>urchase of propert%, plant an( e8uipment an( intan*ible assets 1! 93 13 154 6 53

anB (eposits for perio( over 3 months & & !1 31!

>rocee(s from sale of investment propert% & & 9 6""

Net cash flo= from inv estin* activ ities 1! 3 11 !51 6" !"6

*as/ !lo1 !o5 !"nan-"n4 a-t"v"t"es

0han*e in banB over(rafts !66 1" 93 " 6!#

epa%ment of finance lease liabilities #! 69! ! 1"

>rocee(s from other financial liabilities 5 16 #"1 &

epa%ment of other finance liabilities 4 6# 13 6"3 16 59!

>rocee(s from loans an( borro=in*s & & 5# 5"

epa%ment of loans an( borro=in*s !! 1"3 #36 35 "!

;nterest pai( 5 "!" "! !6 #6

Net cash flo= from financin* activ ities 19 "95 41 34! 1"4 354

N et increase2(ecrease in cash an( cash e8uiv alents 6 "45 !1 !"# 41 #3

Net forei*n echan*e (ifferences 4 5"" !"3 1 494

0ash an( cash e8uivalents at the be*innin* of the perio( 15 41! 11 "33 11 "33

0ash an( cash e8uivalents at the en( of the perio( 159 956 9# "3" 15 41!

;ncrease 2 (ecrease in receivables an( other non&financial assets


41/70


Condensed consolidated financial statements for the three months period ended '!st +arch 2!"

#rctic Paper $.#. Capital %roup



Consolidated statement of c anges in equity

Share

capital

Share

premium

$ranslation

reserve

Other

reserves

etaine( earnin*s

losses $otal

+s at 1 Aanuar !"15 69 ! 4#! #4 95 136 55# 143 939 543 61! 11 459

Net profit for the perio( & & & & 3 65! 3 65! 16 49

Other comprehansive income & & 59 4 !1! & 4 36 5 3!4

$otal comprehensive income & & 59 4 !1! 3 65! "3 11 1#4

+s at 31 E arch !"15 unau(ite( 69 ! 4#! #4 36" 14" #69 14# 59! 535 5#3 19! 633

+ttributable to e8uithol(ers of the >arent 0ompan

Non&controllin*

interes


42/70


Condensed consolidated financial statements for the three months period ended '!st +arch 2!"

#rctic Paper $.#. Capital %roup



Sharecapital

Sharepremium

$ranslationreserve

Otherreserves

etaine( earnin*slosses $otal

+s at 1 Aanuar !"14 69 ! 65! 659 1 13! 13! 69# 35# "15 515 #6" 155 ##!

7orei*n currenc translation & & & & 5 #"! 5 #"! 3 !"6

Other comprehansive income & & 1 #19 4 #"5 & 6 4!4 1 #51

$otal comprehensive income & & 1 #19 4 #"5 5 #"! #!! 1 455

+s at 31 E arch !"14 unau(ite( 69 ! 65! 659 16 41! 1!# 99! 351 314 515 "3# 15# !!#


Non&controllin*interes

Share

capital

Share

premium

$ranslation

reserve

Other

reserves

etaine( earnin*s

losses $otal

+s at 1 Aanuar !"14 au(ite( 69 ! 65! 659 1 13! 13! 69# 35# "15 515 #6" 155 ##!

Net profit for the perio( & & & & 5" 459 5" 459 !# #16

Other comprehansive income & & 9 1#3 3 6" 1# !94 !! 6"# ! "3"

$otal comprehensive income & & 9 1#3 3 6" 33 165 !# 51 !5 66

>rofit (istribution & 1#9 911 & & 1#9 911 & &

+s at 31 /ecember !"14 au(ite( 69 ! 4#! #4 95 136 55# 143 939 543 61! 11 459


Non&controllin*

interes


43/70


#rctic Paper $.#. Capital %roup Page 7' of &



$tanda lone financial statements and selected financial data

$elected standalone financial data

7or the perio(

from "1'"1'!"15

to 31'"3'!"15

7or the perio(

from "1'"1'!"14

to 31'"3'!"14

7or the perio(

from "1'"1'!"15

to 31'"3'!"15

7or the perio(

from "1'"1'!"14

to 31'"3'!"14

t%s' >


44/70





$tandalone income statement

3 months

perio( en(e(

31 Earch !"15

3 months

perio( en(e(

31 Earch !"14

.ear en(e(

31 /ecember !"14


0ontinuin* operations

Sales of serv ices 1" 449 9 3"! 3# 64"

;nterest income !1" !59 999

/ivi(en( income & & 14"

evenues 1" 659 9 561 3 ##9

0ost of sales ! !9! ! 35 9 41#

ross profit on sales 36# # !"3 !9 36!

Other operatin* income 133 16 !#"

Sellin* an( (istribution costs 9!" 9! 4 "36

+(ministrative epenses 1! 5 #46 !9 196

Other operatin* epenses 4"4 4! 1 614

Operatin* profit 2 loss 95! 145 !! !15

7inance income #" 5"# 156

7inance costs 91 65# 3 "1

>rofit 2 loss before ta 9 153 !95 !5 "#6

;ncome ta & & 34

9 153 !95 !5 11"

/iscontinue( operations

& & &

Net profit loss for the %ear 9 153 !95 !5 11"

:arnin*s per shareL

",13 ","" ",36

",13 ","" ",36

",13 ","" ",36

",13 ","" ",36

M basic from the profit loss for the perio(

M (ilute( from the profit loss for the perio(

Net profit loss for the %ear from continuin* operations

>rofit loss for the perio( from (iscontinue( operations

M basic from the profit loss from continuin* operations for the perio(

M (ilute( from the profit loss from the continuin* operations for the perio(


45/70

Consolidated quarterly report for the fi

APSA 1Q 2015 Quarterly Report

Documents

Transcript of APSA 1Q 2015 Quarterly Report