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 compliance
with the Remuneration Policy adopted by the General Meeting.
Information on corporate governance
The Polish Corporate Governance Rules do not require the same detail as to the disclosed information as required by the
Swedish Code. However, information on members of the Company’s bodies, company’s Articles of Association, internal
regulations and a summary of material differences between the Swedish and Polish approach to corporate governance and
shareholders’ rights is published on the Company’s website.
Annual repor t 2022 of Arctic Pap er S.A. 40
Information by the Management Board of Arctic Paper S.A. on
selection of the audit firm
On the basis of a statement made by the Supervisory Board of Arctic Paper S.A. on the selection of the audit firm to audit th e
annual consolidated financial statements of the Arctic Paper Group and standalone financial statements of the Company for the
financial year ended on 31 December 2022 in compliance with applicable laws and on the basis of a statement received from
KPMG Audyt spółka z ograniczoną odpowiedzialnością spółka komandytowa,
The Company’s Management Board informs that the selection of the audit firm by the Supervisory Board was made pursuant to
applicable laws and in line with the “Policy and procedure of selecting an audit firm to conduct a statutory and voluntary au dit of
consolidated and separate financial statements of Arctic Paper S.A. with its registered office in Kostrzyn nad Odrą”.
Additionally, the Company’s Management Board informs that the audit firm and members of its team performing the audit have
complied with the requirements to make an impartial and independent report from t he audit of the annual consolidated financial
statements of the Arctic Paper Group and standalone financial statements of the Company for the financial year ended on 31
December 2022 in compliance with the applicable laws, professional standards and the ru les of professional ethics.
The Management Board of the Company also informs that the applicable laws with regard to a change of the audit firm and the
key statutory auditor, as well as mandatory periods of grace have been complied with. The Arctic Paper G roup has a policy
relating to the selection of the auditing company and a policy of the provision of services that are not an audit by the audi t firm,
entities related to the audit firm or a member of its group, including services that are not covered with the ban on being provided
by audit firms.
Signatures of the Members of the Management Board
First and last name Date Signature
President of the Management
Board
Chief Executive Officer
Michał Jarczyński 28 March 2023
signed with a qualified
electronic signature
Member of the Management
Board
Chief Financial Officer
Göran Eklund 28 March 2023
signed with a qualified
electronic signature
Annual repor t 2022 of Arctic Pap er S.A. 41
Statements of the Management Board
Accuracy and reliability of the presented reports
Members of the Management Board of Arctic Paper S.A. represent that to the best of their knowledge:
— The financial statements of Arctic Paper S.A. for the year ended on 31 December 2022 and the comparable data were
prepared in compliance with the applicable accounting principles and they reflect Company’s economic and financial condition
and its financial result for 2022 in a true, reliable and clear manner.
— The Management Board’s Report from operations of Arctic Paper S.A. in 2022 contains a true image of t he development,
achievements and condition of Arctic Paper S.A., including a description of core hazards and risks.
Signatures of the Members of the Management Board
First and last name Date Signature
President of the Management
Board
Chief Executive Officer
Michał Jarczyński 28 March 2023
signed with a qualified
electronic signature
Member of the Management
Board
Chief Financial Officer
Göran Eklund 28 March 2023
signed with a qualified
electronic signature
FINANCIAL STATEMENTS for the year ended
31 December 2022 together with the auditor’s
report
Annual repor t 2022 of Arctic P aper S. A. 43
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The a ccoun ting policie s an d ad ditional not es in clud ed o n p ages from 48 to 8 7 form an integra l pa rt of the se f inan cial stateme nts.
Standalone financial statements
Standalone profit and loss account
Note
Year ended on
31 December 2022
Year ended on
31 December 2021
Continuing operations
Revenues from sales of services 24
12 754
22 402
Interest income on loans 24
2 290
2 710
Dividend income 24 57 416
38 724
R
evenues
11
Interest expense to related entities and costs of sales of logistics services 12.5
(7 350)
(5 171)
Gross profit/(loss) on sales
65 109
58 664
Other operating income
1 928
488
Administrative expenses 12.4
(17 938)
(25 144)
Impairment allowances to assets 12.1
175 745
(996)
Other operating expenses
(381)
(92)
Operating profit/(loss)
224 463
32 920
Financial income 12.2
3 316
3 899
Financial expenses 12.3
(8 804)
(15 031)
Gross profit/(loss)
218 975
21 787
13.1
Income tax
3 931
-
Net profit/(loss) from continuing operations
222 906
21 787
Earnings/(loss) per share in PLN:
– basic earnings from the profit/(loss) for the period
14
3,22
0,31
– diluted earnings from the profit/(loss) for the period
14
3,22
0,31
Annual repor t 2022 of Arctic P aper S. A. 44
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The a ccoun ting policie s an d ad ditional not es in clud ed o n p ages from 48 to 8 7 form an integra l pa rt of the se f inan cial stateme nts.
Standalone statement of total comprehensive income
Note
Year ended on
31 December 2022
Year ended on
31 December 2021
Net profit (loss) for the reporting period
222 906
21 787
Items which were reclassified to profit/loss in current reporting period:
Measurement of
financial instruments
-
2 574
Items to be reclassified to profit/loss in future reporting periods:
Measurement of financial instruments 27.3 4 954
3 190
Deferred tax on measurement of financial instruments
(941)
(606)
FX differences on translation of foreign operations 19.2 707
306
Other total comprehensive income
4 720
5 464
Total comprehensive income
227 626
27 251
Annual repor t 2022 of Arctic P aper S. A. 45
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The a ccoun ting policie s an d ad ditional not es in clud ed o n p ages from 48 to 8 7 form an integra l pa rt of the se f inan cial stateme nts.
Standalone statement of financial position
Note As at 31 December
2022
As at 31 December
2021
ASSETS
Fixed assets
Fixed assets
451
797
Intangible assets
1 346
1 319
Shares in subsidiaries
16.1 854 898
678 635
Other financial assets 16.3 35 514
5 701
Deferred tax assets 1 865
-
894 074
686 451
Current assets
Trade and other receivables 17
17 566
31 868
Income tax receivables
1 430
35
Other financial assets
16.3
12 728
121 104
Other non
-
financial assets
16.4
5 817
2 874
Cash and cash equivalents 18 213 272
14 966
250 814
170 848
TOTAL ASSETS 1 144 888
857 299
Note As at 31 December
2022
As at 31 December
2021
EQUITY AND LIABILITIES
Equity
Share capital
19.1
69 288
69 288
Reserve capital
19.3
427 502
427 502
Other
reserves
19.4
106 725
124 500
FX differences on translation
19.2
1 463
756
Retained earnings / Accumulated losses
171 993
(44 986)
Total equity 776 970
577 059
Long
-
term liabilities
Interest
-
bearing loans
and
borowings
20
73 022
101 546
Provisions
21
-
3 117
Other financial liabilities
22.2
10
128
Deferred tax liability
13.3
2 003
606
75 036
105 398
Short-term liabilities
Interest
-
bearing loans
and borrowings
20
263 752
145 648
Trade
payables
22.1
19 175
27 307
Other financial liabilities 22.2
49
111
Other short-term liabilities 22.1
1 383
1 776
Employee liabilities 6 895
-
Income tax liabilities
1 630
-
292 883
174 841
Total liabilities
367 919
280 239
TOTAL EQUITY AND LIABILITIES
1 144 888
857 299
Annual repor t 2022 of Arctic P aper S. A. 46
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The a ccoun ting policie s an d ad ditional not es in clud ed o n p ages from 48 to 8 7 form an integra l pa rt of the se f inan cial stateme nts.
Standalone statement of cash flow
Note
Year ended on
31 December 2022
Year ended on
31 December 2021
Cash flows from operating activities
Gross profit (loss)
218 975
21 787
Adjustments for:
Depreciation/amortisation
12.6
228
389
Loss on exchange rate differences
1 421
7 749
Impairment of interests
12.2
(
175 745
)
-
Net interest and dividends
(54 595)
5 368
Profit / loss from investing activities
90
(264)
Increase / decrease in receivables and other non
-
financial assets
9 963
(1 902)
Increase / decrease in liabilities except for loans and borrowings and other
financial liabilities
(4 058)
3 440
Change in provisions and prepayments
-
280
Income tax paid
2 722
-
Change to liabilities due to cash
-
pooling
214 745
(94 821)
Increase / decrease of loans granted to subsidiaries
16.3
3 342
Interests received
2 336
-
Interests paid
(1 506)
-
Other
2 537
190
Net cash flows from operating activities
220 455
(15 320)
Cash flows from investing
activities
Increase of interests in subsidiaries
(50)
(2 498)
Net cash flows from investing activities (50)
(2 498)
Cash flows from financing activities
Repayment of leasing liabilities (180)
(402)
Repayment of loan
liabilities
(48 235)
(144 933)
Borrowings and bonds received
20
-
166 787
Dywidendy otrzymane
-
Interest paid
(3 384)
(5 445)
Dividend disbursed
(27 715)
(20 786)
Other financial expenses -
(2 585)
Net cash flows from
financing activities
(22 099)
(7 364)
Cash and cash equivalents at the beginning of the period
18
Change in cash and cash equivalents
198 306
(25 182)
Cash and cash equivalents at the end of the period
18
213 272
14
966
Annual repor t 2022 of Arctic Paper S.A. 47
Standalone financial statements
(unless s pecified otherwise, al l amounts are in PLN ‘000)
The a ccoun ting policie s an d ad ditional not es in clud ed o n p ages from 48 to 8 7 form an integra l pa rt of the se f inan cial stateme nts.
Standalone statement of changes in equity
Note
Share
capital
Reserve
capital
Translation reserve
Other reserves
Retained earnings
Total equity
As at 1 January 2022
427 502
756
124 500
(44 986)
577 059
Net profit / (loss) for the period
-
-
-
-
222 906
222 906
Other comprehensive income for the period
-
-
707
4 012
-
4 718
Total comprehensive income for the period
-
-
707
4 012
222 906
227 625
Dividend distribution
-
-
-
(21 787)
(5 928)
(27 715)
As at 31 December 2022
427 502
1 463
106 725
171 993
776 969
Note
Share capital
Reserve
capital
FX differences
on translation of
investments
in foreign entities
Other reserves
Retained
earnings/Accumulated
losses
Total
As at 01 January 2021
69
288
427
502
450
136
741
(63
386)
570
594
Net profit/(loss) for the period
-
-
-
-
21 787
21 787
Other total comprehensive income for the period
-
-
306
5
158
-
5
464
Total comprehensive income for the period
-
-
306
5
158
21
787
27
251
Dividend distribution
-
-
-
(17
399)
(3
387)
(20
786)
As at 31
December 2021
69
288
427
502
756
124
500
(44
986)
577
059
Annual repor t 2022 of Arctic P aper S. A. 48
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Accounting principles (policies) and additional explanatory notes
1. General information
The financial statements of Arctic Paper S.A cover the year ended on 31 December 2022 and contain comparative data for the
year ended on 31 December 2021.
Arctic Paper S.A. (hereinafter: (“Company”, “Entity”) is a joint stock company established with Notary deed on 30 April 2008 with
its stock publicly listed. The Company’s registered office is located in Kostrzyn nad Odrą, ul. Fabryczna 1. The Company also has
a foreign branch in Göteborg, Sweden.
The Company is entered in the register of entrepreneurs of the National Court Register maintained by the District Court in Zi elona
Góra – 8th Commercial Division of the National Court Register, under KRS number 0000306944. The Company holds statistical
number REGON 080262255. The duration of the Company is indefinite.
The main area of the Company’s business activity is holding activity for the benefit of the Arctic Paper Capital Group.
Nemus Holding AB is the direct Parent Entity to the Company. The ultimate parent entity of the Group that prepares the
consolidated financial statements is Nemus Holding AB. The Ultimate Parent Entity is Thomas Onstad.
2. Identification of the consolidated financial statemen ts
The Company prepared its consolidated financial statements for the year ended on 31 December 2022 which were approved for
publishing on 28 March 2023.
3. Composition of the Company’s Management Board
As at 31 December 2022, the Company’s Management Board w as 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;
From 31 December 2022 until the publication date of the financial statements no other changes in the composition of the
Management Board of the Company occurred.
4. Approval of the financial statements
These financial statements were approved for publication by the Management Board on 28 March 2023.
Annual repor t 2022 of Arctic P aper S. A. 49
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
5. Investments by the Company
The Company holds interests in the following subsidiary companies:
Unit Registered office Business activity 2022-12-31 2021-12-31
Arctic Paper Kostrzyn S.A.
Poland, Fabryczna 1,
66-470 Kostrzyn nad Odrą
Paper production 100% 100%
Arctic Paper Munkedals AB Sweden, SE 455 81 Munkedal Paper production 100% 100%
Grycksbo Paper UK Limited
United Kingdom, 52 Hither Green
Lane, Abbey Park, Redditch
Trading company 100% 100%
Arctic Paper UK Limited
United Kingdom, 8 St Thomas Street
SE1 9RR London
Trading company 100% 100%
Arctic Paper Baltic States SIA
Latvia, K. Valdemara iela 33-20,
Riga LV-1010
Trading company 100% 100%
Arctic Paper Benelux S.A.
Belgia, Interleuvenlaan 62 bus 14,
B-3001 Heverlee
Trading company 100% 100%
Arctic Paper Schweiz AG
Switzerland, Gutenbergstrasse 1,
CH-4552 Derendingen
Trading company 100% 100%
Arctic Paper Italia srl Italy, Via Cavriana 7, 20 134 Milan Trading company 100% 100%
Arctic Paper Danmark A/S
Denmark, Korskildelund 6
DK-2670 Greve
Trading company 100% 100%
Arctic Paper France SAS
France, 43 rue de la Breche aux
Loups, 75012 Paris
Trading company 100% 100%
Arctic Paper Espana SL
Spain, Avenida Diagonal 472-474,
9-1 Barcelona
Trading company 100% 100%
Arctic Paper Papierhandels GmbH
Austria, Hainborgerstrasse 34A,
A-1030 Wien
Trading company 100% 100%
Arctic Paper Polska Sp. z o.o.
Poland, Okrężna 9,
02-916 Warszawa
Trading company 100% 100%
Arctic Paper Norge AS
Norway, Eikenga 11-15, NO-
0579 Oslo
Trading company 100% 100%
Arctic Paper Sverige AB Sweden, SE 455 81 Munkedal Trading company 100% 100%
Arctic Power Sp. z o.o. (formerly
Arctic Paper East Sp. Z o.o.)
Poland, Fabryczna 1,
66-470 Kostrzyn nad Odrą
Production of energy 100% 100%
Arctic Paper Investment GmbH
Germany, Fabrikstrasse 62,
DE-882, 84 Wolpertswende
Activities of holding
companies
99.80% 99.80%
Arctic Paper Investment AB Sweden, Box 383, 401 26 Göteborg Paper production 100% 100%
Arctic Paper Deutschland GmbH
Germany, Am Sandtorkai 72, D-
20457 Hamburg
Trading company 100% 100%
Arctic Paper Finance AB (formerly
Arctic Energy Sverige AB)
Sweden, Box 383, 401 26 Göteborg
Activities of holding
companies
100% 100%
Kostrzyn Packaging Sp. Z o.o.
Polska, Fabryczna 1
66-470 Kostrzyn nad Odrą
Packaging production 100% 0%
Rottneros AB Sweden, Box 144, Sunne Pulp production 51.27% 51.27%
As at 31 December 2022 and as at 31 December 2021, the share in the overall number of votes held by the Company in its
subsidiary entities was equal to the share of the Company in the share capital of those entities.
Annual repor t 2022 of Arctic P aper S. A. 50
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
6. Material values based on professional jud gement and estimates
In the process of applying accounting policies to the areas presented below, professional judgement of the management staff h ad
the most significant effect, apart from accounting estimations.
6.1. Impairment of assets in subsidiaries
As at 31 December 2022, an impairment test was held at Arctic Paper Grycksbo AB whose 100% are held by Arctic Paper
Investment AB. The test was performed with the discounted cash flow method with reference to investments in both companies
(note 16.2).
In connection with the test, the Company made a number of estimates, of which the forecast sales volume, sales prices, raw
material purchase prices, energy prices, discount rate and growth rate in the residual period had the greatest impact on the
values recognised in these standalone financial statements. Some of the assumptions used to determine the value in use of the
investments in Arctic Paper Grycksbo AB and Arctic Paper Investment AB are based on unobservable inputs and are therefore
subject to estimation uncertainty.
7. Basis of preparation of the financial statements
These financial statements have been prepared on a historical cost basis (except financial instruments).
These standalone financial statements are presented in Polish zloty (“PLN”) and all values are disclosed in PLN ‘000 unless
specified otherwise.
These standalone financial statements have been prepared based on the assumption that the Company will continue as a going
concern in the foreseeable future.
As at the publication date hereof, no circumstances were identified that would pose a threat to the Company continuing as a
going concern.
7.1. Compliance statement
These financial statements have been prepared i n accordance with International Financial Reporting Standards (“IFRS”),
endorsed by the European Union. IFRS cover standards and interpretations approved by the International Accounting Standards
Board (IASB).
7.2. Functional currency and presentation currency
The Polish zloty (PLN) is the functional currency and the presentation currency of the Company in these financial statements.
Annual repor t 2022 of Arctic P aper S. A. 51
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
8. Changes in the applied accounting principles
The accounting policies used in the preparation of the finan cial statements are consistent with those used in the preparation of
the Company’s financial statements for the year ended 31 December 202 1.
The Company did not decide to adopt earlier any other standards, interpretations or amendments that were issued bu t are not yet
effective for periods commencing on 1 January 202 2.
9. New standards and interpretations that have been published and are not yet effective
Standards, Interpretations and amendments to published Standards endorsed by the EU that have been adopte d at the date of
publication of these consolidated financial statements. but are not yet effective for annual periods beginning on 1 January 2 023:
— Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality
Judgments (Effective for annual periods beginning on or after 1 January 2023 Early application is permitted)
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than significant
accounting policies.
— Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Effective for annual periods
beginning on or after 1 January 2023 Early application is permitted)
The amendments introduced a definition of ‘accounting estimates ’ and included other amendments to IAS 8 clarifying how to
distinguish changes in accounting policies from changes in estimates. The distinction is important as changes in accounting
policies are generally applied retrospectively while changes in estimates are accounted for in the period in which the change
occurs.
— Amendments to IAS 12 Income Taxes Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Effective for annual periods beginning on or after 1 January 2023. Early applic ation is permitted)
The amendments narrow the scope of the initial recognition exemption (IRE) to exclude transactions that give rise to equal an d
offsetting temporary differences e.g. leases and decomissioning liabilities. For leases and decomissioning liabilities, the
associated deferred tax assets and liabilities will need to be recognised from the beginning of the earliest comparative period
presented, with any cumulative effect recognised as an adjustment to retained earnings or other components of equity at that
date. For all other transactions, the amendments apply to transactions that occur after the beginning of the earliest period
presented.
Standards and Interpretations awaiting EU approval as at 28 March 2023.
— Amendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint
venture (Effective date deferred indefinitely. Available for optional adoption in full IFRS financial statements. The
European Commission decided to defer the endorsement indefinitely, it is unlikel y that it will be endorsed by the EU in
the foreseeable future)
The Amendments clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition
depends on whether the assets sold or contributed constitute a busi ness, such that:
a full gain or loss is recognised when a transaction between an investor and its associate or joint venture involves the
transfer of an asset or assets which constitute a business (whether it is housed in a subsidiary or not), while
a partial gain or loss is recognised when a transaction between an investor and its associate or joint venture involves
assets that do not constitute a business, even if these assets are housed in a subsidiary
Annual repor t 2022 of Arctic P aper S. A. 52
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Amendments to IAS 1 Presentation of Financial State ments Non-Current Liabilities with Covenants (Effective for
annual periods beginning on or after 1 January 2024 and shall be applied retrospectively. Early application is
permitted. Specific transition requirements apply for companies that have early-adopted the previously issued but not
yet effective 2020 amendments.)
Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to
defer settlement for at least 12 months after the repo rting date. The amendments, as issued in 2020, has removed the
requirement for a right to be unconditional and instead requires that a right to defer settlement must exist at the reporting date
and have substance (the classification of liabilities is unaff ected by management’s intentions or expectations about whether
the company will exercise its right to defer settlement or will choose to settle early).
The amendments, as issued in 2022, further clarify that when the right to defer settlement is subject t o a company complying
with conditions (covenants) specified in a loan arrangement, only covenants with which the company must comply on or
before the reporting date affect the classification of a liability as current or non -current. Covenants with which the company
must comply after the reporting date do not affect a liability’s classification at that date. However, the amendments require
companies to disclose information about these future covenants to help users understand the risk that those liabilities could
become repayable within 12 months after the reporting date. The amendments also clarify how a company classifies a liability
that can be settled in its own shares (e.g. convertible debt).
— Amendments to IFRS 16 Leases Lease Liability in a Sale and Leaseback (Effective for annual periods beginning
on or after 1 January 2024 and shall be applied retrospectively. Early application is permitted)
Amendments to IFRS 16 Leases impact how a seller-lessee accounts for variable lease payments in a sale -and-leaseback
transaction. The amendments introduce a new accounting model for variable payments and will require seller -lessees to
reassess and potentially restate sale -and-leaseback transactions entered into since 2019.
The amendments confirm the following:
on initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising
from a sale-and-leaseback transaction;
after initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease
liability such that it recognises no gain or loss relating to the right of use it retains.
A seller-lessee may adopt different approaches that satisfy the new requirements on subs equent measurement.
These amendments do not change the accounting for leases other than those arising in a sale and leaseback transaction.
As at the date of approval of these financial statements for publication, the Management Board does not expect mate rial impact
of the introduction of other standards and interpretations on the accounting principles (policy) applied by the Company with
respect to the Company’s operations or its financial results.
10. Significant accounting principles (policies)
10.1. Foreign currency translation
The presentation currency of the Company is Polish zloty, however, for the foreign branch the functional currency is Swedish
crown. As at the balance sheet date, assets and liabilities of the branch are translated into the presentation currency of th e
Company using the FX rate prevailing on that date and its income statement is translated using a weighted average FX rate for
the reporting period.
The FX differences arising from the translation are recognised in other total comprehensive income and accumula ted in a
separate item of equity – FX differences on translation.
Transactions denominated in currencies other than Polish zloty are translated to Polish zloty at the FX rate prevailing on th e
transaction date.
Annual repor t 2022 of Arctic P aper S. A. 53
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
As at the balance sheet date, assets and monetary liabilities expressed in currencies other than Polish zloty are translated into
Polish zloty using the National Bank of Poland’s mean FX rate prevailing for the given currency as at the end of the reportin g
period.
FX differences resulting from translation are recognised under financial income (expenses), or – in cases defined in the
accounting policies – are capitalised in assets. Non-monetary foreign currency assets and liabilities recognised at historica l cost
in foreign currency are translated at the historical FX rates prevailing on the transaction date. Non -monetary foreign currency
assets and liabilities recognised at fair value in foreign currency are translated using the FX rates prevailing as at th e date of fair
value measurement.
The following exchange rates were used for book valuation purposes:
31 December 2022
31 December 2021
USD
4.4018
EUR
4.6899
SEK
0.4213
DKK
0.6307
NOK
0.4461
GBP
5.2957
CHF
4.7679
01/
01
–
31/12/
2022
01/01
–
31/12/2021
USD
4.4615
EUR
4.6876
SEK
0.4411
DKK
0.6301
NOK
0.4643
GBP
5.4989
CHF
For translation of assets and liabilities of the foreign branch as at 31 December 2022, the exchange rate SEK/PLN of 0.4213 was
applied (31 December 2021: 0.4486). For translation of the items of comprehensive income for the year ended on 31 December
2022, the exchange rate SEK/PLN of 0.4411 was applied (for the year ended on 31 December 2021: 0.4500) which is an
arithmetic mean of NBP’s mean exchange rates published by NBP in 2022.
Cashpooling is the Company’s core business therefore the cash flow statement cashpooling is presented in operating activities
section.
10.2. Impairment of non-financial fixed assets
An assessment is made at each reporting date to determine whether there is any indication that a component of non-financial
fixed assets may be impaired. If such indications exist, or in case an annual impairment test is required, the Company makes an
estimate of the recoverable amount of that asset or the cash generating unit that the asset is a part of.
The recoverable amount of an asset or a cash -generating unit is the fair value of such asset or cash -generating unit reduced by
costs to sell or its value in use, whichever is higher. The recoverable amount is determined for an individual asse t, unless the
asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing the value in use, the estimated future cash flows are discounted to their present value usin g a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Annual repor t 2022 of Arctic P aper S. A. 54
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Impairment allowances of continuing operations are recognised in the expense categories consistent with the function of the
impaired asset.
An assessment is made by the Group as at each balance sheet date as to whether there is any indication that previ ously
recognised impairment allowances may no longer be required or may be reduced. If such indications exist, the Company makes
an estimate of recoverable amount of the asset. A previously recognised impairment allowance is reversed only if there has be en
a change in the estimates used to determine the asset’s recoverable amount since the last impairment allowance was recognised .
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot ex ceed
the carrying amount that would have been determined (net of depreciation or amortisation), had no impairment allowance been
recognised for the asset in prior years.
Reversal of impairment allowance to assets is recognised immediately as income. After a reversal of an impairment allowance is
recognised, the depreciation (amortisation) charge for the asset is adjusted in future periods to allocate the asset’s carryi ng
amount, reduced by its residual value (if any), on a systematic basis over its remaining useful life.
10.3. Shares in subsidiaries, affiliated entities and in joint ventures
Shares in subsidiaries, affiliated entities and joint ventures are presented at historical cost basis, subject to impairment
allowances.
10.4. Financial assets
In compliance with IFRS 9, the Company classifies financial assets to one of the following categories:
— measured at amortised cost: To measure its financial assets measured at amortised cost, the Group applies the effective
interest rate method; those are trade receivables, loans granted, other financial receivables and cash and cash equivalents.
After initial recognition, trade receivables are measured at amortised cost with the effective interest rate method subject t o
impairment allowances’ trade receivables due within 12 months of the day of their origin (without financing elements) and not
forwarded to factoring, are not discounted and are measured at nominal value; interest income, exchange differences and
impairment allowances are recognised in profit or lo ss; profits or losses on derecognition of a financial instrument are
recognised in profit or loss for the period;
— measured at fair value through other income: profit and loss on a financial asset being a capital instrument which is subject to
a measurement option via other income, are recognised in other income with the exception of dividend received;
— measured at fair value through financial results: profit or loss resulting from measurement of financial assets, classified a s
measured at fair value through profit and loss, are recognised in profit and loss account in the period in which it was
generated; those are primarily derivative instruments not designated for hedge accounting. Profit or loss resulting from
measurement of items measured at fair value through profit and loss account covers also interest and dividend income.
— hedging financial instruments: Hedging financial instruments are measured in accordance with hedge accounting principles
recognised under IFRS 9.
The Company classifies debt financial assets to an appropriate category subject to the business model of managing financial
assets and to the characteristics of contractual cash flows for each financial asset.
10.5. Impairment of financial assets
As at each balance sheet date, the Company assesses whether there is any objective evidence that a financial asset or a group
of financial assets is impaired.
In line with IFRS 9, financial assets are measured at amortised cost or at fair value through other comprehensive income (exc ept
for investments in equity and contract assets). The impairment model is based on the calculation of expected losses. Loans and
trade receivables are the most important financial asset in the Company’s financial statements that are subject to the new
principles of calculating a nticipated credit losses.
In accordance with IFRS 9, the Company measures allowances for expected credit losses in the amount equal to the 12 -month
expected credit losses or expected credit losses in the life of the financial instrument. In the case of trade receivables, t he
Annual repor t 2022 of Arctic P aper S. A. 55
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Company applies a simplified approach and measures an allowance for expected credit losses at the amount equal to the
expected credit losses over the whole life of the asset.
In the case of trade receivables, the Company classifies receivables into the following categories:
- group 1 – includes trade receivables for which a simplified approach has been applied to the valuation of expected credit losses
over the lifetime of receivables, except for receivables included in group 2;
- group 2 – includes trade receivables identified individually as uncollectible.
The Company applies a simplified model to recognise impairment allowances to trade receivables. In the simplified model, the
Group does not monitor changes to credit risk level over the life of the instrument and estimates anticipated credit losses over the
horizon until the maturity of the instrument. In order to estimate the anticipated credit loss, the Company applies a provisi on
matrix estimated on the basis of historic collectibility levels and recoveries from counterparties. The anticipated credit loss is
calculated at the time the receivables are recognised in the statement of financial position and it is updated as at each clo sing of
reporting periods, subject to the number of overdue dates.
10.6. Financial derivatives and hedges
The derivatives used by the Company to hedge its exposure to interest rate movements are primarily interest rate swap contrac ts
(interest rate swaps). Such derivative financial instruments are measured at fair value. Such derivatives a re stated as assets
when the value is positive and as liabilities when the value is negative.
Any gains or losses arising from changes in the fair value of the derivatives that do not qualify for hedge accounting are
recognised directly in the net profit or loss for the financial year.
The fair value of interest rate swap contracts is determined based on a valuation model which takes into account observable
market data, particularly including current term interest rates.
For the purpose of hedge accountin g, hedges are classified as:
— fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability, or
— cash flow hedges when hedging exposure to variability in cash flows that is attributable to a particular risk inhe rent in the
recognised asset or liability or a forecast transaction, or
— Hedges of interests in net assets in a foreign entity
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship as well as the
risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging
instrument, the hedged item or transaction, the nature of the risk being hedged and the assessment method of the hedging
instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the
hedged risk. Hedges are expected to be highly effective in offsetting the exposure to changes in the fair value or cash flows
attributable to the hedged risk. Hedge effectiveness is assessed on a regular basis to check if the hedge is highly effective
throughout all reporting periods for which it was designated.
Cash flow hedge
Cash flow hedges are hedges securing for the risk of cash flow flu ctuations which can be attributed to a particular kind of risk
inherent in the given item of assets or liabilities or in a contemplated investment of high probability, and which could infl uence
profit or loss. The part of profit or loss related to the hedg ing instrument which constitutes an effective hedge is recognised
directly in other comprehensive income and the non -effective part is recognised in profit or loss.
If a hedged intended transaction subsequently results in the recognition of a financial as set or financial liability, the associated
gains or losses that were recognised in other comprehensive income and accumulated in equity shall be reclassified to profit and
loss account in the same period or periods in which the asset acquired or liability assumed affects profit or loss.
If a hedge of a intended transaction subsequently results in the recognition of a non -financial asset or a non-financial liability, or
a forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which fair value hedge
Annual repor t 2022 of Arctic P aper S. A. 56
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
accounting is applied, then gains and losses that were recognised in other comprehensive income are reclassified from equity to
profit or loss in the same period or periods during which the asset acquired or liabilit y assumed affects profit or loss.
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognis ed
directly to net financial result for the period.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or the hedge no
longer qualifies for hedge accounting. At that point in time, any cumulative profit or loss on the hedging instrument that ha s been
recognised directly in other comprehensive i ncome and accumulated in equity, remains recognised in equity until the forecast
transaction occurs. If the forecast transaction is no longer expected to occur, the net cumulative profit or loss recognised in
equity is recognised in net profit or loss for the period.
10.7. Trade and other receivables
Trade and other receivables are stated and recognised at original invoiced amount subject to an allowance for doubtful
receivables. The allowance for receivables is estimated according to principles presented in note 10.5. The allowance for doubtful
receivables is estimated when collection of the full amount of the receivable is no longer probable.
If the effect of the time value of money is material, the value of receivables is determined by discounting the estimate d future
cash flows to present value using a discount rate that reflects current market assessments of the time value of money. Where
discounting is used, any increase in the balance due to the passage of time is recognised as financial income.
Budgetary receivables are presented within trade and other receivables, except for corporate income tax receivables that
constitute a separate item in the statement of financial condition.
10.8. Cash and cash equivalents
Cash and short-term deposits in the statement of fi nancial condition comprise cash at bank and on hand and short -term deposits
with an original maturity of three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
10.9. Interest-bearing loans, borrowings and bonds
All bank loans, borrowings and bonds are initially recognised at fair value reduced by costs associated with obtaining the lo an or
borrowing.
After initial recognition, interest -bearing term loans, borrowings and bonds are subsequently measured at amortised cost using
the effective interest rate method.
The amortised cost is calculated by taking into account any costs associated with obtaining the loan or borrowing, and any
discount or premium received in relation to the liability.
Revenues and expenses are recognised in profit or loss when the liabilities are derecognised from the statement of financial
condition or accounted for with the effec tive interest method.
10.10. Trade and other payables
In compliance with IFRS 9, the Company classifies financial liabilities to one of the following categories:
measured at amortised cost: trade payables, loans, borrowings and bonds
measured at fair value via the profit and loss account: liabilities under derivative instruments not designated to hedge
accounting
hedging financial instruments, assets and financial liabilities being derivative instruments hedging cash flows and hedging
fair value
Annual repor t 2022 of Arctic P aper S. A. 57
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as measured to fair value through profit or loss.
Financial liabilities are classified as held f or trading if they are acquired for the purpose of re -sale in the near term. Derivatives,
including separated embedded derivatives are also classified as held for trading unless they are determined to be effective
hedging instruments.
Financial liabilities may be designated at initial recognition as measured at fair value through profit or loss if the following criteria
are met:
— such qualification eliminates or significantly reduces the inconsistency of treatment, when both the valuation and the rules for
recognizing losses or gains are subject to different regulations; or
— liabilities are part of a group of financial liabilities that are managed and assessed on the basis of fair value, in accorda nce
with a documented risk management strategy; or
— financial liabilities contain embedded derivatives that should be separately recognised.
Financial liabilities measured at fair value through profit or loss are measured at fair value, reflecting their market value as at the
balance sheet date without tak ing sales transaction costs into account. Changes in fair value of those instruments are recognised
in the profit or loss as financial income or expenses.
As at 31 December 2022 and 31 December 2021 , no financial liabilities were designated as measured at fair value through profit
or loss.
Financial liabilities other than financial instruments measured at fair value through profit or loss are measured at amortise d cost
with the effective interest rate method.
The Company excludes a financial liability from its report from financial activities when the liability has expired – that is, when the
obligation specified in the contract has been fulfilled, cancelled or expired. Replacement of an existing debt instrument with an
instrument with basically different conditions, made between the same entities, is recognised by the Company as expiry of the
original financial liability and recognition of a new financial liability. Similarly, major changes to contractual terms and conditions
related to an existing financia l liability is recognised by the Company as expiry of the original and recognition of a new financial
liability. The difference of the respective carrying amounts arising from the replacement is recognised in profit or loss.
Other short-term liabilities include in particular liabilities to tax authorities under personal income tax liability and liabilities to
ZUS.
Other non-financial liabilities are recognised at the amount payable.
10.11. Offsetting financial assets and liabilities
Financial assets and liabilities are offset, and the net amount is shown in the statement of financial position only if the Group has
a valid legal title to set off and intends to settle these amounts net or to realize the asset and settle the liability at th e same time.
10.12. Provisions
Provisions are created when the Group is charged with a (legal or customary) obligation relating to past events, and when it is
likely that satisfaction of such obligation shall result in a necessity of an outflow of economic benefits and an amo unt of such
obligation may be reliably estimated. Where the Group expects some or all of the provisioned costs to be reimbursed, for exam ple
under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the profit and loss account after the deduction of any
reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the estimated fu ture cash flows to
their present value using a discount rate that reflects current market assessments of the time value of money and, where
Annual repor t 2022 of Arctic P aper S. A. 58
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
appropriate, the risks inherent in the liability. Where discounting is used, the increase in the provision due to th e passage of time
is recognised as financial expenses.
10.13. Revenues
The International Financial Reporting 15 Revenue from Contracts with Customers (“IFRS 15”) establishes a Five -Step Model to
recognise revenues resulting from contracts with customers:
— Requirements applicable to identifying contracts with customers: contracts with customers meet the definition when all of the
following criteria have been satisfied: the parties to the contract have concluded the contract and are obliged to perform th eir
obligations; the Company is able to identify the rights of each party concerning the goods to be provided; the Company is able
to identify the payment terms for the goods to be provided; the contract has economic content and it is likely that the Compa ny
will receive its remuneration due to it in exchange for the goods and services to be provided to the customer.
— Identification of obligations to perform the service: at contract conclusion the Group assesses the goods and services
promised in the contract and identifies each promise as a liability for delivery to the customer: the goods or services (or a
package of goods or services) that may be identified or a group of separate goods or services that are basically the same and
when the delivery has the same nature.
— Identification of the transactional price: in order to determine the transactional price, the Company takes the contractual
conditions into account as well as its customary commercial practices. The transactional price is the amount that – as the
Group expects – will be due to it in exchange for the delivery of the promised goods or services to the customer, net of any
amounts collected on behalf of third parties. The contractual remuneration may cover fixed amounts, variable amounts or both
types; in order to estimate the variable remuneration, the Group has decided to apply the most probable value method.
— The allocation of the transactional price of each liability to perform: The Company allocates the transactional price to each
obligation to perform (or for separate goods or separate services) in an amount that reflects the remuneration amount, in line
with the Company’s expectations – it is due to the Company in exchange for the delivery of the promised goods or services to
the customer.
— Revenue recognition when the obligation to perform is being executed: The Group recognises revenues at completion (or
during completion) of its obligation to perform by delivery of the promised goods or services (an asset) to the customer (the
customer acquires control over the asset). Revenues are recognised in the remuneration amount which – as expected by the
entity – is due to it in exchange for the goods or services promised to customers.
The following criteria are also applicable to recognition of revenues.
Provision of services
Revenues are valued on the basis of the payment resulting from the contract concluded with the customer. The Company
recognizes revenue when it transfers control over a good or service to the customer.
Revenue is recognised over time as services are provided. Since the Company is entitled to receive remuneration from customers
in an amount that corresponds directly to the value to the customers of the service already rendered by the entity, the Compa ny
recognises revenue in the amount that it is entitled to invoice.
Interest
Interest income is recognised as interest accrues (using the effective interest rate method that is the rate that discounts t he
estimated future cash receipts over the anticipated life of the financial instrument) to the net carrying amount of the financial
asset. In revenues of core business the Company recognizes only interests from related parties.
Dividend
Dividend is recognised when the shareholders’ rights to receive dividend are established.
10.14. Taxes
Current tax
Current income tax liabilities and receivables for the current period and previous periods are measured at amounts projected to
be paid to tax authorities (to be recovered from tax authorities) with tax rates and based on tax regulations legal ly or actually
applicable as at the balance sheet date.
Annual repor t 2022 of Arctic P aper S. A. 59
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Deferred income tax
For financial reporting purposes, deferred income tax is recognised, using the liability method, regarding temporary differen ces as
at the balance sheet date between the tax value of assets and liabilities and their carrying amount disclosed in the financial
statements.
Deferred tax provision is recognised for all positive temporary differences:
— except where the deferred income tax liability arises from the initial recognition of g oodwill, an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss
nor taxable profit or loss;
— in respect of positive differences associated with investments in subsidiaries, associates and interests in joint ventures,
except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income asset is recognised for all negative temporary differences, carry -forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differ ences,
and the carry-forward of unused tax credits and unused tax losses can be utilised:
— except where the deferred tax asset relating to the negative temporary difference arises from the initial recognition of an a sset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
— in respect of negative temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, the deferred income tax asset is recognised in the statement of financial condition solely to the extent to which it is
probable that in the foreseeable future the above differences will be reversed and sufficient taxable income to deduct such
temporary negative differences.
The carrying amount of the deferred tax asset is reviewed as at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income ta x asset to be utilised.
Unrecognised deferred income tax asset is reassessed as at each balance sheet date and is recognised to the extent that it ha s
become probable that future taxable profit will be available that will allow the deferred tax asset to be recovered.
Deferred tax asset and provisions are measured at the tax rates that are expected to apply in the period in which the asset i s
realised or the provision applied, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the
balance sheet date.
Income tax relating to items recognised outside profit or loss is recognised outside profit or loss: in other comprehensive i ncome
in correlation items recognised in other comprehensive income or directly in equity with refere nce to items recognised directly in
equity.
Deferred income tax asset and deferred income tax liability are offset, if a legally enforceable right exists to set off curr ent
income tax asset against current income tax liability and the deferred income tax r elates to the same taxable entity and the same
tax authority.
Value added tax
Revenues, expenses, assets and liabilities are recognised after the deduction of the amount of VAT, except:
— where VAT incurred on a purchase of assets or services is not recover able from the tax authority, in which case VAT is
recognised as part of the cost of purchase of the asset or as part of the expense item as applicable and
— receivables and payables which are disclosed with the VAT amount inclusive.
The net amount of VAT recoverable from or payable to the tax authority is included in the statement of financial condition as part
of receivables or payables.
Annual repor t 2022 of Arctic P aper S. A. 60
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
10.15. Net profit per share
Net profit per share is calculated by dividing the net profit for the peri od by the weighted average number of shares during the
reporting period. Diluted profit per share is calculated by dividing the net profit for the period by the diluted weighted av erage
number of shares during the reporting period.
11. Revenues
Arctic Paper S.A. is a holding company, providing services to the Group companies.
The table below presents a geographical split of revenues from sales of services, revenues from contracts with customers as w ell
as dividend and interest income in 2022-2021.
Year ended on 31
December 2022
Year ended on 31
December 2021
Revenues from contracts with customers
– Poland
3
274
8
878
– Sweden
9
480
13
523
– other
-
-
12
754
22
402
Other income (dividends and interest)
– Poland
35
797
21
187
– Sweden
23
450
18
404
– other
459
1
843
59 706
41 434
Total 72 460
63 836
The above information about revenues is based on data regarding registered offices of subsidiaries of Arctic Paper S.A.
Service revenues (management, logistics services) constitute revenues recognised on a time basis since the underlying service s
are those provided for a specified time agreed in contracts with customers. The Company usually applied a 14 or 21 day payment
term, and does not receive payments before services are completed.
12. Other revenues and expenses
12.1. Impairment allowances to assets
Year ended on
31 December 2022
Year ended on
31 December 2021
Impairment allowance to financial assets (Arctic Paper Mochenwangen GmbH)
(468)
(996)
Reversal of impairment allowance to assets (Arctic Paper Sverige AB)
178 805
-
Impairment allowance to financial assets (Arctic Paper Mochenwangen GmbH) (2 592)
-
175 745
(996)
Annual repor t 2022 of Arctic P aper S. A. 61
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
12.2. Financial income
Year ended on 31
December 2022
Year ended on 31
December 2021
Interest income on funds in bank accounts
985
191
Financial services 2 331
3 708
3 316
3 899
12.3. Financial expenses
Year ended on 31
December 2022
Year ended on 31
December 2021
Interest on loans and other liabilities 3 683
9 133
FX losses 1 875
1 459
Warranty costs 2 645
2 585
Other financial expenses 602
1 854
8 804
15 031
12.4. Prime costs
Year ended on 31
December 2022
Year ended on 31
December 2021
Depreciation/amortisation 228
389
Materials 134
113
Third party services 11 838
20 797
Taxes and charges 84
70
Wages and salaries 10 696
6 795
Employee benefits 1 233
1 043
Other prime costs 1 076
1 098
25 289
30 304
Prime costs,
of which:
Items recognised as administrative expenses 17 938
25 144
Items recognised as costs of sales: 7 350
5 171
12.5. Depreciation/amortisation
Year ended on 31
December 2022
Year ended on 31
December 2021
Depreciation of tangible fixed assets 226
267
Amortisation of intangible assets
2
122
229
389
Attributable to:
–
continuing operations
229
389
229
389
Annual repor t 2022 of Arctic P aper S. A. 62
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
12.6. Employee benefit costs
Year ended on 31
December 2022
Year ended on 31
December 2021
Wages and salaries 10 696
6 795
Social insurance premiums 1 233
1 043
Costs of retirement benefits -
-
11 929
7 838
13. Income tax
In 2022, Arctic Paper SA and Arctic Paper Kostrzyn SA established a tax capital group ("PGK"), therefore potential future losses
incurred by the company may be used on an ongoing basis under the PGK. PGK was established for 3 years starting at 1 January
2023. Arctic Paper SA is a parent company and Arctic Paper Kostrzyn SA is a subsidiary.
13.1. Tax liability
The major components of income tax liabilities for the year ended on 31 December 2022 and on 31 December 2021 are as
follows:
Year ended on 31
December 2022
Year ended on 31
December 2021
Current income tax liability 2 522
-
Amount of deferred income tax charge 1 409
-
Tax charge disclosed in the profit and loss account 3 931
-
Current income tax liability amounts to PLN 2,522 thousand and relates to tax losses at Arctic Paper SA and is the Company’s
benefit due to utilisation of the tax loss in settlement of the result of PGK.
13.2. Recognition of effective tax rate
A reconciliation of income tax expense applicable to gross profit/(loss) before income tax at the statut ory income tax rate, to
income tax expense at the Company’s effective income tax rate for the year ended on 31 December 2022 and 31 December 2021
is as follows:
Year ended on
31 December 2022
Year ended on
31 December 2021
Gross profit (loss)
before tax
218 975
Tax at the statutory rate in Poland of 19%
4 140
Benefit from utilising tax los
s
in Tax Equity Group
2 522
-
Non
-
activated loss of the current year
-
1 844
Dividend income
(10 909)
(7 358)
Costs that are permanently non-tax deductible 550
1 428
Taxable costs being accounting costs in the year (376)
-
Unrecognised other temporary income/expenses
-
(54)
Impairment allowances for interests and loans
(33 392)
-
Income tax (charge)
recognised in profit or loss
3 931
-
Annual repor t 2022 of Arctic P aper S. A. 63
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
13.3. Deferred income tax
Deferred income tax relates to the following items:
Balance sheet
Profit and loss
31 December
2022
31 December
2021
Year ended on
31 December
2022
Year ended on
31 December
2021
Deferred income tax liability
Accrued interest income 456
776
(320)
(92)
FX gains -
-
-
(2 983)
Gross deferred income tax provision 456
776
(320)
Balance sheet
Profit and loss
31 December
2022
31 December
2021
Year ended on
31 December
2022
Year ended on
31 December
2021
Deferred income tax asset
Uninvoiced liabilities and accrued vacations
and wages
1 612
1 016
(595)
15
Interest accrued on loans received and bonds -
-
-
-
FX losses 198
256
58
3 128
Other 55
134
79
(158)
Gross deferred income tax asset 1 865
1 407
(458)
Deferred income tax charge -
-
(778)
(91)
Deferred income tax assets, not recognised in
the balance sheet
-
631
-
91
Net reserve for deferred tax captured in
other total comprehensive income
31 December
2022
31 December
2021
Year ended on
31 December
2022
Year ended on
31 December
2021
of which:
Measurement of financial instruments 941
606
941
606
Deferred income tax asset is recognised for tax losses carried forward to the extent that realisation of the related tax bene fit
through future taxable profit is probable.
Deferred income tax asset has not been recognised for the following titles :
— in respect of tax losses and negative temporary differences as it is not probable that there will be sufficient taxable income,
which would allow to deduct such differences.
— in respect of recognized impairment in subsidiaries as it is not probable that in the foreseeable future the above differences
will be reversed and sufficient taxable income to deduct such temporary negative differences.
2022 2022 2021 2021
Gross value Tax effect Gross value Tax effect
FX losses
-
-
624
119
Impairment allowances API Gmbh, APMW GmbH and API AB
319 069
60 623
996
189
Tax losses
34 076
6 474
47 060
8 941
353 145
67 098
48 680
9 249
Tax losses for which deferred income tax have not been recognised expire in the years 2023-2027.
Annual repor t 2022 of Arctic P aper S. A. 64
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
In 2022, the company has formed a tax equity group with Arctic Paper Kostrzyn SA, and therefore potential losses incurred by the
company will be utilised on a regular basis.
14. Earnings/(loss) per share
Earnings per share is established by dividing the net profit for the reporting period attributable to the Company’s ordinary
shareholders by weighted average number of issued ordinary shares existing in the reporting period.
There are no instruments for profit dilution of the Company. All shares are ordinary shares. Shares are not privileged. All ordinary
shares belong to the same class.
The information regarding profit and the number of shares which was the base for calculation of earnings per share and dilute d
earnings per share is presented below:
Year ended on
31 December 2022
Year ended on
31 December 2021
Net profit/(loss) for the reporting period 222 906
21 787
Number of ordinary shares – A series 50 000
50 000
Number of ordinary shares – B series 44 253 500
44 253 500
Number of ordinary shares – C series 8 100 000
8 100 000
Number of ordinary shares – E series 3 000 000
3 000 000
Number of ordinary shares – F series 13 884 283
13 884 283
Total number of shares 69 287 783
69 287 783
Weighted average number of shares 69 287 783
69 287 783
Weighted average diluted number of shares 69 287 783
69 287 783
Profit per share (in PLN) 3,22
0,31
Diluted profit per share (in PLN) 3,22
0,31
15. Dividend paid and proposed
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.
As at the date of this report, the Company did not hold any preference shares in respec t of dividends.
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 t he 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 Annual 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.
Annual repor t 2022 of Arctic P aper S. A. 65
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
16. Other assets
16.1. Shares in subsidiaries
Na dzień
31
grudnia 2022
Na dzień
31
grudnia 2021
Arctic Paper Kostrzyn S.A. 442 535
442 535
Arctic Paper Munkedals AB
Rottneros AB 101 616
101 616
Arctic
Paper Investment AB, w tym:
205 584
Arctic Paper Investment AB (udziały) 307 858
307 858
Arctic Paper Investment AB (pożyczki) 82 709
Arctic Paper Investment AB (odpis z tytulu utraty wartości) (184 983)
(363 788)
Arctic Paper Investment GmbH
-
-
Arctic Paper Investment GmbH (udziały) 120 031
120 031
Arctic Paper Investment GmbH (odpis z tytulu utraty wartości) (120 031)
(120 031)
Arctic Paper Sverige AB
2 936
2 936
Arctic Paper Sverige AB (udziały) 11 721
Arctic Paper Sverige AB (odpis z tytulu utraty wartości) (8 785)
(8 785)
Arctic Paper Danmark A/S
5 539
5 539
Arctic Paper Danmark A/S (odpis z tytułu utraty wartości) (2 592)
-
Arctic Paper Deutschland GmbH
4 977
4 977
Arctic Paper Norge AS
516
516
Arctic Norge AS (udziały) 3 194
3 194
Arctic Paper Norge AS (odpis z tytulu utraty wartości) (2 678)
(2 678)
Arctic Paper Italy srl
738
738
Arctic Paper UK Ltd.
522
522
Arctic Paper Polska Sp. z o.o.
406
406
Arctic Paper Benelux S.A.
387
387
Arctic Paper France SAS
326
326
Arctic
Paper Espana SL
196
196
Arctic Paper Papierhandels GmbH
194
194
Arctic Paper Power Sp. z o.o. (poprzednio Arctic Paper East Sp. z o.o.)
2 602
2 602
Arctic Paper Baltic States SIA
64
64
Arctic Paper Schweiz AG
61
61
Kostrzyn Packaging
Sp. z o.o.
50
-
Arctic Paper Finance AB
68
68
Razem
854 898
678 635
The value of investments in subsidiary companies was disclosed on the basis of historic costs. In 2022, there was a reversal of
the write-down of shares in Arctic Paper Investment AB in the amount of PLN 1 78,805 thousand, a write-down for shares in Arctic
Paper Danmark A/S in the amount of PLN 2,592 thousand and the acquisition of 100% of all newly created shares in Kostrzyn
Packaging Sp. z o.o. in the amount of PLN 50 thousand.
16.2. Impairment test of investments in subsidiaries
As at 31 December 2022 and 31 December 2021 and earlier impairment tests were conducted at the cash generating unit of
Arctic Paper Grycksbo with reference to tangible fixed assets and intangible assets.
As a result of the analysis, it was decided to carry out an impairment test of the investment in the subsidiary Arctic Paper
Grycksbo AB (directly and solely controlled by Arctic Paper Investment AB, in which the Parent Company holds 100% of the
shares). The impairment test as at 31 December 2022 at Arctic Paper Grycksbo was related to higher -than-expected results of
the company realised as a result of market conditions such as macroeconomic factors, the impact of the COVID -19 pandemic and
higher demand in the paper segment produced by Grycksbo.
Annual repor t 2022 of Arctic P aper S. A. 66
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
As at 31 December 2022 the Company held impairment tests to the value of its holding in Arctic Paper Investment AB, which is a
direct shareholder of Arctic Paper Grycksbo AB. The shares in Arctic Paper Grycksbo AB ar e the main component of the net
assets of Arctic Paper Investment AB. The estimated value of the investment (recoverable amount) of the shares in Arctic Pape r
Investment AB was determined as the sum of the tax group settlement receivables in Arctic Paper I nvestment AB and the value in
use of Arctic Paper Grycksbo AB determined by the discounted cash flow method as at 31 December 2022, which amounted to
PLN 152,082 thousand. In addition, the value in use of Arctic Paper Grycksbo AB was reduced by financial liabilities (including
the financial liabilities of Arctic Paper Grycksbo AB to the Parent Company) and increased by the cash held by Arctic Paper
Grycksbo AB. The total value in use of the investment in shares in Arctic Paper Investment AB amounted to PLN 205,584
thousand as at the balance sheet date, while the carrying amount of the investment in Arctic Paper Investment AB as at 31
December 2022 was PLN 143,793 thousand.
As a result of the impairment test carried out as at 31 December 2022, it was decid ed to partially reverse the impairment
allowances to the shares in Arctic Paper Investment AB recognised in previous years, amounting to PLN 61,791 thousand. As at
30 June 2022, an impairment allowance in the amount of PLN 117,014 thousand was reversed, so the total reversal of this
allowance in 2022 amounted to PLN 178,805 thousand. The reversal of the impairment allowance is disclosed under Impairment
allowances in the statement of profit and loss.
The total cumulative impairment allowance for Arctic P aper Grycksbo as at 31 December 2022 amounted to PLN 184,983
thousand (31 December 2021: PLN 363,788 thousand).
The key assumptions of the impairment test performed at 31 December 2022 are described below.
Key assumptions underlying the calculation of val ue in use
Calculations of the value in use of the paper sale centre at the Grycksbo Paper Mill is most sensitive to the following varia bles:
— Level of sales;
— Selling prices;
— Discount rate;
— Changes in commodity prices;
— Energy price developments;
Level of sales – estimates of the level of sales are made based on budget data on the basis of the expected demand for a given
type of paper manufactured at AP Grycksbo and taking into account the paper mill’s production capacity.
Selling prices – estimates of selling prices are made based on budget data on the basis of the expected demand for a given type
of paper manufactured at AP Grycksbo and in correlation with the prices of raw materials, mainly pulp.
Discount rate – reflects the assessment of risks inherent to the centre estimated by the management. This is the rate applied by
the management to estimate the operational effectiveness (results) and future investment proposals. In the budgeted period th e
applied discount rate is 9.4% (the rate applied as at 31Dec ember 2021: 8.0%). The discount rate was determined on the basis of
the following: Weighted average cost of capital (WACC).
Changing raw material prices (mainly pulp) – estimates concerning changes to raw materials are made on the basis of the
external data related to pulp prices. The main source of data underpinning the assumptions made are forecasts from a reputable
external pulp market research company. It should be noted that the costs of pulp is characterised by high volatility.
Changing energy prices – a growth of energy prices, mainly electricity, listed at Nordpool, the commodity exchange in Sweden,
and of the energy generated from biomass as the core source of energy, results from the assumptions applied to the projection s
approved by the local management of the Grycksbo Paper Mill. The assumed power purchase prices also take into account price
levels that have been hedged by the company by forward contracts.
Annual repor t 2022 of Arctic P aper S. A. 67
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The table below shows the main assumptions used to calculate the value in use at 31 December 2022. The individual values
represent the Board’s assessment of the future trends of each assumption and are based on historical data from both internal and
external sources of the Paper Mill.
Main assumptions
2022
Approved
projections based on
2023
-
2027
Weighted average cost of capital (WACC)
9,4%
Sales volune (tonnes)
210 000
Average annual change in selling prices in the forecast period
(1,8%)
Average annual change in pulp purhcase prices in the
forecast period
(0,7)%
Average annual change in energy purchase prices in the forecast period
17,8%
Growth rate in the residual period
0,0%
The test conducted assumes that the Paper Mill will continue to operate during the residual period.
The table below presents a sensitivity analysis of an impairment test held on 31 December 2022:
Parameter
Average annual
change of the
parameter by
Impact on the
value of assets
in use
31 December 2022
Weighted average cost of capital (WACC) +0,1 p.p.
(673)
Growth rate in the residual period +0,1 p.p.
401
Sales volume in the the forecast period 1%
63 853
Sales prices in the the forecast period 1%
87 068
Pulp purchase prices in the the forecast period 1%
(35 385)
Energy purchase prices in the the forecast period 10%
(93 710)
Weighted average cost of capital (WACC) -0,1 p.p.
686
Growth rate in the residual period -0,1 p.p.
(393)
Sales volume in the the forecast period -1%
(55 300)
Sales prices in the the forecast period -1%
(92 066)
Pulp purchase prices in the the forecast period -1%
35 385
Energy purchase prices in the the forecast period -10%
87 535
Annual repor t 2022 of Arctic P aper S. A. 68
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
16.3. Other financial assets
Maturity date
As at
31 December 2022
As at
31 December 2021
Short-term
Loans granted to Arctic Paper Grycksbo AB (short-term part)
2021 -
5 167
- amount: EUR 2,014 thousand
Loans granted to Paper Grycksbo AB
2022 8 154
38 906
- amount: EUR 8,400 thousand
Loans granted to Arctic Paper Italy
2023 375
-
- amount: EUR 80 thousand
Cashpooling Arctic Paper Grycksbo AB
-
77 032
Loans granted to Arctic Paper Mochenwangen GmbH
27 567
27 099
- amount: EUR 6,163 thousand
Loan granted to Arctic Paper Investment GmbH
30 269
30 269
- amount: EUR 6,992 thousand
Impairment allowances to assets
(57 836)
(57 368)
- applies to Arctic Paper Investment GmbH and Arctic Paper Mochenwangen GmbH
Measurement of financial instruments 4 199
-
12 728
121 104
*possibility to repay upon request within 14 days
Maturity date
As at
31 December 2022
As at
31 December 2021
Long
-
term
Loan granted to Arctic Paper Grycksbo AB
31 516
-
-
amount EUR 8,400 thousand
Loan granted to Arctic Paper Investment GmbH
4 286
4 286
-
amount: EUR 990 thousand
Impairment allowances to assets
-
applies to Arctic Paper Investment GmbH
(4 286)
(4 286)
Measurement of financial instruments
3 945
3 192
Employee fund 52
2 509
35 514
5 701
Total other financial assets
126
805
*may be repaid prematurely upon request
16.4. Other non-financial assets
As at
31 December 2022
As at
31 December 2021
Insurance 76
99
VAT refundable 2 702
580
Accounting for costs related to new financing 2 078
1 716
Other 961
479
Total 5 817
2 874
– long-term -
-
– short-term 5 817
2 874
5 817
2 874
Annual repor t 2022 of Arctic P aper S. A. 69
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
17. Trade and other receivables
Note
As at
31 December 2022
As at
31 December 2021
Trade receivables from related entities
24 39 875
54 200
Trade receivables from other entities
223
200
Total (gross) receivables
40 097
54 399
Impairment allowances to receivables
(22 531)
(22 531)
Net receivables
17 566
31 868
The Company has no receivables payable after 12 months.
As at 31 December 2022, the cumulative value of short -term write-downs of receivables from AP Investment GmbH amounts to
PLN 11,415 thousand and receivables from AP Mochenwangen GmbH: PLN 11,116 thousand)
Terms and conditions of transactio ns with related entities are presented in note 24.
Ageing of trade receivables as at 31 December 2022
current
1
-
30
31
-
90
91
-
180
181
-
365
over 365
Trade receivables from related entities
17
344
14 670
0
0
0
0
2 674
Trade
receivables from other entities
223
75
39
14
2
88
5
Net receivables
17
567
16
699
39
14
2
88
2 679
18. Cash and cash equivalents
Cash at bank earns interest at variable interest rates based on overnight bank deposit rates.
Short-term deposits are made for varying periods of between one day to one month depending on the immediate cash
requirements of the Company and earn interest at the respective short-term deposit rates. As at 31 December 2022 the Company
had no short-term deposits.
The fair value of cash and cash equivalents at 31 December 2022 is PLN 213,272 thousand (31 December 2021: PLN 14,966
thousand).
The balance of cash and cash equivalents disclosed in the cash flow statement consisted of the following items:
As at
31 December 2022
As at
31 December 2021
Cash in bank and on hand 213 272
14 966
213 272
14 966
Annual repor t 2022 of Arctic P aper S. A. 70
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
19. Share capital and reserve capital/other reserves
19.1. Share capital
Share capital
As at
31 December 2022
As at
31 December 2021
Ordinary series A shares 50 000
50 000
Ordinary series B shares
44 253 500
44 253 500
Ordinary series C shares
8 100 000
8 100 000
Ordinary series E shares
3 000 000
3 000 000
Ordinary series F shares 13 884 283
13 884 283
Total number of shares
69 287 783
69 287 783
Value of share capital (in PLN)
69
287
783
69
287
783
Nominal value of shares
All outstanding shares currently have a nominal value of PLN 1 and have been fully paid.
Purchase of treasury shares
Until the day of these financial statements, the Management Board of Arctic Paper S.A. has not purchased any treasury shares of
the Company.
Major shareholders
As at 31 December 2022
As at
31 December 2021
Share in the
share capital
Share in the
total number of
votes
Share in the
share capital
Share in the
total number of
votes
Thomas Onstad 68.13%
68.13%
68.13%
68.13%
indirectly via 59.15%
59.15%
59.15%
59.15%
Nemus Holding
AB
58.28%
58.28%
58.28%
58.28%
other entity 0.87%
0.87%
0.87%
0.87%
directly
8.98%
8.98%
8.98%
8.98%
Other 31.87%
31.87%
31.87%
31.87%
19.2. FX differences on translation of investments in foreign entities
Swedish krona is the functional currency of the Company’s foreign branch.
As at the balance sheet date, the assets and liabilities of the branch are translated into the presentation currency of the G roup
and its profit and loss account is translated using the average weighted exchange rate for the relevant reporting period. The FX
differences on translation are recognised in other total comprehensive income and cumulated in a separate equity item.
As at 31 December 2022, FX differences on translation of t he foreign branch recognised in capital amounted to PLN 1,463
thousand (as at 31 December 2021: PLN 756 thousand). The FX differences on translation of the foreign branch, recognised in
the total comprehensive income statement, amounted to PLN 707 thousand in 2022 and PLN 306 thousand in 2021.
Annual repor t 2022 of Arctic P aper S. A. 71
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
19.3. Reserve capital
The reserve capital was originally established from the issue premium in 2009 of PLN 35,985 thousand which was reduced by the
costs of the issue recognised as a decrease of the reserve capital and was modified over the successive years as a result of
subsequent share issues and allocations from profit.
As at 31 December 2022, the total value of the Company’s reserve capital is PLN 427,502 thousand (31 December 2021: PLN
427,502 thousand).
19.4. Other reserves
As at 31 December 2022, the total value of the Company’s other reserves is PLN 10 6.725 thousand (31 December 2021: PLN
124.500 thousand)
19.5. Retained profit/(loss) and restrictions to dividend distribution
In accordance with the provisions of the Code of Commercial Companies, the Company is obliged to establish reserve capital to
cover potential losses. At least 8% of the profit for the financial year disclosed in the financial statements of the Company should
be transferred to the category of the capital until the capital has reached the amount of at least one third of the share capital.
Appropriation of the reserve capital and other reserves depends on the decision of the General Meeting; however, the reserve
capital equivalent to one third of the share c apital may be used solely for the absorption of losses disclosed in the financial
statements and may not be used for any other purposes.
Dividend payment restrictions were described in note 15.
As at 31 December 2022, there were no other restrictions conce rning dividend distribution.
20. Interest-bearing loans and borrowings
Repayment
date
Interest rate
*
As at
31 December
2022
As at
31 December
2021
Short-term
Long-term loan syndicate of banks (Santander Pekao BNP) PLN
short-term part
2026 * 9.10% 14 828
16 064
Long-term loan syndicate of banks (Santander Pekao BNP) EUR
short-term part
2026 * 3.75% 15 497
15 556
Revolving loan syndicate of banks (Santander Pekao BNP) PLN
2024 **
8.54% -
11 793
Revolving loan syndicate of banks (Santander Pekao BNP) EUR
2024 **
3.09% -
6 520
Cashpooling Arctic Paper Grycksbo AB
56 449
-
Cashpooling Arctic Paper Kostrzyn S.A.
164 163
53 704
Cashpooling Arctic Paper Munkedals AB 12 816
42 010
263 752
145 648
Repayment
date
Interest rate
As at
31 December
2022
As at
31 December
2021
Long-term
Long-term loan syndicate of banks (Santander Pekao BNP) PLN
long-term part
2026 *
9.10% 36 044
50 968
Long-term loan syndicate of banks (Santander Pekao BNP) EUR
long-term part
2026 *
3.75% 36 979
50 579
73 022
101 546
* The interest rate depends on the reference rates (WIBOR 3M, EURIBOR 3M) and on compliance with certain financial ratios
** The interest rate depends on the reference rates (WIBOR 1M, EURIBOR 1M) and on compliance with certain financial ratios
Annual repor t 2022 of Arctic P aper S. A. 72
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
20.1. Collateral to loans
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, in favour of Bank Santander Bank Polska S.A., acting as Security Agent,
collateral was established for the above receivables and other claims, 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 and 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);
› declaration by the Company and the Guarantors on volunta ry submission to 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 the 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 Company and the Guarantors, registered in Poland;
2. under Swedish law – Collateral Documents establishing the following Collateral:
› pledges on all shares held by the Companies and the Guarantors, registered in Sweden, belonging to grou p companies,
except for 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 Guaran tors 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.
21. Long-term employee liabilities
As at 31 December 2022, the Company has no long -term provisions.
Annual repor t 2022 of Arctic P aper S. A. 73
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
22. Trade and other payables and other financial liabilities
22.1. Trade and other payables (short-term)
Note
As at
31
December 2022
As at 31 December
2021
Trade payables
Due to related entities 24 587
4 251
Due to other entities 18 587
23 055
19 175
27 307
Other liabilities
Liabilities due to employees
-
619
Liabilities towards the budget
569
441
Advisory services
232
259
Other liabilities
582
457
1 383
1 776
The terms and conditions of financial liabilities presented above:
— Terms and conditions of transactions with related entities are presented in note 24.
— Other liabilities are interest free and the usual payment term is 30 days.
— There are no receivables payable after 12 months.
22.2. Other financial liabilities
As at
31 December 2022
As at
31 December 2021
Other financial liabilities
Measurement of financial instruments
-
-
Lease liabilities 59
239
59
239
Other financial liabilities
Long-term
10
128
Short-term 49
111
59
239
23. Contingent liabilities
As at 31 December 2022, the Company had no contingent liabilities.
23.1. Tax settlements
Tax settlements and other areas of activity subject to specific regulations (like customs or FX matters) may be inspected by
administrative bodies that are entitled to impose high penalties and sanctions.
No reference to stable legal regulations in Poland results in lack of clarity and consistency in the regulations. Frequent
differences of opinion as to legal interpretation of tax regulations – both inside state authorities and between state authorities and
enterprises – generate areas of uncertainty and conflicts. As a result, tax risks in Poland are much higher than in countries with a
more developed tax system.
Annual repor t 2022 of Arctic P aper S. A. 74
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
23.2. Uncertainties related to tax settlements
Regulations related to corporate income tax are subject to frequent changes. Those frequent changes res ult in unavailability of
appropriate points of reference, inconsistent interpretations and few precedents that could apply. Additionally, the applicab le
regulations contain also certain ambiguities that result in differences of opinion as to legal interpre tations of tax regulations –
among public authorities and between public authorities and enterprises.
Tax settlements and other areas of operations (for instance customs or FX issues) may be inspected by the authorities that ar e
entitled to impose high penalties and fines as well additional tax liabilities resulting from inspections that have to be paid along
with high interest. As a result, tax risk in Poland is higher than in countries with more mature tax systems.
Therefore, the amounts presented and disclosed in the financial statements may change in the future as a result of final decisions
by tax inspection authorities.
The Company recognises and measures assets or liabilities applying the requirements of IAS 12 Income Taxes, on the basis of
profit (tax loss), taxation base, carried forward tax losses, unutilised tax credits and applicable tax rates, and further su bject to
uncertainties related to tax settlements. When an uncertainty exists if and to what extent the tax authority accepts tax s ettlements
to specific transactions, the Group recognises those settlements subject to u ncertainty assessment.
Tax settlements may be subject to inspections for five years from the end of the year in which the tax was paid. Consequently ,
the Company may be subject to additional tax liabilities, which may arise as a result of additional tax audits.
In the opinion of the Management Board, such risk does not exist as at 31 December 2022 and therefore the Company has not
established any provision for recognised and quantifiable tax risk.
Annual repor t 2022 of Arctic Paper S.A. 75
Standalone financial statements
(unless s pecified otherwise, al l amounts are in PLN ‘000)
24. Information on related entities
Related Entity
Sales to
related
entities
Purchases
from
related
entities
Interest –
operational
income
Dividend
received
Interest
–
financial
expense
Guarantees
obtained –
other
financial
expenses
Receivables
from related
entities
including
overdue
Loan
receivables,
including
cashpooling
Liabilities
to related
entities
including
overdue,
after the
payment
date
Loans
liabilities,
including
cashpooling
Parent entity:
Nemus Holding AB 2022 2
-
-
-
-
-
2 674
-
-
-
-
-
2021 1
801
-
-
-
-
3 194
-
-
347
-
-
Subsidiaries 2022 12 754
2 547
2 290
57 416
1 506
2 645
38 631
22 531
180 590
587
-
233 427
2021 22 402
15 287
2 710
38 724
11
2 585
51 005
22 531
261 181
3 904
-
96 715
Total 2022 12 756
2 547
2 290
57 416
1 506
2 645
41 305
22 531
180 590
587
-
233 427
impairment allowances
-
-
-
-
-
-
(22 531)
-
(57 836)
-
-
-
presentation as interests in
subsidiaries
-
-
-
-
-
-
-
-
(82 709)
-
-
-
2022 following impairment allowances and changes to
presentation
12 756
2 547
2 290
57 416
1 506
2 645
21 448
22 531
40 045
587
-
233 427
-
-
2021 22 403
16 088
2 710
38 724
11
2 585
54 200
22 531
261 181
4 251
-
95 715
impairment allowances
-
-
-
-
-
-
(22 531)
-
(57 368)
-
-
-
presentation as interests in
subsidiaries
-
-
-
-
-
-
-
-
(82 709)
-
-
-
2020 following impairment allowances and changes to
presentation
22,403
16 088
2 710
38 724
11
2 585
31 669
22 531
121 104
4 251
-
95 715
Annual repor t 2022 of Arctic P aper S. A. 76
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
24.1. Transactions with parent entities
Transactions between the Company and Nemus Holding AB took place during the year ended on 31 December 2022 and 31
December 2021. They were disclosed in note 24.
24.2. Terms and conditions of transactions with related entities
Related entity transactions are made at arm’s length.
The related entities Arctic Paper Kostrzyn SA, Arctic Paper Grycksbo AB and Arctic Paper Munkedals AB (the “Guarantors”) have
provided guarantees to the Company in connection with the term and revolving loan agreements concluded on 2 April 2021. The
fees for the guarantees were confirmed on the basis of a benchmarking exercise carried out in accordance with the OECD
Transfer Pricing Guidelines for Multinational Enterpris es and Tax Administrations. The guarantors issue invoices to the Company
once a year for the guarantee fees, payable within 21 days.
Receivables from related entities (trade receivables and loans) are unsecured, their maturity is 14 -21 days and they are settled
by bank transfer.
24.3. Loan granted to members of the Management Board
In the period covered by these financial statements, the Company did not grant any loans to key management and did not grant
any loans in the comparable period.
24.4. Remuneration of the Company’s managerial staff
Key management staff of the Company as at 31 December 2022 comprised two persons: President of the Management Board and
a Member of the Management Board.
The table below presents the total value of remuneration to the members of the Management Board and the members of the
Supervisory Board for the current and previous year:
Year ended on 31
December 2022
Year ended on 31
December 2021
Management Board
Short-term employee benefits 2 280
2 613
Post-employment payments 335
353
2 615
2 966
Supervisory Board
Short-term employee benefits 1 098
1 034
Total 3 378
4 000
Short-term employee benefits (PLN 2.280 thousand) include costs incurred by the Company for key management personnel
services provided by a separate management unit in the amount of PLN 1,496 thousand.
In the period covered by these financial statements, the Company did not have any unsettled balances t o key management.
Annual repor t 2022 of Arctic P aper S. A. 77
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
25. Information on the remuneration of the statutory auditor or entity authorised to audit
financial statements
The table below presents the remuneration of the statutory auditor, paid or payable for the year ended on 31 December 2022 and
31 December 2021 by category of services:
Service type
Year ended on 31
December 2022
Year ended on 31
December 2021
Statutory audit of the annual financial statements
307
195
Review of interim financial statements
98
83
Mandatory audit of the annual financial statements (branch)
-
-
Tax consultancy services
-
-
Other services
42
-
Total
447
278
26. Financial risk management objectives and policies
The core financial instruments used by the Company include bank loans, cash on hand and loans granted and borrowings
received within the Group. The main purpose of these financial instruments is to raise finance for the Company’s and Group’s
operations. The Group has various other financial instruments such as trade receivables and payables which arise directly from
its operations.
The principle used by the Company currently and throughout the whole period covered with these financial statements is not to
trade in financial instruments.
The core risks arising from the Company’s financial instruments include: interest rate risk, liquidity risk, FX risk and cred it risk.
The Management Board verifies and approves the management principles of each type of risk – the principles are concisely
presented here below. The Company has also been monitoring the risk of market prices of holdings of financial instruments.
26.1. Interest rate risk
The Company’s exposure to the risk of changes in market interest rates relates primarily to financial liabilities and granted
variable interest loans.
Annual repor t 2022 of Arctic P aper S. A. 78
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
Interest rate risk – sensitivity to fluctuations
The following table shows financial instruments broken down into fixed and floating rates
31.12.2022
31.12.2021
Financial
instruments:
carrying amount
carrying amount
-
with a fixed interest rate
Trade receivables
17 566
31 868
Loans granted
40 0
45
44 073
Financial liabilities
8 144
3 192
Cash and cash equivalents
213 272
14 966
Trade
liabilities
(19 175)
(27 307)
259
85
2
66 792
SWAP effect
(103 348)
(151 479)
156 5
0
4
(8
4 687
)
-
with a variable interest rate
Loans granted
–
cashpooling
-
77 032
Loans received
–
cashpooling
(233 427)
(95 715)
Interest
-
bearing loans
,
borrowings
and debt
(103 348)
(151 479)
Lease liabilities
(10)
(128)
(336 785)
(170 290)
SWAP effect
103 348
151 479
(233 437)
(18 811)
The following table shows the sensitivity of gross profit/(loss) to reasonably possible changes in interest rates assuming ot her
factors remain constant. No impact on equity or total comprehensive income has been presented.
Gross financial effect 2022 Gross financial effect 2021
+ 1 p.p. -1 p.p. + 1 p.p. -1 p.p.
Variable interest rate financial instruments
(3 368)
3 368
(1 703)
1 703
SWAP effect 1 033
(1 033)
1 515
(1 515)
(2 334)
2 334
(188)
188
26.2. FX risk
The Company is exposed to transactional FX risk. Such risks arise mainly from the Company’s receipt of dividends from
subsidiaries and the granting and receiving of loans in currencies, and to a lesser extent from purchase transactions in curr encies
other than its valuation currency.
The following table demonstrates the sensitivity of gross profit/(loss) (due to changes in the fair value of monetary assets and
liabilities) and the Company’s equity to reasonably possible change of FX rates with all other variables held constant.
Annual repor t 2022 of Arctic P aper S. A. 79
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
31.12.2022
PLN
EUR
SEK
Inne
Trade receivables
8 648
2 276
5 904
739
Loans granted
-
-
-
Cash and cash equivalents
122 961
8 757
434
Employee fund
-
-
52
-
Interest
-
bearing loans
-
-
Trade and other
payables
3 466
5 041
357
Net exposure
109 340
9 672
815
31.12.2021
PLN
EUR
SEK
Inne
Trade receivables
4 868
8 670
1 254
Loans granted
-
-
Cash and cash equivalents
745
3 164
731
Interest
-
bearing loans
-
-
2 509
-
Trade and other payables
-
-
Borrowings received
4 431
734
Net exposure
(23 067)
9 195
4 283
1 251
Growth/drop of
FX rates
Impact on
gross profit or
loss
Impact on total
comprehensive
income
31 December 2022
–
SEK
+1%
9
7
-
-
1%
(9
7
)
-
31 December 2022
–
EUR
+1%
1 093
-
-
1%
(1 093)
-
31 December 2022
–
other
+1%
8
-
-
1%
(8)
-
Growth/drop of
FX rates
Impact on
gross profit or
loss
Impact on total
comprehensive
income
31 December 2021
–
SEK
+1%
43
-
-
1%
(43)
-
31 December 2021
–
EUR
+1%
92
-
-
1%
(92)
-
31 December 2021
–
other
+1%
13
-
-
1%
(13)
-
26.3. Credit risk
With respect to the Company’s other financial assets such as cash and cash equivalents, the Company’s exposure to credit risk
arises from default of the counter party, with a maximum exposure equal to the carrying amount of those instruments.
2022-12-31
2021-12-31
Other financial assets 48 242
126 805
Trade receivables 17 566
31 868
Cash and cash equivalents 213 272
14 966
Total 279 080
173 640
Annual repor t 2022 of Arctic P aper S. A. 80
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
There are no significant concentrations of credit risk in the Company with the exception of Group entities , in particular relating to
loans to Arctic Paper Grycksbo AB (other financial assets) and cash resulting from Group companies’ participation in the cash -
pool system.
The table below presents information on credit risk exposure for trade receivables and o ther financial assets (loans and cash
pooling) as at 31 December 2022 and 31 December 2021:
2022-12-31 2021-12-31
Group 1 Group 2 Group 1 Group 2
Trade receivables – gross value 17 566
22 531
31 868
22 531
Impairment allowances -
22 531
-
22 531
Trade receivables – carrying amount 17 566
-
31 868
-
Other financial assets – gross value 48 242
57 836
126 805
57 368
Impairment allowances -
57 836
-
57 368
Other financial assets – carrying amount 48 242
-
126 805
-
The company only works with group entities. Credit risk is assessed taking into account the individual characteristics of each of
the Company’s counterparties. Group 2 assets were fully covered by an impairment allowance. For group 1, the default rates
calculated for the previous 3 years are zero, therefore the Company did not recognize expected credit losses on these assets as
at 31 December 2022 and 31 December 2021.
The Company recognises impairment allowances that correspond to the estimated values of expec ted credit losses. The core
component of such allowances is the part covering specific losses due to exposure to a single material risk.
26.4. Liquidity risk
The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool. The tool considers the maturity of
both its financial investments and financial assets (e.g. receivables, other financial assets) and projected cash flows from
guaranteed bank loans.
The table below presents the maturity profile of the Company’s financial liabilit ies at 31 December 2022 based on maturities of
contractual undiscounted payments.
31 December 2022
Upon request
Less than 3
months
3 to 12
months
1 to 5 years
> 5 years
Total
Interest
-
bearing loans
and borrowings
336 775
-
233 427
32 292
77 739
-
343 458
Other liabilities
19 175
-
19 187
37
10
-
19 234
-
252 614
32 328
77 749
-
362 692
31 December 2021 Upon request
Less than 3
months
3 to 12
months
1 to 5 years
> 5 years
Total
Interest
-
bearing loans, borrowings
247 194
-
114 028
30 294
108 205
-
252 527
Other liabilities
27 307
-
27 335
83
128
-
27 546
-
141 363
30 377
108 333
-
280 073
Financial liabilities with a maturity period of less than 3 months include, among others, cash -pooling liabilities towards related
entities, as at 31 December 2022 they amounted to PLN 233,427 thousand.
As at 31 December 2022, the Company held no contingent liabilities.
Annual repor t 2022 of Arctic P aper S. A. 81
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
27. Financial instruments
The Company holds the following financial instruments: cash in bank accounts, loans, borrowings, receivables, liabilities und er
financial leases and SWAP interest rate contracts.
27.1. Fair value of each class of financial instruments
Due to the fact that the carrying amounts of the financial instruments held by the Group do not materially differ from their fair
value (except those listed in the table below), the table below p resents all financial instruments by their carrying amounts, split
into classes and categories of assets and liabilities.
Book value
Category in compliance
with IFRS 9
31 December
2022
31 December
2021
Financial assets
Other (long-term) financial assets WwZK 31 568
2 509
Trade and other receivables WwZK 17 566
31 868
Cash and cash equivalents WwZK 213 272
14 966
Derivative instruments IRZ 8 145
3 192
Other (short-term) financial assets WwZK 8 529
121 104
Total 279 080
173 640
Financial
liabilities
Interest-bearing loans, borrowings and bonds WwZK 336 775
247 194
Trade payables WwZK 19 175
27 307
Leasing liabilities/other liabilities WwZK 59
239
Total 356 008
274 740
Abbreviations
used:
WwZK - Financial assets/liabilities measured at amortised cost
WwWGpWF
–
Financial assets/liabilities measured at fair value through profit and loss account
IRZ- hedging instruments
Loans with the book value of PLN 336,775 thousand as at 31 December 2 022 have fair value of PLN 338,782 thousand.
As at 31 December 2022 and as at 31 December 2021, financial instruments as at the measurement hierarchy are qualified to
level 2 in case of derivative instruments.
27.2. Changes to liabilities resulting from financing activity
Year ended on
31 December 2022
Note
As at 1
January 2022
Changes
from
financing
cash flows
Effect of changes in
foreign exchange
rates
Changes
in fair
values
Other
changes
As at
31 December
2022
Interest
-
bearing loans
and
borrowings
20
(151 479)
(162)
59
(103 347)
Finance lease liabilities
22.2
(239)
180
-
-
-
(59)
Derivative financial
instruments
27.3
3 192
2 016
-
2 936
-
8 144
Total liabilities from financing
activities
(148 527)
(162)
2 936
59
(95 262)
Annual repor t 2022 of Arctic P aper S. A. 82
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
27.3. Collateral
In connection with interest rate risk as detailed in note 26.1, the Company hedges its future cash flows that may fluctuate as a
result of the risk. As at 31 December 2022, the Company held loans and debt securities for PLN 103,348 thousand with a variable
interest rate that were hedged with SWAP derivative instruments (PLN 133,166 thousand as at 31 December 2021).
The effectiveness of the hedging instruments is very hi gh due to the fact that the parameters of the hedging instruments are
matched to the hedged items, particularly with regard to the denominations and dates of the cash flows, the interest rate
underlying the calculation of these flows, and the interest accr ual conventions. The company assesses whether the derivative
designated in each hedging relationship will effectively offset changes in the cash flows of the hedged item using the notion al
derivative method.
Cash flow hedge
As at 31 December 2022, the Company used cash flow hedge accounting for the following hedging items:
— he Company designated SWAP derivatives to hedge accounting to hedge interest payments in EUR on a bank loan in EUR,
— the Company designated SWAP derivatives to hedge accounting to hedg e interest payments in PLN on a bank loan in PLN,
Cash flow volatility hedge accounting related to variable loan interest rate of the long -term loan with the use of SWAP
transactions
The table below presents detailed information concerning the hedging rela tionship in the cash flow hedge accounting related to
the payment of interest:
SWAP on the interest rate EUR PLN
Type of hedge
Hedge of cash flows related to variable interest rate
on the EUR long-term loan
Hedge of cash flows related to variable interest rate
on the PLN long-term loan
Hedged position
The hedged item are future EUR interest flows in
EUR related to a loan in EUR calculated on the basis
of 3M EURIBOR
Future PLN interest flows on PLN loan calculated on
the basis of 3M WIBOR
Hedging instruments
SWAP transaction under which the Company agreed
to pay interest in EUR on the EUR loan on the basis
of a fixed interest rate
SWAP transaction under which the Company agreed
to pay interest in PLN on the PLN loan on the basis
of a fixed interest rate
Currency Date Loan amount PLN as of 31.12.2022
EUR 2021-04-02 – 2026-04-02
20 928 327
EUR 2021-04-02 – 2026-04-02
15 773 612
EUR 2021-04-02 – 2026-04-02
15 773 612
52 475 552
PLN 2021-04-02 – 2026-04-02
20 287 316
PLN 2021-04-02 – 2026-04-02
15 292 412
PLN 2021-04-02 – 2026-04-02
15 292 412
50 872 140
The total value of loans is secured with an interest rate swap
103 347 692
The fixed interest rate on the EUR flow hedge is: 0.11%, and for flows in PLN it is: 1.21%.
Annual repor t 2022 of Arctic P aper S. A. 83
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The table below presents the fair value of hedging instruments in cash flow hedge accounting as at 31 December 2022 and the
comparative data:
Status as at 31 December 2022
Status as at 31 December 2021
Assets
Equity and
liabilities
Assets
Equity and
liabilities
SWAP
8
144
-
3
192
-
Total hedging derivative instruments
-
-
3
192
-
The table below shows the nominal value of the amounts associated with the positions designated as hedging instruments at 31
December 2022:
Up to 1 year
1 to 5
years
Over 5 years
Total
interest rate SWAP
principal repayment (in PLN ‘000)
30
325
73
022
-
103
348
The table below presents the amounts related to cash flow hedge accounting that were recognised in 2022 by the Company in the
income statement and in the total comprehensive income statement:
Year ended on
31 December 2022
Revaluation reserve as at 31 December 2022 – changes of fair value measurement of hedging derivative instruments
due to the hedged risk, corresponding to effective hedging, less the tax effect
4
013
Ineffective part of the change in fair value measurement due to the hedged risk, recognised in financial income or
expenses
-
The period of the anticipated hedged flows
1 January 2022 –
02 April 2026
The table below presents changes to revaluation reserve due to cash flow hedge accounting in 2022:
Year ended on
31 December 2022
Revaluation reserve as at 01 January 2022
2 584
Deferral to changes of fair value measurement of the hedging derivative instruments due to the hedged risk,
corresponding to the effective hedge, less the tax effect
4
013
The amount of the changes of fair value measurement of the hedging derivative instruments due to the hedged risk,
removed from the revaluation reserve and transferred to financial income or expenses
-
Revaluation reserve as at 31 December 2022
6
597
28. Capital management
The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximise shareholder value. Credit ratings and capital ratios depend on current
market conditions and the Group’s situation therefore there is no established adequate level by the Company.
Annual repor t 2022 of Arctic P aper S. A. 84
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintai n
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares. No changes were made in the objectives, policies or processes during the year ended on 31 December 2022
and 31 December 2021.
As at
31 December 2022
As at
31 December 2021
Interest-bearing borrowings 336 834
247 433
Trade and other payables 20 558
29 083
Minus cash and cash equivalents (213 272)
(14 966)
Net debt 144 119
261 550
Equity 776 970
577 059
Equity and net debt 921 089
838 609
Leverage ratio 0.16
0.31
The Company monitors its equity using a leverage ratio, which is net debt divided by total equity plus net debt. The Company’ s
net debt includes interest-bearing loans and borrowings, trade payables and other liabilities, less cash and cash equivalents.
29. Employment structure
The average headcount in the Company in the year ended on 31 December 2022 and 31 December 2021 was as follows:
As at
31 December 2022
As at
31 December 2021
Management Board* 2
2
Finances 4
4
Logistics 26
26
Administration 2
2
IT 1
-
Total 35
34
* Members appointed to the Management Board
30. Material events after the balance sheet date
30.1. Joint investment of 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 Packaging 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.
Annual repor t 2022 of Arctic P aper S. A. 85
Standalone f inancial statements
(unless s pec ified otherwise, al l amounts are in PLN ‘000 )
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 co mpletion 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 ec onomic 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 investment will generate an annual revenue of approximately P LN
60 million.
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.
From the balance sheet date until the day of publishing of these consolidated financial statements, there were no other events
which might have a material impact on the Company’s financial and capital position.
Signatures of the Members of the Management Board
First and last name Date Signature
President of the Management Board
Chief Executive Officer
Michał Jarczyński 28 March 2023
signed with a qualified
electronic signature
Member of the Management Board
Chief Financial Officer
Göran Eklund 28 March 2023
signed with a qualified
electronic signature