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Årsredovisning 2023

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Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 69
(unless specified otherwise, all amounts are in PLN ‘000)

The balance of cash and cash equivalents disclosed in the cash flow statement consisted of the following items:
As at 31 December 2023 As at 31 December 2022

Cash in bank and on hand 500 316 481 930
Short-term deposits 133 -
Cash in transit - -

Cash and cash equivalents in the consolidated statement of financial position 500 449 481 930
Cash in bank and on hand attributable to discontinued operations - -

Cash and cash equivalents in the consolidated cash flow statement 500 449 481 930

Since 2017, cash pooling in EUR and in PLN has been operating within the Arctic Paper Group companies. The operation
consists in pooling cash balances held by the individual system participants and setting them off with temporary shortages of
funds with the other cash-pool participants. The solution is aimed at supporting effective cash management in the Group and
minimising the costs of external funding sources by using the Group’s own cash.

25. Share capital and other capital
Share capital
Share capital (in PLN)

As at 31 December
2023
As at 31
December
2022

series A ordinary shares of the nominal value of PLN 1 each 50 000 50 000
series B ordinary shares of the nominal value of PLN 1 each 44 253 500 44 253 500
series C ordinary shares of the nominal value of PLN 1 each 8 100 000 8 100 000
series E ordinary shares of the nominal value of PLN 1 each 3 000 000 3 000 000
series F ordinary shares of the nominal value of PLN 1 each 13 884 283 13 884 283

Number of shares 69 287 783 69 287 783

Value of share capital 69 287 783 69 287 783
25.1.1. Changes to the share capital of Arctic Paper S.A.
In 2022 and 2021 there were no changes to the share capital of Arctic Paper S.A.
25.1.2. Nominal value of shares
The shares have a nominal value of PLN 1 and have been fully paid.
25.1.3. Shareholders’ rights
Shares in all series are entitled to one vote and they have equal privileges as to dividend and capital refund.

===== SIDA 70 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 70
(unless specified otherwise, all amounts are in PLN ‘000)

FX differences on translation of foreign operations
This item includes exchange rate differences resulting from the translation of the financial statements of foreign subsidiaries, for
which the functional currency is different from PLN, into the presentation currency of these financial statements, i.e. PLN. The
rules of translation along with the applied FX rates are described in note 9.4.
Supplementary capital
Supplementary capital is made up of the issue price of shares of Arctic Paper S.A. in excess of their nominal value reduced by
the costs of the issues that took place in 2009, 2010 and 2013, equal to PLN 134,257 thousand, reduction of the nominal price of
the shares from PLN 10 to PLN 1 in 2012 of PLN 498,632 thousand and a portion of retained profit and accumulated loss
resulting from profit distribution by Arctic Paper S.A. of PLN -224,913 thousand.
2023-12-31 2022-12-31
Excess of issue price over nominal value (agio) 117 486 134 257
Capitals under Article 396 of the Code of Commercial Partnerships and
Companies 19 771 19 771
Decrease of share capital 498 632 498 632
Capital created from company profits 35 829 -
Coverage of losses with supplementary capital (244 683) (244 683)
TOTAL 443 805 407 977

The table below presents changes to the supplementary capital in the year ended on 31 December 2023 and 31 December 2022:

Year ended on 31
December 2023
Year ended on 31
December 2022

Supplementary capital at the beginning of period 407 976 407 976
Profit/loss distribution 35 829 -

Supplementary capital at the end of the period 443 419 407 976

In accordance with provisions of the Code of Commercial Partnerships and Companies, the parent entity is obliged to
establish supplementary 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 supplementary capital and
reserve funds is determined by the General Meeting; however, a part of supplementary 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.

===== SIDA 71 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 71
(unless specified otherwise, all amounts are in PLN ‘000)

Other capital
The capital reserve comprises part of the retained earnings and losses arising from the distribution of the result of Arctic Paper
S.A., the reclassification between capitals in APSA and the capital from the valuation of hedging transactions. Information on the
Other capital is presented in the table below:
2023-12-31 2022-12-31
Other reserves created from profits 135 511 135 511
Capital from revaluation of a hedging instrument 27 240 176 936
TOTAL 162 751 312 447

The table below presents changes to the reserve capitals in the year ended on 31 December 2023 and 31 December 2022:

Year ended on 31
December 2023
Year ended on 31
December 2022

Other reserves at the beginning of period 312 447 201 226

Changes to cash flow hedges

Change of measurement of financial instruments, of which: (172 130) 147 549
– Forward for electricity (167 829) 139 895
– interest rate SWAP (4 703) 4 845
– Forward for pulp 402 2 810
Deferred income tax on the change of measurement of financial
instruments, including: 35 322 (30 400)
– Forward for electricity - (28 811)
– interest rate SWAP 34 510 (941)
– Forward for pulp 894 (648)
Other changes (83) -
Dividend disbursed to shareholders of AP SA - (5 928)

Other reserves at the end of period 175 639 312 447

Retained profit/accumulated loss and restrictions to dividend distribution
The item of retained profit/accumulated loss covers retained profit/accumulated loss of the financial year and actuarial
gains/losses on actuarial measurement of provisions for retirement benefits.
Retained profit/accumulated loss in the consolidated financial statements may contain amounts that are not distributable – such
that may not be distributed as dividend. All financial statements of consolidated entities are prepared in accordance with the
companies’ articles of association. Arctic Paper Kostrzyn S.A. and Arctic Paper S.A. prepare their financial statements in
accordance with International Financial Reporting Standards. The statutory financial statements of the other entities are prepared
in accordance with local accounting standards. Dividendsto the Parent Entity may be paid on the basis of the financial result
established in the separate annual accounts prepared for statutory purposes. Such local definition of undistributed profit often
differs from the definition of undistributed profit resulting from EU IFRS which may restrict profit distribution. For instance, local
legal regulations often require allocations to certain reserves on account of potential future losses. Application of different
accounting principles may generate differences between statutory financial statements and reporting packages for consolidation
purposes.

===== SIDA 72 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 72
(unless specified otherwise, all amounts are in PLN ‘000)

Dividend for shareholders of the parent entity may be distributed out of net profit disclosed in the standalone annual financial
statements of Arctic Paper S.A. made for statutory purposes.
In connection with the term and revolving loan agreements 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 (as that term is defined in the term and
revolving credit facility agreement) and there being no event of default (as that term is defined in the term and revolving loan
agreement). In 2022, there were no restrictions on the payment of dividends on this account.
Due to the signed loan agreement, RROS AB has a dividend restriction of 50% of net profit.
As at 31 December 2023, there were no other restrictions concerning dividend distribution.
Retained earnings/losses presented in the statement of financial position as at 31 December 2023 and 31 December 2022 consist
of the following items:

As at 31 December
2023
As at 31 December
2022

Consolidated gains / losses attributable to the parent company 1 032 560 785 429
Consolidated profit / loss from the distribution of profit / loss of the parent company, incl (166 189) 56 717
– from last year’s profit/loss distribution/dividend payment (222 906) (21 787)

Profit / loss on the acquisition/sale of Rottneros AB shares from non-controlling
shareholders, incl. 23 193 23 193
– profit 29 353 29 353
– loss (6 160) (6 160)

Actuarial profit/loss (27 530) (27 637)

Gains / losses retained at the end of the period 862 036 837 702

Non-controlling interests

Year ended on 31
December 2023
Year ended on 31
December 2022

As at beginning of the period 464 564 330 859
Dividend disbursed by subsidiary entities (41 849) (20 088)
Share in other comprehensive income of subsidiary entities (64 633) 153 792

At the end of period 358 081 464 564

Non-controlling interests cover a portion of the Group’s equity attributable primarily to the non-controlling shareholders in
Rottneros AB. The table below presents the main financial data for the Rottneros Group disclosed in the consolidation of the
Arctic Paper Group, taking into account the settlement of the fair value of the assets acquired as at the date of taking control of
the Rottneros Group:

===== SIDA 73 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 73
(unless specified otherwise, all amounts are in PLN ‘000)

Consolidated profit and loss account
Year ended on 31
December 2023
Year ended on 31
December 2022

Revenues from sales of products 1 091 506 1 314 473
Operating expenses (1 032 077) (1 076 712)
Operating profit/(loss) 59 429 237 761
Financial income/expenses 1 189 88 661
Gross profit/(loss) 60 617 326 422
Income tax (12 678) (68 088)
Net profit/(loss) 47 939 258 334

Consolidated balance sheet As at 31 December 2023 As at 31 December 2022
Fixed assets 576 093 548 430
Current assets, of which: 492 618 777 298
Inventories 193 599 183 687
Receivables and other assets 222 207 397 707
Cash and cash equivalents 76 812 195 905
TOTAL ASSETS 1 068 711 1 325 728

Equity 728 150 865 248
Long-term liabilities 110 516 184 108
Short-term liabilities 230 045 276 373
TOTAL EQUITY AND LIABILITIES 1 068 711 1 325 728

Consolidated cash flow statement
Year ended on 31
December 2023
Year ended on 31
December 2022

Cash flows from operating activities 38 169 244 488
Cash flows from investing activities (54 017) (54 815)
Cash flows from financing activities (90 728) (55 578)

Change in cash and cash equivalents (106 575) 134 094
Cash and cash equivalents at the beginning of the period 195 905 72 225
Net FX differences (12 517) (10 414)
Cash and cash equivalents at the end of the period 76 812 195 905

During 2023, Rottneros AB paid dividends, totalling PLN 85,932 thousand (SEK 213 million) of which PLN 41,849 thousand
related to non-controlling shareholders.
During 2022, Rottneros AB paid dividends, totalling PLN 41,248 thousand (SEK 91 million) of which PLN 20,088 thousand related
to non-controlling shareholders.

There are no other restrictions on the management of assets and capital for the Arctic Paper Group due to the non-controlling
shareholders of the Rottneros Group.

===== SIDA 74 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 74
(unless specified otherwise, all amounts are in PLN ‘000)

Analysis of other comprehensive income by capital item

Na dzień
31 grudnia 2023
Na dzień
31 grudnia 2022
FX differences on translation of foreign operations
included in “FX differences on translation of foreign operations” attributable to equity holders of the
parent company (67 547) (47 328)
included under “Non-controlling shareholders’ equity” (31 486) (23 938)

Measurement of financial instruments
Items to be reclassified to profit/(loss) in future reporting periods:
included under “Other reserves” (128 013) 252 488
included under “Non-controlling shareholders’ equity” (50 514) 118 137
reclassified to profit/(loss) during the reporting
included under “Other reserves” (8 795) (135 339)
included under “Non-controlling shareholders’ equity” (7 888) (66 228)

Actuarial profit/(loss) for defined benefit plans
recognised under “Retained earnings” 108 2 374
included under “Non-controlling shareholders’ equity” - -

TOTAL (294 136) 100 166

===== SIDA 75 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 75
(unless specified otherwise, all amounts are in PLN ‘000)

26. Liabilities under bank loans and other financial liabilities
Short-term liabilities Note
Repayment
date Interest rate
As at 31
December
2023
As at 31
December
2022

Other financial liabilities:
Lease liabilities 17 do 31-12-2024 4 720 7 881
Hedging instruments 35 (2) -
Other liabilities do 31-12-2024 162 174
Total other short-term financial liabilities 4 880 8 055
Bank loan commitments:
Long-term loan from a consortium of banks: Santander, Pekao, BNP (short-
term part) in PLN 31-03-2026 7,68% 13 383 14 828
Long-term loan from a consortium of banks: Santander, Pekao, BNP (short-
term part) in EUR 35.3 31-03-2026 5,71% 13 225 15 497
Loan from Danske Bank in SEK 35.3 14-07-2024
STIBOR
3M+1,75% 12 541 -
Loan from Nordea Bank Abp in SEK (short-term part) 35.3 do 31-12-2024 NSSu+1,75% 4 714 5 062

Total short-term bank loans 43 862 35 387
Total short-term financial liabilities 48 742 43 443

Long-term liabilities Note
Repayment
date Interest rate
As at 31
December
2023
As at 31
December
2022

Other financial liabilities:

Lease liabilities 17 to 31-12-2029 24 022 22 315
Other liabilities 865 843
Total other long-term financial liabilities 24 887 23 158
Bank loan commitments:
Long-term loan from a consortium of banks: Santander, Pekao, BNP (long-
term part) in PLN 35.3 31-03-2026 7,68% 21 417 36 043
Long-term loan from a consortium of banks: Santander, Pekao, BNP (long-
term part) in EUR 35.3 31-03-2026 5,71% 20 663 36 979
Loan from Nordea Bank Abp in SEK (long-term part) 35.3 to 31-12-2024 NSSu+1,75% 17 244 23 593
Loan from Danske Bank in SEK 35.3 14-07-2024
STIBOR
3M+1,75% 19 987 42 551

Total long-term bank loans 79 311 139 166
Total long-term financial liabilities 104 198 162 324

===== SIDA 76 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 76
(unless specified otherwise, all amounts are in PLN ‘000)

Bank loans
In the period covered by this report, the Group made a partial repayment of the term loan under the loan agreement concluded on
2 April 2021 with a syndicate of banks in the amount of PLN 29,256 thousand and made a partial repayment of the loan with
Nordea Bank in the amount of PLN 4,754 thousand and with Danske Bank in the amount of PLN 46,751 thousand.
The other changes in the value of loans at 31 December 2023 compared to 31 December 2022 are mainly due to changes in the
balance sheet valuation and payment of interest accrued at 31 December 2022 and paid during 2023
Loan collateral
2023
The collateral established in connection with the term and revolving loan agreements signed on 2 April 2021 and signed on 11
May 2021 remained unchanged as at 31 December 2023.
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 or interests held by the Company and Arctic Paper Kostrzyn SA registered in
Poland, 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 relating to the assets of the Company Arctic Paper Kostrzyn S.A. (with
the exception of the insurance policies listed in the Loan Agreement);
› declarations by the Company and Arctic Paper Kostrzyn S.A. on voluntary submission to enforcement, in the form of a
notary deed;
› financial pledges and registered pledges on the bank accounts of the Company and Arctic Paper Kostrzyn S.A. 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 the Polish bank accounts of the Company and Arctic Paper Kostrzyn S.A.;
› civil surety for liabilities granted by Arctic Paper S.A., Arctic Paper Kostrzyn S.A., Arctic Paper Munkedals AB, Arctic Paper
Grycksbo AB

2. under Swedish law – Collateral Documents establishing the following Collateral:
› pledges over all the Company’s and Arctic Paper Munkedals AB, Arctic Paper Grycksbo AB shares or interests registered in
Sweden
› mortgages on all real properties located in Sweden and owned by Arctic Paper Munkedals AB, Arctic Paper Grycksbo AB,
provided that only existing mortgage deeds are subject to such security;
› 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 Arctic Paper Munkedals AB and Arctic Paper
Grycksbo AB (with the exception of insurance policies listed in the Loan Agreement);
› pledges on Swedish bank accounts of Arctic Paper Munkedals AB and Arctic Paper Grycksbo AB, 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.
Apart from the above, as at 31 December 2023 the Group disclosed:
1) collateral on assets related to the obligations contracted by Rottneros AB with Danske Bank – this is:
› pledge on assets for SEK 284,730 thousand (PLN 111,586);

===== SIDA 77 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 77
(unless specified otherwise, all amounts are in PLN ‘000)

2. collaterals on assets on account of AP Kraft’s liabilities with Nordea Bank – these are:
› mortgage on assets for SEK 68,000 thousand (PLN 26,649 thousand).

2022
The collateral established in connection with the term and revolving loan agreements signed on 2 April 2021 and signed on 11
May 2021 remained unchanged as at 31 December 2022.
Apart from the above, as at 31 December 2022 the Group disclosed:
1) collateral on assets related to the obligations contracted by Rottneros AB with Danske Bank – this is:
› pledge on assets for SEK 284,730 thousand (PLN 119,957);
2. collaterals on assets on account of AP Kraft’s liabilities with Nordea Bank – these are:
› mortgage on assets for SEK 80,000 thousand (PLN 33,704 thousand).

27. Employee benefits
Employee liabilities
The table below summarises the employee liabilities as at 31 December 2023 and 31 December 2022.

Nota
Na dzień
31 grudnia 2023
Na dzień
31 grudnia 2022

Provision for pensions and similar benefits 27.2 42 694 47 286
Payable to employees as salaries 18 202 13 701
Personal Income Tax 5 045 6 147
Tax on repaid provision for pensions and similar benefits 5 523 13 908
Social benefit liabilities 24 064 17 010
Unused leave 38 592 42 690
Bonuses 10 433 34 050
Other employee liabilities 2 111 1 921

TOTAL 146 664 176 712

– short-term 105 525 133 165
– long-term 41 139 43 547

Retirement benefits and other post-employment benefits
Group entities pay post-employment benefits to its retiring employees in amounts set forth in Poland’s Labour Code in case of
Arctic Paper Kostrzyn S.A. and on the basis of existing agreements with trade unions in case of Arctic Paper Munkedals AB,
Arctic Paper Kostrzyn S.A and Arctic Paper Grycksbo AB which additionally has set up a Social Fund for future retirees. In Q4
2022, AP Munkedals and AP Grycksbo, under a signed agreement with the pension fund in Sweden, the PRI made a full
repayment of the liability for this. Moreover, due to legal regulations, Arctic Paper Mochenwangen GmbH is still obliged to
recognize the provision for retirement benefits.

===== SIDA 78 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 78
(unless specified otherwise, all amounts are in PLN ‘000)

In this connection, on the basis of measurement performed in each country by professional actuarial companies, the Group
establishes a provision for future benefits.
Measurement of employee benefits related to defined benefit plans, covering actuarial gains and losses, is recognised in other
comprehensive income and is not later re-classified to profit or loss.
The Group recognises the following changes to its net liabilities relating to defined benefit plans within costs of sales,
administrative expenses or selling and distribution costs, composed of:
 service costs (including inter alia the current service costs, future service costs)
 net interest on the net liability under the defined benefit plans.
The net cost of employee benefits is presented in the table below:

Year ended on 31
December 2023
Year ended on 31
December 2022

Current headcount
costs

921 1 778
Interest expense on employee benefit liabilities 1 172 1 172
Actuarial (profit)/loss (281) (1 935)
-
Total costs of benefit in the plan 1 812 351
of which:
recognised in the income statement 2 092 2 286
recognised in other comprehensive income (281) (1 935)

===== SIDA 79 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 79
(unless specified otherwise, all amounts are in PLN ‘000)

The justification presenting changes in the provisions for the years ended on 31 December 2023 and 31 December 2022 is
presented in the table below.

Defined
benefit plan
in Sweden
(AP SA
branch)
Defined
benefit plan
in Sweden
(Munkedals)
Defined
benefit plan
in Sweden
(Grycksbo)
Defined
benefit plan
in Sweden
(Rottneros
Group)
Defined
benefit plan
in Poland
(Kostrzyn)
Defined
benefit plan
in Germany Total

Provisions for pensions and
similar benefits as at 1 January
2023 3 083 - - 23 172 13 912 7 120 47 286
Current headcount costs - - - - 848 73 921
Interest expense - - - - 831 341 1 172
Actuarial Loss (Profit) - - - - (917) 636 (281)
Benefits paid (3 083) - - - (448) (722) (4 254)
FX differences on translation of
foreign plans - - - (1 617) - (533) (2 150)
Liabilities for pensions and
similar benefits at 31 December
2023 - - - 21 555 14 226 6 914 42 694

Provisions for pensions and
similar benefits as at 1 January
2022 3 117 33 553 37 289 23 327 11 166 11 392 119 844
Current headcount costs (34) - - 1 264 548 - 1 778
Interest expense - (358) 358 - 335 174 508
Actuarial Loss (Profit) - - (58) - 2 377 (4 254) (1 935)
Benefits paid - - (381) - (514) (417) (1 313)
Repayment of liability to the
pension fund - (31 153) (34 435) - - - (65 588)
FX differences on translation of
foreign plans - (2 042) (2 773) (1 420) - 225 (6 009)
Liabilities for pensions and
similar benefits at 31 December
2022 3 083 - - 23 172 13 912 7 120 47 286

===== SIDA 80 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 80
(unless specified otherwise, all amounts are in PLN ‘000)

The core assumptions made by actuary as at each balance sheet date to calculate the amounts of the obligations are as follows:

As at 31
December
2023
As at 31
December
2022

Discount rate (%)
Programme in Sweden** n.a. n.a.
Programme in Poland 5,0% 6,0%
Programme in Germany 3,6% 4,2%

Anticipated salary growth rate (%)
Programme in Sweden** n.a. n.a.
Programme in Poland 5,0% 7,0%
Programme in Germany* n.a. n.a.

Remaining employment period (in
years)
Programme in Sweden** n.a. n.a.
Programme in Poland 11,0 12,3
Programme in Germany* 13,2 12,9

* AP Mochenwangen is not a business operator and therefore changes in interest rates and the duration of employment do not
affect the value of the provision for retirement benefits in Germany.

The table below presents a sensitivity analysis of the provision for retirement benefits:

Change in the adopted discount rate by 1 percentage point

Increase by 1
p.p.
Decrease by 1
p.p.
31 December 2023 w tys. PLN PLN thousand
Impact on the defined benefit obligation (not including Swedish tax) (2 348) 2 858
31 December 2022
Impact on the defined benefit obligation (not including Swedish tax) (2 509) 3 096

Change to the anticipated salary growth rate by 1 percentage point

Increase by 1
p.p.
Decrease by 1
p.p.
31 December 2023 w tys. PLN PLN thousand
Impact on the liabilities under defined benefit plans 1 684 (1 417)
31 December 2022
Impact on the liabilities under defined benefit plans 1 798 (1 501)

===== SIDA 81 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 81
(unless specified otherwise, all amounts are in PLN ‘000)

28. Provisions
Change in provisions
The table below presents changes to provisions in for 2023-2022:

Provisions

As at 1 January 2023 10 467
Established during the financial year 4 801
Applied (8 277)
Reversed
Adjustment due to FX differences (656)
As at 31 December 2023, of which: 6 335
- short-term 1 240
- long-term 5 095

As at 1 January 2022 1 840
Established during the financial year 8 797
Applied (63)
Reversed
Adjustment due to FX differences (107)
As at 31 December 2022, of which: 10 467
- short-term 9 202
- long-term 1 265

Other provisions as at 31 December 2023 and 31 December 2022 cover mainly a provision for rights to emit CO2.

Provisions for complaints and returns
Provisions for complaints and returns are established on the basis of complaints and returns made in the previous years. Due to
regular outlays on improvement of the quality of production processes and products, the Group did not recognise a provision for
complaints and returns as at the end of 2023 and 2022.

===== SIDA 82 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 82
(unless specified otherwise, all amounts are in PLN ‘000)

29. Trade and other payables, grants and deferred income
Trade and other payables (short-term)

Na dzień
31 grudnia 2023
Na dzień
31 grudnia 2022

Trade payables, of which:
Due to related entities 6 56
Due to other entities 412 918 519 847

412 924 519 903
Taxes, duties and other liabilities
VAT 5 009 12 118
Excise tax 575 586
Real estate tax 2 634 4 171
Other taxes 1 876 1 870
10 094 18 744
Other liabilities
Investment commitments 16 295 9 303
Liabilities related to environmental protection 198 1 486
Prepayments 8 406 1 774

24 899 12 563

TOTAL 447 917 551 211

Principles and payment terms of the liabilities presented above:
— the terms and conditions of transactions with related entities are presented in note 32.3;
— trade payables are interest free and are usually payable within 60 days;
— other liabilities are interest free and the usual payment term is 1 month;
— the amount of the difference between VAT payable and receivable is paid to the relevant tax authorities on a monthly
basis.

Grants and deferred income
As at 31 December 2023 As at 31 December 2022

Grants from Ekofundusz 4 517 5 704
Grants from
NFOŚiGW

3 172 4 071
Grants in Sweden - 1 264
Deferred income 9 132 14 316

TOTAL 16 821 25 355

– short-term 8 708 14 843
– long-term 8 113 10 512

===== SIDA 83 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 83
(unless specified otherwise, all amounts are in PLN ‘000)

30. Investment plans
As at 31 December 2023, the Group plans to make expenditures on tangible fixed assets in 2024 of minimum PLN 150 million.
These amounts will be allocated to the purchase of new machinery and equipment.
As at 31 December 2022, the Group planned expenditures on tangible fixed assets of no less than PLN 180 million in 2023.
31. Contingent liabilities
Bank guarantee
— a bank guarantee in favour of Skatteverket Ludvika for SEK 135 thousand (PLN 53 thousand) .
Legal claims
Arctic Paper S.A. and its subsidiaries are not a party to any legal cases filed in court against them.
32. Information on related entities
The related entities to the Arctic Paper S.A. Capital Group are as follows:
— Thomas Onstad – majority shareholder,
— Nemus Holding AB – parent company for Arctic Paper SA,
— Munkedal Skog – a subsidiary of Nemus Holding AB,
— Key management personnel – company related to the CEO.
Senior management consists of the President and Members of the Parent Entity’s Management Board. Related entities may also
include the Chairman and Members of the Supervisory Board of the Parent Entity during the period in which they serve on the
Company’s body.

===== SIDA 84 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 84
(unless specified otherwise, all amounts are in PLN ‘000)

The table below presents the total values of transactions with related entities in 2022-2023:

Data for the period from 1 January 2023 to 31 December 2023 and as at 31 December 2023

Related Entity
Sales of
services to
related
entities
Purchases of
services from
related
entities/remuneratio
n
Interest –
financial
income
Interest –
financial
expense
Receivable
s from
related
entities
Loan
receivable
s
Liabilities
to related
entities

Nemus Holding AB 409 60 - - - - 6
Thomas Onstad - - - - - - -
Munkedals Skog - 349 - - - - -
Key management
personnel - 1 272 - - - - -
Total 409 1 681 - - - - 6
Data for the period from 1 January 2022 to 31 December 2022 and as at 31 December 2022

Related Entity
Sales of
services to
related
entities
Purchases of
services from
related
entities/remunerati
on
Interest –
financial income
Interest –
financial
expense
Receivables
from related
entities
Loan
receivables
Liabilities to
related
entities

Nemus Holding AB 444 64 - - 2 716 - 7
Thomas Onstad - - - - - - -
Munkedals Skog - 244 - - - - -
Key management
personnel - 1 191 - - - - 49
Total 444 1 499 - - 2 716 - 56

Ultimate Parent Entity of the Group
The ultimate parent entity of the Group that prepares the consolidated financial statements is Nemus Holding AB. During the
financial year ended 31 December 2023 and 31 December 2022, there were transactions between the Group and Nemus Holding
AB listed in note 32.
Parent Entity
Nemus Holding AB is the Parent Entity for the Arctic Paper S.A. Capital Group which as at 31 December 2023 held 59.15%
ordinary shares in Arctic Paper S.A.
Terms and conditions of transactions with related entities
Trade receivables and payables usually have a payment term of between 14 and 30 days for related entities. Transactions with
related entities are carried out at arm’s length.
Remuneration of senior management and the Supervisory Board of the
Parent Entity
The Parent Entity’s management team as at 31 December 2023 comprises three persons: President of the Management Board
and two Members of the Management Board.

===== SIDA 85 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 85
(unless specified otherwise, all amounts are in PLN ‘000)

The remuneration of the management staff in the year ended on 31 December 2023 amounted to PLN 3,857 thousand (PLN 3,713
thousand in the year ended on 31 December 2022).
The table below shows the remuneration of the Parent Entity’s senior management and Supervisory Board:
Year ended on 31
December 2023 Year ended on 31
December 2022
Management Board
Short-term employee benefits 2 418 2 280
Post-employment payments 265 335
2 683 2 615
Supervisory Board
Short-term employee benefits 1 174 1 098

Total 3 857 3 713

Short-term employee benefits include costs incurred by the Company for senior management services provided to a subsidiary of
PLN 1,427 thousand.

Loan to a member of the Management Board
In 2022-2023 neither the Parent Entity, nor its subsidiary companies granted any loans to Members of the Management Board.
Other transactions with the involvement of Members of the Management
Board
In the period covered with these Consolidated Financial Statements there were no other transactions between the subsidiary
companies and Members of the Management Board .
33. Information on the agreement and remuneration of the
statutory auditor or entity authorised to audit financial
statements
On 22 February 2023, the Company’s Supervisory Board decided to appoint PricewaterhouseCoopers Polska Spółka z
ograniczoną odpowiedzialnością Audyt Sp.k. as the auditor of the Company and the Arctic Paper S.A. Capital Group to audit the
financial statements for 2023 and 2024.
On 22 February 2023, the Company’s Supervisory Board, based on the Audit Committee’s recommendation on the selection of an
auditor, decided to select PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp.k. as the auditor of
the Company and the Arctic Paper S.A. Capital Group to audit the financial statements for 2023 and 2024. The recommendation
of the Audit Committee was issued as a result of the selection procedure in compliance with the “Policy and procedure for the
selection of the audit firm for the statutory and voluntary audit of the consolidated and standalone financial statements of Arctic
Paper S.A. with its registered office in Kostrzyn nad Odrą”.

===== SIDA 86 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 86
(unless specified otherwise, all amounts are in PLN ‘000)

The table below presents the remuneration of the statutory auditor, paid or payable for the year ended on 31 December 2023 and
31 December 2022 by category of services:
Service type Year ended on 31
December 2023 Year ended on 31
December 2022
Statutory audit of the annual financial statements 335 307
Review of interim financial statements 115 98
Other services (examination of the proforma report and correct
calculation of covenants in accordance with the loan agreements) - 50

Total 450 455

The above remuneration does not include services provided to other Group companies.

34. Financial risk management objectives and principles
The main financial instruments used by the Group include bank loans. The main purpose of those financial instruments is to raise
finance for the Group’s operations. The Group companies also conclude lease agreements.
The Group also uses factoring without recourse for trade receivables. The main purpose for using the financial instrument is to
quickly raise funds. Receivables that are subject to factoring have been removed from the consolidated statement of financial
position, as the conditions for removing the asset in accordance with IFRS 9 have been met.
The Group has various other financial instruments such as trade receivables and payables which arise directly from its
operations. The core risks arising from the Group’s financial instruments include: interest rate risk, liquidity risk, FX risk and
credit risk. The Management Board reviews and approves policies for managing each of those risks.
In 2023, in the opinion of the Parent Entity’s Management Board – compared to the annual consolidated financial statements
prepared as at 31 December 2023, there were no significant changes in financial risk. There have been no changes to the
objectives and policies of the management of the risk.
Ryzyko stopy procentowej
The Group is exposed to interest rate changes primarily with respect to its long-term financial liabilities. The Group held bank
deposits as at 31 December 2023.
Interest rate risk – sensitivity to fluctuations
The table below presents the sensitivity of gross profit to rationally feasible interest rate changes assuming no change to other
factors (related to liabilities based on variable interest rates). Variable rate loans and leases as at 31 December 2023 and 31
December 2022 are included in the calculation. For each currency the same growth of interest rate was assumed by 1 percentage
point. At the end of each reporting period, the values of loans and leases in a specific currency were grouped together and an
increase of 1 percentage point was calculated on the calculated amounts.

===== SIDA 87 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 87
(unless specified otherwise, all amounts are in PLN ‘000)

As at 31 December 2023 PLN SEK EUR

Long-term portion of loans 21 417 37 231 20 663
Long-term portion of lease liabilities 14 504 5 992 3 414
Less loans covered by SWAP (21 417) - (20 663)
The basis for calculating the impact of a change in the interest rate 14 504 43 222 3 414
Effect on profit before tax of a 1 percentage point increase in interest rates (145) (432) (34)

As at 31 December 2022 PLN SEK EUR

Long-term portion of loans and bonds 36 043 66 144 36 979
Long-term portion of lease liabilities 12 035 6 824 2 978
Less loans covered by SWAP (36 043) - (36 979)
The basis for calculating the impact of a change in the interest rate 12 035 72 968 2 978
Effect on profit before tax of a 1 percentage point increase in interest rates (120) (730) (30)

The basis for calculating the impact of interest rate changes at 31 December 2023 for the long-term part of the SEK loans takes
into account the extended maturity for the loan with Nordea Bank Abp.
The following table shows the carrying amount of the Group’s financial instruments exposed and not exposed to interest rate risk.
As at 31 December 2023 As at 31 December 2022

The value of
the financial
liability,
including:
The value of
liability subject
to fixed
interest rate
The value of
liability subject
to variable
interest rate
The value of
the financial
liability,
including:
The value of
liability subject
to fixed
interest rate
The value of
liability subject
to variable
interest rate

Other financial liabilities:
Lease liabilities 28 742 - 28 742 30 196 - 30 196

Bank loans:
Long-term loan from a consortium of banks:
Santander, Pekao, BNP in PLN 34 800 34 800 - 50 872 50 872 -
Long-term loan from a consortium of banks:
Santander, Pekao, BNP in EUR 33 888 33 888 - 52 476 52 476 -
Revolving loan syndicate of banks (Santander,
Pekao, BNP) PLN - - - - - -
Revolving loan syndicate of banks (Santander,
Pekao, BNP) EUR - - - - - -
Loan from Nordea Bank Abp in SEK 21 957 - 21 957 28 655 - 28 655
Loan from Danske Bank in SEK 32 528 - 32 528 42 551 - 42 551
Total fixed and variable rate bank loans 123 173 68 687 54 485 174 554 103 347 71 206
TOTAL FIXED AND VARIABLE INTEREST
RATE LIABILITIES 151 915 68 687 83 228 204 750 103 347 101 403

The fixed interest rates for bank loans result from the concluded SWAP instruments.

===== SIDA 88 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 88
(unless specified otherwise, all amounts are in PLN ‘000)

Currency risk
The Group is exposed to transactional FX risk. This risk also takes place in the case of transactions in other currencies than the
entity’s measurement currency.
The table below presents the sensitivity of the financial result and comprehensive income to rationally feasible fluctuations of
USD, EUR, GBP and SEK rates assuming no changes to any other factors. The calculations cover only the impact of FX rate
fluctuations on FX balance sheet items and a rate increase or decrease for each currency of 5% was applied. At the end of each
reporting period, assets and liabilities were grouped by currency and a rate increase or decrease by 5% was calculated on the net
position in each currency – assets minus liabilities. During the year, FX assets and liabilities remained stable.

As at 31 December 2023
Basis for the
calculation
Impact of FX rate changes on gross profit
the effect of FX rate
change
FX rate
growth Total impact FX rate drop Total impact

PLN – EUR 181 509 +5% 9 075 -5% (9 075)
PLN – USD (22 384) +5% (1 119) -5% 1 119
PLN – GBP 13 850 +5% 693 -5% (693)
PLN – SEK (17 870) +5% (893) -5% 893
SEK – EUR 147 131 +5% 7 357 -5% (7 357)
SEK – USD 99 327 +5% 4 966 -5% (4 966)
SEK – GBP 18 547 +5% 927 -5% (927)

Impact of financial instruments on other
comprehensive income (due to differences on
translation of foreign operations)
FX rate
growth Total impact FX rate drop Total impact

PLN – SEK +5% 36 965 -5% (36 965)
PLN – EUR +5% 61 -5% (61)

As at 31 December 2022
Basis for the
calculation

Impact of FX rate changes on gross profit
growth/drop of FX
rates
FX rate
growth
Total impact FX rate drop Total impact

PLN – EUR 89 332 +5% 4 467 -5% (4 467)
PLN – USD (68 453) +5% (3 423) -5% 3 423
PLN – GBP 17 865 +5% 893 -5% (893)
PLN – SEK (18 495) +5% (925) -5% 925
SEK – EUR 379 187 +5% 18 959 -5% (18 959)
SEK – USD 91 148 +5% 4 557 -5% (4 557)
SEK – GBP 23 273 +5% 1 164 -5% (1 164)

Impact of financial instruments on other
comprehensive income (due to differences on
translation of foreign operations)
FX rate
growth Total impact FX rate drop Total impact

PLN – SEK +5% 34 412 -5% (34 412)
PLN – EUR +5% 87 -5% (87)

Product and raw material price risk
The Group is exposed to the risk of decreasing sales prices as a result of intensifying competition in the market and the risk of
growing prices of raw materials due to restricted supply of raw materials in the market.
The Group uses derivative instruments to manage market risk. The Rottneros Group is hedging against changes in the price of its
product, cellulose. The Group hedges the risk of changes in energy prices to limit their impact on the volatility of the result.
Details of all hedges used in the Group are set out in note 35.

===== SIDA 89 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 89
(unless specified otherwise, all amounts are in PLN ‘000)

Credit risk
Credit risk is the risk of financial loss by the Group when a customer or a counterparty to a financial instrument contract defaults
under the contract. Credit risk is primarily related to receivables. The Group’s trade receivables are mostly covered by insurance.
The Group enters into transactions solely with companies of a good financial standing. All customers who wish to use merchant
credit are subject to preliminary verification procedures. Additionally, due to monitoring of the status of receivables on an ongoing
basis, the Group’s exposure to the risk of uncollectible receivables is limited.
The Group recognises an impairment allowance on financial assets (allowance for expected credit losses) classified as financial
assets measured at amortised cost or financial assets measured at fair value through profit or loss. If credit risk related to a
specific financial instrument has increased materially since initial recognition, the Group estimates the allowance for anticipated
credit losses related to the financial instrument equal to anticipated credit losses throughout the lifetime of the instrument. If as at
the reporting date, credit risk related to a financial instrument has not increased materially since its initial recognition, the Group
assesses the allowance for anticipated losses related to that financial instrument in an amount equal to 12-month anticipated
credit losses. Due to the fact that the Group’s trade receivables do not contain a material funding component, the impairment
allowance for trade receivables is calculated on the basis of the anticipated credit losses throughout the lifetime of the financial
instrument.
The table below presents the calculation of the allowance for trade receivables in terms of expected credit losses and specific
risk (allowance) :
As at 31 December
2023
Weighted
average
percentage of
the expected
loss for
uninsured
receivables
Gross value of
uninsured
receivables
Weighted
average
percentage of
expected
credit losses
insured
receivables
Gross value
of insured
receivables
Allowance for
expected loss
on uninsured
receivables
Allowance for
expected loss
on insured
receivables
Specific
allowance
Total
allowance
for
receivables

Not overdue 0,00% 83 212 0,00% 239 006 1 - - 1
< 30 days 0,00% 4 583 0,00% 35 357 - - - -
30-60 days 0,17% 445 0,32% 605 1 2 - 3
60-90 days 0,47% 48 nd - - - - -
90-120 days 1,64% 37 0,99% 86 1 1 - 1
120-360 days 1,88% 1 998 1,22% 82 38 1 - 39
>360 days 4 106 - - - 4 106 4 106
94 430 275 135 40 4 4 106 4 150
As at 31 December
2022
Weighted
average
percentage of
the expected
loss for
uninsured
receivables
Gross value of
uninsured
receivables
Weighted
average
percentage of
expected
credit losses
insured
receivables
Gross value
of insured
receivables
Allowance for
expected loss
on uninsured
receivables
Allowance for
expected loss
on insured
receivables
Specific
allowance
Total
allowance
for
receivables

Not overdue 0,00% 97 742 0,01% 301 696 4 21 - 25
< 30 days 0,01% 7 179 0,01% 45 053 1 6 - 6
30-60 days 0,28% 237 0,11% 2 168 1 2 - 3
60-90 days 3,70% 114 1,29% 64 4 1 - 5
90-120 days 36,59% 21 7,86% 254 8 20 - 28
120-360 days 84,08% 259 14,25% 2 952 218 421 - 639
>360 days 4 776 - - - 4 776 4 776
110 328 352 187 235 471 4 776 5 482
The weighted average percentage of expected loss was determined on the basis of historical data for 2019-2021 and took into
account an analysis of macro-ecomonic factors possible in the future.
The Group treats all receivables that are not overdue and are not subject to any impairment allowance, as collectible.

===== SIDA 90 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 90
(unless specified otherwise, all amounts are in PLN ‘000)

With respect to other financial assets of the Group such as cash and cash equivalents, the Group’s exposure to credit risk arises
from default of the counterparty.
The Group has no major concentration of credit risk. Concentration of risk is assessed separately for insured and uninsured
receivables. In addition, when determining the credit risk for a given group of receivables, the Group takes into account the grade
of paper/cellulose being sold and the currency of the transaction, as well as the geographical location of the counterparties and
their rating.
The maximum amount exposed to credit risk is equal to the carrying value of the financial instruments held.
Liquidity risk
The Group monitors its risk of a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both
its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows from
operating activities.
The Group aims to maintain a balance between continuity and flexibility of financing through the use of various sources of
funding, such as overdrafts, bank loans and leasing agreements.
The table below summarises the Group’s financial liabilities at 31 December 2023 and as at 31 December 2022 by maturity based
on contractual undiscounted payments.
As at 31 December 2023
Carrying
amount
Upon
request
Less
than 3
months
3 to 12
months
1 to 5
years
Over 5
years Total

Bank loans 123 173 - 6 307 40 923 83 883 - 131 113
Leases 28 742 538 1 427 3 916 14 536 49 626 70 043
Trade payables and for the purchase of tangible and intangible
assets 429 219 479 424 056 4 685 - - 429 219
Other financial liabilities 1 025 160 - - 865 - 1 025

582 159 1 177 431 789 49 524 99 285 49 626 631 401

As at 31 December 2022
Upon
request
Less
than 3
months
3 to 12
months
1 to 5
years
Over 5
years Total

734 973 626 531 950 49 593 170 661 46 137 798 967

As at 31 December 2023
Carrying
amount
Upon
request
Less than 3
months
3 to 12
months
1 to 5
years
Over 5
years Total

Bank loans 123 173 - 6 058 38 396 78 919 - 123 373
Leases 28 742 538 1 427 3 715 14 536 49 626 69 842
Trade payables and for the purchase of
tangible and intangible assets 429 219 479 424 056 4 685 - - 429 219
Other financial liabilities 1 025 160 - - 865 - 1 025
582 159 1 177 431 541 46 796 94 320 49 626 623 460

As at 31 December 2022
Upon
request
Less than 3
months
3 to 12
months
1 to 5
years
Over 5
years Total

===== SIDA 91 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 91
(unless specified otherwise, all amounts are in PLN ‘000)

Bank loans 174 554 - 3 567 40 684 155 503 - 199 755
Leases 30 196 - 3 084 5 453 14 316 46 137 68 989
Trade payables and for the purchase of
tangible and intangible assets 529 206 452 525 299 3 456 - - 529 206
Other financial liabilities 1 017 174 - - 843 - 1 017
734 973 626 531 950 49 593 170 661 46 137 798 967
The table above as at 31 December 2023 takes into account the extension of the term of the loan with Nordea Bank Abp.
The Group has contractual commitments to acquire tangible fixed assets amounting to PLN 150,938 thousand as at 31 December
2023 (PLN 36,522 thousand as at 31 December 2022).
The table below provides a reconciliation of the items in the table above to the data in the statement of financial position (SHSF)
or a note.
As at 31 December 2023
Note /
balance
sheet
Value
according
to the
note or
balance
sheet
Interest
payable
until
repayment
Value
according
to the table
Bank loans 26 123 173 7 940 131 113
Leases 17 28 742 41 062 69 804

Trade payables and for the purchase of tangible and intangible assets 29.1 429 219 nd 429 219

Other financial liabilities 26 1 025 nd 1 025

As at 31 December 2022
Note /
balance
sheet
Value
according
to the
note or
balance
sheet
Interest
payable
until
repayment
Value
according
to the table
Bank loans 26 174 553 25 201 199 755
Leases 17 30 197 38 792 68 989

Trade payables and for the purchase of tangible and intangible assets 29.1 529 206 nd 529 206

Other financial liabilities 26 1 017 nd 1 017

There is no significant concentration of liquidity risk in the Group. Concentrations of risk are assessed separately for loan
agreements, leases, trade and other payables by maturity of the liability. In addition, the Group takes into account the type and
currency of the transaction and the geographical location of the counterparty when determining liquidity risk.
The table below shows the breakdown of cash by rating of the bank where it is deposited:
rating
cash and cash equivalents at
31.12.2023
A+ 233 111
AA- 41 483
BBB+ 50 339
BBB 56 498
BB 97 830
Pozostałe* 21 189
Suma 500 449
*The remaining cash is kept in bank accounts of sales branches; due to significant fragmentation, no data was collected on the ratings of the
banks where the cash is deposited.

===== SIDA 92 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 92
(unless specified otherwise, all amounts are in PLN ‘000)

Three main banks that the Group deposits cash and cash equivalents are 31%, 20% and 15% of the balance as at 31 December
2023.

35. Financial instruments
The Company uses the following financial instruments: cash on hand and in bank accounts, loans, receivables, payables, lease
agreements and interest SWAP contracts, forward contracts for the sale of pulp and forward contracts for the purchase of
electricity.

Fair values of different categories 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 presents all financial instruments by their carrying amounts, split
into classes and categories of assets and liabilities.

Carrying amount Fair value

Category in
compliance
with IFRS 9
As at 31
December
2023
As at 31
December
2022
As at 31
December
2023
As at 31
December
2022

Financial assets

Trade and other receivables WwZK 375 276 464 949 *** ***
Hedging instruments* IRZ 46 629 309 406 *** ***
Derivative instruments measured at fair value through
profit and loss WwWGpWF 7 838 72 781 *** ***
Receivables from pension fund WwZK 21 236 22 829 *** ***
Settlement of realised forward contracts WwZK 11 008 37 641 *** ***
Other financial assets ** WwWGpWF 14 501 3 370 *** ***
Cash and cash equivalents WwZK 500 449 481 930 *** ***

Financial liabilities

Loans WwZK 123 173 174 553 126 986 181 237
Lease liabilities , of which: WwZK 28 742 30 196 *** ***
– long-term 24 022 22 315 *** ***
– short-term 4 720 7 881 *** ***
Trade payables, for the purchase of tangible and
intangible assets. WwZK 430 244 530 222 *** ***
Hedging instruments* IRZ 865 - *** ***

* derivative hedging instruments meeting the requirements of hedge accounting
** primarily investments in equity instruments
*** financial assets and liabilities at fair value close to carrying amount
Abbreviations used:
WwZK – Financial assets/liabilities measured at amortised cost
IRZ – Hedge Accounting Instruments at fair value through other comprehensive income (where the instrument is determined to be effective)
WwWGpWF – financial assets/liabilities measured at fair value through profit and loss

===== SIDA 93 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 93
(unless specified otherwise, all amounts are in PLN ‘000)

The fair value of hedging instruments was determined on the basis of observable data from active markets that are not market
quotations.
The fair value of loans is estimated using an internal model based on discounting financial flows.
As at 31 December 2023 and 31 December 2022, financial instruments according to the valuation hierarchy qualify as Level 3
except for derivatives (Level 2).

Changes in assets and liabilities arising from financing activities
Year ended on 31 December 2023 Note
1
January
2023
Changes
resulting
from cash
flows from
financing
activity
Effects of
currency
exchange
rate
fluctuations
Changes
in fair
value or
amortised
cost
Changes due to
acquisition/disposal
31
December
2023

Liabilities arising from financing activities
Loans (short-term and long-term) 27 174 554 (41 142) (10 239) - - 123 173
Lease liabilities (short-term and long-term) 27 30 196 (9 795) (1 105) - 9 446 28 742
Other (short-term and long-term) 27 1 017 (795) (71) 875 - 1 025

Total liabilities resulting from financing
activity 205 767 (51 731) (11 415) 875 9 446 152 940

Assets arising from financing activities
Derivative financial instruments (assets) 20.1 8 144 4 147 - (8 849) - 3 442
Total assets arising from financing activities 8 144 4 147 - (8 849) - 3 442

Hedge accounting
As at 31 December 2023 the Group’s cash flows were hedged with a forward contract for purchase of electricity, a forward
contract for sale of pulp, an interest rate SWAP.
Hedge accounting of cash flows from sales of pulp
The table below presents detailed information concerning the hedging relationship in cash flow hedge accounting regarding sales
of pulp:

Type of hedge Cash flow hedge related to sales of pulp

Hedged item The hedged item is a part of highly likely future cash inflows for pulp sales

Hedging instruments Forward contracts are used as the hedging item wherein the Company agrees to sell pulp
for SEK

Contract parameters:
Contract conclusion date 2023
Maturity date: depending on the contract; until 31.12.2024
Hedged quantity of pulp 12,000 tonnes
Term price SEK 13 284 /tonne

===== SIDA 94 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 94
(unless specified otherwise, all amounts are in PLN ‘000)

Cash flow hedge accounting related to electricity purchases with the use of forward transactions
The table below presents detailed information concerning the hedging relationship in the cash flow hedge accounting related to
electricity purchases:
Type of hedge Cash flow hedge related to planned purchases of electricity

Hedged item The hedged item is a part of highly likely future cash flows for
electricity purchases

Hedging instruments Forward contract for the purchase of electricity at Nord Pool
Exchange

Contract parameters:
Contract conclusion date depending on the contract; from 2019
Maturity date depending on the contract; until 31.12.2028
Hedged quantity of electricity 879 189 MWh
Term price from 26,95 to 65,10 EUR/MWh

===== SIDA 95 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 95
(unless specified otherwise, all amounts are in PLN ‘000)

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 relationship in the cash flow hedge accounting related to
payment of interest in EUR and PLN on the loan in EUR and PLN:

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 item
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 Fair loan amount in PLN as at 31.12.2023
EUR 2021-04-02 – 2026-04-02 14 000 560
EUR 2021-04-02 – 2026-04-02 10 500 420
EUR 2021-04-02 – 2026-04-02 10 500 420
35 001 400

PLN 2021-04-02 – 2026-04-02 15 000 000
PLN 2021-04-02 – 2026-04-02 11 250 000
PLN 2021-04-02 – 2026-04-02 11 250 000
37 500 000
The value secured is the interest calculated on the value of the loan in the
amount of 72 501 400
Interest secured by an interest
rate swap 4 607 267

The fixed interest rate on the EUR flow hedge is: 0.11%, and for flows in PLN it is: 1.21%.
The effectiveness of the hedging instruments is very high 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 accrual conventions. The effectiveness of hedging instruments such as
electricity forwards is very high due to the fact that the parameters of the hedging instruments are matched to the hedged items,
particularly in terms of the type and quantity of energy purchased and the dates of cash flows associated with energy payments.
The effectiveness of hedging instruments such as forwards for the sale of pulp is very high due to the fact that the parameters of
the hedging instruments are matched to the hedged items, in particular with regard to the grade and quantity of the pulp sold and
the dates of the cash flows associated with receiving payment for the pulp.
The Group assesses whether the derivative designated in each hedging relationship will effectively offset changes in the cash
flows of the hedged item using the notional derivative method. The hedge ratios are 100% and the only source of potential
ineffectiveness we identify is the two-day difference in maturity of the hedged item and the hedging instrument. The ratios and
sources of ineffectiveness are presented in the hedge accounting documentation.

===== SIDA 96 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 96
(unless specified otherwise, all amounts are in PLN ‘000)

35.3.1. Other information on derivative instruments
The table below shows the fair value of derivative hedging instruments in cash flow hedge accounting and fair value as at 31
December 2023 and comparatives:

Status as at 31 December
2023
Status as at 31 December
2022

Assets Equity and
liabilities Assets Equity and
liabilities

Forward on pulp sales 3 135 - 2 528 -
SWAP 3 441 - 8 144 -
Forward for electricity 40 053 865 302 033 -

Total hedging derivative instruments 46 629 865 312 705 -

The table below shows the nominal value of the amounts associated with the positions designated as hedging instruments at 31
December 2023:

Up to 1 year 1 to 5 years Over 5 years Total

Forward for electricity:
Purchased energy (in PLN ‘000) 47 151 39 081 - 86 232
Forward on pulp sales
Pulp sold (in PLN ‘000) 62 472 - - 62 472
interest rate SWAP
principal repayment (in PLN ‘000) 26 607 42 080 - 68 687

The table below presents the amounts related to hedge accounting that were recognised in 2023 by the Group in profit and loss
and in the total comprehensive income statement:

Year ended on 31 December
2023

Other reserves in the part related to revaluation as at 31 December 2023 – fair value measurement of
hedging derivative instruments due to the hedged risk, corresponding to effective hedging, net of tax
effect 40 127
including those concerning
forward contracts 37 448
SWAP contracts 2 679

The period of the anticipated hedged flows
01 January 2024 – 31
December 2028

The table below presents changes to other reserves in the part related to measurement under hedge accounting in 2023:

===== SIDA 97 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 97
(unless specified otherwise, all amounts are in PLN ‘000)

Year ended on 31 December
2023

Other reserves in the part related to revaluation as at 1 January 2023 176 935
Deferral to changes of fair value measurement of the hedging derivative instruments due to the hedged
risk, corresponding to the effective hedge, net of tax effect
(136 808)
Amount of deferred remeasurement to fair value of hedging derivatives for hedged risk, removed from
other reserves and transferred to financial income, net of tax effect
-

Other reserves in the part related to revaluation as at 31 December 2023 40 127

The amounts in the table disclose the effect of deferred income tax.
36. Capital management
The primary objective of the Group’s capital management is to maintain a strong credit rating and healthy capital ratios in order
to support the Group’s business operations and maximise the shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions. To maintain
or adjust the capital structure, the Group may adjust the dividend payment to its shareholders, return capital to the shareholders
or issue new shares. No changes were made in the objectives, policies or processes during the year ended on 31 December 2023
and 31 December 2022.
The Group monitors its equity using a leverage ratio, which is net debt divided by total equity plus net debt. The Group’s rules
stipulate that this ratio should be within a range of up to 0.55. The Group includes interest bearing loans, trade and other
payables, net of cash and cash equivalents within its net debt.
Arctic Paper Group As at 31 December 2023 As at 31 December 2022

Bank loans and other financial liabilities 152 940 205 766
Trade and other payables 447 917 551 211
Minus cash and cash equivalents (500 449) (481 930)

Net debt 100 408 275 048
Equity 1 801 508 2 727 665

Equity and net debt 1 901 915 3 002 713

Leverage ratio 0,05 0,09

Compared to the 2022 annual report, the leverage ratio decreased as a result of an increase in cash and cash equivalents and
equity as at 31 December 2023.

===== SIDA 98 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 98
(unless specified otherwise, all amounts are in PLN ‘000)

37. Employment structure
The average headcount in the Group in the years ended on 31 December 2023 and 31 December 2022 was as follows:

Year ended on 31
December 2022
Year ended on 31
December 2021

Management Board of the Parent Entity 2 2
Management Boards of Group entities 36 35
Administration 119 124
Sales Department 108 77
Production Division 1 183 1 118
Other 77 153

Total 1 525 1 509

38. Certificates in cogeneration
The property rights to the certificates of origin, which are evidence of the production of electricity in CHP, are held by AP
Grycksbo.
For the cogeneration of electricity, in 2023 the AP Grycksbo acquired the following rights: green certificates 1,586 MWh (2022:
10,497 MWh In 2023, revenue generated from the sale of certificates amounted to PLN 0 thousand (2022: PLN 3 thousand).
Revenues related to the certificates in cogeneration are recognised as a reduction of internal costs of sales in the profit and loss
account.
39. Grants
In the current year, the Group companies have not received any material grants.
40. Information on the impact of climate issues on the Group’s
operations
The Arctic Paper Group regularly assesses climate-related risks and opportunities that may affect the Group’s operations. The
impact of climate issues has been determined to the best of management’s knowledge, current, obtainable estimates of the
economic and social conditions likely to occur in the foreseeable future. The environment and climate change, is one of the
identified significant areas from the point of view of assessing their importance and impact on the Arctic Paper Group’s
operations.
The detailed risk areas, their implications and the mitigating actions taken by the Arctic Paper Group are presented in the Arctic
Paper Group Sustainability Report in section 2.4 Principal risks and their management.Mitigating risks associated with the effects
of climate change include, among others, careful monitoring of environmental standards and indicators, reduction of individual
energy consumption and investment in renewable, carbon-neutral energy sources.
The Arctic Paper Group is actively investing in the energy transition, both in terms of improving the efficiency of the technologies
currently used and diversifying energy sources towards low and zero carbon solutions, including the construction of a multi-fuel

===== SIDA 99 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 99
(unless specified otherwise, all amounts are in PLN ‘000)

boiler at Arctic Paper Munkedals and the start of an investment to build a biomass drying and pellet plant at Arctic Paper
Grycksbo, which will provide more sustainable fuel sourcing and reduce energy costs.
Arctic Paper’s ambition and the target set by the 4P Strategy adopted in 2021 is to achieve CO2 neutrality in the paper and
packaging pillars by 2030, and in all pillars (including the energy and pulp pillars) by 2035.
There were no significant impairment allowances of fixed or current assets in 2023. There was also no indication of any additional
provisions other than the allowances and provisions that are recognised in the course of the Group’s regular business.
41. Impact of the war in Ukraine on the Group’s operations
The Arctic Paper Group sells graphic paper to, inter alia, Ukraine (sales to Russia and Belarus have been discontinued); sales to
this market are made mainly on the basis of prepayments (some customers are insured) and own collection from the premises of
Arctic Paper factories or on the basis of FCA Poland. In 2023, sales to this market amounted to 0.99% of the Group’s turnover.
We assess that the war in Ukraine has no direct impact on the Group’s operation.

42. Material events after the balance sheet date
From the balance sheet date until the day of publishing of these condolidated financial statements, there were no other events
which might have a material impact on the Group’s financial and capital position.

Signatures of the Members of the Management Board
Position First and last name Date Signature
President of the Management
Board
Chief Executive Officer
Michał Jarczyński 4 April 2024 signed with a qualified electronic
signature
Member of the Management
Board
Chief Finance Officer
Katarzyna Wojtkowiak 4 April 2024 signed with a qualified electronic
signature
Member of the Management
Board
Executive Vice-President for
Sales and Marketing
Fabian Langenskiöld
4 April 2024 signed with a qualified electronic
signature

===== SIDA 100 =====

Consolidated Financial Statements 2023 of the Arctic Paper S.A. Capital Group 100
(unless specified otherwise, all amounts are in PLN ‘000)

Statement 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 consolidated financial statements of the Arctic Paper Capital Group for the year ended on 31 December 2023 and
the comparable data were prepared in compliance with the applicable accounting principles and they reflect the
economic and financial condition of the Capital Group and its financial result for 2023 in a true, reliable and clear
manner.

Signatures of the Members of the Management Board

Position First and last name Date Signature
President of the Management
Board
Chief Executive Officer
Michał Jarczyński 4 April 2024 signed with a qualified electronic
signature
Member of the Management
Board
Chief Finance Officer
Katarzyna Wojtkowiak 4 April 2024 signed with a qualified electronic
signature
Member of the Management
Board
Executive Vice-President for
Sales and Marketing
Fabian Langenskiöld 4 April 2024 signed with a qualified electronic
signature

===== SIDA 101 =====

TRANSLATORS’ EXPLANATORY NOTE
The English content of this report is a free translation of the registered auditor’s report of the below -
mentioned Polish Company. In Poland statutory accounts as well as the auditor’s report should be prepared
and presented in Polish and in accordance with Polish legislation.
The accompanying translation has not been reclassified or adjusted in any way to conform to the accounting
principles generally accepted in countries other than Poland, but certain terminology current in Anglo-Saxon
countries has been adopted to the extent practicable. In the event of any discrepancies in interpreting the
terminology, the Polish language version is binding.

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. , ul. Polna 11, 00-633 Warsaw, Poland, T: +48 (22) 746
4000, F:+48 (22) 742 4040 , www.pwc.pl
PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. is entered into the National Court Register maintained by
the District Court for the Capital City of Warsaw, under KRS number 0000741448, NIP 526 -021-02-28. The seat of the Company is in Warsaw at
Polna 11.
Independent Registered Auditor’s Report
To the General Shareholders’ Meeting and the Supervisory Board of Arctic Paper S.A.
Report on the audit of consolidated financial statements
Our opinion
In our opinion, the accompanying annual consolidated financial statements:
• give a true and fair view of the consolidated financial position of Arctic Paper S.A. (the “Parent
Company”) and its subsidiaries ( together “the Group” as at 31 December 2023 and the Group’s
consolidated] financial performance and the consolidated cash flows for the year then ended in
accordance with the applicable International Financial Reporting Standards as adopted by the
European Union and the adopted accounting policies;
• comply in terms of form and content with the laws applicable to the Group and the Parent
Company’s Articles of Association.
Our opinion is consistent with our additional report to the Audit Committee issued on the date of this
report.
What we have audited
We have audited the annual consolidated financial statements of the Group Arctic Paper S.A. which
comprise:
• the consolidated statement of financial position as at 31 December 2023;
and the following prepared for the financial year from 1 January to 31 December 202 3:
• the consolidated statement of income statement;
• the consolidated statement of comprehensive income;
• the consolidated statement of changes in equity;
• the consolidated statement of cash flows, and
• the additional information to consolidated financial statements comprising a description of the
significant adopted accounting policies and additional notes and explanations.
Basis for opinion
We conducted our audit in accordance with the National Standards on Auditing in the wording of the
International Standards on Auditing as adopted by the resolution of the National Council of Statutory
Auditors (“NSA”) and pursuant to the Law of 11 May 2017 on Registered Auditors, Registered Audit
Companies and Public Oversight (the “Law on Registered Auditors”) and the Regulation (EU) No.
537/2014 of 16 April 2014 on specific requirements regarding the statutory audit of public -interest
entities (the “EU Regulation”). Our responsibilities under NSA are further described in the Auditor’s
responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropr iate to provide a basis
for our opinion.

===== SIDA 102 =====

Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional
Accountants (including International Independence Standards) issued by the Int ernational Ethics
Standards Board for Accountants (IESBA Code) as adopted by resolution of the National Council of
Statutory Auditors and other ethical requirements that are relevant to our audit of the consolidated
financial statements in Poland. We have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. During the audit, the key registered auditor and the
registered audit firm remained independent of the Group in accordance with the independence
requirements set out in the Law on Registered Auditors and in the EU Regulation.
Our audit approach
Overview

• The overall materiality threshold adopted for the purposes of
our audit was set at PLN 17.100 thousand, which represents
5% of the profit before tax.

• We have audited the Parent Company and three
subsidiaries and one consolidated group in two countries.
• The audit team visited the following subsidiaries Rottneros
AB Vallviks Bruk (Sweden).
• The scope of our audit covered 98% of the Group’s revenue
and 96% of the absolute value of its profit or loss (after
consolidation eliminations).
• Recognition of revenues from contracts with customers.

As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where the Parent
Company’s Management Board made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. As in all of our audits we also addressed the risk of management override of
internal controls, including among other matters, consideration of whether there was evidence of bias
that represented a risk of material misstatement due to fraud.

Materiality

Group
scoping

Key audit
matters

===== SIDA 103 =====

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall materiality for the consolidated financial statements as a whole, as set out in the
table below. These, together with qualitative considerations, helped us to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the consolidated financial sta tements as
a whole.

Overall Group materiality PLN 17.100 thousand
How we determined it 5% of the profit before tax
Rationale for the
materiality benchmark
applied
For the Arctic Paper Group, we used profit before tax as the basis for
determining materiality because, in our opinion, this measure is
commonly used to assess the Group's operations by users of financial
statements and is a generally accepted benchmark.
We have set a materiality level of 5% because, based on our
professional judgment, it is within the range of acceptable quantitative
materiality thresholds.

We agreed with the Audit Committee of the Company [Parent] that we would report to them
misstatements of the consolidated financial statements identified during our audit above PLN 1,710
thousand, as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. They include the most
significant identified risks of material misstatements, including the identified risks of material
misstatement resulting from fraud. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon. We do not provide
a separate opinion on these matters.

===== SIDA 104 =====

Key audit matter How our audit addressed the key audit matter
Recognition of revenues from contracts with
customers

The Group presented the principles of
recognizing revenues from contracts with
customers in note 9.21 and disclosures related
to sales revenues in note 10 to the
consolidated financial statements. In the
financial year ended December 31, 2023, the
Group generated revenues from contracts with
customers in the total amount of PLN 3,549.2
million (in 2022: PLN 4,894.3 million) from the
following titles:
• from the sale of paper;
• from the sale of cellulose.

This matter was the subject of our special
attention due to the fact that the application of
appropriate financial reporting standards
regarding the recognition, measurement and
presentation of revenues is complex and
requires the Management Board to make
decisions, among others: related to the
allocation of the transaction price resulting
from signed contracts with customers to
performance obligations. Moreover, the correct
determination of revenues is also based on the
use of complex IT data processing systems.
Due to the materiality and importance of the
revenue item to the consolidated financial
statements, the need to make estimates and
judgments, and the potential risk of fraud, we
considered this issue to be a key audit matter.

Our audit procedures included, in particular:

• understanding and assessing the internal control
environment, including the IT environment,
relating to the recognition, measurement and
presentation of particular types of sales revenue;
• assessing the compliance of accounting policies
regarding revenue recognition with the relevant
financial reporting standards, in particular those
related to significant accounting estimates and
judgments;
• analysis of significant sales agreements and
accompanying contracts concluded by the Group;
• tests of internal controls, on a selected sample,
in terms of the correctness and accuracy of the
sales prices used and the compliance of the
invoice with the order/price list and the
compliance of the invoice with the transport
document;
• detailed tests for the selected sample, including:
on confirmation of specific aspects of transactions
with customers or reconciliation of issued sales
invoices, release and delivery documents for
products and goods sold, related contracts with
customers, sales prices applied and payments
received;
• detailed tests regarding the correctness of the
moment of revenue recognition based on
a selected sample;
• tests, on a selected sample, of the correctness
and completeness of the recognition of sales
discounts and marketing campaigns;
• analysis of non-standard posting patterns in the
transaction journal in the audited year;
• taking into account the element of unpredictability
when selecting the type, timing and scope of audit
procedures.
• assessing the correctness and completeness of
disclosures regarding revenues from contracts
with customers in the consolidated financial
statements.

===== SIDA 105 =====

Responsibility of the Management and Supervisory Board for the consolidated
financial statements
The Management Board of the Parent Company is responsible for the preparation, based on the
properly maintained books of account of the annual consolidated financial statements that give a true
and fair view of the Group’s financial position and results of operations, in accordance with
International Financial Reporting Standards as adopted by the European Union, the adopted
accounting policies, the applicable laws and the Parent Company’s Articles of Association, and for
such internal control as the Management Board determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, the Parent Company’s Management Board is
responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
Management Board either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Parent Company’s Management Board and members of the Supervisory Board are obliged to
ensure that the consolidated financial statements comply with the requirement s specified in the
Accounting Act of 29 September 1994 (“the Accounting Law”). Members of the Supervisory Board are
responsible for overseeing the financial reporting process.
Auditor’s responsibility for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with the NSA will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered mat erial
if, individually or in aggregate, they could reasonably be expected to influence economic decisions of
users taken on the basis of these consolidated financial statements.
The scope of the audit does not include an assurance on the Group’s future profitability nor the
efficiency and effectiveness of the Parent Company’s Management Board conducting its affairs, now
or in future.
As part of an audit in accordance with NSA, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Parent Company’s Management Board;

===== SIDA 106 =====

• conclude on the appropriateness of the Parent Company’s Management Board’s use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opi nion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going
concern;
• evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation;
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the Audit Committee, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Other information, including the report on the operations
Other information
Other information comprises:
• a Report on the Group Arctic Paper S.A. operations for the financial year ended 31 December
2023 (“the Report on the operations”) and the corporate governance statement which is a
separate part of this Report,
• a separate report on non-financial information referred to in Article 55(2c) of the Accounting Act,
• other documents comprising the Annual Report for the financial year ended 31 December 2023
(“the Annual Report”),
(together “Other Information”). Other information does not include the financial statements and our
auditor’s report thereon.

===== SIDA 107 =====

Responsibility of the Management and Supervisory Board
The Management Board of the Parent Company is responsible for the preparation of the Other
Information in accordance with the law.
The Parent Company’s Management Board and the members of the Supervisory Board are obliged to
ensure that the Report on the operations of the Group including its separate parts comply with the
requirements of the Accounting Law.
Registered auditor’s responsibility
Our opinion on the consolidated financial statements does not cover the Other Information.
In connection with our audit of the consolidated financial statements, our responsibility under NSA is
to read the Other Information and, in doing so, consider whether the Other Information is materially
inconsistent with the information in the consolidated financial statements, our knowledge obtained in
our audit, or otherwise appears to be materially misstated. If, based on the work performed, we
identified a material misstatement in the Other Information, we are obliged to inform about it in our
audit report. In accordance with the requirements of the Law on the Registered Auditors, we are also
obliged to issue an opinion on whether the Report on the operations has been prepared in accordance
with the law and is consistent with information included in annual consolidated financial statements.
Moreover, we are obliged to issue an opinion on whether the Parent Company and Group provided
the required information in its corporate governance statement and to inform whether the Parent
Company and Group prepared a statement on non-financial information/a separate report on non-
financial information.
Statement on the Other information
We declare, based on the knowledge of the Group and its environment obtained during our audit, that
we have not identified any material misstatements in the Report on the operations of the Group and
the remaining Other information.
Opinion on the Report on the operations
Based on the work we carried out during our audit, in our opinion, the Report on the operations of the
Group:
• has been prepared in accordance with the requirements of Article 49 of the Accounting Act and
para. 70 and para. 71 of the Regulation of the Minister of Finance dated 29 March 2018 on current
and periodical information submitted by issuers of securities and conditions for considering as
equivalent the information required under the legislation of a non-Member State (“Regulation on
current information”);
• is consistent with the information in the consolidated financial statements.
Opinion on the corporate governance statement
In our opinion, in its corporate governance statement, the Parent Company and Group included
information set out in para. 70.6 (5) of the Regulation on current information. In addition, in our
opinion, information specified in paragraph 70.6 (5)(c)–(f), (h) and (i) of the said Regulation included
in the corporate governance statement are consistent with the applicable provisions of the law and
with information included in the consolidated financial statements.
Information on non-financial information
In accordance with the requirements of the Act on the Registered Auditors, we confirm that the Group
has included in its Report on the operations, information on the preparation of a separate report on

===== SIDA 108 =====

non-financial information referred to in Article 55(2c) of the Accounting Act and that the Group has
prepared such a separate report.
We have not performed any assurance work relating to the separate report on non -financial
information and we do not provide any assurance with regard to it.
Report on other legal and regulatory requirements
Report on the compliance of the marking up of consolidated financial statements with the
requirements of the European Single Electronic Format (“ESEF”)
In connection with the audit of consolidated financial statements we have been engaged by the Parent
Company’s Management Board as part of our audit engagement letter to conduct a reasonable
assurance engagement to express an opinion whether the consolidated financial statements of the
Group as at and for the year ended 31 December 2022 prepared in the single electronic format
contained in the file named ESEFArcticPaperSA-2023-12-31-pl (the “consolidated financial statements
in the ESEF format”) was marked up in accordance with the requirements in the article 4 of
the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 s upplementing Directive
2004/109/EC of the European Parliament and of the Council with regard to regulatory technical
standards on the specification of a single electronic reporting format (the “ESEF Regulation”).
Description of a subject matter and applicable criteria
The consolidated financial statements in the ESEF format were prepared by the Parent Company’s
Management Board to comply with the technical requirements regarding the specification of a single
electronic reporting format and marking up, which are set out in the ESEF Regulation.
The subject matter of our assurance engagement is the compliance of the consolidated financial
statements in the ESEF format with the requirements of the ESEF Regulation and the requirements of
this regulation, in our view, constitute appropriate criteria to form a reasonable assurance conclusion.
Responsibility of the Management Board of the Parent Company and the Supervisory Board
The Parent Company’s Management Board is responsible for the preparation of the consolidated
financial statements in the ESEF format in accordance with the technical requirements regarding the
specification of a single electronic reporting format which are set out in the ESEF Regulation. This
responsibility includes the selection and application of appropriate markups in iXBRL using taxonomy
specified in the ESEF Regulation. The responsibility of the Management Board also includes
designing, implementing and maintaining internal controls relevant for the preparation of the
consolidated financial statements in the ESEF format which are free from material non-compliance
with the requirements of the ESEF Regulation and their marking-up in compliance with these
requirements.
Members of the Parent Company’s Supervisory Board are responsible for overseeing the financial
reporting process, which also includes the preparation of the consolidated financial statements in
accordance with the format that is compliant with legal requirements.

===== SIDA 109 =====

Our responsibility
Our objective was to express a conclusion, based on the conducted reasonable assurance
engagement, whether the consolidated financial statements prepared in the ESEF format were
marked up, in all material respects, with the requirements of the ESEF Regulation.
We conducted our engagement in accordance with the National Standard on Assurance Engagements
other than Audit and Review 3001pl - audit of financial statements prepared in the single electronic
reporting format (“KSUA 3001pl”) and where relevant with the National Standard on Assurance
Engagements 3000 (R) in the wording of the International Standard on Assurance Services 3000
(Revised) - ‘Assurance Engagements other than Audits and Reviews of Historical Financial
Information’ as issued by the National Council of Statutory Auditors (“KSUA 300 0(R)”). These
standards require that we comply with ethical requirements, plan and perform procedures to obtain
reasonable assurance whether the consolidated financial statements in the ESEF format were marked
up, in all material respects, in compliance with the specified criteria.
Reasonable assurance is a high level of assurance, but it does not guarantee that the engagement
performed in accordance with KSUA 3001pl and KSUA 3000 (R) will always detect the material
misstatement (significant non-compliance with the requirements).
The selection of the procedures depends on the auditor's judgement, including the auditor's
assessment of the risk of material misstatements, whether due to fraud or error. In performing the
assessments of this risk, the auditor shall consider the internal control related to the preparation of the
consolidated financial statements in the ESEF format and its marking-up in order to plan appropriate
procedures to provide the auditor with sufficient evidence appropriate to the circumstan ces. The
assessment of the functioning of the internal control system was not carried out in order to express
an opinion on the effectiveness of its operation.
Quality control and ethical requirements
We apply the provisions of the regulation of the National Council of Statutory Auditors with regard to
internal quality control in the wording of International Standard on Quality Control 1 and accordingly
maintain a comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
We comply with the independence and other ethical requirements of the International Code of Ethics
for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants as adopted by resolution of the National Council
of Statutory Auditors, which is founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour.
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance whether the
consolidated financial statements in the ESEF format were marked-up, in all material respects,
in compliance with the applicable requirements. Our procedures included in particular:
• obtaining an understanding of the process of preparation of the consolidated financial statements
in the ESEF format, including the process of selection and application by the Group of the XBRL
tags and ensuring the compliance with the ESEF Regulation, including understanding the
mechanism of the internal control system related to this process;
• reconciliation, on a selected sample, of the marked-up information contained in the consolidated
financial statements in the ESEF format to the audited consolidated financial statements;

===== SIDA 110 =====

• evaluating of compliance with the technical standards regarding the specification of a single
electronic reporting format, including the use of XHTML;
• evaluating the completeness of marking up the consolidated financial statements in the ESEF
format using the iXBRL tags;
• evaluating the appropriateness of the use of XBRL tags selected from the taxonomy defined in the
ESEF Regulation and whether the extension markups were used appropriately where no suitable
element in taxonomy defined in the ESEF Regulation has been identified;
• evaluating the appropriateness of anchoring of the extension elements to the ESEF ta xonomy
from the ESEF regulation;
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, based on the procedures performed, the consolidated financial statements in the E SEF
format were marked-up, in all material respects, in compliance with the requirements of the ESEF
Regulation.

Statement on the provision of non-audit services
To the best of our knowledge and belief, we declare that the non-audit services we have provided to
the Parent Company, its parent company and its subsidiaries are in accordance with the applicable
laws and regulations in Poland and that we have not provided any non-audit services prohibited under
Article 5(1) of the EU regulation and Article 136 of the Law on Registered Auditors.
The non-audit services which we have provided to the Parent Company and its subsidiaries during the
audited period are disclosed in the Report on the Group’s operations (page 47).
Appointment
We have been appointed to audit the annual consolidated financial statements of the Group by the
Resolution of the Supervisory Board of 22 February 2023. The consolidated financial statements of
the Group were audited by us for the first time.

The Key Registered Auditor responsible for the audit on behalf of PricewaterhouseCoopers Polska
spółka z ograniczoną odpowiedzialnością Audyt sp.k., a company entered on the list of Registered
Audit Companies with the number 144., is Krzysztof Zech.

Krzysztof Zech
Key Registered Auditor
No. 13917

Poznań, 4 April 2024

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Management Board’s Report 2023 Arctic Paper S.A .1

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Management Board’s Report 2023 Arctic Paper S.A .2
Translator ʼs 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.
Arctic Paper has prepared its 2023 consolidated annual financial statement in the European Single Electronic Format(ESEF) which is the
electronic reporting format in which issuers on EU regulated markets shall prep are their annual financial reports from 1 January 2020 based on
Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliam ent and of
the Council with regard to regulatory technical standard s on the specification of a single electronic reporting format as amended.
This PDF version of consolidated annual financial statement of Arctic Paper Capital Group has been prepared solely only for the convenience of
digital reading.
Despite all the efforts devoted to the conversion of XHTML file into PDF format, certain discrepancies, omissions or approximations may exist . In
case of any differences between the PDF and the XHT ML versions, the XHT ML version is the only one legally binding and shall p revail.
Arctic Paper, its representatives and employees decline all responsibility in this regard.

Table of contents

Letter from the President of the Management Board of Arctic Paper S.A. ................................ ........................ 4
Information on the report ................................ ................................ ................................ ............................... 6
Definitions and abbreviations ................................ ................................ ................................ ........................ 7
Forward -looking statements ................................ ................................ ................................ ........................ 12
Forward -looking statements relating to risk factors ................................ ................................ ..................... 12
Selected consolidated financial data ................................ ................................ ................................ ............ 14
MANAGEMENT BOARD’S REPORT ................................ ................................ ................................ ............... 15
Description of the business of the the Arctic Paper S.A. Group ................................ ................................ ... 16
General information ................................ ................................ ................................ ................................ ................................ ... 16
Capital Group structure ................................ ................................ ................................ ................................ ............................. 18
Chan ges in the capital structure of the Arctic Paper Group ................................ ................................ ................................ ........ 18
Modifications to the core management principles ................................ ................................ ................................ ....................... 18
Shareholding structure ................................ ................................ ................................ ................................ .............................. 18
Market environment ................................ ................................ ................................ ................................ ................................ ... 19
Market situation and strategy of the Group in 2023 ................................ ................................ ................................ .................... 22
Sales structure ................................ ................................ ................................ ................................ ................................ .......... 22
Markets ................................ ................................ ................................ ................................ ................................ ..................... 23
Buyers ................................ ................................ ................................ ................................ ................................ ...................... 23
Vendors & Suppliers ................................ ................................ ................................ ................................ ................................ .. 24
Information on the seasonal or cyclical nature of business ................................ ................................ ................................ ......... 25
Research and development ................................ ................................ ................................ ................................ ....................... 25
Labour matters ................................ ................................ ................................ ................................ ................................ .......... 25
Natural enviro nment ................................ ................................ ................................ ................................ ................................ .. 25
Summary of the consolidated financial results ................................ ................................ ............................. 29
Selected items of the consolidated statement of profit and loss ................................ ................................ ................................ .. 29
Select ed items of the consolidated statement of financial position ................................ ................................ ............................. 32
Selected items of the consolidated cash flow statement ................................ ................................ ................................ ............. 35
Relevant information and factors affecting the financial results and the assessment of the financial standing
................................ ................................ ................................ ................................ ................................ ... 36
Key factors affecting the performance results ................................ ................................ ................................ ............................ 36
Unusual events and factors ................................ ................................ ................................ ................................ ....................... 37
Impact of changes in Arctic Paper Group’s structure on the financi al result ................................ ................................ ................ 37
Other material information ................................ ................................ ................................ ................................ ......................... 37

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Management Board’s Report 2023 Arctic Paper S.A .3
Factors influencing the development of the Arctic Paper Group ................................ ................................ ... 39
Information on market trends ................................ ................................ ................................ ................................ ..................... 39
Factors influencing the financial results in the perspective of the next year ................................ ................................ ................ 40
Risk factors ................................ ................................ ................................ ................................ ................................ ............... 41
Supplementary information ................................ ................................ ................................ ......................... 44
The Management Board position on the possibility to achieve the projec ted financial results published earlier ........................... 44
Principles for the preparation of annual consolidated financial statements ................................ ................................ ................. 44
Dividend information ................................ ................................ ................................ ................................ ................................ .. 44
Changes to the bodies of Arctic Paper S.A. ................................ ................................ ................................ ............................... 44
Changes to the share capital of Arctic Paper S.A. ................................ ................................ ................................ ...................... 45
Remuneration paid to Members of the Management Board and the Supervisory Board ................................ ............................... 45
Agreements with Members of the Management Board guaranteeing financial compensation ................................ ....................... 45
Changes in holdings of the Issuer’s shares or rights to shares by persons managing and supervising Arctic Paper S.A. ............. 46
Management of financial resources ................................ ................................ ................................ ................................ ............ 46
Capital investments ................................ ................................ ................................ ................................ ................................ ... 46
Information on financial instruments ................................ ................................ ................................ ................................ .......... 46
Information of sureties, guarantees and pledges ................................ ................................ ................................ ........................ 46
Material off -balance sheet items ................................ ................................ ................................ ................................ ................ 47
Assessment of the feasibility of investment plans ................................ ................................ ................................ ...................... 47
Information on significant court and arbitration proceedings and proceedings pending before public administrative
authorities ................................ ................................ ................................ ................................ ................................ ................. 47
Information on transactions with related entities executed on non -market terms and conditions ................................ .................. 48
Information on agreements resulting in changes to the proportions of share holdings ................................ ................................ . 48
Information on purchase of treasury shares ................................ ................................ ................................ ............................... 48
Information on remuneration of the entity authorised to audit the financial statements ................................ ................................ 48
Headcount ................................ ................................ ................................ ................................ ................................ ................. 48
Information on the preparation of a separate group report on non -financial information ................................ .............................. 48
Statement on the application of the Corporate Governance Rules ................................ ................................ 49
Corporate governance rules ................................ ................................ ................................ ................................ ...................... 49
Information on the extent the Issuer waived the provisions of the corporate governance rules ................................ .................... 49
Internal control and risk management systems with reference to the development processes of financial statements .................. 50
Shareholders that directly or indirectly hold significant packages of shares ................................ ................................ ................ 51
Securities with special control rights ................................ ................................ ................................ ................................ .......... 51
Information on major restrictions on transfer of title to the Issuer’s securities and al l restrictions concerning the exercising of
voting rights ................................ ................................ ................................ ................................ ................................ .............. 51
Description of the principles of amending the Issuer’s Articles of A ssociation ................................ ................................ ............. 52
Description of the functioning of the General Meeting ................................ ................................ ................................ ................ 52
Operation of the Issuer’s managing and supervising bodies and its committees as well as information on the composition of
those bodies ................................ ................................ ................................ ................................ ................................ ............. 53
Information compliant with the requirements of Swedish regulations concerning corporate governance. ...... 62
General Meeting of Shareholders ................................ ................................ ................................ ................................ .............. 62
Appointment of governing bodies of the company ................................ ................................ ................................ ...................... 62
Tasks of the bodies of the Company ................................ ................................ ................................ ................................ .......... 62
Size and composition of the Company’s bodies ................................ ................................ ................................ .......................... 62
Chairpersons of the bodies of the Company ................................ ................................ ................................ ............................... 63
Procedures of the bodies of the Company ................................ ................................ ................................ ................................ .. 63
Remuneration of members of the bodies of the Company and management staff ................................ ................................ ........ 63
Information on corporate governance ................................ ................................ ................................ ................................ ......... 63
Information by the Management Board of Arctic Paper S.A. on selection of the audit firm ............................ 64
Statements of the Management Board ................................ ................................ ................................ .......... 65
Accuracy and reliability of the presented reports ................................ ................................ ................................ ........................ 65

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Management Board’s Report 2023 Arctic Paper S.A .4

Letter from the President of the Management Board of Arctic
Paper S.A.
Dear Sirs,
am pleased to present you the Arctic Paper Group's annual report for 2023.

It was another year in when we had to operate in a dynamically changing economic environment. The economic situation, which
was very favorable for us in 2022, has changed dramatically and the entire industry has recorded a significant drop in demand
and deterioration of results. How ever, thanks to quick adjustment actions, we achieved very good results even with significantly
reduced production. Focusing on the margins achieved, and not on the production volume, brought the expected results. The
achieved EBITDA level is the second be st result in the history of the Group. It is worth noting the group's very strong financial
situation, strong balance sheet and high level of cash flow. This has two benefits, as it both reduces financial costs, especially at
the current high interest rate levels, and enables the implementation of an ambitious investment plan related to the
implementation of subsequent stages of the 4P strategy. Most of the expenditure is allocated to the development of our two new,
promising segments - energy and packaging . In just a few months (June 2024), a photovoltaic installation with a capacity of 17
MW will be launched at the Kostrzyn paper mill, and another one (with a capacity of 9 MW ) is in the development phase. This will
significantly reduce the carbon footprint of our production. We have started the construction of a new biomass installation for the
factory in Grycksbo, which, in addition to generating green thermal energy necessary for paper production, will enable the
production of 50,000 tons of wood pellets, which will be sold as green fuel to customers in Germany and France.
Consistent implementation of the 4P strategy and the results achieved as a result confirm that the Arctic Paper Group is a re liable
and solid partner for its Clients and meets the expec tations of shareholders.

I would like to thank the entire Arctic Paper Group team for their consistency in implementing the tasks set before us.

Sincerely yours,

Michał Jarczyński
President of the Management Board of Arctic Paper S.A.

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Management Board’s Report 2023 Arctic Paper S.A. 6

Information on the report
This Management Board’s Report, which is a component of the Consolidated Annual Report for 2023, has been prepared in
accordance with the Regulation of the Minister of Finance of 29 March 2018 on current and periodical information disclosed by
issuers of securities and conditions of recognition as equivalent of information required by the law of non -member states (Journal
of Laws of 2018, item 757).
Certain s elected information contained in this report comes from the Arctic Paper Group management accounting system and
statistics systems.
This Management Board’s Report presents data in PLN, and all figures, unless otherwise specified, are disclosed in PLN ‘000.

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Management Board’s Report 2023 Arctic Paper S.A. 7

Definitions and abbreviations
Unless the context requires otherwise, the following definitions and abbreviations are used in the whole document:
Abbreviations applied to business entities, institutions and authorities of the Company

Arctic Paper, Company, Issuer, Parent Entity, AP Arctic Paper Spółka Akcyjna with its registered office in Kostrzyn
nad Odrą, Poland
Capital Group, Group, Arctic Paper Group, AP Group Capital Group comprised of Arctic Paper Spółka Akcyjna and its
subsidiaries as well a s joint ventures
Arctic Paper Kostrzyn, AP Kostrzyn, APK Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in
Kostrzyn nad Odrą, Poland
Arctic Paper Munkedals, AP Munkedals, APM Arctic Paper Munkedals AB with its registered office in Munkedal
Municipality, Västra Götaland County, Sweden
Arctic Paper Mochenwangen, AP Mochenwangen, APMW Arctic Paper Mochenwangen GmbH with its registered office in
Mochenwangen, Germany
Arctic Paper Grycksbo, AP Grycksbo, APG Arctic Paper Grycksbo AB with its registered office in Kungsvagen,
Grycksbo, Sweden
Paper Mills Arctic Paper Kostrzyn, Arctic Paper Munkedals, Arctic Paper
Grycksbo
Arctic Paper Investment AB, API AB Arctic Paper Investment AB with its registered office in Göteborg,
Swede n
Arctic Paper Investment GmbH, API GmbH Arctic Paper Investment GmbH with its registered office in
W olpertswende, Germany
Arctic Paper Verwaltungs Arctic Paper Verwaltungs GmbH with its registered office in
W olpertswende, Germany
Arctic Paper Immobilienverwaltungs Arctic Paper Immobilienverwaltungs GmbH & Co. KG with its
registered office in W olpertswende, Germany
Kostrzyn Group Arctic Paper Kostrzyn Spółka Akcyjna with its registered office in
Kostrzyn nad Odrą and EC Kostrzyn Sp. z o.o. with its registered
office in Kostrzyn nad Odrą
Mochenwangen Group Arctic Paper Investment GmbH, Arctic Paper Mochenwangen
GmbH, Arctic Paper Verwaltungs GmbH, Arctic Paper
Immobilienverwaltungs GmbH & Co.KG
Grycksbo Group Arctic Paper Grycksbo AB and Arctic Paper Investment AB , Arctic
Paper Finance AB
Sales Offices Arctic Paper Papierhandels GmbH with its regist ered office in
Vienna (Austria)
Arctic Paper Benelux SA with its registered o ffice in Oud -Haverlee
(Belgium)

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Management Board’s Report 2023 Arctic Paper S.A. 8

Arctic Paper Danmark A/S with its regis tered office in Greve
(Denmark)
Arctic Paper France SA with its regi stered office in Paris (France)
Arctic Paper Deutschland GmbH with its registered office in
Hamburg, Germany
Arctic Paper Italia Srl with its reg istered office in Milan (Italy)
Arctic Paper Baltic States SIA with its reg istered office in Riga
(Latvia)
Arctic Paper Norge AS with its reg istered office in Oslo (Norway)
Arctic Paper Polska Sp. z o.o. with its regis tered office in Warsaw
(Poland)
Arctic Paper España SL with its registe red office in Barcelona
(Spain)
Arctic Paper Finance AB with its registe red office in Munkedal
(Sweden)
Arctic Paper Schweiz AG with its registered office in Derendingen
(Switzerland)
Arctic Paper UK Ltd with its registered office in London (UK)
Arctic Power Sp. z o.o.
(formerly Arctic Paper East Sp. z o.o.)
Arctic Power Sp. z o.o. with its registered office in Kostrzyn nad
Odrą (Poland)
Kostrzyn Packaging Spółka z o.o. Arctic Paper East Sp. z o.o . with its registered office in Kostrzyn
nad Odrą (Poland)
Rottneros, Rottneros AB Rottneros AB with its registered office in Sunne (Sweden)
Rottneros Group, Rottneros AB Group Rottneros AB with its registered office in Söderhamn, Sweden;
Rottneros Bruk AB with its registered office in Rottneros, Sweden;
Utansjo Bruk AB with its registered office in Söderhamn, Sweden,
Vallviks Bruk AB with its registered office in Vallvik, Sweden;
Rottneros Packaging AB with its registered office in Sunne,
Sweden; SIA Ro ttneros Baltic with its registered office in Kuldiga,
Latvia; since 1 January 2020 – Nykvist Skogs AB with its registered
office in Gräsmark, Sweden
Pulp Mills Rottneros Bruk AB with its registered office in Rottneros, Sweden;
Vallviks Bruk AB with its re gistered office in Vallvik, Sweden
Rottneros Purchasing Office SIA Rottneros Baltic with its registered office in Kuldiga, Latvia
Office Kalltorp Kalltorp Kraft Handelsbolaget with its registered office in
Trollhattan, Sweden
Nemus Holding AB Nemus Hold ing AB with its registered office in Göteborg, Sweden
Thomas Onstad The Issuer’s core shareholder, holding directly and indirectly over
50% of shares in Arctic Paper S.A.; a member of the Issuer’s
Supervisory Board

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Management Board’s Report 2023 Arctic Paper S.A. 9

Management Board, Issuer’s Management Board,
Company’s Management Board, Group’s Management
Board
Management Board of Arctic Paper S.A.
Supervisory Board, Issuer’s Supervisory Board,
Company’s Supervisory Board, Group’s Supervisory
Board, SB
Supervisory Board of Arctic Paper S.A.
AGM, GM, Issuer’s General Meeting, Company’s General
Meeting
Annual General Meeting of Arctic Paper S.A.
EGM, Extraordinary General Meeting, Issuer’s
Extraordinary General Meeting, Company’s Extraordinary
General Meeting
Extrao rdinary General Meeting of Arctic Paper S.A.
Articles of Association, Issuer’s Articles of Association,
Company’s Articles of Association
Articles of Association of Arctic Paper S.A.
SEZ Kostrzyńsko -Słubicka Special Economic Zone
Registration Court District Court in Zielona Góra
W arsaw Stock Exchange, W SE Giełda Papierów W artościowych w W arszawie Spółka Akcyjna
KDPW , Depository Krajowy Depozyt Papierów W artościowych Spółka Akcyjna with its
registered office in W arsaw
PFSA Polish Financial Supervision Authority
SFSA Swedish Financial Supervisory Authority, equivalent to PFSA
NASDAQ in Stockholm, Nasdaq Stock Exchange in Stockholm, Sweden
CEPI Confederation of European Paper Industries
EURO -GRAPH The European Association of Graphic Paper Producers
Eurostat European Statistical Office
GUS Central Statistical Office of Poland
NBSK Northern Bleached Softwood Kraft
BHKP Bleached Hardwood Kraft Pulp

Definitions of selected terms and financial indicators and abbreviations of currencies

Sales profit margin Ratio of profit/(loss) on sales to sales revenues from continuing
operations
EBIT Profit on continuing operating activities (Earnings Before Interest
and Taxes)
EBIT profitability, operating profitability, operating profit
margin
Ratio of operating profit/(loss) to sales revenues from continuing
operations

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Management Board’s Report 2023 Arctic Paper S.A. 10

EBITDA Operating profit from continuing operations plus depreciation and
amortisation and impairment allowances (Earnings Before Interest,
Taxes, Depreciation and Amortisation)
EBITDA profitability, EBITDA margin Ratio of operating profit plus depreciation and amortisation and
impairment allowances to sales income from continuing operations
Gross profit margin Ratio of gross profit/(loss) to sales revenues from continuing
opera tions
Sales profitability ratio, net profit margin Ratio of net profit/(loss) to sales revenues
Return on equity, ROE Ratio of net profit/(loss) to equity income
Return on assets, ROA Ratio of net profit/(loss) to total assets
EPS Earnings Per Share, ratio of net profit to the weighted average
number of shares
BVPS Book Value Per Share, Ratio of book value of equity to the number
of shares
Debt -to-equity ratio Ratio of total liabilities to equity
Equity to fixed assets ratio Ratio of equity to fixed assets
Interest -bearing debt -to-equity ratio Ratio of interest -bearing debt and other financial liabilities to equity
Net debt -to-EBITDA ratio Ratio of interest -bearing debt minus cash to EBITDA from
continuing operations
EBITDA -to-interest coverage ratio Ratio of EBITDA to interest expense from continuing operations
Current ratio Ratio of current assets to short -term liabilities
Quick ratio Ratio of current assets minus inventory and short -term accruals and
deferred income to short -term liabilities
Cash solvency ratio Ratio of total cash and similar assets to short -term liabilities
DSI Days Sales of Inventory, ratio of inventory to cost of sales
multiplied by the number of days in the period
DSO Days Sales Outstanding, ratio of trade receivables to sales income
from continuing operations multiplied by the number of days in the
period
DPO Days Payable Outstanding, Ratio of trade payables to cost of sales
from continuing operations multiplied by t he number of days in the
period
Operating cycle DSI + DSO
Cash conversion cycle Operating cycle – DPO
FY Financial year
Q1 1st quarter of the financial year
Q2 2nd quarter of the financial year

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Management Board’s Report 2023 Arctic Paper S.A. 11

Q3 3rd quarter of the financial year
Q4 4th quarter of the financial year
H1 First half of the financial year
H2 Second half of the financial year
YTD Year -to-date
Like -for -like, LFL Analogous, with respect to operating result.
p.p. Percentage point, difference between two amounts of one item
given in percentage
PLN, zł, złoty Monetary unit of the Republic of Poland
gr grosz – 1/100 of one zloty (the monetary unit of the Republic of
Poland)
Euro, EUR Monetary unit of the European Union
GBP Pound sterling, monetary unit of the United Kingdom
SEK Swedish Krona – monetary unit of the Kingdom of Sweden
USD United States dollar, the legal tender in the United States of
America
IAS International Accounting Standards
IFRS International Financial Reporting Standards
IFRS EU International Financial Reporting Standards endorsed by the
European Union
GDP Gross Domestic Product

Other definitions and abbreviations

Series A Shares 50,000 shares of Arctic Paper S.A. A serie s ordinary shares of PLN 1 each
Series B Shares 44,253 .500 shares of Arctic Paper S.A. B serie s ordinary shares of PLN 1 each
Series C Shares 8,100 .000 shares of Arctic Paper S.A. C serie s ordinary shares of PLN 1 each
Series E Shares 3,000 .000 shares of Arctic Paper S.A. E serie s ordinary shares of PLN 1 each
Series F Shares 13, 884 .283 shares of Arctic Paper S.A. F series of the nominal value of PLN 1 each
Shares, Issuer’s Shares Series A, Series B, Series C, Series E, and Series F Shares jointly

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Management Board’s Report 2023 Arctic Paper S.A. 12

Forward -looking statements
The information contained in this report which does not relate to historical facts relates to f orward -looking statements . Such
statements may, in particular, concern the Group’s strategy, business development, market projections, planned investment
outlays, and future revenues. Such statements may be identified by the use of expressions pertaining to the future such as, e .g.,
“believe”, “think”, “expect”, “may”, “will”, “should”, “is expected”, “is assumed”, and any negations and grammatical forms o f these
expressions or similar terms. The statements contained in this report concerning matters which are not historical facts should be
treated only as projections subject to risk and uncertainty. Forward -looking statements are inevitably based on certain estimates
and assumptions which, although our management finds them rational, are naturally subject to known and unknown risks and
uncertainties and other factors that could cause the actual results to differ materially from the historical results or the p rojections.
For this reason, we cannot assure that any of the events provided for in the forward -looking statements will occur or, if they
occur, about their impact on the Group’s operating activities or financial situation. W hen evaluating the information present ed in
this report, one should not rely on such forward -looking statements, which are stated only as at the date they a re expressed.
Unless legal regulations contain detailed requirements in this respect, the Group shall not be obliged to update or verify th ose
forward -looking statements in order to provide for new developments or circumstances. Furthermore, the Group is n ot obliged to
verify or to confirm the analysts’ expectations or estimates, except for those required by law.
Forward -looking statements relating to risk factors
In this report we described the risk factors that the Management Board of our Group considers specific to the sector we operate
in; however, the list may not be exhaustive. Other factors may arise that have not been identified by us and that could have
material and adverse impact on the business, financial condition, results on operations or prosp ects of the Arctic Paper Group. In
such circumstances, the price of the shares of the Company listed at Giełda Papierów W artościowych w W arszawie S.A. (W arsaw
Stock Exchange) or at NASDAQ in Stockholm may decrease, investors may lose their invested funds i n whole or in part and the
potential dividend disbursement by the Company may be limited.
W e ask you to perform a careful analysis o f the information disclosed in “ Risk fact ors” of this report – the section contains a
description of risk factors and uncer tainties related to the business of the Arctic Paper Group.

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Management Board’s Report 202 3 Arctic Paper S.A. 14
Selected consolidated financial data

Period
from
01.01.2023
to 31.12.2023
Period
from
01.01.2022
to 31.12.2022
Period
from
01.01.2023
to 31.12.2023
Period
from
01.01.2022
to 31.12.2022
PLN ‘000 PLN ‘000 EUR ‘000 EUR ‘000

Continuing operations
Sales revenues 3 549 153 4 894 276 781 121 1 043 934
Operating profit/(loss) 357 068 842 979 78 586 179 805
Gross profit/(loss) 340 917 927 577 75 031 197 849

Net profit/(loss) for the period 272 388 756 822 59 949 161 428
Net profit/(loss) attributable to the shareholders of the Parent
Entity 247 132 631 001 54 390 134 591

Net cash flows from operating activities 471 204 607 383 103 706 129 553
Net cash flows from investing activities (146 720) (155 879) (32 291) (33 249)
Net cash flows from financing activities (288 934) (124 588) (63 591) (26 574)

Change in cash and cash equivalents 35 550 326 916 7 824 69 730

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) 3,57 9,11 0,78 1,94
Diluted EPS (in PLN/EUR) 3,57 9,11 0,78 1,94

Mean PLN/EUR exchange rate* 4,5437 4,6883

As at
31 December 2023
As at
31 December 2022
As at
31 December 2023
As at
31 December 2022
PLN’000 PLN’000 EUR’000 EUR’000

Assets 2 722 877 3 254 485 626 237 693 935
Long-term liabilities 279 753 395 397 64 341 84 308
Short-term liabilities 641 616 806 906 147 566 172 052
Equity 1 801 508 2 052 182 414 330 437 575
Share capital 69 288 69 288 15 936 14 774

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) 26,00 29,62 5,98 6,32
Diluted book value per share (in PLN/EUR) 26,00 29,62 5,98 6,32

Declared or paid dividend (in PLN/EUR) 187 077 014 27 715 113 43 025 992 5 909 532
Declared or paid dividend per share (in PLN/EUR) 2,70 0,40 0,62 0,09

PLN/EUR exchange rate at the end of the period** - - 4,3480 4,6899

* – 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 and book value per share have been translated at the mean arithmetic exchange rates published by the National Bank of Poland, prevailing on the balance
sheet date.

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MANAGEMENT BOARD ’S
REPORT

from operations of the
Arctic Paper Capital Group
for 2023

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Management Board’s Report 2023 Arctic Paper S.A. 16

Description of the business of the
the Arctic Paper S.A. Group
General information
The Arctic Paper Group is a paper and pulp producer. W e offer voluminous book paper and a wide range of products in this
segment, as well as high -grade graphic paper. The Group produces numerous types of uncoated and coated wood -free paper as
well as wood -containing uncoated paper for printing houses, paper distributors, book and magazine publishing houses and the
advertising industry. In connection with acquisition of the Rottneros Group in December 2012, the Group’s assortment was
expanded with the produc tion of pulp. As at 31 December 2023, the Arctic Paper Group employs over 1,500 people in its Paper
Mills, companies involved in sale of paper and in pulp producing companies, procurement office and a company producing food
packaging. Our Paper Mills are l ocated in Poland and Sweden, and have tota l production capacity of over 69 5,000 tonnes of
paper per year. Our Pulp Mills located in Sweden have aggregated production capacities of over 400,000 tonnes of pulp annuall y.
As at 31 December 2023, the Group had 13 Sales Offices ensuring access to all European markets, including Central and Eastern
Europe. Our consolidated sales revenues for 12 months of 2023 amounted to PLN 3,549 million.
Arctic Paper S.A. is a holding company set up in April 2008. The Parent Entity is entered in the register of entrepreneurs of the
National Court Register maintained by the District Court in Zielona Góra, 8th Commercial Division of the National Court Regis ter,
under KRS number 0000306944. The Parent Entity holds statistical number REGON 080262255. The Company has a foreign
branch in Göteborg, Sweden.
Business activity
The principal business of the Arctic Paper Group is production and sales of paper and pulp. The Group’s additional business,
partly subordinate to paper and pulp production, covers:
— Production of packaging,
— Generation of electricity,
— Transmission of electricity,
— Electricity distribution,
— Heat production,
— Heat distribution,
— Logistics services,
— Paper and pulp distribution.
Our production facilities
As on 31 December 2023, as well as on the day hereof, the Group owned the following Paper Mills:
— the Paper Mill in Kostrzyn nad Odrą (Poland) has the production capacity of about 315,000 tonnes per yea r and mainly
produces uncoated wood -free paper for general printing use such as printing books, brochures and forms, and for producing
envelopes and other paper products;
— the Paper Mill in Munkedal (Sweden) has the production capacity of about 160,000 tonn es and mainly produces fine uncoated
wood -free paper used primarily for printing books and high -quality brochures;
— the Paper Mill in Grycksbo (Sweden) has the production capacity of about 22 0,000 tonnes per year and produces coated
wood -free paper used for printing maps, books, magazines, posters and printing of advertising materials.
As on 31 December 2023, as well as on the day hereof, the Group owned the following Pulp Mills:
— the Rottneros mill (Sweden) has a production capacity of around 160,000 tonnes per year and produces one type of
mechanical fibre pulp: chemi -thermo mechanical pulp (CTMP);
— the Pulp Mill in Vallvik (Sweden) has the annual production capacity of about 240,000 tonnes and produces two types of long -
fibre sulphate pulp: fully bleached sulphate pulp and unbleached sulphate pulp. The most of Vallvik Pulp Mill production is

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Management Board’s Report 2023 Arctic Paper S.A. 17

known as NBSK pulp. The unbleached sulphate pulp produced by the Pulp Mill is characterised by very high purity and is
primarily used to produce transformers and in cab le industry.
Our products
The product assortment of the Arctic Paper Group covers:
— Uncoated wood -free paper, in particular:
› white offset paper that we produce and distribute primarily under the Amber brand which is one of the most versatile types of
paper destined for various applications;
› woodfree bulky book paper that we produce under the Munken brand, used primarily for book printing;
› high quality graphic paper with a particularly smooth or rough surface, used for printing various advertising and marke ting
materials, which we produce under the Munken Design brand;
— Coated wood -free paper, in particular:
› coated woodfree paper, manufactured under the G and Arctic Volume brands, used primarily for printing of books,
magazines, catalogues, maps, personalise d direct mail correspondence.
— Uncoated wood -containing paper, in particular:
› premium wood containing bulky book paper that we produce and distributed under the Munken brand, was developed
specially for multi -colour and B/W printing of books;
— Packaging pape rs
› kraft paper, which is manufactured under the brand name Munken Kraft
› one side coated packaging papers produced under the brand name G -Flexmatt
Both grades are ideal for a wide range of packaging applications, such as shopping bags, bags for loose food, packaging or
laminates used in the food or non -food industry.

— Unbleached sulphate pulp
› fully bleached sulphate pulp and unbleached sulphate pulp used primarily to produce printing and writing paper, cardboard,
toilet paper and white packaging paper.
— Mech anical fibre pulp
› chemi -thermo mechanical pulp ( CTMP), which is mainly used in the production of printing and writing paper;

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Management Board’s Report 2023 Arctic Paper S.A. 18

Capital Group structure
The Arctic Paper Capital Group comprises Arctic Paper S.A., as the Parent Entity, and its subsidiaries, a s well as joint ventures.
Since 23 October 2009, Arctic Paper S.A. has been listed on the primary market of Giełda Papierów W artościowych w W arszawie
S.A. (W arsaw Stock Exchange) and since 20 December 2012 in the NASDAQ stock exchange in Stockholm. The Gro up operates
through its Paper Mills and Pulp Mills and its subsidiary producing packaging as well as its sales Offices and Procurement
Offices.
Detailed information on the organisation of the Arctic Paper Capital Group with identification of the consolidated entities is
provided in the section ‘Accounting principles (policies)’ and in note to the consolidated financial statements (note 1 and 2 ).
Changes in the capital structure of the Arctic Paper Group
In 2023, no material changes in the capital structure of the Arctic Paper Group occurred.
Modifications to the core management principles
In 2023, 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 2023) 40, 981.449 shares of our Company, which constitutes
59.15% of its share capital and corresponds to 59.15% 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 5,623 .658 shares representing
8.12% of the total number of shares in the Company, a nd 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 2023 was 68.13% and has not changed until th e date of approval of this report.

as at 31.12.2023
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 41 581 449 60,01% 41 581 449 60,01%
Nemus Holding AB 40 981 449 59,15% 40 981 449 59,15%
other entity 600 000 0,87% 600 000 0,87%
- directly 5 623 658 8,12% 5 623 658 8,12%
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%

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Management Board’s Report 2023 Arctic Paper S.A. 19

The data in the above tables are shown as at the date of approval of this report, which has not changed as compared to 31
December 2023, and the date of publication of the quarterly report for Q3 2023, i.e. as at 7 November 2023.
Market environment
Segments of the graphic paper market
The graphic paper market is split into three core segments:
— coated and uncoated fine paper,
— coated and uncoated wood -containing paper,
— magazine paper.
The Group operates solely in the segment of high quality graphic papers. W e are not present in the newsprint and photocopy
paper segments.

Below is a description of segments in the graphic market:
— fine paper is wood -free paper where minimum 90% of fibre mass is pulp fibres obtained with chemical methods:
› uncoated wood -free paper made of pulp. It may be subject to additional processing like surf ace sizing, cale ndering, surface
or mass dyeing;
› two core categories of the paper include graphic paper (used e.g. to print books, handbooks and catalogues) and office
copying paper ;
› coated wood -free paper made of pulp is subject to coating with pigment an d glue mixtures (kaolin, calcium carbonate). The
coating may be performed on paper machines (online) or outside paper machines (offline). Coating of paper improves its
smoothness and transparency of the background, improves the quality of colour reproducti on.

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Management Board’s Report 2023 Arctic Paper S.A. 20

— wood -containing paper is most often manufactured of mechanical pulp or recycled -paper pulp, without or with small quantities
of filler. It contains lignin which increases the opacity of the paper but accelerates ageing.
› uncoated wood -containing paper is manufactured of mechanical pulp, used to print magazines with rotogravure and offset
techniques (newsprint) and to print single -colour publications. Products of the Group in that segment are u sually used to
print paperbacks;
› coated wood -containing paper is manufactured of mechanical pulp, it is double coated. It is used to print multi -colour
magazines and catalogues.
In that product group there is e.g.: SC (Super Calendared ), MFC (Machine Finished Coated), LW C (Light W eight Coated),
ULW C (Ultra -Light W eight Coated) MW C (Medium W eight Coated). The paper in the form of rolls is used for heat -set
printing.
Additional information on the market environment is provided further in this report in the section: Information on market tre nds.
Packaging paper market segments in which Arctic Paper operates:

The packaging paper market, where Arctic Paper operates, is divided into two basic segments:
— Kraft paper, which is divided into bleached, unbleached and recycled fibre papers ;
— pack aging papers coated on one side.
The Group operates exclusively in the segment of machine -finished kraft paper and one -sid e coated matt surface packaging . W e
are not present in the other segments.

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Management Board’s Report 2023 Arctic Paper S.A. 21

Segments of the pulp market

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Management Board’s Report 2023 Arctic Paper S.A. 22

Since December 2012, along with the acquisition of Rottneros AB, our assortment has been expanded by:
— fully bleached sulphate pulp and unbleached sulphate pulp used primarily to produce printin g and writing paper, cardboard,
toilet paper and white packaging paper;
— chemi -thermo mechanical pulp CTMP), which is mainly used in the production of printing and writing paper .
Market situation and strategy of the Group in 2023
The year 2023 was a period of market challenges for the Arctic Paper Group. The market situation has become radically different
from that of 2022. Demand for paper and pulp decreased significantly, which was reflected in lower capacity utilisation and
financial performance. The infl ationary environment posed further challenges to effective profitability management. Despite such
an unfavourable market environment, the Group achieved very good results. It recorded its second -best result in its history,
maintained a strong balance sheet and consistently pursued its strategy of developing two new segments – packaging and
energy.

Sales structure
In 2023 and in 2022, the sales structure by main product lines was as follows:

PLN ‘000 2023 % share 2022 % share

Paper 2 460 441 69% 3 579 803 73%
Amber 1 047 941 30% 1 683 656 34%
G-Print 604 247 17% 497 935 10%
Munken 549 767 15% 729 265 15%
Arctic 217 431 6% 604 141 12%
AP Tech 41 031 1% 64 141 1%
Other 24 0% 664 0%

Pulp 1 088 712 31% 1 314 473 27%
NBSK and derivatives 984 514 28% 781 383 16%
Groundwood - 0% 150 994 3%
CTMP 47 543 1% 285 793 6%
Other 56 655 2% 96 303 2%
Total paper and pulp 3 549 153 100% 4 894 276 100%

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Management Board’s Report 2023 Arctic Paper S.A. 23

thousand tonnes 2023 % share 2022 % share

Paper 431 55% 617 61%
Amber 190 24% 296 29%
G-Print 111 14% 91 9%
Munken 82 10% 108 11%
Arctic 39 5% 110 11%
AP Tech 8 1% 11 1%
Other - 0% - 0%

Pulp 356 45% 389 39%
NBSK and derivatives 235 30% 220 22%
Groundwood - 0% 56 6%
CTMP 121 15% 113 11%
Total paper and pulp 787 100% 1 006 100%

In 2023 there were no material changes to the sales structure of paper and pulp by the Group or in the revenue structure from
sales of paper and pulp by the Group by its products. In 2023, there is a quantitative decrease and a quantitative increase i n
pap er and pulp sales.
Markets
In 2023 the share of G roup sales outside Poland was 83 % compared to 2022 (8 3%). This year, similarly to previous years, sales
were focused on European markets. The share of those markets in the overall value of sales was 99% in 2023 (2022: 9 8%).
The geographical structure of sales revenues by the main markets in 2023 and in 2022 is presented in note 10.1 to the
consolidated financial statements.
Buyers
The base of our customers covers both direct and indirect buyers. Direct buyers purchase the Group’s products from our Paper
Mills. Indirect buyers do not buy the Group’s products on their own and they resort to the services of printers or paper merchants ,
nevertheless, they constitute an important target group of marketing activities of Arctic Paper since it is indirect buyers t hat
recommend and prescribe the Group’s papers to direct buyers. The groups of direct and indirect buyers of products include:
— pri nting houses – they are direct buyers straight from the Group’s Paper Mills,
— wholesalers – they are direct buyers of paper manufactured by the Group for further re -sale,
— publishers – they are direct and indirect buyers of paper manufactured by the Group st raight from the Group for their
publishing business and instruct or recommend the use of our paper to printing houses to which they commission the printing
of books and other publications,
— advertising agencies – they are mainly indirect buyers that do not buy our products directly; however, they play an important
role in commissioning and recommending our products to printing houses, in particular high quality paper to print annual
reports of companies, brochures, leaflets and packaging,
— end users and brand owners – those are direct and indirect buyers that buy our products directly; they also play an important
role in commissioning and recommending our products to printing houses to which they commission printing services.

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Management Board’s Report 2023 Arctic Paper S.A. 24

Pulp Mill products are mainly boug ht by customers that produce paper for printing, paper hygienic products and cardboard as well
as electrical devices and filters. Pulp is supplied to entities that do not have the capacity to produce pulp by themselves a nd to
buyers that produce certain ty pes of pulp and look for suppliers of other types of pulp.
In our opinion, we are not materially dependent on any single specific buyer. The Group’s consolidated revenues for 2023 show
that the share of the largest buyer did not exceed 12% of total sales r evenues.
Vendors & Suppliers
In its business, the Group relies on the following goods and services:
— Pulp for Paper Mills,
— W ood for Pulp Mills,
— Chemicals,
— Electricity,
— Transport services.
Pulp
Pulp is the core material used by the Group to produce paper. Th e Group acquires pulp on the basis of revolving annual contracts
concluded under framework agreements or one -off transactions.
Wood
W ood is the core material used by the Pulp Mills to produce pulp. The Rottneros Group has a procurement department placing
orders with sawmills in Sweden as well as its subsidiary company – SIA Rottneros Baltic, purchasing wood in the Baltic states.
Chemicals
The core chemicals used to produce papers are fillers (mainly calcium carbonate), starch (of maize, potatoes, tapioca), optical
bleaching agents and other chemicals. Chemicals are also used to produce cellulose.
Electricity
In its production processes, the Group uses electricity and heat energy. The entire demand for electricity and heat energy fo r the
Paper Mill in Kostrz yn is covered with its own heat and power plant using natural gas. The gas is supplied pursuant to a contract
with a Polish supplier (PGNiG) at annual indexed prices in line with changes to the sectoral indicators published by GUS [Cen tral
Statistical Offi ce of Poland] subject to negotiations of the indexation formula when the contractual change levels are exceeded.
Gas is acquired from deposits located close to Kostrzyn nad Odrą and delivered to the Paper Mill with a local pipeline.
In autumn 2022, a new b oiler designed to generate steam from waste fuels was commissioned at the Arctic Paper Munkedals mill.
The boiler is designed to handle any solid fuel. The paper mill is also powered by electricity from an internal hydroelectric power
station, mains electr icity and steam from a natural gas boiler.
Energy for the Paper Mill Arctic Paper Grycksbo is obtained from biomass and electricity is partly acquired from external
suppliers.
The Rottneros Pulp Mill covers its entire demand for electricity with purchases from external suppliers.
The Vallvik Pulp Mill provides for about 75% of its demand for electricity with its own resources. The remaining demand for
electricity is covered with purchases f rom external suppliers.
Transport services
The Group does not operate its own means of transportation and resorts to specialised external entities for distribution of i ts
products from Paper Mills and warehouses to buyers.

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Management Board’s Report 2023 Arctic Paper S.A. 25

Entities in the Group are not de pendent on those suppliers. The Group’s consolidated costs for 2023 show that the share of the
largest service provider did not exceed 10% of total costs .
Information on the seasonal or cyclical nature of business
The demand for the Group’s products is su bject 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 W estern Europe are closed.
Global graphic paper markets are also subject to st ructural decline due to digitalisation in society, but thanks to its efficient sales
process and strong brands, Arctic Paper manages its market shares and overall paper decline better than its competitors.
Research and development
The Arctic Paper Group mainly carries out development work aimed at streamlining and modernizing production processes,
improving cost and energy efficiency and improving the quality of the products offered. During the period covered by this rep ort,
the pap er and pulp mills carried out development work aimed at improving the production process, reducing energy and raw
material consumption and optimising the cost of the production process.
Labour matters
Matters concerning the Group’s employees are described in detail in the document “ Non -financial information of the Arctic Paper
S.A. Capital Group ” published separately – Social Responsibility Report 2023” .

Natural environment
Our Group complies with environmental standards set forth in numerous applicable r egulations and in administrative decisions.
The standards are aimed at ensuring protection of soil, air and water against pollution as well as noise and electromagnetic
fields. Below, we provide a description of how environmental regulations affect the ope rations of our Paper Mills and Pulp Mills:
Kostrzyn Paper Mill
Pursuant to a decision of the Governor of the Lubuskie Province of 8 December 2005, Kostrzyn obtained an integrated permit to
operate a paper production installation with a fuel combustion inst allation at the facility in Kostrzyn nad Odrą. In the case of
Kostrzyn, the need for such permit was due to its paper production capacity in excess of 20 tonnes per day. This permit has b een
updated many times, adjusting the plant to the applicable legal r equirements. The last update took place on 8 November 2023 by
the decision of the Marshal of the Lubuskie Province.
The condition for receiving the integrated permit is that the installation meets the environmental protection requirements
resulting, among others, from best available techniques (BAT). Operation in accordance with the conditions laid down in the
permit ensures compliance with the legally prescribed environmental parameters.
In order to comply with the requirements specified in the environment al permit and other environmental standards related to
waste management, Kostrzyn has entered into a number of contracts covering collection and management of production waste.
In May 2008, an industrial wastewater treatment plant was opened at the Kostrzy n nad Odrą site. Pursuant to a decision of the
Governor of the Lubuskie Province of 14 August 2007, Kostrzyn obtained a water law permit to discharge rainwater and melt
water and to construct a discharge dock to the River of W arta (valid until 1 August 201 7). In 2017, a new water law permit was
obtained to discharge rain and melt water, valid until 25 June 2027. On 8 December 2016, Arctic Paper Kostrzyn S.A. obtained,
also, a W ater Law Permit for discharging snowmelt and rainwater into the W arta River valid until 7 December 2026, while
revoking the permit of 25.06.2013.
AP Kostrzyn participates in the EU Emissions Trading System (ETS) for greenhouse gases. A permit to emit greenhouse gases
was obtained by AP Kostrzyn pursuant to a decision of the Governor o f the Lubuskie Province of 9 November 2016 for the paper
production installation with the production capacity in excess of 20 tonnes per day located in the facility in Kostrzyn nad O drą (as

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Management Board’s Report 2023 Arctic Paper S.A. 26

amended on 26.02.2019, 14.04.2020 and 24.03.2022). This authorisation was granted for an indefinite period. In connection with
the permit, Kostrzyn is obliged to monitor the volumes of CO2 emissions and to file annual report on the emissions.
With environmental protection in mind, the Arctic Paper Kostrzy n mill has invested in modern and efficient e nergy solutions. The
CHP plant was modernised in 2007 and 2009 and now runs on natural gas, a much cleaner fuel than oil and coal. Thanks to this it
has significantly reduced CO2 emissions into the environment.
The fight against global warming is one of the greatest challenges for the future.
Arctic Paper Kostrzyn S.A. contributes to positive change and the search for long -term sustainable alternatives to today’s energy
solutions. In 2019, solar cell testing beg an at our paper mill in Kostrzyn. The first stage was a pilot PV installation in late 2019 /
early 2020. The next stage was the expansion of the above PV installation completed in H1 2021 and the commissioning of
another unit at the beginning of H2 2021. T he results of the above allowed the selection of appropriate technological and
operational aspects, the determination of the impact of the PV installation on the electricity grid and the knowledge of the
estimated efficiency under our climatic conditions. At present, Arctic Paper Kostrzyn S.A. is taking steps to improve its energy
efficiency, so it is continuing preparatory activities for the construction of further modules of the photovoltaic installati on together
with the accompanying infrastructure.
The Paper Mill in Kostrzyn nad Odrą holds compliance certificates with the following standards: ISO 45001, ISO 14001, ISO 9001.
It publishes an annual publicly available EMAS environmental report, providing an assessment of the environmental impact of i ts
acti vities. In addition, paper produced at APK S.A. has been certified to meet FSC ® chain of custody certification and PEFC™
chain of custody certification for products containing wood raw materials. The certificates are to document that the pulp use d to
produ ce the paper comes from forests used in a sustainable manner. The FSC (Forest Stewardship Council) certificate is a major
certificate granted to paper producing companies. In 2006, the first FSC certificate was granted to the paper manufactured at AP
Kostr zyn. At present, the Kostrzyn nad Odrą mill uses FSC -certified pulp and PEFC -certified pulp (Programme for the
Endorsement of Forest Certification) for the production of Amber and Munken Kraft paper.
Munkedals Paper Mill
The business of Munkedals is subject to environmental management systems EMAS and ISO 14001. EMAS (Eco -Management
and Audit Scheme) is a voluntary system applied by the European Union which applies to enterprises outstanding for their
constantly improved environmental protection l evel within their business. Companies registered with EMAS comply with
environmental protection regulations, maintain an environmental management system and publish information on environmental
protection in their business in the form of a separate verifie d statement on compliance with environmental protection regulations.
ISO, International Standards Organisation, has been developing various standards. ISO 14000 is a group of one of the best
known environmental management standards (i.e. activities underta ken by entrepreneurs in order to reduce the harmful impact of
their activities on the environment and ensure continuous improvement of the level of environmental protection).
Certain properties owned by Munkedals are located in the Natura 2000 area. Areas in the Natura 2000 constitute wild nature
reservations established on the basis of a decision of the District Council of Munkedal (Sweden) in 2005. The objective to
establish the Natura 2000 network was to preserve the natural habitats and vegetation and a nimal species most endangered with
extinction all over Europe. The extent of the coverage and the restrictions concerning business operations are set forth in t he
Council Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flo ra (Habitat Directive) and in the
Council Directive 79/409/EEC on the conservation of wild birds (Birds Directive) of 2 April 1979 and the applicable domestic
regulations. The protection level of habitats and birds in Natura 2000 areas is subject to the oc currence of specific species and/or
habitats that are protected.
On 24 June 2020, the entire range produced at the Munkedals factory was certified by the Cradle to Cradle Products Innovation
Institute (C2CPII). A recertification was carried out in 2023. Th e entire production process of the paper mill in Munkedal has been
audited and has reached the bronze level which is the overall level of product certification. The Cradle to Cradle Certified ™
program is an internationally recognised standard for safe and sustainable development. It a ssesses the environmental impact of
products throughout their life cycle. Designing according to “Cradle to Cradle” principles means not only minimising the nega tive
impact on the environment, but above all leaving a positive footprint.

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Management Board’s Report 2023 Arctic Paper S.A. 27

Grycksbo Paper Mill
Paper production in the Paper Mill Arctic Paper Grycksbo AB has been carried out in compliance with the environmental permit of
March 2007. The permit was issued by the Swedish Environmental Protection Tribunal for the production of up to 310,000 tonnes
annually. Additionally, the Paper Mill holds a CO2 emission permit issued by the regional authorities of the province of Dalarna.
Since 1997 Arctic Paper Grycksbo AB has held an ISO 14001 certificate and our environmental activities are reported in
compliance with EMAS. The core objective of EMAS is to encourage its member companies to enhance their efforts to protect the
natural environment in a systematic and consistent manner, to an extent even beyond legislative requir ements. This is achieved
by establishing a programme composed of specific action plans and assessment of all effects for the environment resulting fro m
the activities pursued. Companies are obliged to prepare annual reports on the results of their pro -envi ronmental activities.
Independent inspectors ensure that companies comply with their obligations.
Arctic Paper Grycksbo AB participates in the EU Emissions Trading System (ETS) for greenhouse gases. 2010 was the first year
when zero CO2 emissions from fos sil fuels were declared. That was made possible as a result of a reconstruction of the boiler
combined with an investment in equipment to handle biofuels, electrical filters for flue gas particles and reconstruction to turbine
generating electricity from r enewable sources.
In numbers, the switch to biofuels means annual reduction of CO2 emissions from fossil fuels by about 70,000 tonnes. The
reconstructed turbine provides for 10% of demand for electricity by the Paper Mill with renewable energy sources tha t it
generates itself which in turn results in reduction of CO2 emissions by another 4,000 tonnes. In 2022, the paper mill investe d in a
0.5MW h solar power plant.
The Paper Mill has implemented an energy management system in compliance with ISO 50001 (Ener gy Management System).
Our products are verified within the “Chain of Custody” in compliance with FSC (Forest Stewardship Council) and in compliance
with PEFC (Programme for the Endorsement of Forest Certification) as well as they meet the requirements of the standards of
Nordic Ecolable (the Nordic Swan).
The paper mill received Cradle to Cradle certification in April 2021.
Pulp Mills
Environmental issues are central to Rottneros’ corporate culture and are part of the DNA of the entire Group. Products from the
forest are part of the climate solution, and improving environmental performance is a daily job. The Group’s long -term goal is to
eliminate fossil fuels altogether.
Rottneros is in the business of being part of the solution to global warming. A growin g forest absorbs CO2 and is thus stored in
the products made from it. In many places, intensive research is being conducted to develop new products that replace fossil raw
materials with bio -based raw materials.
Rottneros does not own any forest, but contr ibutes to sustainable forestry in many ways. Both of the Group’s sites have
environmental management systems and are certified to ISO 14001. The environmental management system includes well
established procedures for inspection, sampling and dealing with deviations.
Suppliers and raw materials are carefully selected. The Rottneros Group is FSC® and PEFCTM certified and in 2023 purchased
raw materials only from FSC® certified suppliers.
The company’s efficient use of raw materials in production provides env ironmental and economic benefits. The Rottneros plant
uses around 95% of the raw material. At the Vallvik plant, around 45% of the raw material becomes pulp. W aste products from
production are mainly used as energy.
To reduce the environmental impact of t ransport, the raw material is purchased locally. The Vallvik mill buys around 50% and
Rottneros around 75% of its pulp from sources within a 100 kilometre radius. Through proper planning and coordination, we
reduce transport distances within the Group and transport from other companies.
Rottneros’ production processes involve various risks that affect the environment. The Rottneros plant has a mechanical
production process, and the biggest environmental risks are energy consumption and water emissions. Ener gy consumption is
significant, and the focus has been on reducing dependence on fossil fuels through the design of more efficient equipment and
product reformulation.

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Management Board’s Report 2023 Arctic Paper S.A. 28

At the Vallvik plant , where cellulose is produced using chemical processes, chemical treatment and emissions to water and air
pose the greatest environmental risk. In order to protect the environment and prevent any violations of applicable emission
regulations and requirements, the Group has a continuous sampling system with alarm functio ns linked to plant control systems.
In addition, random hand samples are taken.
The Group’s long -term goal is to become free of fossil fuels. The plan is for production to be completely free of fossil fuels by
2030. The only challenge that remains is repla cing the fossil fuels used to start production, especially at the Vallvik plant,
combined with production interruptions and planned maintenance shutdowns. Another challenge that still remains is to ensure
that the electricity purchased comes from fossil fu el-free sources.
Eliminating indirect CO2 emissions that occur outside the gates of operations is another long -term challenge to complete freedom
from fossil fuels. This aspect mainly concerns vehicles used to transport deliveries to and from factories.
It is Group policy that all employees in relevant positions must have the necessary environmental knowledge. The Group’s senio r
environmental staff are constantly undergoing further training.
Both factories are certified to mana gement standards and have achieved ISO 50001 certification. A key element of this effort has
been the creation of an energy management group that actively works on energy -related issues, including conducting energy
management audits in factories.

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Management Board’s Report 2023 Arctic Paper S.A. 29

Summary of the consolidated financial results
Selected items of the consolidated statement of profit and loss

PLN ‘000 2023 2022
Change %
2023/2022

Continuing operations
Sales revenues 3 549 153 4 894 276 (27 .5)
of which:
Sales of paper 2 460 441 3 579 803 (31 .3)
Sales of pulp 1 088 712 1 314 473 (17 .2)
Profit on sales 745 68 4 1 410 757 (47 .1)
% of sales revenues 21.01 28.82 (7 .8) p.p.

Selling and distribution costs (340 973) (445 197) (23 .4)
Administrative expenses (124 077) (138 766) (10 .6)
Other operating income 129 397 85 778 50.9
Other operating expenses (52 963) (69 593) (23 .9)
EBIT 357 068 842 979 (57 .6)
% of sales revenues 10.06 17.22 (7 .2) p.p.

EBITDA 475 304 973 973 (51 .2)
% of sales revenues 13.39 19.90 (6 .5) p.p.

Financial income 15 069 92 767 (83 .8)
Financial expenses (31 220) (8 169) 282 .2
Gross profit/(loss) 340 917 927 577 (63 .2)

Income tax (68 528) (170 755) (59 .9)
Net profit/(loss) 272 388 756 822 (64 .0)
% of sales revenues 7.67 15.46 (7 .8) p.p.

Net profit/(loss) for the reporting period
attributable to the shareholders of the Parent
Entity 247 132 631 001 (60 .8)

Revenues
In 2023, consolidated sales revenues reached PLN 3,549 ,153 thousand compared to PLN 4,894,276 thousand in the previous
year and decreased by 27.5% (PLN 1,345,123 thousand). Revenues from paper sales decreased by 31.3% (PLN 1,119 ,361
thousand) and revenues from pulp sales decreased by 17.2% (PLN 225,762 thousand) compared to 2022.
The volume of paper sales in 2023 was 431 thousand tonnes (2022: 617 thousand tonnes) and was 217 thousand tonnes lower
than in the previous year. This means a decrease in sales volume by 3 0.2 %.
Pulp sales volumes in 2023 were 356 thiusand tonnes (2022: 3 89 thousand tonnes) and was 36 thousand tonnes lower than in the
previous year. This means a decrease in sales volume by 9.2%.
Profit on sales, costs of sales, selling and distribution costs, and administrative expenses
Profit on sales in 2023 was by 47.1% l ower than in the previous year. Sales profit margin in the current year stood at 21.01%
compared to 28.82% ( -7.8 p.p.) in the previous year.

===== SIDA 141 =====