Financial statement analysis of Mondi Świecie S.A. Agata Kocia, Ph.D., MBA based on presentation of Piotr Sokołowski

Company’s history 1991 – Pulp and Paper Plant in Świeć wholly transformed into sole proprietorship State Treasury company 1997 – introduced 15% of the shares onto the Warsaw Stock Exchange and sold majority stake in the Framondi NV company Since Mondi Świecie SA

Ownership structure

Production activities Paper for corrugated board ProVantage Paper for paper bag production Advantage kraft Advantage Semi extensible

Market structure Sixth market in terms of packaging Good growth prospects in the future Mondi Świecie S.A. current cost market leader The market should be analyzed as a European market and not only Polish Oligopoly structure?

Competition (1) Smurfit Kappa Ireland – is part of an international corporation Smurfit Kappa Group, a leading packaging supplier in Europe with a strong position in Latin America European leader in the production of solid board, corrugated and graphics as well as cardboard packaging sales of around € 7 billion, approximately 400 locations and employees Stora Enso Oyj – Finnish pulp and paper manufacturer headquarters in Helsinki, has approximately employees in 2002 was the fifth largest producer of pulp and paper in terms of revenues in 2005 the world's largest pulp and paper producer in terms of production capacity

Competition (2) DS. Smith VPK Model Dunapack

Plans and growth perspectives Improve quality Maintain cost market leader position reduce energy costs reduce costs associated with the purchase of wood reduce costs associated with the use of chemicals

Balance sheet analysis – Assets (1) PLN in ASSETS Long-term assets 1,473,832 1,836,757 1,726,446 Fixed (tangible) assets 1,445,308 1,820,461 1,707,746 Intangible assets 5,938 5,115 2,904 Investments available for sale 516 Other financial assets Long-term deferred taxes 22,070 10,665 15,280 Short-term assets 432, , ,319 Inventory 140, , ,596 Trade receivables 225, , ,408 Derivative contracts 13,468 1,018 1,410 Cash and cash equivalents 45,141 60,381 52,905 Short-term deferred taxes 7, Total assets 1,906,172 2,306,136 2,345,765

Balance sheet analysis – Assets (2) % ASSETS Long-term assets77.32%79.65%73.60% Fixed (tangible) assets98.06%99.11%98.92% Intangible assets0.40%0.35%0.17% Investments available for sale0.04%0.03% Other financial assets0.00% Long-term deferred taxes1.50%0.58%0.89% Short-term assets22.68%20.35%26.40% Inventory32.54%37.16%36.75% Trade receivables52.23%49.76%54.48% Derivative contracts3.12%0.22%0.23% Cash and cash equivalents10.44%12.86%8.54% Short-term deferred taxes1.67%0.00% Total assets100.00%

Balance sheet analysis – Assets (3) 2008/ /2010 % change ASSETS Long-term assets24.62%-6.01% Fixed (tangible) assets25.96%-6.19% Intangible assets-13.86%-43.23% Investments available for sale0.00% Other financial assets-- Long-term deferred taxes-51.68%43.27% Short-term assets8.57%31.94% Inventory23.98%30.47% Trade receivables3.41%44.47% Derivative contracts-92.44%38.51% Cash and cash equivalents33.76%-12.38% Short-term deferred taxes %- Total assets20.98%1.72%

Balance sheet analysis – Liabilities and equity (1) PLN in LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity 1,065,433 1,182,382 1,432,554 Share capital 333,734 Paid-in capital 635, , ,648 Profit (loss) from current year 143,192 70, ,172 Retained earnings Revaluation capital- 46, Liabilities 840,739 1,123, ,211 Long-term liabilities 276, , ,316 Long-term interest bearing loans 196, , ,366 Reserves 4,082 3,796 4,048 Reserves for deferred taxes 76,095 67,059 56,902 Short-term liabilities 564, , ,895 Trade payables 370, , ,626 Current installment of interest-bearning loans 109,807 32, ,349 Derivative contracts 73,109 2, Tax liability ,851 Short-term reserves 11,110 4,546 11,870 Total liabilities and stockholders equity 1,906,172 2,306,136 2,345,765

Balance sheet analysis – Liabilities and equity (2) % LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity55.89%51.27%61.07% Share capital31.32%28.23%23.30% Paid-in capital59.63%65.84%59.24% Profit (loss) from current year13.44%5.94%17.46% Retained earnings0.00% Revaluation capital-4.39%0.00% Liabilities44.11%48.73%38.93% Long-term liabilities32.85%66.31%52.27% Long-term interest bearing loans70.97%90.49%87.23% Reserves1.48%0.51%0.85% Reserves for deferred taxes27.55%9.00%11.92% Short-term liabilities67.15%33.69%47.73% Trade payables65.63%89.27%73.33% Current installment of interest-bearning loans19.45%8.67%23.02% Derivative contracts12.95%0.63%0.05% Tax liability0.00%0.22%0.88% Short-term reserves1.97%1.20%2.72% Total liabilities and stockholders equity100.00%

Balance sheet analysis – Liabilities and equity (3) 2008/ /2010 % change LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity10.98%21.16% Share capital0.00% Paid-in capital22.54%9.01% Profit (loss) from current year-50.99%256.49% Retained earnings-- Revaluation capital %- Liabilities33.66%-18.74% Long-term liabilities169.83%-35.95% Long-term interest bearing loans244.06%-38.26% Reserves-7.01%6.64% Reserves for deferred taxes-11.87%-15.15% Short-term liabilities-32.95%15.15% Trade payables-8.80%-5.42% Current installment of interest-bearning loans-70.12%205.82% Derivative contracts-96.72%-91.71% Tax liability % Short-term reserves-59.08%161.11% Total liabilities and stockholders equity20.98%1.72%

Balance sheet analysis – ratios (1) % of fixed assets to total assets77.32%79.65%73.60% % of current assets to total assets22.68%20.35%26.40% fixed assets to current assets % stockholders equity to total liabilities and stockholders equity55.89%51.27%61.07% % liabilities to total liabilities and stockholders equity44.11%48.73%38.93% stockholders equity to liabilities

Balance sheet analysis – ratios (2) assets to stockholders equity liabilities to stockholders equity78.91%95.04%63.75% net sales to current assets

Revenues

Costs

Cash flow statement Cash flows from operations 302, , ,390 Cash flows from investing activities - 526, , ,402 Cash flows from financing activities 202, , ,219 Net cash flows - 20,892 59, ,231 Net income 177,084 73, ,512

Growth strategy Cash flows from operations+++ Cash flows from investing activities--- Cash flows from financing activities++-

Liquidity I II III IV

Kapitał obrotowy working capital to sales revenue working capital to total assets working capital to current assets working capital to inventory and receivables

Turnover total asset turnover fixed asset turover current asset turnove

Profit margin Gross profit margin 12.68%5.37%11.68% Net profit margin 10.25%5.15%11.05%

ROA ROA 7.5%3.0%10.7% Interest % 6.4%6.3%8.3%

ROE ROE 13.4%6.0%17.5% liabilities to stockholders equity and liabilities 44.1%48.7%39.0% stockholders equity to stockholders equity and liabilities 55.9%51.3%61.0%

Market value EPS P/E P/BV book value 6.67 stock price 4078

Thank you for your attention