FINANCIAL STATEMENT ANALYSIS OF MONDI WIECIE S A

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 2008 - Mondi Świecie SA

Ownership structure

Production activities • Paper for corrugated board • Pro. Vantage • 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 40 000 employees • Stora Enso Oyj – Finnish pulp and paper manufacturer • headquarters in Helsinki, has approximately 29 000 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) 2008 2009 2010 PLN in 1 000 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 5, 938 5, 115 2, 904 516 516 - - - 22, 070 10, 665 15, 280 Short-term assets 432, 340 469, 379 619, 319 Inventory 140, 702 174, 438 227, 596 Trade receivables 225, 830 233, 542 337, 408 Derivative contracts 13, 468 1, 018 1, 410 Cash and cash equivalents 45, 141 60, 381 52, 905 7, 199 - - Intangible assets Investments available for sale Other financial assets Long-term deferred taxes Short-term deferred taxes Total assets 1, 906, 172 2, 306, 136 2, 345, 765

Balance sheet analysis – Assets (2) 2008 2009 2010 % ASSETS Long-term assets 77. 32% 79. 65% 73. 60% Fixed (tangible) assets 98. 06% 99. 11% 98. 92% Intangible assets 0. 40% 0. 35% 0. 17% Investments available for sale 0. 04% 0. 03% Other financial assets 0. 00% Long-term deferred taxes 1. 50% 0. 58% 0. 89% Short-term assets 22. 68% 20. 35% 26. 40% Inventory 32. 54% 37. 16% 36. 75% Trade receivables 52. 23% 49. 76% 54. 48% Derivative contracts 3. 12% 0. 23% Cash and cash equivalents 10. 44% 12. 86% 8. 54% Short-term deferred taxes 1. 67% 0. 00% 100. 00% Total assets

Balance sheet analysis – Assets (3) 2008/200 9 2009/201 0 % change ASSETS Long-term assets 24. 62% -6. 01% Fixed (tangible) assets 25. 96% -6. 19% Intangible assets -13. 86% -43. 23% 0. 00% - - -51. 68% 43. 27% Short-term assets 8. 57% 31. 94% Inventory 23. 98% 30. 47% Trade receivables 3. 41% 44. 47% Derivative contracts -92. 44% 38. 51% Cash and cash equivalents 33. 76% -12. 38% -100. 00% - 20. 98% 1. 72% Investments available for sale Other financial assets Long-term deferred taxes Short-term deferred taxes Total assets

Balance sheet analysis – Liabilities and equity (1) 2008 2009 2010 PLN in 1 000 LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity 1, 065, 433 1, 182, 382 1, 432, 554 Share capital 333, 734 Paid-in capital 635, 279 778, 471 848, 648 Profit (loss) from current year 143, 192 70, 177 250, 172 - - - 46, 772 - - Retained earnings Revaluation capital - Liabilities 840, 739 1, 123, 754 913, 211 Long-term liabilities 276, 177 745, 203 477, 316 Long-term interest bearing loans 196, 000 674, 348 416, 366 4, 082 3, 796 4, 048 76, 095 67, 059 56, 902 Short-term liabilities 564, 562 378, 551 435, 895 Trade payables 370, 536 337, 944 319, 626 Current installment of interest-bearning loans 109, 807 32, 813 100, 349 73, 109 2, 401 199 - 847 3, 851 Short-term reserves 11, 110 4, 546 11, 870 Total liabilities and stockholders equity 1, 906, 172 Reserves for deferred taxes Derivative contracts Tax liability 2, 306, 136 2, 345, 765

Balance sheet analysis – Liabilities and equity (2) 2008 2009 2010 % LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity 55. 89% 51. 27% 61. 07% Share capital 31. 32% 28. 23% 23. 30% Paid-in capital 59. 63% 65. 84% 59. 24% Profit (loss) from current year 13. 44% 5. 94% 17. 46% Retained earnings 0. 00% Revaluation capital -4. 39% 0. 00% Liabilities 44. 11% 48. 73% 38. 93% Long-term liabilities 32. 85% 66. 31% 52. 27% Long-term interest bearing loans 70. 97% 90. 49% 87. 23% Reserves 1. 48% 0. 51% 0. 85% Reserves for deferred taxes 27. 55% 9. 00% 11. 92% Short-term liabilities 67. 15% 33. 69% 47. 73% Trade payables 65. 63% 89. 27% 73. 33% Current installment of interest-bearning loans 19. 45% 8. 67% 23. 02% Derivative contracts 12. 95% 0. 63% 0. 05% Tax liability 0. 00% 0. 22% 0. 88% Short-term reserves 1. 97% 1. 20% 2. 72% 100. 00% Total liabilities and stockholders equity

Balance sheet analysis – Liabilities and equity (3) 2008/2009/2010 % change LIABILITIES AND STOCKHOLDERS EQUITY Stockholders equity 10. 98% 21. 16% Share capital 0. 00% Paid-in capital 22. 54% 9. 01% Profit (loss) from current year -50. 99% 256. 49% Retained earnings - - Revaluation capital -100. 00% - Liabilities 33. 66% -18. 74% Long-term liabilities 169. 83% -35. 95% Long-term interest bearing loans 244. 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% - 354. 66% Short-term reserves -59. 08% 161. 11% Total liabilities and stockholders equity 20. 98% 1. 72% Tax liability

Balance sheet analysis – ratios (1) 2008 2009 2010 % of fixed assets to total assets 77. 32% 79. 65% 73. 60% % of current assets to total assets 22. 68% 20. 35% 26. 40% 3. 41 3. 91 2. 79 2008 2009 2010 % stockholders equity to total liabilities and stockholders equity 55. 89% 51. 27% 61. 07% % liabilities to total liabilities and stockholders equity 44. 11% 48. 73% 38. 93% 1. 27 1. 05 1. 57 fixed assets to current assets stockholders equity to liabilities

Balance sheet analysis – ratios (2) assets to stockholders equity liabilities to stockholders equity net sales to current assets 2008 2009 2010 1. 79 1. 95 1. 64 78. 91% 95. 04% 63. 75% 3. 22 2. 88 3. 64

Revenues

Costs

Cash flow statement 2008 Cash flows from operations Cash flows from investing activities Cash flows from financing activities Net cash flows Net income 2009 2010 302, 866 202, 383 347, 390 - 526, 582 - 552, 658 - 111, 402 202, 824 409, 859 - 244, 219 - 20, 892 59, 584 - 8, 231 177, 084 73, 169 264, 512

Growth strategy 2008 2009 2010 Cash flows from operations + + + Cash flows from investing activities - - - Cash flows from financing activities + + -

Liquidity 2008 2009 2010 I 0. 77 1. 24 1. 42 II 0. 52 0. 78 0. 88 III 0. 12 0. 16 0. 12 IV 0. 08 0. 16 0. 12

Kapitał obrotowy 2008 2009 2010 working capital to sales revenue -0. 09 0. 07 0. 08 working capital to total assets -0. 07 0. 04 0. 08 working capital to current assets -0. 31 0. 19 0. 30 working capital to inventory and receivables -0. 36 0. 22 0. 32

Turnover 2008 2009 2010 total asset turnover 0. 73 0. 59 0. 97 fixed asset turover 0. 95 0. 74 1. 31 current asset turnove 3. 23 2. 90 3. 66

Profit margin 2008 2009 2010 12. 68% 5. 37% 11. 68% 10. 25% 5. 15% 11. 05% Gross profit margin Net profit margin

ROA 2008 2009 2010 7. 5% 3. 0% 10. 7% 6. 4% 6. 3% 8. 3% ROA Interest %

ROE 2008 2009 2010 13. 4% 6. 0% 17. 5% 44. 1% 48. 7% 39. 0% 55. 9% 51. 3% 61. 0% ROE liabilities to stockholders equity and liabilities stockholders equity to stockholders equity and liabilities

Market value EPS P/E P/BV book value stock price 2008 2009 2010 2. 86 1. 40 5. 00 13. 99 55. 71 15. 60 5. 99 11. 69 6. 67 40 78 78

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