Cham Paper Group Holding AG: Quarterly report as at 30.9.2009

This brings total revenue for the first nine months of the 2009 financial year to CHF 229.0 million, down 16.6% on the previous year (CHF 274.5 million). Adjusted for currencies, revenue came in at 11.3% lower. EBIT was CHF 7.9 million (previous year CHF 13.4 million) and net profit CHF 10.9 million (of which CHF 6.8 million came from discontinued operations/net profit for previous year CHF 6.5 million). The total sales volume of 133,775 tonnes is 8.3% down on the previous year on a cumulative basis, while the quantity sold in the third quarter was just 0.7% below the 2008 figure.

Recovery continues in all market segments The positive trend for one-side coated flexible packaging paper continued apace. In this stable market, the amount sold was up 20% compared to third-quarter 2008 (YTD +15%). This was thanks to both the consistently high quality of our products and the capturing of market share from competitors who had to exit the business.

For papers for the self-adhesive market (pressure sensitive), which we supply to the auto industry in particular, we have seen a turnaround following the decline at the start of the year and the recovery that began in the second quarter. Thanks to the revival of the industry and the advertising market, we were able to sell as much in the third quarter as in the corresponding quarter in 2008 (YTD -13%).

For technical papers, such as the inner lining for cigarette packages, the market recovery continued. After an extremely weak start to 2009, sales returned to prior-year levels (YTD -20%) in the third quarter. Cham Paper Group also benefitted from the continuing trend for metallised paper, which is manufactured using significantly fewer raw materials than traditional paper.

In the still small area of digital imaging papers, we have also seen a turnaround. Following the major decline in the first half of the year, the advertising market is recovering, and Cham Paper Group has been able to set a new trend in the market with the launch of new products that are produced using curtain coater. Sales in the third quarter were significantly higher than in the corresponding period in 2008 (YTD -8%). Flexible production processes are able to offset volatile demand The economic crisis prompted clients to set about reducing their inventories in the first half of the year, even in less cyclical sectors, which had a major negative impact on incoming orders. Thanks to good contingency planning and prompt action we were able to react quickly to this situation. The implementation of short-time work played a particularly important role in this respect, even though it had to be used just once for a short period in the third quarter.

Low client inventories led to a considerable reduction in the order cycle in some cases; instead of an interval of four to six weeks, Cham Paper Group's factories are now often faced with very short lead times for orders, sometimes only two to three days. A functioning supply chain management has made it possible for Cham Paper Group to meet these client needs without having to build up too much inventory itself. This has significantly strengthened the group's position as a partner for its clients. The programmes to optimise processes and boost efficiency at our Italian plants will be completed by the end of the year as planned. Balance sheet discipline and a focus on cash bear fruit Manufacturing costs also moved lower in the third quarter thanks to the (still) low cost of pulp and energy. Thanks to consistent inventory and receivables management, free cash flow (operating cash flow minus capital expenditures) increased to CHF 26.8 million in the first nine months of 2009 from CHF 5.0 million in the prior-year period. This is despite higher expenses for research and development as well as for sales and marketing. Thanks to significantly reduced inventories (15.7% lower than at the end of 2008), net working capital fell to CHF 96.2 million. With this free cash flow from operations, net debt fell by CHF 23.8 million to CHF 35.9 million. The group has liquid assets of CHF 75 million, while shareholders' equity as at 30 September 2009 was CHF 211.4 million. This represents an equity ratio of 53.7% and CHF 303.60 per share.

COO Peter Studer appointed CEO as of 1 January 2010 The Board of Directors has appointed Peter Studer (b. 1968), who has headed the group's operations as COO since 1 April 2009, as CEO. He has worked for Cham Paper Group since 2004 and until recently was also responsible for the plant in Cham.

Outlook Cham Paper Group expects the normalisation in its markets to continue. As a result, however, we can expect the cost of pulp (+30% in USD since 1 June 2009) and energy to rise, as well. Therefore the results from the third quarter cannot be extrapolated and applied to the following quarter. Nevertheless, we expect to post a clear net operating profit for the year as a whole. Cham Paper Group is well positioned for the future. Report of the Board of Directors on the mandatory tender offer by BURU Holding AG The prospectus on the mandatory tender offer by BURU Holding AG was published today and contains a statement by the Board of Directors of Cham Paper Group Holding AG. Based on the accompanying report, this statement neither recommends nor advises against accepting the offer. It merely informs shareholders of the advantages and disadvantages of selling their shares as part of the offer from the point of view of the Board of Directors. The report can be downloaded from the Cham Paper Group website (http://ir.champaper.com).

The complete quarterly report can be downloaded from www.cham-group.com (Investor Relations section). This area also contains all documents relating to the mandatory tender offer by BURU Holding AG. Please note that this quarterly report is being published on an exceptional basis because of the mandatory tender offer by BURU Holding AG. Cham Paper Group usually reports on its business performance on a half-yearly basis. Conference call At 2:00 p.m. today a conference call will take place to discuss the quarterly figures and the report from the Board of Directors on the mandatory tender offer by BURU Holding AG.

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