Consolidated Report of Amica S.A. for 2018 Consolidated Report of Amica S.A

Consolidated Report of Amica S.A. For 2018 Consolidated Report of Amica S.A. For 2018

1. Letter of the President of the Management Board of Amica S.A. 3. Corporate Governance Statement

2. Management Board’s Report on Activities in 2018 including the 4.Statements of the Management Board and the Supervisory Board`s Report on Activities in 2018 Board I. 2018 Summary • Statement of the Management Board of Amica S.A. on the II. Financial position reliability of the annual reports III. Business model • Management Board`s statement regarding the audit firm IV. Our employees

V. Impact on the environment • Assessment of the Supervisory Board of Amica S.A. Regarding statements for 2018 VI. Prospects

VII. Risk management • Statement of the Supervisory Board on the selection of an audit firm to audit of the annual financial statements in VIII. Corporate information, including Principles of Corporate Statement of Non- Financial accordance with the applicable regulations Governance Information

5.Consolidated Financial Statements of Amica Group

6.Auditior`s Report on the Consolidated Financial Statements

List Prezesa ZarząduList Prezesa Zarządu SprawozdanieSprawozdanie z działalności z działalności Oświadczenie w sprawie ładu korporacyjnegoOświadczenia Oświadczenia SprawozdanieSprawozdanie finansowe finansowe SprawozdanieSprawozdanie audytora audytora PodsumowaniePodsumowanie 2018 2018 r. r. SytuacjaSytuacja finansowa finansowa Model biznesowyModel biznesowy Nasi PracownicyNasi Pracownicy WpływWpływ na na otoczenie otoczenie Perspektywy Perspektywy ZarządzanieZarządzanie ryzykiem ryzykiem Ład korporacyjnyŁad korporacyjny InformacjeInformacje uzupełniające uzupełniające xx Letter from the President of the Management Board 1 Amica S.A

Wronki, 29 March 2019 In 2018 we also presented new products that meet our customers' Dear Business Partners, preferences. On the largest European trade fair IFA in Berlin, we have 2018 was the next stage of rapid development of the Amica Group and presented a new line of ovens and other built-in Amica X-type / Q-type implementation of the long-term HIT2023 strategy. During this period, products. The first months of this year is the time to implement these we had to develop a response to the many challenges that have products for sales. In the category of refrigerators, with non frost emerged in the international arena, having geopolitical aspect and technology, we strengthen our position in the markets, we successfully impact on business, including the operation of our company in foreign implement for sales wine coolers and use various environmentally-friendly markets. solutions in our products. We very much hope that the new products will In 2018, such factors were tensions between the United States and be well received by the customers. China, which have led to the customs war or uncertainty associated with In 2018 also we focused on the integration of the English and French Brexit. In the coming year we will certainly have to deal with its companies with the Amica Group. I am convinced that in the nearest future consequences. Our business model with Great Britain makes us we will see their rapid development and growth in profits. Amica also prepared for all possible scenarios, including a no deal Brexit, but it does prepares for further acquisitions; we will announce them as soon as they not change the fact that the final decisions will have to be taken are completed. depending on the final agreement between the EU and Great Britain. In 2018 we also managed to stop the rise in production costs both in terms Also, the political conflict does not allow us to grow our sales faster in of materials and components, as well as labour costs. We are aware that Ukraine. these factors are, however, very sensitive and subject to fluctuations. 2018 was a period of strong expansion of large Chinese companies on Therefore, we are committed increase productivity through digitalisation our continent, that carried out the acquisition of well-recognised and better work organisation. European companies. These companies, having a high financial The above-described actions meant that the financial results can be potential, become increasingly competitive in international markets. deemed satisfactory. Double-digit percentage growth in sales and profits Our response to these challenges is a consistent implementation of the allows us to further invest and strengthen our position in the international adopted strategy. Many years of production experience, consistent markets. investment, digitisation and robotisation, geographic and product An important aspect of our business is the management of the workplace, diversification, and well prepared acquisitions allow the Amica Group for investment in social and environmental capital, and communication with rapid development and reduction of the impact of adverse external stakeholders, i.e. all these areas, through which we reinforce the image of factors. Launched in late 2017, automatic high-bay warehouse is an a socially responsible company. This year's report puts a strong emphasis example of our efforts to raise efficiency. This investment brought in on this aspect, showing key projects. It also highlights how we are 2018 better than expected results and met with great interest of the perceived by our customers, suppliers, and other business partners, logistics industry, media representatives, and experts following shareholders, but above all by our employees, who are largely the authors innovative solutions implemented in the industry. of the success of our company.

Many families work in Amica for tens of years. We highly appreciate this commitment and loyalty. Therefore, it is very important to us that Amica was the best possible place to work and grow for people working in Wronki, Poznań, but also in our foreign companies. We engage in projects supporting development of local communities. With undisguised pride I observe a dynamic development of Amicis Foundation, which has already grown into a landscape of entities most involved in charity in Wielkopolska. I believe that the results of this work translate into real improvement in the quality of life of many people who live in our close and more distant neighbourhood. To sum up, I would like to thank everyone who have contributed to our success in 2018, but above all our crew and our business partners. Thank you also for the support of the members of the Supervisory Board and the Shareholders. Aware of the efforts in recent months, we think of the new year with optimism. I am convinced that 2019 will strengthen the Amica Group's position, and our new appliances will find many satisfied customers in all markets where we are present.

Best Regards, Jacek Rutkowski President of the Management Board of Amica Spółka Akcyjna

List Prezesa Zarządu Sprawozdanie z działalności Oświadczenie w sprawie ładu korporacyjnego Oświadczenia Sprawozdanie finansowe Sprawozdanie audytora Podsumowanie 2018 r. Sytuacja finansowa Model biznesowy Nasi Pracownicy Wpływ na otoczenie Perspektywy Zarządzanie ryzykiem Ład korporacyjny Informacje uzupełniające Management board's 2 operating statement for 2018 (contains a statement on non-financial information) • I. 2018 summary 2

• II. Financial position 7

• III. Business model 19

• IV. Our employees 39

• V. Impact on the environment 52

• VI. Prospects 62 Statement on non- financial information • VII. Risk management 64

• VIII. Corporate information, including 71

Principles of corporate governance

• IX. Supplementary information 78 Wronki, 29 March 2019 Place of preparation and date of publication

Summary information on Amica Group 3 Selected operating and financial data 4-5 Calendar of important events in 2018 6

Letter from the President of the Board Report on the Activities Statement on Corporate Governance Declaration Financial Statements Auditor's Report 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 2 Summary information on Amica Group

Amica S.A. is the largest Polish manufacturer of home appliances and one of the most recognized Polish companies listed on the Warsaw Stock Exchange. Despite the increasing competition from Full MDA segment abroad, Amica remains the leader on the national market with market shares amounting to 18% The Amica Group consistently builds in its strong position, becoming a leading kitchen appliances company in key European markets. In spite of aggressive expansion of global home appliances players on the Polish market and their intense promotion, Polish brand Amica remains the leader of awareness among consumers, maintaining brand awareness for years at a level above 80. In Poland, Amica remains the leader of the entire MDA segment. Amica Group generates over 70% of revenue from export sales in more than 60 foreign markets. It is most popular in Germany, United Kingdom and Nordic countries. Amica products are associated with useful technology and modern design. Customers know that they can rely on Amica. We confirm our domination in the kitchen through the growing popularity in the small household appliances category. Amica Group’s portfolio of brands include foreign brands Gram, Hansa, CDA, and Sideme. Gram is a prestigious, traditional Danish brand operating since 1901, acquired by Amica in 2001 and well-known throughout Scandinavia. The Hansa brand is associated with robust technology and is highly popular on Eastern European markets. CDA is a British brand acquired in 2015. It is well-recognized in distribution channels such as kitchen furniture studios. And Sideme is a distributor of home appliances, which specialises in supplying a broad portfolio of products under distributors' brand names and private labels, Curtiss, Le Chai, Caviss. Amica has a modern heating appliances factory in Wronki. It was founded in 1945 and has since continuously produced household appliances, being the foundation of a dynamic growth of the company. The number of employees in all factories and offices in Poland and abroad exceeds 3,000 people. In 2018, Amica Group's revenues increased to PLN 2,928 million, PLN 273 million more than in 2017. We share generated profits with our shareholders. In 2018 we paid dividends once again, this time in the amount PLN 3.0 per share. Debt ratios are maintained at a stable and secure level.

Presence on international markets We are an European manufacturer of household appliances, present on over 60 markets worldwide.

2.0 mln 2.3 mln

number of sold number of sold cookers, ovens, and hobs goods

more than 60 18% 74%

the number of countries Amica Group share share of sales in the markets where the Group is present in the Polish market outside Poland from the point of view of sales

3,020 PLN 3.3 million 16 number of employees in Expenditure on CSR initiatives in 2018 number of companies in the Amica Group Group

RevenuePLN 2,928 million Total assets PLN 1,828 million Equity PLN 835 million Liabilities PLN 993.2 million

vs. PLN 2,654 million vs. PLN 1,728 million vs. PLN 747 million vs. PLN 980.6 million [+ 10.3%] [+ 5.8%] [+ 11.7%] [+ 1.3%]

EBITDA margin 7.0% Gross profit PLN 136.6 million

vs. 7.2% vs. PLN 121.0 million 2018 [+ 12.9%] 2018

2017 4,7% 4,6% 205,2 191,4 2017

0,0% 0,0% 0,0 0,0 EBITDA (mln zł) Grossmarża zyskuprofit bruttomargin (%)(%)

Operating CF PLN 145.0 million Change in cash balance (-) PLN 15.6 million Cash PLN 76.0 million

vs. PLN 135.7 million vs. + PLN 6.3 million vs. PLN 91.6 million

2018

2017

Participation in International Fair of Polish Intelligent Consumer Development CEO of the Year Electronics IFA 2018 Award in two Award for the in Berlin categories: President of Amica (Debut of new X- Innovation in S.A. Jacek type line) Industry 4:0 and Rutkowski, in the 2 awards Decision to pay President competition (September 2018) organized by the Złota Villa 2018 a dividend of visionary PLN 23.3 million (October 2018) Trade Media Organiser: (PLN 3.0 per International Villa magazine share) Publishing (March 2018) (June 2018) (December 2018)

IQ 2018 IIQ 2018 IIIQ 2018 IVQ 2018 IQ 2019

Commendation for Polish company - Amica S.A. in the Amica for International Champion category Opening of Acquisition of living - award for Amica in Maintenance, in the the new own 250,000 competition New brand the category "Exporter: showroom in shares for a total organized by image Polish Private Poznań of PLN 30 million Inżynieria i (July 2018) Company - large (May 2018) (October 2018) enterprise Utrzymanie Ruchu and Control Organiser: PwC Poland and Engineering Poland Puls Biznesu (December 2018) (December 2018)

Financial results 8 Sales markets 9-10 Economic position - assets 11 Economic position - liabilities 12 Cash position 13 Financial ratios 14-15 Assessment of financial resources 16 management and projected financial position Assessment of the investment plans 16 Financial performance projections 16 Dividends 16 Financing of the activities 17-18 Pledges, guarantees and other relevant off- 18 balance sheet items

Gross profit/(loss) on sales 803,232 772,052 31,180 4.0% 287,968 460,299

Gross profit on sales 27.4% 29.1% -1.6% n/a 19.0% 29.1%

Selling costs 313,332 291,852 21,480 7.4% 77,371 140,237 General administrative 336,233 336,963 -730 -0.2% 115,496 253,017 expenses 3500 PLN 2,928 CAGR 2008-2018 Balance of other income and million -1,669 279 -1,948 -698.2% -3,336 -6,625 3000 expenses + 9% 2500 Profit/(loss) on operating 151,998 143,516 8,482 5.9% 91,765 60,420 2000 activities 1500 Operating profit margin 5.2% 5.4% -0.2% n/a 6.0% 3.8% 1000 The result on financial 500 operations + share of -15,389 -22,526 7,137 -31.7% 42,199 44,339 0 subsidiaries in the result 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gross profit/(loss) 136,609 120,990 15,619 12.9% 133,965 104,759 Gross profit margin 4.7% 4.6% 0.1% n/a 8.8% 6.6% Net profit/(loss) for the 114,595 151,135 -36,540 -24.2% 125,474 148,706 financial year

Net profit margin 3.9% 5.7% -1.8% n/a 8.3% 9.4% Letter from the President of the Board Operating Statement Statement on Corporate Governance Declaration Financial Statements Auditor's Report 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 8 Sales markets Sales markets

Sales by regions in 2016 – 2018

27% Poland 27% 31%

40% West 39% 35%

17% 18% East 18%

8% 8% North 9% 2018

7% 2017 7% 2016 South 7%

Division of markets by region in 2015 - 2017 million PLN 2018 2017 2016 Sale of products and goods: 2,815 2,550 2,383 Poland 756 699 731 East 483 461 419 North 238 209 222 South 203 189 171 West 1136 992 841 Other sales, including: 112 105 92 -spare parts and materials 74 69 61 - services 38 36 31 Poland West East North South Total revenue from sales 2,928 2,654 2,475 Products constituting the offer of companies within the Capital Group within each business line include a range of products found in many versions, and with considerable diversity. With this in mind, this report omits the presentation of quantitative sales, because such presentation is liable to be misleading the as to the real meaning of a particular segment for the Capital Group’s activities. In 2018, none of the entities exceeded 10% of total sales revenue within Amica Group. With regard to the parent company there were 3 such entities. These were the companies of Amica Group.

• On the Polish market, Amica has increased thr revenues from sales of commercial goods by 17.6% y/y, where revenues from sales of refrigerators increased by 23.9% y/y. • In 2018, the company in Germany recorded an increase in sales by 10% y/y. The increase was achieved through higher sales of refrigerators and dishwashers. • On the British market, Group sales in Pounds was higher by 7.1% y/y, driven by an increase in revenues from sales of refrigerators +23.5% and heating appliances +14.0%. The share of own products in total sales increased in 2018 to 18.5% (+4.0 pp. y/y). • In the Nordic countries sales increased by 12% y/y, largely due to higher sales of refrigerators • The transformation of the Russian market and depreciation of RUB [a drop by 12% y/y] had a negative effect on the revenue earned in PLN. • 23.9% higher sales in other Eastern markets stems mainly from higher sales of ovens (+23% y/y), stand-alone cookers (+23% y/y), and commercial goods (+22% y/y). • On the Ukrainian market, revenues increased by 16.5% y/y. Sales of heating equipment were 29% higher than last year. • On the Czech and Slovak markets, Amica Commerce reported a 5.5% increase in sales YoY. The company has been consistently implementing a policy to increase sales of commercial goods and become a supplier for a full range of household goods to consumers. • In other southern markets, the Group increased sales in 2018 by 8%, mainly in Serbia by 64%, Croatia by 49%, Bulgaria by 17%, and Romania by 10%. The increase in the revenues from sales of commercial goods amounted to +27% y/y. • In the Spanish market, the Group achieved almost two times higher turnover y/y. In the heating equipment range, refrigeration equipment and microwave ovens, the revenues increased nearly 2.5 times. While for hoods, the turnover increased more than 4 times.

Poland West East North South

Receivables from deliveries inventory and services and other 555,296 512,901 42,395 8.3% 346,026 375,630 receivables. 30,4% Other current assets 79,960 72,739 7,221 9.9% 47,572 52,000 receivables

4,4% current asset Cash and equivalents 76,044 91,555 - 15,511 -16.9% 5,674 31,362 item 4,2% 0,6% 63,5% cash Assets classified as 10,657 10,657 - 0.0% - - assets available for sale current assets designated for sale

Total assets 1,827,944 1,728,047 99,897 5.8% 1,406,747 1,408,355

Key events affecting the economic situation within the scope of assets: . . The increase in the value of fixed assets results from realized investments (investments in new product development, automation, and development in the IT area. . The increase in current assets (inventories and receivables) is associated with an increase in sales. The dynamics of inventories and receivables is lower than the sales dynamics. . Lower cash level is due to the repayment of long-term credit debt.

Consolidated data Unit data thousands PLN 2018 2017 Change Change 2018 2017

Total equity capital 834,783 747,465 87,318 11.7% 824,480 744,792 Amica Capital Group sources of financing in 2018 Total liabilities 993,161 980,582 12,579 1.3% 582,266 663,563 Źródła finansowania Grupy Kapitałowej Amica w 2018 r. Long-term liabilities 149,469 180,775 31,306 -17.3% 139,120 169,462

Short-term liabilities 843,692 799,807 43,885 5.5% 443,147 494,101 8,2% Long-term liabilities including short-term provisions 127,550 129,306 - 1,756 -1.4% 25,855 89,111

Total liabilities 1,827,944 1,728,047 99,897 5.8% 1,406,747 1,408,355 Key events affecting the economic situation within the scope of liabilities: 45,7% . change of equity was due, on the one hand, to the achieved net profit (in plus) and the dividend paid (change equity in minus PLN 23.3 million) capital

. Reduction of long-term debt balance resulted from the repayment of loans according to schedule .

. change in short-term liabilities was associated in particular with the increase in the scale of operations 46,2% current liabilities throughout 2018 54,4% Total liabilities . Short-term provisions (mainly for bonuses) remained at a similar level (PLN 127.5 million).

Consolidated data Unit data thousands PLN 2018 2017 Change 2018 2017

Cash flows from operating activities 144,967 135,745 9,222 27,176 54,952 Cash flows from investment activities -71,496 -77,968 6,472 -11,769 -55,336 Cash flows from financial activities -88,456 -51,536 -36,920 -40,963 -484 Opening balance of cash -15,551 6,264 -21,815 31,311 32,532 Change in cash (amount) 91,555 85,314 6,241 -25,642 -1,096 Closing balance of cash 76,570 91,555 -14,985 5,755 31,665

Consolidated cash flow for 2018 in millions PLN Skonsolidowane przepływy pieniężne za 2018 rok [w mln zł] 300,0 53,2

250,0 136,6 - 20,2 -6,8 -0,5 200,0 - 17,2 20,9 150,0

- 92,4 - 35,1 100,0 91,6 . - 30,0 76,6 - 23,3 50,0

0,0

Changes in Other operating Investments External financing Acquisition of own shares Opening Gross profit provisions flows Depreciation Currency translation Other cash flows from Closing balance Dividends differences changes in working investment activities balance capital

3,9% Net margin marża netto 5,7%

5,2% 2018 Operating profit marża zysku operacyjnego 5,4% margin 2017 7,0% EBITDA margin marża EBITDA 7,2%

Higher net margin in 2017 (+5.7%) arises from the recognition of deferred tax assets associated with KSS SE. Operating profit margin and EBITDA are at a similar level as in the previous year.

Group Parent company KPI 2018 2017 2018 2017 gross return on sales in the period/net sales revenue in the period in gross sales profit margin 27.4% 29.1% 19.0% 29.1% question okresie EBITDA (thousands PLN) 205,165 191,416 137,490 100,463 increased operating profit + depreciation

EBITDA margin 7.0% 7.2% 9.1% 6.3% EBITDA / net sales revenue in the period in question . operating profit margin 5.2% 5.4% 6.0% 3.8% operating profit in the period / net sales revenue in the period in question net margin 3.9% 5.7% 8.3% 9.4% net profit in the period/net sales revenue in the period in question

Group Parent company KPI 2018 2017 2018 2017 Working capital (thousands PLN) 315,121 284,576 170,327 140,635 current assets - short-term liabilities Current ratio 1.37 1.36 1.38 1.28 current assets/short-term liabilities Quick ratio 0.84 0.85 0.90 0.93 (Current assets – Inventory) / Current liabilities Immediate liquidity 0.09 0.11 0.01 0.06 cash and cash equivalents/short-term liabilities Equity to assets ratio 0.46 0.43 0.59 0.53 equity/total assets

Equity to fixed assets ratio 1.27 1.18 1.04 0.96 equity/fixed assets

Total debt ratio 0.54 0.57 0.41 0.47 total liabilities / total assets

Debt equity ratio 1.19 1.31 0.71 0.89 Total liabilities / equity

Short-term debt ratio 0.46 0.46 0.32 0.35 short-term liabilities/total assets Long-term debt ratio 0.08 0.10 0.10 0.12 long-term liabilities/total assets .

Letter from the President of the Board Operating Statement Statement on Corporate Governance Declaration Financial Statements Auditor's Report 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 15 Assessment of financial resources management and projected financial Dividends position On 25 April 2018, the Issuer's Board of Management presented a proposal for the distribution of profits generated by the Issuer, to pay a dividend amounting to PLN Actions taken in 2018 to increase the efficiency of sales, production and distribution 23,325,819 from the net profit for 2017 in the amount of PLN 148,705,981.30, which over the next year will contribute to achieving even better results of the Group. means that the dividend per 1 (one) share of the Company amounted to 3.00. In the product area we have prepared a lot of new models, mainly for refrigeration and cooking. We will focus on the introduction of heating equipment from a new On the same day, the Supervisory Board gave a positive opinion on the request. line of X-type. In line with the strategy of expanding product portfolio we intend to The Annual General Meeting held on 28 June 2018 decided to distribute a dividend in accordance with the enter new markets with wine coolers, which so far have been offered only on two above request. markets (France, The UK). The date of determining the right to dividend was set to 6 July 2018 and the dividend payment date was 16 July Our investments for 2018 and planned for next year will ensure higher production 2018. capacity (needed to meet the expected sales volume) as well as increasing On March 28, 2019, the Management Board recommended that a portion of the net profit for 2018 - in the efficiency through automation and changing production processes. These activities amount of PLN 30,101,092.00 - shall for the payment of dividend to the shareholders of the Company, which are intended to create in Wronki one of the most modern plants for the production means that the dividend per 1 share of the Company will amount to PLN 4.00 (where the payment of benefits will of household appliances. exclude 250,000 own shares purchased as part of the Share Buyback Program). We will closely observe developments related to Brexit. Depending on the finally adopted conditions, we will change our approach to this business. According to On March 29, 2019, the Supervisory Board issued a positive opinion for the recommendation of the Management information as of the date of preparation of the report, the Management Board Board. At the same time the Issuer reminds that the final decision on profit distribution shall be taken by the believes there are no grounds to stop the hedging policy in relation to the Annual General Meeting of the Company. concluded financial instruments related to the Company's operations in the UK. Figures below illustrate the level of dividends paid to shareholders in 2013-2018 and the declared dividend in The financial statements does not include the additional reserves for possible risks 2019. Payment of dividends in millions Dividend per share in PLN associated with Brexit. 160,0 6,00 Wypłata dywidendy (mln zł) 148,7 Dywidenda na akcję (zł) PLN 5,50 140,0 Assessment of the investment plans 5,00 128,6 120,0 125,5** 4,00** In terms of investment plans for 2019, the Group will mainly focus on three areas. 4,00 4,00 100,0 3,50 The first one is the replacement investments in technology. 94,5 The second area, extremely important for us, will be investments on projects 80,0 78,5 3,00 associated with the increase of production capacity, including part of the funding 3,00 3,00 60,0 56,2 42,8 2,00 will be intended for automation and optimization of production processes. 38,2 30,1** 40,0 Moreover, as in previous years, we plan to invest in product development. 31,1 1,00 The final element, no less important, are investments in IT development. 20,0 35,0 27,2 23,3 23,3 The Company believes that the available resources are sufficient for the execution 0,0 0,00 of planned investments and as of the date of this report, no significant changes are 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 anticipated in the financing structure of the Group. Net profit* Dividends * net profit relates to the previous year from which the dividend was paid. ** dividend recommended by the Management Board and passed by the Supervisory Board Performance projections Neither the Group nor the parent company publish forecasts of financial results. Letter from the President of the Board Operating Statement Statement on Corporate Governance Declaration Financial Statements Auditor's Report 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 16 Loan agreements The following table presents loan agreements realized by the Group Amount of Repayment Status on No. Interest rate Type of credit the date 31/12/2018 Agreement WIBOR O/N + BANK'S MARK- WORKING-CAPITAL 1 2019 UP CREDIT 5,000 0 Terminated loan agreements: WIBOR O/N + BANK'S MARK- WORKING-CAPITAL In 2018, no loan agreements were terminated. 2 2019 UP CREDIT 5,000 0 3 2019 WIBOR 1M + BANK'S MARK-UP WORKING-CAPITAL CREDIT 5,000 24 Loans obtained WIBOR 1M + BANK'S MARK-UP WORKING-CAPITAL 4 2019 CREDIT 5,000 50 The Group did not receive any loans. WIBOR 1 M + BANK'S MARKUP WORKING-CAPITAL 5 2018 CREDIT 7,000 0 WIBOR 3 M + BANK'S MARKUP INVESTMENT CREDIT 6 2020 55,500 22,200 7 2019 WIBOR 1M + BANK'S MARK-UP WORKING-CAPITAL CREDIT 85,000 38,676 Granted loans WIBOR 1M + BANK'S MARK-UP WORKING-CAPITAL 8 2019 CREDIT 35,000 0 The following table presents the loans granted by the Company: WIBOR 3 M + BANK'S MARKUP INVESTMENT CREDIT 9 2023 100,000 83,443 10 2020 WIBOR 3 M + BANK'S MARKUP INVESTMENT CREDIT 4,200 2,494 Company 31.12.2018 31.12.2017 WORKING-CAPITAL 11 2019 LIBOR 1M + BANK'S MARK-UP CREDIT 12,900 0 KKS Lech Poznań S.A. 26 1.050 WORKING-CAPITAL Arcula Sp. z o.o. 10.936 10.947 12 2019 EONIA + BANK'S MARK-UP CREDIT 6,880 0 FIXED INTEREST RATE + WORKING-CAPITAL TOTAL 10.989 12.031 13 2019 BANK'S MARK-UP CREDIT 1,247 0 14 2019 MOSPRIME 1M + BANK'S WORKING-CAPITAL 37,870 6,822 MARK-UP CREDIT The value of PLN 10.989. thousand. of the amount presented above accounts for the loans granted to Arcula Sp. z o.o. (PLN 10.936. thousand ) oraz KKS Lech 15 2019 MOSPRIME 1M + BANK'S WORKING-CAPITAL 10,820 0 MARK-UP CREDIT (PLN 26 thousand ). These have a short-term nature. The loan granted to Arcula as EURIBOR 3M + BANK'S MARK- WORKING-CAPITAL of 31.12.2018 was collateralised by assignment of the rights to Arcula investment 16 2019 UP CREDIT 1,075 2,064 account. In 2018, interest rate on loans was based on the basis of WIBIR3M + 17 2019 FIXED INTEREST RATE + WORKING-CAPITAL 6,665 800 BANK'S MARK-UP CREDIT bank's mark-up. EURIBOR 1M + BANK'S MARK- WORKING-CAPITAL 18 2019 UP CREDIT 1,290 1,144 In 2018, no loan agreements were terminated. WORKING-CAPITAL Amica Group companies did not grant loans to entities outside the Group . 19 2019 EONIA + BANK'S MARK-UP CREDIT 0 1,750 WORKING-CAPITAL 20 2019 EONIA + BANK'S MARK-UP CREDIT 0 581 FIXED INTEREST RATE + WORKING-CAPITAL 21 2019 BANK'S MARK-UP CREDIT 23,948 7,136

Total (equivalent in PLN) 409,394 167,183

Structure of the Capital Group 20 Products and segments 21 Amica Group's Business Strategy 22-23 The strategy of responsible business and 24-26 sustainability of Amica S.A. Stakeholders 26 Standards and Management Policy 27-29 Our values 30 Ethics, Codes 31-32 Cooperation with suppliers 33-34 Relations with the consumer 35-36 Investments and R&D activities 37 Significant agreements 38 Transactions with affiliates and subsidiaries 38 Seasonality 38

Amica Electrodomesticos S.L. 100% Spain

THE CDA GROUP LIMITED 100% United Kingdom

Sideme S.A. 95% France Letter from the President of the Board Operating Statement Statement on Corporate Governance Declaration Financial Statements Auditor's Report 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 20 Consistent portfolio of household appliances Prepared portfolio includes new control panels - now also available in "slim" 64% of the volume sales of Amica Group in 2018 constituted heating equipment or (their height was reduced to the increasingly popular 96mm standard), new kitchen appliances for cooking. At the same time, Amica has an extensive portfolio electronic timers and a number of new features allowing expansion of our of other household appliances product portfolio. Free-standing cookers We have also implemented several innovative functional solutions, which will be used extensively in our This product group is traditionally the most important category in terms of marketing communications. As already described in the case of free-standing cookers, in 2018, our contribution to the sales result (24% share in total sales). In 2018, we continued to built-in ovens have been adapted to the requirements of Ecodesign standards. develop features and functions available for these products. The most extensive Ovens account for 13% of share in total sales revenue. works regarded changes in the design of free-standing cookers with a width of 60cm for the use of new, larger oven cavities. Cookers with greater capacity, implemented Built-in hobs/induction hobs with a range of features, functions, and designs, will allow us to continue the development of sales in this category, even on the most demanding markets. Amica has been successfully implementing its own technology on the European market for several Another very important issue, which we have worked on this year was to adapt our years now. The current design of the hobs does not give way to products from other renown products to meet growing requirements of the European Standards in terms of manufacturers in terms of either quality or solutions. In 2018, we continued the development of this energy efficiency (Ecodesign), which required modifications in the design of all our family of products, focusing among other things on the preparation of induction hobs solutions for the products with ovens. This change was an opportunity to revise and refresh our new free-standing cookers with larger ovens, as well as for cookers of 50 cm width, with optimized cookers portfolio on selected markets. parameters and costs. An important issue is the development of the gas hobs portfolio, which in many countries continue to be Ovens an important segment of the market (despite the dynamic development of induction hobs). In 2018, the Company conducted development works, which will result in the introduction of new products in our In the built-in appliances segment, in 2018, works on the product focused on the offer in 2019 and 2020. preparation of implementation of a new product platform with a new, larger oven The share of built-in hobs in total sales revenue amounts to 8%. cavity. This very large project, which was a challenge for our whole company, is the basis for further development of our sales in the coming years. In line with a clear Wine coolers market trend, ovens with a capacity greater than 70L become more popular among consumers. Our new design of the oven cavity, the capacity of which depending on During Berlin trade fair IFA 2018 Amica presented a wide range of free-standing and built-in wine the model and equipment ranges from 71 to 82 litres, will allow us to remain coolers, which differ in size and capacity. competitive and increase sales on the demanding European market. The use of Introduction of wine coolers, which are specialized refrigerators for wine storage and maturation, is an new oven platform is combined with the implementation of a completely new design example of meeting the needs and expectations of customers. Amica offers both single-zone and dual- line of ovens and complementary products ("X-type" line), and refreshing other zone appliances for the storage of bottles at different temperatures depending on the wine. Design of design lines. the proposed models matches the new Amica X-type line, which was implemented for sale on the Polish market in April 2019. Amica Group strives to use an extensive experience of Sideme in France or CDA in the UK in the sales of wine coolers, and plans further expansion on the part of the markets in which it operates.

The development strategy of Amica Group announced by 2023 (strategy HIT 2023) Diversification Continuous development assumes the entrance of Amica Group into the TOP3 players on the heating equipment market in Europe (currently #5) and is based on 5 pillars.

vision Strategic 1.2 billion euro in revenues; 9% EBITDA. Strong position on the major European directions of markets. development of Expansion Strong local Own product Large production into new brands lines capacity for Amica Group, markets cookers which will contribute to achieving the vision

Excellent production processes and involved people in the Amica Group

Locally and globally Tradition and innovation

Amica implements further acquisition plans focused revenuePodział przychodów distribution wg regionów by region w latachin 20142014 oraz and 2018 on markets with high growth potential. Amica Group continuously looks for interesting acquisition 7% 2018 5% In March 2017, Amica Group opportunities. Good, healthy acquisitions will allow us Amica bought 61% shares in to achieve our strategic objectives. We neither can nor Sideme - distributor of 55% household appliances in 60% want to depend on any single market – greater France (current commitment: geographical diversification is our key challenge. Each 95%;. time, all acquisition projects are subject to a strict 40% 34% financial and business analysis. In 2015, Amica 2014 2018 Group founded a trading company in Zachód Centrum, Wschód, Południe Inne Spain Western Europe Central, Eastern Other and Southern Europe

Locally recognizable brands (mainstream) Thanks to acquisitions, Amica Group’s portfolio of brands expands with strong local brands.

*Markets on which local brands from Amica’s portfolio currently operate

How our strategy was created? To consolidate Amica S.A. approach to CSR and define strategic directions, we took into account the following perspectives.

Regional perspective ( Responsible business Environment Global perspective Internal perspective key standards Poland, Wielkopolska, perspective Szamotuły district) perspective • "Sustainable development • "Social Diagnosis 2015" • In September 2016 we • Analysis of business practices • Main recommendations of objectives for 2015-2030" • "Values and social trust in organised a series of panels in terms of CSR through ISO26000 social responsibility adopted by the UN member Poland" - Central Statistical with the stakeholders (in internal workshops with standard states Office, 2015 Wronki and Poznań - 3 panel executives and business • Main recommendations of the • 17 detailed sustainable • „Quality of life in Europe - groups + supplementary professionals standard for non-financial data development goals identifying facts and views -overall life interviews). The purpose of • Opinions and reporting GRI G4 the most important social and satisfaction” – Eurostat, 2015 the meetings was to get to recommendations of Amica • Guidelines of Directive know the opinions and environmental challenges for • "Skills of Polish people - the S.A. executives – on-line 2014/95/EU imposing an expectations towards Amica the world and implementation results of the International survey obligation on companies to regarding responsible measures, which the UN Adult Competency Tests • Analysis of internal report non-financial data business management and its member states should aim for. (PIAAC)" - Institute for documents and policies social role in the region. The They have been identified Educational Research, 2013 taking into account the results foundation prepared and The strategy of responsible business • "The competence of the of the largest in the history of conducted meetings based on Polish people and the needs and sustainability of Amica S.A. 2017- the UN consultations with the guidelines defined in the of the Polish economy" - a experts from many countries. international Stakeholder 2023, defines the pillars of responsible report summarizing the fourth Engagement Standard edition of BKL Study of 2013, 1000SES. Stakeholders business and sustainable development Prof. Jarosław Górniak attending particular panels of Amica S.A. for the years 2017-2023, • "Poland in numbers - shared their views on Amica's Wielkopolska Region", responsible business and the corresponding strategic objectives "Poland in numbers - social activities in Wronki and and measures for their implementation. Szamotuły district" the Region of Wielkopolska. (http://www.polskawliczbach.pl The recommendations and ) expectations have been • Statistical councilor handbook communicated directly to the - Szamotuły district"- Management Board of Amica Statistical Office in Poznań, S.A. and become the basis for 2015 defining priorities in the • "Report on the state of the “Strategy for Responsible environment in Wielkopolska Business and Sustainable in 2015" - Regional Development of Amica S.A. Inspectorate for for the years 2017-2023” and Environmental Protection in preparation of the first non- Poznań financial report. • Stakeholders opinion on-line survey.

Amica S.A. inspires to act together and Sustainable Development Strategy of Amica S.A. encourages pleople to believe in their own abilities.

Sensitivity to the Developing Investing in social Transparency needs of consumers employees' potential capital Implementing ambitious • Consistent development of • Focus on useful product • Equal development • Promoting effective business goals, the non-financial reporting solutions (useful functions, opportunities for ambitious education and development Amica S.A. strives practices comfort of operation, robust men and women of the potential of the for sustainable quality), which support the citizens in the region development • Expanding practical • Organisational culture open knowledge of managers and consumers in life, allow for to inspiration from other • Encouraging the residents of employees of the rules of mutual care for the loved countries and nationalities local communities to keep a Amica S.A. takes care of conduct and prevention of ones and partnership in the • Intergenerational exchange healthy, active lifestyle and dialogue and partnership, irregularities in the family of competencies and supporting initiatives for because mutual respect workplace cooperation health and safety in the and openness to others • Culture of respect and region drive positive change and participation • Responsible waste water innovation. • Work-life balance: management encouraging employees to • Energy efficiency reducing maintain a healthy, active resource consumption and lifestyle and supporting them greenhouse gas emissions in taking care of their health • Increasing awareness of the • Ensuring safe working relationship between the conditions and mutual state of the environment and responsibility for the health health of all employees

Stakeholder Form of contact indirect contact = phone / e-mail- via Amica headquarters Suppliers 69 members of the 32 stakeholders direct contact = by registration on www.amica.com.pl management involved in the Helpline participating in the on- stakeholder panels and 69 32 Facebook line survey supplementary Consumers Instagram interviews amica.com.pl website 120 stakeholders from Poland 3 Management Board Survey informed about the involvement of members participating in Meetings Amica S.A. in CSR and sustainable 120 3 stakeholder panels Customers Trainings/workshops development (via an invitation to according to AA1000 amica.pl website express an opinion on Amica S.A. in an on-line survey) Press Office E-mail: [email protected] 49 stakeholders Press conferences Media More than 35 members of from Poland Individual meetings with journalists management and specialists >35 49 (mainly customers Current telephone and email communication of Amica S.A. involved in and suppliers) amica.pl website internal workshops, working participating in the Natural environment Meetings with environment protecting organisations meetings and supporting the on-line survey dialogue with stakeholders Schools, colleges, Meetings research institutions Partnership agreements Participation in scientific events 9 stakeholders External 9 stakeholders from Grant competition, e-mail: [email protected] Local community, civil outside Poland Meetings society organizations participating in the Helpline, amica.pl website on-line survey Engaging in joint projects, for example Wroniecka Dycha Meetings Trade organisations Membership in organisations [GRI 102-13] Participation in major trade conferences Meetings with investors CECED Polish- Conference on the annual financial results Poland - Association Responsible Russian Council of Chamber of Investors One-on-One Meetings Association of Listed Business Chamber of Thirty in Commerce in "Investor Relations" tab Organisation of study visits to the Kitchen Factory of Household Companies Forum Commerce Wielkopolska Wielkopolska Appliances Amica.emplo.pl Portal - the main source of communication within the company and Industry Chat with representatives of the Management Board Employers Information events Internal magazine Amica Od Kuchni Employees: Via e-mail box AmicaInfo

Internal Internal Videos with comments of the Management Board members, Directors Surveys stakeholders: Intranet, quarterly meetings for managers, meetings with line managers

Our objectives resulting from the strategy of responsible business and sustainable Integrated Management System at Amica S.A. includes: development of Amica S.A. 2017-2023: • quality management in accordance with the requirements of ISO 9001: 2015; • constant dialogue with stakeholders; • environmental management in accordance with the requirements of ISO 14001: 2015; • Expanding practical knowledge of managers and employees of the rules of conduct and • occupational health and safety management according to PN-N 18001: 2004 / BS OHSAS 18001: prevention of irregularities in the workplace 2007; in terms of design, development, manufacturing, and installation and maintenance of • Carefully inclusion of the perspective of social and environmental risks in the risk household appliances. Integrated Management System in Amica has no exclusions. management system; • System approach to social and environmental issues in the purchasing policy. Management review at Amica S.A. takes place in the 1st quarter, after the settlement of the financial year. Management reviews are planned and realised based on the requirements of ISO9001, ISO 14001 and PN-N / OHSAS 18001.

Management Standards in Amica S.A. and Capital Group Amica are established by: Management Manual is deemed a guide to the Management System of quality, environment, occupational health and safety, giving the necessary information and actions. Compliance with the rules contained in the Management Manual applies to all organizational units of the Company, within the scope of the Integrated Management System.

Integrated Matrix structure of Amica Group's Amica S.A. Leader Management Amica Group Code of Ethics Code System at Amica S.A.

Our ability to quickly respond to customer needs makes us an important supplier for a wide range of household appliances in Europe ". We focus our attention on the continuous improvement in the satisfaction of our customers, effectively and efficiently adjust business processes and structures to the challenges of the market, creating value for shareholders, employees and local communities to the highest standards in terms of quality, ecology and safety in different sectors of our business:

• Achieve planned EBITDA margin. • Effectively manage working capital of the group. Finance • Compliance of manufacturing processes and products with the • Systematically increase the efficiency of the entire organization. principles for safety and ergonomics in the working environment and at • Minimize financial risk of the group. the consumer's. Safety • Continuous development of systematic measures to prevent the

occurrence of accidents and occupational nuisance • Offer modern and user-friendly appliances. • Build strong regional brands on key markets. • The Company aims to optimize all areas of environmental impact, Custo mer • Work closely and ensure a high level of service to become an professional development of corporate relationships with the indispensable trading partner on strategic markets. business, social, and environmental circles, as well as in the area of grassroot development initiatives and sustainable development Ecology standards. • Improving product life cycle management, taking into account all

the principles of eco-design, energy efficiency and recycling in the • Compliance with legal requirements in the planning and execution of our context of the full manufacturer's responsibility for the product. actions on the road to success in domestic and international business. • Participation in partner developing and complying with EU and national Law legislation concerning the assessment of conformity of our products • Building a culture open to change by promoting proactivity, • Adherence to corporate governance - "Best Practices of WSE Listed entrepreneurship, knowledge sharing and innovation. Learning and Companies". • Develop people motivated and able to face challenges of the future in development Amica Group.

• Effectively implement the strategy • Develop own complete product lines of kitchen appliances Internal • Provide effective service support. processes • Increase production efficiency.

In 2018, we collected feedback on the implemented project. The collected opinions will be used to implement improvements and determine further steps in 2019.

[GRI 102 -11] Prudence principle Certification and Ecology Manager and the EU and ISO 14001 Requirements Specialist are responsible for ensuring identification and assessment of significant environmental aspects. Identification is applicable to the activities, products and services within the defined scope of the environmental management system of Amica S.A., which have an impact on the environment and which Amica S.A. can control For the identified environmental aspects areas of occurrence are assigned (associated with the location and the process) which are supervised by the people responsible for the area. Aspects are subject to periodic assessment of their significance by the EU and ISO 14001 Requirements Specialist. A detailed method of identifying and assessing the environmental aspects is described in the procedure S431-00.00.00.

How the process of working on a Code of Ethics looked like?

Phase I Analysis of the initial state • meetings with the management and directors • meetings with focus groups • mapping family and professional relationships • analysis of existing policies and procedures

External Internal Phase II Ethical foundation relations relations • development of ethical principles - workshop with the project team • development of a system of signalling potential irregularities 1. Receiving and giving gifts and gratuities 1. Care for the Amica Group's image 2. Quality of products and services 2. Equal treatment and prevention of discrimination 3. Conflict of interest 3. Prevention of mobbing Phase III rooting 4. Social engagement 4. Internal communication • implementation of the Code 5. Attitude towards the environment. 5. Security of data and information 6. Using the resources of the company • training for managers 7. Family relationships - prevention of nepotism • communication campaign 8. Development and Training • training for all employees

Information about the applications received in 2018 [GRI 406-1]: Training "Undesirable situations in workplace relations." Major objective: • 3 applications received via internal channels 1. Building awareness in terms of irregularities, but also the employee's duties and rights of • 3 applications received via external channels employers All application have been reviewed by the Ethics Committee Interviews have been conducted and 2. Prevention of irregularities in workplace relations other employees have been trained in "Undesirable situations in workplace relations." 3. Assertive and constructive communication Proceedings for 5 applications have been completed and the issues have been resolved. One case 4. Distinguishing situations of potential mobbing nature is open. 5. Embedding the Code of Ethics in Amica Training all employees: in 2018, 1,557 people were trained, in 2019 training will be Methods for reporting irregularities continued.

External channels To further regulate the most important issues related to ethical conduct in 2018, we implemented additional policies related to the Code of Ethics. These are: • Helpline open 7: 00-18:00 on working days • Family relationships policy • Internet platform amica.liniaetyki.pl • Policy of giving and receiving gifts • Dedicated e-mail address: [email protected] • Prevention of conflicts of interest policy • Anti-mobbing policy Internal channels The Amica S.A. and Amica Group is working on the implementation of anti-corruption • Notification to the manager policies. In 2018, there were no confirmed cases of corruption. • Contact with the Human Resources Department • Contact with the Ethics Committee: [email protected] or personal e-mail to members of the Committee

Me People Business

Growth Cooperation Respect Honesty Openness Ambition Wide perspective Entrepreneurship Accountability • I am a • I share my • I undertake • I am hungry for • I encourage • I am attentive to genuine, views, if they challenges. knowledge and cooperation. others, I make others • I take into account • I approach the • I act autonomously and credible, can provide • In my actions I encourage others to do • I support others in feel important. various aspects. company as my own give autonomy to consistent. value to set myself so. taking action. • I show tolerance to • I think the long term, I business. others. • I do what I say others. high standards • I build myself and the • I talk and I look for other people, their think 360o. • I take care of resources • I give space to act. regardless of • I am curious of and strive for team. agreements with other diversity. • I am a visionary, I and their efficient use. • I take matters into my the the opinion of success. • I create space for company departments. • I respect the customs encourage others to • I analyse the own hands and without relationships others and • I have high gaining knowledge and • I put organization's of other cultures. such thinking. consequences, assess grudges and and position. encourage aspirations. experience. objectives over mine - I • I act tactfully, I use and accept/take risk. complaining. others to • I care about sustainable • I accept • I inspire myself and can work in a team business savoir-vivre. development (CSR). • I take care of the • I have the courage to express their challenges others. towards common • I treat people like I opinions. development and make decisions. and challenge • I learn from mistakes, goals. want to be treated. business continuity. • I am open to • I feel co-responsible for others and I have the courage • I focus on the • I look for opportunities the results of my work changes, requiring to admit them and challenges and not on which I treat for business and others' work, and effort. draw conclusions for individuals. development. for our products. as an the future. opportunity. • I am open to new ideas. • I Identify with the • I am ready to go • I see the need for company's goals. outside the comfort change. • I understand the zone and give myself consequences of my and others the right to actions. experiment.

I DO NOT judge I say NO short- I DO NOT strive I DO NOT want I DO NOT and draw I DO NOT want to fight sightedness, acting only for success at all rudeness, ridicule, accept conclusions I DO NOT accept for "me" at the expense here and now, looking at I say NO to costs, I do not malice, I do not want manipulation of without knowing attitudes: "I know of others, I do not want business only from the mismanagement, I say NO to bravado, rest on laurels, I personal grievances, I do information, the context, I do everything" and "I do not "silos", I do not want perspective of my own passivity, closure, contempt, recklessness, do not accept not accept hypocrisy, not accept hiding have time to learn" thinking "we-you" or "they department or my own omission, sweeping under fear of committing laziness and discrimination, backbiting, lying behind the are guilty" or "they benefit. the carpet, settling on mistakes. stagnation. humiliation, contempt beaten practices cannot do it." laurels and patterns. and disdain. I say NO to conventional thinking.

Supply markets - goods 37% Purchases of goods are carried out directly from the manufacturers. The Group works with dozens of manufacturers around the world. The Group imports goods from the European and Asian markets. The Group has a diversified portfolio of suppliers. In 2018, none of the suppliers exceeded 10% of the share in 14% turnover with the Issuer or the Group .

Supply chain management Amica purchasing structure in 2018: 29% • purchases of commercial goods Electrical and electronic Other • purchases of components for production Steel sheets and products Glass components • non-production purchases (indirect) Elektryka i elektronika Blachy i wyroby hutnicze Szkło Pozostałe To import commercial goods we use intermodal transport in vast majority (> 95%), which is a combination of Components purchasing structure by origin maritime transport (supplier's port - domestic port), rail transport (domestic port - station near the warehouse), Struktura zakupów komponentów wg pochodzenia and road transport (transport from the train station to the destination warehouse). Component delivery is the prevalence of road transport (> 95%). For shipments from the warehouse (sale) we use road transport in 100%. % share of the different categories of transport (air, sea, rail, road) in the reporting year

Air transport 0% - in terms of value per year Rail transport 8% - in terms of value per year (imports of commercial goods + part of the share in intermodal 47% transport) 53% Maritime 29% - in terms of value per year (imports of commercial goods) transport Road transport 63% - in terms of value per year (sale from the warehouse to all markets + part of the share in intermodal transport )

Domestic Foreign suppliers Dostawcysuppliers krajowi Dostawcy zagraniczni

• Observance of human rights and workers' rights • We set high requirements to our suppliers towards the principles of health • Compliance with the social and working conditions. Occupational and safety at work • Fair remuneration of employees Health and • We promote solutions that support the highest standards of safety and health Safety • Prohibition of child labour Suppliers ethics - at work as well as meet the highest safety regulations criteria for the • Prohibition of discrimination assessment of • Compliance with all applicable environmental legislation, our suppliers regulations and standards • Adherence to good practices of cooperation with the Upon conducting a purchasing process, we also support Social Purchasing Department, procedures and regulations. labour markets of small and medium-sized enterprises, engagement development of the market and local communities

• We provide suppliers with equal access to information • We organize technical dialogue with potential and current suppliers Fair • We apply objective criteria for the evaluating tenders and so as to develop awareness and seek technologically innovative Innovation, competition solutions conditions for participating in the purchasing process development: • When evaluating tenders, besides economic criteria we also focus on additional ones that promote innovation

• We promote environmentally friendly solutions Environmental • We control and require performance of appropriate tests for components protection • We require from the suppliers to have conducted their activities with respect to environmental protection and the highest standards in this field, thus shaping the environmental awareness amongst their employees and subcontractors

Marketing Over the years, Amica earned an image of a strong, solid brand, esteemed both in Poland and in the world. This is evidenced by numerous awards and trust placed in Amica by the consumers. Product Management Amica S.A. received the With the customers in mind, Amica develops more and more technologically advanced Amica S.A. was awarded in the Amica S.A. won the Złota award in the competition products, so that everyday chores become not only easier but also more enjoyable. Marketed category of Innovation in Industry Villa 2018 award in two organised by PwC Poland Amica appliances are characterized by the highest quality and energy efficiency. 4.0 for the project implementation categories, i.e. for and Puls Biznesu, in the "Construction of automatic high- EB422VBX IN oven from category "Exporter: Polish Sales bay warehouse" and " an innovative line of Amica Private Company - large Amica products cook, bake, cool, wash and clean in millions of homes in Poland and over 60 Expansion of production capacity IN. and PI6144S4WSU enterprise". countries around the world. Appliances are available both in stationary stores and online. The and upgrading technology in the hob success of the brand can be also proven by the fact that every second cooker sold on the Polish Kitchen Factory". Mr. Martin Bilik, market, is Amica cooker. Vice-president of Amica S.A., earned the title of Visionary Mission President for his innovative For years, Amica brand has one goal: to create functional appliances adapted to the changing approach to the management of requirements and needs of consumers. Therefore, Amica products are the combination of operational and logistics issues, innovative technological solutions and savings with great aesthetics. translating into an increase in Striving to manufacture modern, functional products of the highest quality has been appreciated production and organizational by both consumers and professionals. Amica brand has won, among others, numerous awards development of the company. of Most Trusted Brand, Red Dot award or Superbrands Created in Poland 2013 award.

Environmentally friendly technology [GRI 416-2, GRI 417-3] The use of cutting-edge technology makes production in Amica factories environmentally friendly. We pay a lot of attention to the use in manufacturing of materials which do not contain any harmful substances and which can be recycled or re-used. Amica has offered environment-friendly products for many years. This is an expression of concern for the safety and health of users, as well as care for the environment. Amica continued its activities in the field of reducing the amount of materials used in production, the use of raw materials and parts meeting the requirements of the RoHS directive (the ban on using specified hazardous substances, including heavy metals), REACH ordinance, Ecodesign and Energy Labels directives and associated ordinances of the European Commission, and also taking into account the necessity of later recycling of used appliances when choosing materials (the WEEE directive). An increasingly important element of the environmental strategy is the products life-cycle management, taking into account all the principles of eco-design, energy efficiency and recycling Manufactured in Amica heating appliances, which have the highest class A energy efficiency for this type of product, systematically increasing share of induction hobs (the highest cooking efficiency), and refrigeration equipment with ever greater share of A+ and A++ class appliances reflects a programme adopted by the company for marketing primarily energy-efficient products. Thus the consumer consumes less energy in their operation, and Amica implements one of the EU priority environmental objectives - increasing market share of energy efficient products.

R&D associated with the development of products and goods The largest product project was the launch of products based on the new oven platform - the so- called big cavity. We have also conducted durability and quality tests on the new group of products both in Amica S.A. laboratories and external certification bodies, with particular emphasis on new solutions, such as "Automatic door opening" feature or new steam oven design. The project also involved designing a new family of programmers, which enables the control of products via Internet using mobile applications. As part of the continuous development of induction hobs, in this product group we have implemented for the production induction hobs with power management function. We also launched the production of a new type of induction hobs for free-standing cookers with a large oven cavity.

Insurance, partnership or cooperation agreements The Group concludes standard cooperation agreements with major suppliers of both goods and components and concludes standard insurance agreements.

Transactions with affiliates and subsidiaries The Company or its subsidiaries did not conclude any significant transactions with related parties on conditions other than market conditions. The list of transactions with related parties are presented in the table below:

Name of the subsidiary Revenues from core business Cost of core business 2018 2017 2018 2017 Holding Wronki SA 43 43 3,933 3,571 KKS LECH Poznań 4,879 5,143 3,764 3,371 Invesco Sp. z o.o. 2 2 - - Antiqua Sp. z o.o. 4 - - Fundacja Amicis (Amicis Foundation) 67 45 - - Arcula Sp. z o.o. 13 13 - - Total 5,004 5,250 7,697 6,942

Name of the subsidiary Trade receivables Trade liabilities 2018 2017 2018 2017 Holding Wronki SA 7 1,017 806 KKS LECH Poznań 1,525 4,373 630 357 Antigua Sp. z o.o. - - - - Fundacja Amicis (Amicis Foundation) 5 7 - - Arcula Sp. z o.o. 4 4 - - Sidepar - - - - Total 1,534 4,391 1,647 1,163 Detailed information on the related parties is given in section 40 of the Consolidated Financial Statement of Amica.

Objectives 40 Employment 40 Employee issues management 41 Terms of employment 42 Development of employees 43-45 Diversity in the workplace 46-47 Safety in the workplace 48-51

Employees provided by the temporary employment agency - 232 persons, including 122 women (including workers from Ukraine). Order/work contract - 46 persons, including 11 women.

Number of personsLetter from employed the President offrom the Board the Prison in WronkiOperating based Statement on work assignment - 80Statement on Corporate Governance Declaration Financial Statements Auditor's Report people (men) 2018 summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 40 Employee issues management [GRI 103-1, GRI 103-2, GRI 103-3] Amica S.A. has a functioning or is implementing the following policies and procedures related to the Workers from Ukraine management of employee issues. Since April 2017, we employ in the Kitchen Factory people from Ukraine. In 2018, we have implemented a project aimed at direct employment based on the contract of employment of people from Ukraine (we employed 2 Internal people). We first employed workers from Ukraine in January 2019 Ethics Communication Code Practice Recruitment The result of previously indicated actions was to fill vacancies on the production positions, Policy - governing Worker Diversity which allowed for the realization of the objectives of the operations department while ensuring recruitment Introduction Charter proper organization and comfort of workers. rules, including Procedure internal recruitment Leader Remuneration Home Office Code Policy Terms

Succession Training and and Talent Sustainable Development Development Strategy Policy Managemen t Practice

We do not have policies or guidelines for the entire Group. In employee issues, each company operates in accordance with established regulations and internally defined procedures.

Improvement and diversification of sources of employment Contract of employment for for an indefinite period of time Since January 2017, new production and indirectly associated with production workers are employed directly by Amica S.A. under an employment contract. After completion of the probation period, employees are offered a contract of employment for an indefinite period of time. Employees of the Penitentiary. Due to the difficulty of finding new employees on the local market, in Januray 2017 Amica S.A. employed people serving penalty in the Prison in Wronki. At the same time, such solution is a socially responsible practice and has a positive impact on the local community life. Allowing the convicted persons to work helps them in the process of rehabilitation. Persons employed by us stay in a half-open type prison, which means that they are not convicted of serious crimes and can stay outside the prison without escort. We currently employ 80 people.

Additional benefits for employees [GRI 401-2] We do not have policies concerning benefits for Amica Group. Each company applies internal policies and procedures. Amica S.A. offers the following benefits to employees.

Resort in Mierzyn Kindergarten and nursery Canteen AMICA KIDS MULTISPORT card

• All employees of Amica Group • Amica KIDS was founded to help and support and pensioners of Amica S.A. • There is an employer- employees in combining everyday professional duties Multisport card users have the are eligible to stay in the Resort. subsidised canteen in the with childcare and development of children. opportunity to use a wide range of The resort consists of 21 fully Kitchen Factory Canteen • Kindergarten is open from 5:30 to 18:00. The services in the sports - equipped cottages. In the is open during hours kindergarten consists of four groups preschool groups recreational facilities throughout summer season in 2018, 901 adapted to the production and two nursery groups. Poland. people - employees and their staff work shifts. families, spent holidays in • In 2018, in Amica Kids there were 36 children in the Mierzyn. nursery and 122 in the kindergarten.

Employment Anniversary Sales to employees Life Insurance Medical care Scheme

Amica Group employees have the opportunity to Amica S.A. has an established Amica Group employees have purchase life insurance on preferential terms. This Each employee has the opportunity to Employment Anniversary Scheme, the opportunity to purchase cover applies to both employees and their families. buy a medical package, significantly aimed at appreciating loyal Amica equipment at Insurance guarantees additional financial support in subsidised by the employer. In employees, who have worked in preferential prices under the difficult situations, such as hospitalization, surgery, addition, the factory in Wronki has a the company for years. sales to employees scheme. accident or serious illness. In 2018, 2,287 employees corporate AmiMed clinic, were covered by the insurance.

Insurance for children and Family is important grandchildren

Amica employees have the Amica understands that family is important. opportunity to purchase accident Therefore, in 2017 we have launched a program insurance for children and dedicated parents, under which every month, an grandchildren under a dedicated eligible parent will receive a benefit supplementing neneficial terms. In 2018, 706 the amount of maternity / parental benefit amount children were insured. up to 100% of the base gross benefit. In 2018, this benefit was paid to 159 people.

In 2018, we completed in total 32,468 hours of training. The average number of training hours per employee is: 14.2

Tasks Plan Competences Summary Tasks Relocation for of development POWER Assessment the future period

At this point, we focus on the tasks Planning the areas of competence POWER competences and job This area is becoming increasingly important Assessment summary which In this part, the evaluator and the performed in the past period to be (broadening knowledge, developing skills role skills in the context of the expansion of national comprises an overall perspective of person assessed determine the key assessed. The basis for this or strengthening attitudes), which are and international structures. Therefore, the POWER tasks and competences and tasks for the following year (next Assessment and Development System assessment are quarterly reviews of job role skills. The system suggests assessment period). It is worth indicated by the evaluator based on the enables anyone – during self-assessment – bonus objectives, if such a system POWER analysis and considered to indicate whether they are ready to take up the recommended rating, but this is analysing whether the goals are in line includes a given employee. important to strengthen through coaching the challenge of relocation, and if so, the only a hint. The final assessment is with the SMART approach. In the next or other forms of development. An element country and the time considered. This is not provided based on the conversation year, they should be an indication for of the plan is also foreseeing development a commitment, while the information and a joint review of both areas. planning quarterly bonus targets if needs in the field of specialist screened in this way provide only an such a system includes a given competencies. At this point, it is also worth indication for the HR Department and each employee. time, where the possibility of relocation considering further development of the emerges, this decision will be discussed with employee's career within Amica. the employee in detail.

The Amica's periodic assessment is conducted at 180 degrees: self-assessment, supervisor’s assessment and joint reconciliation of conclusions and assessment results by the two parties. The assessment conclusions not only provide knowledge about the staff's developmental needs and motivations for their direct supervisors. Data on development plans are analysed by the Human Resources Department and constitute an important element in designing central development plans for employees.

The percentage of Amica S.A. employees subject to regular job quality assessment and career development review: 21%, including 39% of female employees and 61% of male employees:

In addition, managers were invited to participate in the workshops For many years, Amica's primary educational target has been the training of senior and middle based on the Action-learning method (with over management in the field of managerial competences. Just like in the preceding year, in 2018, 40 participants) – the method assumes working in small groups, which facilitates reflection on and such trainings were held at Amica SA and Amica Handel i Marketing, while there were no analysis of one's own behaviour and preparation of the development plan. Topics indicated by projects addressed to the entire Group. managers will be included in development activities in 2019.

Management Champions League. The project, under which managerial trainings cover every Preparation of trainings in response to the on-going challenges faced by the company. In 2018, person employed at the position related to the management of employees. In 2018, the project these included mainly trainings on “Undesirable Situations in Employee Relations” as well as e-learning covered a group of 16 newly appointed managers. The training program consists of a series of trainings on the GDPR and Labour Law. four 2-day training sessions on: • Team management and authority building The opportunity of individual learning of a selected foreign language, financed entirely by the • Effective delegation of tasks company. Classes are held during the manager's work. • Motivating employees • Supporting employees in development Possibility of co-funding the cost of studies or specialized courses.

In addition, during five two-day workshops focused on the subject of "Effective communication Since 2017, in justified situations (development needs, business needs), the company has also used and motivation", all coordinators, masters and foremen working in the operational division were 360 degree assessments, which aim to design precise individual development paths with the support trained (nearly 60 people). In addition, 20 managers were invited to participate in a project of specialized assessors and coaches. In 2018, such an assessment covered 13 Amica executives. We focused on strengthening competencies in the field of employee development, under which they are planning to cover additional groups of mangers with the assessment in 2019. In the past year, a had the opportunity to participate in workshops and together with experts develop a compendium wide debate was launched to help grow our employees with high development potential. As a result of of knowledge for managers regarding practical activities aimed at development of subordinates' the debate, in 2019, in-depth work will be continued to come up with tailored development paths for competences. these individuals.

. At Amica, we understand that diversity at the workplace is one of the key values that contributes to the company's growth and achievement of business goals. Our employees differ in many respects, which in turn has a direct impact on their motivation and style of work, the way of communicating or building relationships with other employees. Diversity management in our understanding means perceiving and accepting diversity at the workplace and building a competitive advantage of a company based thereon. We believe that a team which is diverse in terms of gender, age, culture or religion is a value in itself and is more competitive on the market. We do not yet have any policies or guidelines in this respect for the entire Group.

For the time being, each company operates in accordance with the adopted legal regulations and internally defined procedures. The implementation of the diversity management policy by Amica must be considered and planned, and cannot be implemented in isolation from a reliable and objective analysis of the current situation in the organization.

Total number of employees who took We care for jobs for employees with disability certificates Together (HR, Health and Safety, Head of Department, occupational medicine doctor) we take steps to find a suitable, tailored maternity leave 72 job position for every disabled employee or worker with medical restrictions. In 2018, 80 employees of Amica SA held paternity leave 0 disability certificates.

We do not have a group policy or procedure in this respect. Each company operates in accordance with the adopted legal regulations and internally defined procedures.

The safety at work in Amica SA is supervised by the occupational health and safety service; however, many other people working in administration and production are involved in the safety activities. At each department of the Cooker Factory and at each work shift, there are 80 Departmental Rescue Workers and 93 employees ready to carry out activities in the field of fire fighting and evacuation of employees.

The duties of the occupational health and safety services are set out In 2018, for the fourth time, an Occupational in the Regulation of the Council of Ministers on the OSH service of Health and Safety Knowledge Competition “Safety 02 September 1997 (Journal of Laws 109, item 704) as amended. Every Day” was organized for employees, in which Procedures and instructions developed for the company's needs are 120 production employees took part. stored in a single network location and are available to all the company’s employees who have access to a computer.

Many tasks of OSH and fire protection In 2018, an art competition was services are undertaken in order to engage organized for children of Amica Group's and raise the knowledge and awareness of all How do we work? employees. The leading theme of the employees of the company. Once every competition were emergency numbers quarter, information and educational materials and the aim of the competition was to prepared in accordance with the schedule for involve the employees' children in the a given year are posted on the "Safety at safety related issues. Work" notice boards and published on in the internal communication portal.

The Occupational Health and Safety and Fire Protection Service, for the first time, organized the "Safety Day” at the Company’s premises. On that day, Tasks undertaken to improve occupational health and safety and at the designated and specially prepared spot, the employees could fire protection are defined in accordance with the Procedure B examine the blood sugar level, learn exercises to prevent the carpal tunnel, 433-00.00.00. Determination and implementation of OHS and fire try to save someone's life by learning the first aid procedures under the protection objectives and programs. Occupational health and supervision of departmental rescuers, feel the simulated effects of alcohol in safety and fire protection improvement program for a given the body (with alco-goggles) and ask experts about the personal protection calendar year, in which the improvement tasks undertaken, equipment used at the plant. Every person taking part in any form of activity including deadlines and people responsible for their on that day, participated in the draw for a prize related to safety (e.g. car fire implementation are listed in Annex B 433-00.00.02 and the tasks extinguisher, reflective vests, reflections, etc.) and could take fruit. under the program are settled in the Report on the Achievement of OHS and fire protection objectives No. B 433-00.00.03.

In mid-2017, we provided a car to transport injured people in the In order to raise awareness in the field of cardiopulmonary event of an ambulance refusal or as recommended by Medicover resuscitation, in 2018, the company again joined the common service at the company's outpatient clinic. The procedure is attempt to break the Polish record in the largest number of defined in the Instruction for Accident or Sudden Illness in Amica people conducting CPR at the same time. 97 employees took - B511-00.11.00. The car is equipped with a bag with dressings part in the project carried out at the Company's premises. and a defibrillator.

The Terms and Conditions of Kaizen Program have The Company purchased a program for been amended by addition of OHS provisions. Now, ergonomic evaluation based on ERA employees can submit initiatives and solutions methodology. Employees from the designed to improve the conditions and ergonomics of engineering department, work work, whereas once a quarter, the best Kaizen is How do we work? scheduling managers, supervisors and awarded a prize. the OHS Service employees have been trained in the use of the software.

In order to improve the first aid knowledge of The departmental rescuers (80 people) are departmental paramedics, in addition to an visualized and equipped with on-call emergency annual training, the Company organizes telephones and first aid kits. department drills and inter-department first-aid trainings using the pre-defined scenarios.

93 employees assigned to carry out activities in the field of fire fighting and evacuation of employees attended theoretical and practical trainings, which are repeated every year. These workers bear the label “Amica Fire Team” in the sleeves of their working clothes.

In three production areas, vending cabinets have been installed to issue protective gloves, which means that [GRI 403-1] employees have access to them 24 hours per day and can take from the cabinets only those gloves that have The Occupational Health and Safety Committee consists of the same number of been assigned to hazards at their workplace. Items of PPE are assigned to particular plant areas after obtaining employees’ representatives as of the employer’s (8 employees' representatives - approval from employees testing a given product. Social Labour Inspectors and Trade Union representatives + 8 employers’ In order to facilitate the process of issuing referrals for preventive care examinations, a tutorial was developed representatives - occupational medicine doctor, employees of Occupational Health showing a ‘step-by-step’ procedure for issuing referrals. and Safety and Fire Protection Service). The Chair of the Occupational Health and Safety Committee is the Quality Management Director and the Vice-Chair is the Social Labour Inspector.

The Manager for Occupational Health and Safety and Fire Protection is responsible for ensuring the identification of hazards at workplaces and occupational risk assessment. The identification applies to all processes and types of operations at Amica SA, which may pose a threat to the life or health of employees. Hazards related to the company's operations, products and services are identified by: • analysing the information provided by designers of technological processes to the Manager for Occupational Health and Safety and Fire Protection about planned and introduced changes in the workplace organization, • review of work stations in the case of new launches, changes in technological processes, modernization, • conducting an internal audit in a specific area (department), • ongoing observations provided by supervisors of the respective areas or their subordinates.

The hazard identification process takes into account: • normal operating conditions, • abnormal operating conditions (start-up, shut-down), • emergency situations.

Each process has identified hazards and occupational risks assessed. Occupational risk is assessed using the RISK SCORE method on a 5-point scale. The company uses the Penta Soft computer program to identify hazards and assess the occupational risks. In the risk assessment performed by the working teams, the important factors include near accidents, accidents at work, suspicions or recognitions of occupational diseases, data from reviews and inspections and workplace inspection results.

In 2018, no occupational diseases were reported among employees of Amica SA

Our activities [GRI 413-1] Grant competition "We invest locally" Amica wants to support the most interesting social initiatives implemented in the District of Szamotuły. The competition is designed to support projects aiming to improve the living conditions of the local community in the areas of science and education, health care and protection, social welfare, environmental protection, and sports activities. Participants may apply for large grants amounting to PLN 5000, medium grants of up to PLN 2000 or grants in the form of Amica home appliances.

What qualities of initiated and supported activities are What effects do we want to achieve? valuable in our opinion? Exploring and Promoting active approach and strengthening the healthy self-esteem. potential of people, The first edition of the competition We invest especially young locally (2017) Based on cooperation and people. connecting different social Permanent results number of projects submitted: 33 groups and different number of grants awarded: potentials 10

The second edition of the competition We invest locally (2018)

number of projects submitted: 23 number of grants awarded: 8

Many people can benefit from their effects Building sustainable social capital and sustainable development of the region.

The first edition confirmed that the very form of the competition means that our applicants are trying to propose original, well-thought-out projects, focused on the realistic effects, changing something in our environment for the better. There are many issues that should be popularized among our cohabitants, especially children and teenagers such as robotics, programming, local history, school journalism or first aid. These are really ambitious tasks and the applicants want to promote them in an original way”. In 2019, we plan to organize the next two editions of the competition Read more: https://www.amica.pl/granty Letter from the President of the Management Report on Activities Corporate Governance Statement Declaration Financial Statements Auditor's Report Board 2018 Summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 53 Investing in social capital Fundacja Amicis (Amicis Foundation)

Amica SA is the main sponsor of the Amicis Foundation - one of the largest organizations supporting the poor and needy in the region of Wielkopolska. The foundation was established in 2005 in Wronki with the aim help those who need it most i.e. children, the elderly, sick, lonely, homeless or addicted. The Foundation provides financial and material support to educational, care and nursing institutions. These facilities receive, among others, home appliances free of charge. For example, such support was offered to the centres of Monar and Markot in Bełchatów and Wałbrzych, centres for single mothers in Niesławice and Siemiątków, children's homes in Łódź and Szamocin, schools and kindergartens in Pobiedziska and Wronki, or facilities dealing with people with disabilities in Oborniki and Nowy Tomyśl. Amicis also supports the active leisure of children and young people, especially from rural areas and small towns, by co-funding various types of sports activities, such as camps, and trips to competitions, as well as sightseeing and tourist trips. The Foundation also co-finances international student exchanges and supports cultural initiatives to enable young people pursue their passions.

Every year, the Amicis foundation organizes Santa Claus meetings with the youngest, during which children receive presents and large families receive food packages. A similar event is also carried out during the Easter time, when the poorest families from the vicinity of Wronki receive support.

All those involved in the Foundation's activities work pro bono. With marginal administrative cost, almost 100% of the funds are transferred to meet the social needs. For more information on the Foundation’s activities, visit www.amicis.org.

In 2018, the Amicis Foundation spent PLN 498,689.19 on the implementation of its statutory objectives.

Amica SA and Amica Handel i Marketing (main donors of the foundation) provided financial and material support worth more than PLN 415 thousand.

The Amica Volunteer Fire Department was founded in 1953, and consists of 42 volunteer members, who are employees of Amica on a daily basis. The Department is maintained exclusively by Amica. Activities of the Department involve fighting fires and other local We support medical facilities threats, not only at the premises of the company, as the volunteers are also dispatched by Amica SA gladly supports institutions and associations providing help to the inhabitants of our region. This the State Fire Service of Szamotuły to events in the district of Szamotuły. The activities of also applies to hospitals. As part of the sustainable development strategy, we have assumed continuation the Volunteer Fire Department include also a number of preventive actions, consisting in of activities supporting healthcare facilities, in particular in our region. spreading knowledge and skills in the field of first aid and fire safety. We support athletes “Amica supports the organization of sports competitions and all events promoting a healthy lifestyle and Amica Volunteer Fire Department in numbers recreation, but we are particularly eager to do so when our employees take part in them."

Partnerships: • MKS Błękitni Wronki 4 honorary 42 volunteers • Wroniecka Dziewiątka is one of the largest bowling clubs in Poland. It is not an accident that Amica SA members 4 42 (including 8 women) has been supporting a club with 40-year tradition since 2012. Sports competition on bowling tracks is one of the favourite forms of spending time for the company's employees. Amica, as a company from Wronki, wants to support local traditions, especially if they are important for its employees. Until now, several years of cooperation between Amica and the team allowed not only for building and 51 rescue operations, 9 organized talks as including 22 fire-fighting implementation of the club's development strategy, but also for the modernization of the facility itself at part of preventive 9 51 actions, 20 local hazard the Market Square in Wronki, where it is based. In addition, during this cooperation players of Amica’s activities PL management actions and 3 team won over 100 medals in the Polish Bowling Championships in all age categories. Some of them false alarms. are employees of the company who formed their own Interdepartmental League and organize internal N tournaments within its framework. The total amount allocated by • Mażoretki Miraż – The team was formed in 2004 and includes 80 talented girls aged from 4 to 18, 152 Amica SA for the operations of Amica Volunteer Fire divided into four age groups: pre-schoolers, cadets, juniors and seniors. Girls dance to mechanical tho Department in Wronki in music or with the Brass Band of the Cultural Centre of Wronki. The concert groups "Mirage I" and usa 2018 "Mirage II" take part in parades, competitions and reviews of majorettes. The biggest success of the team is the nomination for the European Championship in 2012 for the duet ‘duo pompon’ in the nd category of seniors. The girls of “Mirage I" group are champions of Western Poland of 2012 in the Donations following categories: baton formation - juniors, solo baton - seniors and juniors, baton duets - juniors, Value of in-kind donations in the form of home appliances: pompon - senior duets. approx. PLN 217.1 thousand • Anna Nawrot - the world vice-champion in fitness – an assembly line worker in Amica Sum of donations made: approx. PLN 458.6 thousand Local events we support • IV Wroniecka Dycha • 4th Polish National Dance Tournament "Wielkopolski Bat" Wronki 2018 • Amica Cup 2018.

Auctions will also be held throughout 2019.

In 2018, as a result of all the auctions, the sum of PLN 13,500 was raised.

Letter from the President of the Management Report on Activities Corporate Governance Statement Declaration Financial Statements Auditor's Report Board 2018 Summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 57 Each year, on the basis of the identified aspects and the risk analysis Limitation of water consumption conducted, the Company develops the Environmental Program, specifying Water consumption is monitored on an ongoing basis. Each line has a water meter the activities designed to reduce the negative impact on the environment. installed, which is automatically read and an analysis of water consumption is carried out When creating a program, the following is taken into account: on a regular basis. • the need to satisfy and observe the compliance requirements, • minimal consumption of materials, raw materials and utilities, taking into • Rotameters are installed on most of the scrubbers to accurately dispense the predetermined amounts of water. account the life cycle of products, This causes that water consumption to be minimal. • proper management of waste, including segregation, recovery, recycling • The final rinsing is carried out with demineralised water. It is regenerated on an on-going basis, in order to save and disposal thereof, without harm to the natural environment, water in ion-exchange columns or reverse osmosis systems. • increasing environmental awareness of the employees. • Use of spray washing or mixing the bath with circulating pumps during immersion washing (bath line). We do not have guidelines for the entire Group in this respect, however, we monitor water consumption for the The Company, in carrying out the directives of Ordinance EC 1907/2006 of Cooker Factor in Wronki, since it is the factory that exerts the strongest impact on the environment, and thus, the the European Parliament and Council of Europe concerning the registration, policy and the process. evaluation and authorisation of chemicals used (REACH) after the Responsible Wastewater Management [GRI 103-1, GRI 103-2, GRI 103-3] implementation of the REACH system, continually monitors the management process of all chemical substances applied in production and technology and The plant produces the following types of wastewater: oversees the chemical composition of supplied materials and components for - industrial wastewater compliance with the requirements of REACH and RoHS. - domestic wastewater The Company played an active role in the further development in the system Wastewater produced at Amica SA is directed to in-house industrial, human and rainwater sewage systems. Then, for collecting, processing, reusing and recycling used electrical and electronic the wastewater is subjected to purification processes respectively at the industrial wastewater treatment plant, and appliances (in line with the WEEE Directive). The Company initiated the Bioblok domestic wastewater treatment plant, whereas rainwater is pre-treated on separators. After the treatment establishment of the municipal Authorised Collection Point for Waste processes, when appropriate parameters have been achieved, sewage is discharged into the watercourse, which is a Electrical and Electronic Equipment and currently organizes used batteries tributary of the Warta River. and WEEE Collection Campaigns jointly with the Office of the Town and Purified industrial wastewater meets the quality requirements in accordance with the Integrated Permit held. Municipality of Wronki e.g. waste collection during an Eco-Friendly Picnic. Wastewater measurements are carried out 6 times a year, and the results of monitoring tests are transferred to the appropriate environmental protection authorities. Water Management in 2018 Purified domestic wastewater meets the requirements set out in the permit for entering domestic wastewater into waters. The measurements take place twice a year, and the obtained results of monitoring are transferred to the [GRI 303-1] appropriate environmental protection authorities. Total water consumption [m3]: 41,439* Rainwater and snowmelt are treated in separators and an integrated sludge sedimentation tank. In addition, Water intake by water source [m³]: periodical equipment inspections, cleaning and maintenance work are carried out in accordance with the operating Water from water intakes / municipal mains 41,439 instructions to check the technical condition and purity of individual components. Surface water (e.g. from the Vistula River) 0 Deep well water 0 The quantitative and qualitative parameters of the industrial and domestic wastewater discharged and their quantities Drainage water 0 are in line with the permits obtained. In 2018, the permissible quantities of wastewater and values of pollution Water from other sources (what?) 0 indicators specified in the permits were not exceeded. * Data for Amica S.A. - we do not monitor this aspect for the entire group The main activities aimed at reducing the quantity of wastewater generated are related to the prolongation of the use of process baths through their continuous regeneration (centrifuges) and thus reduction in the wastewater volumes. * Data for Amica S.A. - we do not monitor this aspect for the entire group The reduction in the wastewater volumes has also direct impact on decreasing the quantity of waste generated (the post-neutralization sediment, activated carbon). Letter from the President of the Management Report on Activities Corporate Governance Statement Declaration Financial Statements Auditor's Report Board 2018 Summary Financial position Business model Our employees Impact on the environment Prospects Risk management Corporate information Supplementary information 58 Responsible Waste Management Total weight of waste generated by the Company in 2018: The company holds all the necessary permits related to waste management: i.e. Integrated Permit Hazardous waste 158 and Waste Generation Permit. [Mg]: The quality and quantity monitoring is Non-hazardous 10,002 carried out for the entire waste stream, waste [Mg]: and the related reports are submitted to Waste hierarchy appropriate environmental protection waste prevention authorities. In addition, the Group Main policies / regulations All the principles governing the waste management are maintains qualitative and quantitative implemented by Amica SA included in the procedures: records of waste generated, based on regarding responsible waste S 446-01.00.00 Waste Management Waste Record Sheets and Waste Transfer management S 446-01.02.00 Instructions for developing waste Sheets. preparing for re-use management rules S 446-01.01.00 Waste storage instructions The company conducts separate waste Main activities aimed at When awarding the contract to a company collecting collection. All waste is stored in reducing the production of non- waste, the processes to which the waste will be transferred recyclable waste: are taken into account, which is one of the criteria for appropriately labelled and selected recycling containers and containers. In addition, the selection of the waste recipient. plant's WASTE STORAGE facility is Percentage of waste AMICA SA 98 adjusted to storage of hazardous waste. transferred for recycling and other recovery processes other recovery Waste management is performed in processes Additional explanatory At the end of the year, each of the recipients gives accordance with the waste hierarchy - so information concerning the information about the processes used with respect to the that most of the waste is subjected to the calculation methods waste collected in a given year in accordance with processes of recycling and recovery, in Annexes 1 and 2 to the Act on Waste. particular packaging waste, plastic and waste treatment scrap metal.

The entities collecting waste are specialized in its management in accordance with the law. Waste collecting companies must have all the necessary permits to carry out activities in the field of waste management (entry in waste management register, permit for collection or processing of waste).

The packaging waste generated is collected in a selective manner and the entire stream is subjected to recycling processes and other recovery processes, in accordance with the Act of 13 June 2013 on the management of packaging and packaging waste.

In 2018, the quantitative limits of generated waste specified in the permits were not exceeded.

The main initiatives taken to reduce the Company's energy consumption or increase the Company's Energy used for the production and heating of premises: energy efficiency: • gas GZ-50 – 95,688 GJ • commissioning of a new Gas Boiler House at the Cooker Factory • electricity – 57,248 GJ • commissioning of a system for recovery of heat from compressors Energy (fuels) used for company cars, forklifts, power generators • modernization of the compressor room ventilation system • Unleaded gasoline – 837 GJ • successive replacement and installation of LED lighting • Auto diesel oil – 7,010 GJ • modernization of the central heating installation at the Cooker Factory – Stage I Energy (fuel) used for forklifts • development of a cogeneration concept for the Cooker Factory (1 MWe) • Liquefied gas (LPG) - 651 GJ • development of the photovoltaic plant concept for the Cooker Factory (2MWp)

Exemplary results of the above activities: • covering the entire demand for hot water from system for recovery of heat from compressors • lower gas consumption • lower electricity consumption

In addition, educational materials are also posted on the in-house information portal "emplo". The Organizing trips for schools with the aim to educate students about the production of home topics discussed in 2018 included: appliances as well as its environmental impacts. During the visit, children learn about all aspects of • COP24 Climate Summit the plant's impact on the environment and how Amica SA cares for the natural environment by • Ideas for ecological holidays minimizing the adverse effects of its activities. • Database of products, packaging, and waste management • Exotic souvenirs – What not to bring from holidays Organizing an ecological competition for employees of Amica SA in the form of a crossword, whose • Ecological Picnic with Robert Makłowicz! slogans were related to environmental protection. • Composting – the oldest type of recycling • World Earth Day What are our plans for the future? • Earth Day Rise Above Plastics • Participation in the organization of the next eco-friendly picnic with competitions and games for • Air quality in the winter adults and children • You want to feed birds, not every way is good • Organization of ecological contests at the Company • Beginning of January, and the cranes are coming back • Educational campaign for all employees of Amica Group • Further increasing of the employees’ environmental awareness Articles also describe current problems and trends related to environmental protection. The Educational activities addressed to employees are undertaken to a large extent through our in-house newsletters also describe legal changes in the field of environmental protection for residents of communication platform available to Amica Group employees in Poland. We plan ensure the access Wronki and neighbouring towns . Thus, employees are aware of changes, for example in the to the service to employees of our foreign companies in 2019. municipal waste collection system.

Prospects and factors affecting development 63

There are a number of external factors that will affect the global industry of home appliances, including Amica Group, in the coming years. One of them is the ongoing market consolidation driven in the recent years by Chinese manufacturers (takeover of Gorenje by Hisense and Candy Group by Haier). These activities are the elements of the global development strategy of these companies. Following China, Europe is the second biggest market for manufacture and sale of home appliances worldwide.

Other external factors affecting the industry include: trade tensions between the U.S. and China, unstable political situation in Turkey (impact on Turkish producers: Arcelika and Vestela) and Brexit.

In comparison with other European markets, Poland is characterized by a positive dynamics of the market value growth. According to Applia Polska, in 2018, the market for large home appliances grew by 7% y-o-y. The volume of domestic sales is estimated at over PLN 10 billion, if which PLN 2.5 billion is spent on small home appliances and PLN 7.7 billion on large home appliances. According to GFK, in terms of quantity, 5.6 million large home appliances were sold in Poland in 2018 (cf. 5.5 million pcs in 2017).

Amica is constantly increasing its presence in this growing market. Both in terms of quantity and value, the share in sales on the domestic market increased again.

In 2018, the highest growth rate was recorded for products with the lowest market penetration i.e. products which are relatively the least popular in Polish households. Last year, these were clothes dryers and dishwashers. Likewise, “new” groups of small home appliances show a growing trend. This year's leaders include pressure coffee makers and air fresheners. Increases have also been recorded for hobs and ovens.

According to publicly available estimates, approximately 210,000 people already work directly in the production of home appliances in Europe. The annual sales of products cover approximately 125 million small items and about 100 million large home appliances and have been systematically increasing in the subsequent years. Most people are employed in Turkey, Germany, Italy and Poland.

According to Applia, there are 27,000 employees in the home appliances industry in Poland, of whom 20% are white-collar workers. In 2018 alone, capital expenditures in the industry amounted to PLN 1.3 billion. These expenditures were intended mainly at increasing the existing capacity and building new factories, including in accordance with the concept ‘Industry 4.0’. Other elements included expenses related to logistics, global service centres and R&D centres.

The value of production of home appliances in Poland amounts to PLN 21 billion and translates into 22 million items, which accounts for approximately 33% of the production of large home appliances in the European Union.

The main challenges for the industry in the near future include the recycling of electric waste. The target value for 2019 was set at 55%, while by 2021 it is expected to increase to 65%. Other elements influencing the industry include new European regulations, including requirements related to environmental protection and supply on the labour market.

Risk management model 65 Risk management process 65 Organizational structures responsible for the 66 risk management Risk related to Amica Group's operations 67-69

Risk management model For Amica Group, the risk is an integral part of its business operations. Given the existing exposure to particular types of risk i.e. strategic, business, operational or cybernetic, a comprehensive risk management system has been implemented, based ENVIRONMENT on the international standard ISO 31000:2012 “Risk Management - Principles and Guidelines”. In pursuing business objectives, the Company recognizes threats (negative risks) as well as risks related to the strategy implementation, accompanying Background development opportunities and building the added value for stakeholders (positive risks). The Corporate Risk Management System will ultimately include all the companies of Amica Group. Risk assessment Risk identification Scope and process of the risk management Monitoring In pursuit of Amica Group's objectives and within the related risk management process, we have identified the scope of works and standards which shall underlie the Risk analysis actions taken to determine the risks and methods for limiting their impact on the operations: • the risk management system is based on the ISO:31000 standard, • each risk has its Owner and Supervisor who perform the assessment at the set time intervals, Risk evaluation • depending on a particular risk, the assessment is conducted at various time intervals, • the risk is assessed in terms of probability of occurrence and possible financial consequences, impact on the loss of reputation / image and the implementation of Communications and consultations tasks, Risk handling • analysis of risk materialization and estimated risk value, • analysis of the impact of risk on the financial statements, • analysis of the impact on Amica Group’s operations.

The risk management process in Amica Wronki S.A. includes the following phases: • risk assessment (identification, analysis and evaluation of risk), • preparation of the unacceptable risk handling plan, • implementation of risk handling plans and risk monitoring, • risk reporting.

Risk management is ensured at particular levels of organization management. The organizational structures responsible for risk management in Amica SA as the parent and supervisor are presented below. Financial Division Reporting to the Vice-President for Finance and Controlling

Manager for Audit Financial Risk Liquidity and and Internal Administrative Staff Risk Manager Periodic verification of activities Manager Credit Risk Team Control in the area of the most important identified risks. Implementation of the Risk Periodic Carrying out, Foreign exchange risk Management System Credit risk assessment of the identifying and and interest rate risk The Supervisory and supervision over management risk management analysing risks in management human resources effectiveness Board everyday operations responsible for risk management The effectiveness of the risk Analysis and Managing the risk of monitoring of risks changes in prices of management process is Periodic risk Managing liquidity within the Group's raw material assessed and levels of key risks assessments risk are monitored, including the risk management (including oil prices) effectiveness of the corrective Audit Committee actions taken. Managing the Register of Risks and the Corporate Map of Risks

Acceptance of the Risk Preparation of plans Management Book and for managing supervision of systemic risk unacceptable risks, management with the recommendation of Management the Management Board Board

Risk related to implementation of ‘HIT 2023 Strategy’ Negative and positive risks associated with the implementation of ‘HIT 2023 Strategy’ are directly related to the pillars on which the growth model of Amica Group was built .

• In order to limit the impact of the risk, Amica Group regularly analyses the risk of failure to achieve the revenue growth plans and the EBITDA level, as assumed under the ‘HIT 2023 Strategy’. • As part of the plans to minimize the risk, the following actions are taken: Increase in revenue and profitability • monitoring of competition activities, • monitoring the macroeconomic situation, • monitoring the industry situation, portfolio changes

• One of the assumptions under the HIT 2023 model is an adequate diversification of sales aimed to reduce risk of impact of economic problems Expansion to new markets occurring in particular markets. Amica Group is seeking opportunities through mergers and acquisitions as an effective model to ensure entry and development in new markets.

• In order to provide support for local Amica equipment distributors, the Group plans to expand and invest in the Cooker Factory in Wronki. Measures High potential for production of cookers are taken to minimize the risk of failure to meet the assumptions of ‘HIT 2023 Strategy’ by investing in machinery, expanding production capacity, investing in R&D and introducing technological innovations in Amica products.

• The increase in the recognition of local brands and their value contributes to retention of the existing customers and systematic acquisition of new Strong regional brands ones. In order to ensure further growing recognition of local brands, the following measures are taken: appropriate advertising and promotion activities, presence of Amica in local events as a sponsor, widespread availability at distributors.

• In connection with the adopted product distribution model, Amica Group recognizes the political risk that may adversely affect the operations of local companies from the Group on a micro- and macro-economic scale. The Group has taken the following measures to limit the effects of risk: Political risks • diversification of activities in particular countries • monitoring the economic and political situation in the countries, where business operations are conducted • periodic analysis of the impact of political changes on the global markets

• The companies of Amica Group earn revenue and incur costs in PLN, EUR, USD, CNY, and RUB. Foreign exchange rate fluctuations have a significant (positive and negative) impact on the financial data presented. The Group has taken measures to reduce the effects of the foreign exchange risk by use of: Foreign exchange risk • hedging strategy. • monitoring and analysis of foreign exchange rate fluctuations

• Amica Group is exposed to the interest rate risk in connection with concluded loan agreements. The increase in the variable loan component will translate into an increase in the cost of financing. Most loans are taken with a variable interest rate based on WIBOR. In order to minimize risk, companies use the following Interest rate risk measures: • diversification of sources of capital and • monitoring of the most important interest rates

• Amica Group, which is a manufacturer of heating equipment at the Cooker Factory located in Wronki, is exposed to the volatility of prices of raw materials necessary for production and transport costs (oil prices). The Group has taken measures to reduce the above-mentioned risk through the use of: Raw material risk • diversification of raw material suppliers • applying a hedging strategy

• Given that Amica Group conducts its operations in more than a dozen countries, the exposure to the unstable legislative environment is high. The diversity of environmental standards, tax regulations, labour and industrial rights affects the operations of the Group. The following solutions have been implemented: Unstable legislative environment • monitoring legal and tax changes affecting the business operations • implementing a strategy for modification of environmental standards • introduction of audits and controls for providers of goods and services

• Amica Group operates mainly on the Western and Eastern European market. lower consumer incomes and less dynamic economic situation may affect the propensity to consume. A downturn can adversely affect the operating results of Amica Group, and consequently, its financial position. In order to mitigate the risk, the following measures have been taken: Risk of economic downturn • diversification of activities outside the EU • matching the sales strategy • monitoring economic indicators in major markets

• As part of its sales operations involving deferred payments, Amica Group recognizes the credit risk. In addition, the Group is exposed to the financial risk from its customers and their ability to settle liabilities. The following measures have been taken to limit the risk: Credit risk • insurance of trade receivables • monitoring the financial situation of business partners • monitoring of trade receivables

• Amica Group has a diversified demand for working capital to settles its liabilities arising from purchase of products, production and payment of taxes. The objective of the liquidity management is to maintain a stable financial situation in the short and long term. The risk is treated as a loss of the ability to settle liabilities in a timely manner and obtain funds for business operations. The Group has taken the following measures to limit the risk: Liquidity risk • monitoring and analysis of the financial liquidity of Amica Group • diversification of the capital raised • use of factoring services

• In accordance with ‘HIT 2023 Strategy’, Amica Group assumes long-term development at particular levels. To ensure the added value for stakeholders, the Group determines the appropriate operational development of the Cookers Factory and the innovativeness of products placed on the markets. The risk in the operating area is defined as the reduction of production efficiency, cost efficiency, and increase in profitability. • To mitigate the operational risks, the Group takes the following actions: Operational risk • monitoring and analysis of production efficiency • diversification of sources of production materials • production automation and analysis of R&D potentials

• Analysing global trends and the increase in the significance of security of data, systems and business continuity, Amica Group takes measures aimed at limiting the risk of data loss or system failures i.e .: System and data security • analysis and monitoring of systems’ susceptibility to attacks • introduction of systemic solutions to limit the risk • trainings for employees

• Amica Group identifies the effectiveness of internal processes as one of the key factors for success of HIT 2023 Strategy. Appropriate management and improvement of the processes creates an opportunity for achieving the set goals. In order to mitigate the negative risk, the following measures have been introduced: Effectiveness of internal processes • launch of the Lean Management unit • monitoring periodic effectiveness of processes • implementation of system/IT measures

• Amica Group exercises the utmost care to ensure that the products delivered are safe, which is why the product safety risk is assessed as soon as at the design stage. In order to mitigate the risk, the following measures have been taken: Risk of product safety • Verification of components delivered for production • Obtaining certificates of conformity with applicable standards for products • Conducting product tests

• When analysing the situation in the countries where Amica Group conducts its operations, the risk of excessive staff turnover is an important factor that may have an impact on local communities and operations. In order to limit the risk of staff turnover, the following measures are taken: Risk of excessive staff rotation • Introduction of a sustainable development culture • Support in the form of employee programs • Introduction of development paths and employee evaluation programs

• Amica Group has identified the risks associated with environmental aspects and significant environmental aspects (according to ISO 14001). In order to mitigate the risk, the following measures have been taken: • Introduction and management in accordance with ISO 14001 Risk of non-compliance with environmental standards • Education of employees in the field of environmental standards

• Amica SA and all companies of Amica Group undertake numerous initiatives to support respect for human rights. The risk related to this area has not been Respect for human rights identified by us separately.

• Amica Group has identified the risk of corruption-related activities and corruption. In connection with the operations carried out, the Group believes that there is a risk of improper selection of business partners. In order to counteract the foregoing, Amica Group companies have taken the following measures: Risk of corruption • Introduction of Group purchasing policy • Introduction of business partners’ analysis • Analysis of contracts and business partners as part of audit and internal control tasks

Information on shares and shareholdings 72-73 Managing and supervising body Principles of Corporate Governance 74-77

Seria A Seria B Total 7,775,273 100.00% 10,492,951 100.00% * Data reported based on the notifications received by the Company from its Shareholders, prepared pursuant to Article 69 of the Act Treasury shares of 29 July 2005 on Public Offering. Subsidiaries neither acquired nor held any treasury shares in 2018. ** After the balance sheet date, under the Share Repurchase Program, the Company acquired 250,000 ordinary bearer shares of In response to the offer for purchase of not more than 250,000 de materialized Amica SA designated with the ISIN code PLAMICA00010 (see: Current Report No. 35/2018 of 16 October 2018). ordinary bearer shares of the Company, designated by the National Securities Shares and votes held directly by members of the Company's bodies Deposit with ISIN code: PLAMICA00010 (see: Current Report No. 34/2018 of 28 Shares and votes held directly by members of the Company's bodies as at 31 December 2018. September 2018 regarding the publication of the offer), on 18 October 2018, the Company acquired 250,000 own shares with a total nominal value of PLN Management Board of Amica SA 500,000 for a total price of PLN 30,000,000 i.e. PLN 120 per share. The Number of shares Nominal value purchased shares account for 3.22% of the share capital and 2.38% of the total number of votes in the Company. Marcin Bilik 13,900 27,800 The Company acquired its own shares in connection with the implementation of Alina Jankowska-Brzóska 1,015 2,030 an incentive scheme for the key managerial staff of the Company, as adopted Piotr Skubel* 13,367 26,734 on 28 June 2018 by the Annual General Meeting under Resolution No. 24/2018 Supervisory Board of Amica S.A. on the development and implementation of an incentive scheme for the key managerial staff. Tomasz Rynarzewski 400 800 The Offer was published in connection with the acquisition of the Company's Shares on the terms specified in Resolution No. 25/2018 of the Annual General Meeting on the consent to the repurchase of own shares by Amica Spółka Other members of managing and supervising bodies, who do not Amica SA shares Akcyjna and the adoption of the Share Repurchase Program and in the Members of managing and supervising bodies who do not hold shares / interest in entities of Amica Group Resolution of the Management Board of the Company of 27 September 2018.

Limitations on transfer of share ownership rights The shareholders possessing series A preference shares have the priority Listing of shares when purchasing series A registered preference shares offered for sale – the process of selling registered preference shares may be carried out based on Below is a chart of the Company's shares quoted in the period from June 2017 to 28 February 2019 in the principles stipulated in the § 8 of the Company’s Articles of Association. comparison to WIG 40 and WIG indexes The Company has introduced no restrictions on the transfer of ownership of the Company's securities. 120%

100%

80% Amica

60% WIG40

40% WIG

20%

0% VI 2017 I 2018 VI 2018 XII 2018

Management Board of Amica SA There were no changes in the composition of the Management Board in 2018 and until the date of this report.

Jacek Rutkowski Piotr Skubel Marcin Bilik Wojciech Kocikowski Alina Jankowska- Brzóska

President of the Vice-President of the Vice-President of the Vice-President of the Vice-President of the Management Board of Management Board of Amica Management Board of Amica Management Board of Amica Management Board of Amica Amica Group Group, President of Amica Group for Operations Group for Finance Group for Goods Management Handel and Controlling and Logistics Mr. Jacek Rutkowski, as the i Marketing Mr. Marcin Bilik, as the Vice-President of the Mr. Wojciech Kocikowski, as the Vice- Ms. Alina Jankowska-Brzóska, as the President of the Management Mr. Piotr Skubel, as the Vice-President Management Board for Operations, manages President of the Management Board for Vice-President of the Management Board, directs the work of the of the Management Board for Trade and the area of duties assigned to: Finance and Controlling, manages the Board for the Goods Management and Management Board (including by Marketing, is responsible for conducting • Cooker Factory, area of affairs entrusted to the Logistics, manages the duties entrusted convening and chairing the all the tasks related to commercial and • Research and Development Department, competence of: to: meetings of the Management marketing activities in the companies of • Engineering Department, • Accounting Department, • Goods Procurement Department, Board) as well as issues internal Amica Group as well as coordinates and • Quality Management Department, • Treasury Department, • Department of Strategic orders and business instructions, supervises the work of all core-business • Investment and Plant Maintenance • Controlling Department (excluding Management of Products – Goods policies and other regulations organizational units of Amica Group. Department, the Strategy and Business • Logistics Department, governing the Company's • Service Department, Development Section), • Non-Production Purchasing Section, operations. • OHS and Fire Protection Services, – and in this regard, supervises the work – and in this regard, supervises the work • Components Purchasing Department, of these departments and their of these departments and their – and in this regard, supervises the work of organizational units. organizational units. these departments and their organizational units.

Supervising body

Supervisory Board

Tomasz Dudek, Artur Małek, Tomasz Rynarzewski, Andrzej Konopacki, Paweł Wyrzykowski, Piotr Rutkowski

Member of the Vice-Chair of the Chairman of the Member of the Member of the Member of the Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board (Independent) (Independent)

There were no changes in the composition of the Supervisory Board in 2018 and until the date of this report.

The responsibilities of the Compensation and Nomination Committee include in particular: 1) preparing and presenting opinions to the Supervisory Board regarding the terms of employment and compensation for Members of the Management Board of the Company; 2) preparing and presenting to the Company's Supervisory Board proposals regarding the terms of employment and compensation for Members of the Management Board, ensuring compliance of the proposals with the principles of remuneration adopted by the Company as well as the performance assessment for individual Members of the Management Board; 3) participation in the process of nomination of the Management Board Members, in particular, participation in the final stage of interviewing candidates and providing recommendations to the Supervisory Board regarding the nomination of the Management Board Members. The Supervisory Board may, by way of a resolution, appoint other committees than those listed above, composed exclusively of members of the Supervisory Board. In each case, the resolution of the Supervisory Board shall determine the composition, method of appointment, tasks, scope of activities and the mode of operation of the committee.

Corporate Governance Statement This Corporate Governance Statement has been prepared based on the document entitled “Best Practice for WSE Listed Companies 2016”, as attached to Resolution No. 26/1413/2015 of the Supervisory Board of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) of 13 October 2015 on the adoption of the “Best Practice for WSE Listed Companies 2016”, and forms a separate integral part of the Report on the Issuer's Activities – Annex 1.

Auditor Amica’s semi-annual and annual Financial Statements (both consolidated and non-consolidated) were reviewed and audited, respectively, by GRANT THORNTON POLSKA SP. Z O.O. SPÓŁKA KOMANDYTOWA with its registered office and address in Poznań, ul. Abpa Antoniego Baraniaka 88 E, 61-131 Poznań (a company entered in the Register of Entrepreneurs maintained by the District Court in Poznań - Nowe Miasto and Wilda in Poznań, under the number KRS 0000407558, and entered in the list of entities authorized to audit financial statements, kept by the National Council of Statutory Auditors, under the number 4055). The audit firm responsible for verifying the above financial statements has been chosen by the Supervisory Board of the Company. Agreement with the above-mentioned firm was entered into on 21 June 2017 for the duration of its subject matter. The audit firm indicated above was also selected to carry out similar activities in 2018, respectively. In 2018, Grand Thornton also performed a due diligence service for the Company. The following table shows the remuneration of the entities authorized to audit financial statements of the entire Group, paid or payable for the year ended 31 December 2018, and for the year ended 31 December 2017, broken down by types of services:

Consolidated data Non-consolidated data Type of service 2018 2017 2018 2017 Mandatory Audit of the Financial 662 523 124 120 Statements Other services allowed for the Auditor under the law (Consultations on IFRS 15 15 15) Other services allowed for the Auditor under the law 57 222 57 222 (Due diligence) Total 719 760 181 357 Detailed information on the selection of an audit firm was published by the Company in its Current Report No. 09/2017.

Please do not hesitate to contact us: Malwina Frydrychowicz Manager for Communication and CSR [email protected]

Key non-financial data 4.6 Sensitivity to consumer needs GRI 103-1, 103-2, 103-3 Description of the key reporting aspect ‘Ethics in providing information on 35-36 Business model GRI 102-1 Name of the Organization 20 products and services’ GRI 102-3 Location of headquarters 20 GRI 102-2 Description of the organization's activities, brands, products and/or services 35, 22 GRI 102-4 Location of operations 20 GRI 102-5 Ownership and legal form 20 GRI 416-2 Incidents of non-compliance concerning the health and safety impacts of 36 GRI 102-6 Markets served 23 products and services GRI 102-7 Scale of the organization 4 Authorities of ASA Group GRI 102-18 Governance structure, including committees reporting to the 75 GRI 417-3 Incidents of non-compliance concerning the marketing communication, 36 highest supervisory body including advertising, promotion and sponsorship, broken down by type of GRI 102-10 Significant changes to the organization’s scale, structure, 20 effects ownership and its supply chain Business strategy GRI 102-2 Business strategy 22 Developing the potential of employees GRI 103-1, 103-2, 103-3 Description of the key reporting aspect ‘Employment’ 41 CSR Strategy GRI 102-15 CSR strategy 24-26 GRI 102-8 Information on employees and other workers, including: 40 CSR Strategy Description of the key reporting aspect ‘Information about the 24-28 company's goals in the field of corporate social responsibility’ Total number of employees by gender and type of employment 40 Our surroundings GRI 102-40 List of stakeholder groups engaged by the reporting 26 Total number of employees by type of employment (full or part time) by 40 organization gender GRI 102-42 Identifying and selecting stakeholders engaged by the 24 organization GRI 102-41 Employees covered by collective bargaining agreements 40 GRI 102-43 Approach to stakeholder engagement, including the frequency 26 GRI 401-1 New employee hires and employee turnover in the reporting period, 40 of engagement by type and group of stakeholders including: GRI 102-44 Key topics and concerns raised by stakeholders and the 24 New employee hires and employee turnover by gender, age and region 40 response from the organization, including by reporting them (country) Total number and percentage of employees who left the organization, by 40 GRI 102-13 Membership in associations and organizations 26 gender, age and region (country) Management standards GRI 102-11 Explanation of whether and how the organization applies the 29 GRI 404-3 Percentage of employees receiving regular performance and career 44 precautionary principle. development reviews by gender and employee categories GRI 102-16 Organization values, code of ethics, rules and norms of 30 behaviour. GRI 401-2 Additional benefits provided to full-time employees 42 GRI 103-1, 103-2, Description of the key aspect of 'Counteracting corruption'. 30 103-3 GRI 103-1, 103-2, 103-3 Description of the key reporting aspect ‘Diversity and equal opportunities’. 46 Cooperation with suppliers GRI 102-9 Description of the supply chain 33 GRI 401-3 Returns after work and employment after parental leave 47 GRI 103-1, 103-2, Description of the key aspect of ‘Supply Chain Management’ 33 103-3 GRI 405-1 Composition of supervisory bodies and workforce by gender, age, minorities 47 and other diversity factors

GRI 406-1 Incidents of discrimination 31

Table of compliance with the Accounting Act

Page number Topic Amica S.A. Amica Group 1. Business model 20-38 20-38 2. Non-financial key performance indicators 4-6 4-6 3. Policies, procedures, documents regulating: • Employment issues 39-51 39-51 • Social issues 52-56 53 • Environmental issues 57-61 57 • Respect for human rights 30-36, 46-47 30-36, 46-47 • Counteracting corruption 30-31 30-31 4. Non-financial risk management 70 70

Jacek Rutkowski Piotr Skubel Marcin Bilik Wojciech Kocikowski Alina Jankowska-Brzóska

President of the Vice-President of Vice-President of Vice-President of the Vice-President of the Management Management the Management the Management Management Board Board Board Board Board

Approval and publication

29 March 2019

List Prezesa Zarządu Sprawozdanie z działalności Oświadczenie w sprawie ładu korporacyjnego Oświadczenia Sprawozdanie finansowe Sprawozdanie audytora Podsumowanie 2018 r. Sytuacja finansowa Model biznesowy Nasi Pracownicy Wpływ na otoczenie Perspektywy Zarządzanie ryzykiem Informacje korporacyjne Informacje uzupełniające Annex 1 to Amica S.A. Management Board’s Report on Activities in 2018 Amica Spółka Akcyjna's Statement on Application of Recommendations and Principles laid down in “Best Practice for WSE Listed Companies 2016”

Wronki, 29 March 2019

Annex 1 to Amica S.A. Management Board’s Report on Activities in 2018

Statement of the Management Board of

Amica Spółka Akcyjna

with its registered office in Wronki

regarding the implementation of Principles of Corporate Governance

“Best Practice for WSE Listed Companies 2016”

This Corporate Governance Statement has been prepared based on the document entitled “Best Practice for WSE Listed Companies 2016”, as attached to Resolution No. 26/1413/2015 of the Supervisory Board of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) of 13 October 2015 on the adoption of the “Best Practice for WSE Listed Companies 2016”.

*****

In accordance with § 70 section 6 point 5) of the Regulation of the Minister of Finance of 29 March 2018 on current and interim reports published by issuers of securities and on conditions for recognition of information required by the non-Member State regulations as equivalent, the Corporate Governance Statement forms a separate part of the Report on the Company's Activities being an integral part of the Annual Report of Amica Spółka Akcyjna for the financial year 2018.

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Annex 1 to Amica S.A. Management Board’s Report on Activities in 2018 Amica Spółka Akcyjna's Statement on Application of Recommendations and Principles laid down in “Best Practice for WSE Listed Companies 2016”

Wronki, 29 March 2019

Information on application by “Amica Spółka Akcyjna” of the recommendations and principles laid down in “Best Practice for WSE Listed Companies 2016”

A. Set of corporate governance principles applicable to the Company and the place where the text of the set of principles is publicly available

In 2018, “Amica Spółka Akcyjna” complied with the corporate governance principles laid down in “Best Practice for WSE Listed Companies 2016”, as adopted by the Board of Board of the Warsaw Stock Exchange pursuant to Resolution No 26/1413/2015 of 13 October 2015 on the adoption of “Best Practice for WSE Listed Companies 2016”.

[The abovementioned regulations are available on the website of the Warsaw Stock Exchange at: https://www.gpw.pl/lad_korporacyjny_na_gpw ].

B. The extent to which the Company has waived the provisions of the corporate governance principles referred to in Section A, identification of those provisions and clarification of the grounds for the waiver

“Amica Spółka Akcyjna” has resolved to apply the “Best Practice for WSE Listed Companies 2016”, as issued by the Warsaw Stock Exchange”, except for the following: 1. ensuring real-life broadcast of the general meeting to the Shareholders of the Company – Rule IV. R.2 item 1) and Rule IV.Z.2, Chapter IV “General Meeting, Shareholder Relations”*; 2. ensuring real-time bilateral communication where shareholders may take the floor during a general meeting from a location other than the general meeting to the Shareholders of the Company – Rule IV. R.2 item 2), Chapter IV “General Meeting, Shareholder Relations”*; 3. ensuring the possibility to exercise of the right to vote during a general meeting either in person or through a plenipotentiary to the Shareholders of the Company – Rule IV. R.2 item 3), Chapter IV “General Meeting, Shareholder Relations”*; And further decides that: 1. pursuant to Rule IZ1.15, Chapter I “Disclosure Policy, Investor Communications” (section on the “diversity policy”), the Company – respecting the diversity policy in relation to the Company and its key managers – will develop an official document and publish on its website the applicable principles of this policy, taking into account in particular such components of the diversity policy as: gender, direction of education, age, professional experience;

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2. pursuant to Rule V.Z.6, Chapter V, “Conflict of Interest, Related Party Transactions”, based on the previously existing internal regulations of the Company – regulations concerning the principles and procedures of operation of the Company's corporate bodies – the Company will propose relevant changes and modifications of the Operating Rules of the Management Board and the Operating Rules of the Supervisory Board – addition of specific provisions according to which a Member of the Management Board/Member of the Supervisory Board shall inform of any conflicts of interest (or the possibility of its occurrence) and not participate in the consideration of any such affairs (in particular, not participate in voting on matters where there is or may potentially arise a conflict of interest); 3. pursuant to Rule VI.R.1., Chapter VI “Remuneration”, the Company will develop – in the form of an official document – the principles of the applicable remuneration policy (and incentive schemes) for Members of the Company bodies and its key managers, which will be closely linked to the Company’s strategy, its short- and long-term objectives, long-term interests and the economic and financial results and will further take into consideration the solutions for avoiding discrimination on any grounds whatsoever.

C. Detailed information on application by “Amica Spółka Akcyjna” of the recommendations and principles laid down in „Best Practice for WSE Listed Companies 2016”

I. Disclosure Policy, Investor Communications

Listed companies should ensure adequate communications with investors and analysts by pursuing a transparent and effective disclosure policy. To this end, they should ensure easy and non-discriminatory access to disclosed information using diverse tools of communication.

Recommendations I.R.1. Where a company becomes aware that untrue information is disseminated in the media, which significantly affects its evaluation, it should immediately publish on its website a communiqué containing its position on such information, unless in the opinion of the company the nature of such information and the circumstances of its publication give reasons to follow a more adequate solution. The principle is applied.

I.R.2. Where a company pursues sponsorship, charity or other similar activities, it should publish information about the relevant policy in its annual activity report.

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The principle is applied. [Comment: The Company supports charitable activities. The information on the policy pursued in this respect is included in the Company's Non-Financial Statement. The company provided the relevant information for the first time in the report on activities for the year 2017, along with the information on corporate social responsibility]. I.R.3. Companies should allow investors and analysts to ask questions and receive explanations – subject to prohibitions defined in the applicable legislation – on topics of their interest. This recommendation may be implemented through open meetings with investors and analysts or in other formats allowed by a company.

The principle is applied.

I.R.4. Companies should use best efforts, including taking all steps well in advance as necessary to prepare a periodic report, to allow investors to review their financial results as soon as possible after the end of a reporting period. The principle is applied.

Detailed principles

I.Z.1. A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation:

I.Z.1.1. basic corporate documents, in particular the company's articles of association; I.Z.1.2. the full names of the members of its management board and supervisory board and the professional CVs of the members of these bodies including information on the fulfilment of the criteria of independence by members of the supervisory board;

I.Z.1.3. a chart showing the division of duties and responsibilities among members of the management board drawn up according to principle II.Z.1;

I.Z.1.4. the current shareholding structure indicating those shareholders that hold at least 5% of the total vote in the company according to information provided to the company by shareholders under the applicable laws;

I.Z.1.5. current and periodic reports, prospectuses and information memoranda with annexes, published by the company at least in the last 5 years; I.Z.1.6. information on the dates of corporate events leading to the acquisition or limitation of rights of a shareholder, information on the dates of publication of financial reports and other events relevant to investors, within a timeframe enabling investors to make investment decisions;

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I.Z.1.7. information materials published by the company concerning the company's strategy and its financial results; I.Z.1.8. selected financial data of the company for the last 5 years of business in a format enabling the recipient to process such data; I.Z.1.9. information about the planned dividend and the dividend paid out by the company in the last 5 financial years, including the dividend record date, the dividend payment date and the dividend amount, in aggregate and per share; I.Z.1.10. financial projections, if the company has decided to publish them, published at least in the last 5 years, including information about the degree of their implementation; I.Z.1.11. information about the content of the company's internal rule of changing the company authorised to audit financial statements or information about the absence of such rule; I.Z.1.12. a statement on compliance with the corporate governance principles contained in the last published annual report; I.Z.1.13. a statement on the company's compliance with the corporate governance recommendations and principles contained herein, consistent with the information that the company should report under the applicable legislation; I.Z.1.14. materials provided to the general meeting, including assessments, reports and positions referred to in principle II.Z.10, tabled to the general meeting by the supervisory board; I.Z.1.15. information about the company's diversity policy applicable to the company's governing bodies and key managers; the description should cover the following elements of the diversity policy: gender, education, age, professional experience, and specify the goals of the diversity policy and its implementation in the reporting period; where the company has not drafted and implemented a diversity policy, it should publish the explanation of its decision on its website; I.Z.1.16. information on the planned broadcast of the general meeting - no later than 7 days before the date of the general meeting, I.Z.1.17. justification of draft resolutions of the general meeting concerning issues and determinations which are relevant to or may give rise to doubts of shareholders, within a timeframe enabling participants of the general meeting to review them and pass the resolution with adequate understanding; I.Z.1.18. information about the reasons for cancellation of a general meeting, change of its date or agenda, and information about breaks in a general meeting and the grounds of those breaks; I.Z.1.19. shareholders' questions asked to the management board pursuant to Article 428 § 1 or § 6 of the Commercial Companies Code together with answers of the management board to those questions, or a detailed explanation of the reasons why no answer is provided, pursuant to principle IV.Z.13; I.Z.1.20. an audio or video recording of a general meeting;

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I.Z.1.21. contact details of the company's investor relations officers including the full name and e-mail address or telephone number.

The Company observes the principles worded in I.Z.1.1. – I.Z.1.21, except for the Principle set forth in I.Z.1.15.

I.Z.2. A company whose shares participate in the exchange index WIG20 or mWIG40 should ensure that its website is also available in English, at least to the extent described in principle I.Z.1. This principle should also be followed by companies not participating in these indices if so required by the structure of their shareholders or the nature and scope of their activity. The principle is applied.

II. Management Board, Supervisory Board

A listed company is managed by its management board, whose members act in the interest of the company and are responsible for its activity. The management board is responsible among others for the company's leadership, engagement in setting and implementing its strategic objectives, and ensuring the company's efficiency and safety.

A company is supervised by an effective and competent supervisory board. Supervisory Board members act in the interest of the company and follow their independent opinions and judgement. The supervisory board in particular issues opinions on the company's strategy, verifies the work of the management board in pursuit of defined strategic objectives, and monitors the company's performance.

Recommendations

II.R.1. To ensure the highest standards of the management board and the supervisory board of a company in efficient fulfilment of their obligations, the management board and the supervisory board should have members who represent high qualifications and experience. The principle is applied.

II.R.2. Decisions to elect members of the management board or the supervisory board of a company should ensure that the composition of these bodies is comprehensive and diverse among others in terms of gender, education, age and professional experience.

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The principle is applied.

II.R.3. Functions on the management board of a company should be the main area of the professional activity of management board members. Additional professional activities of management board members must not require so much time and effort that they could adversely affect proper performance of functions in the company. In particular, management board members should not be members of governing bodies of other entities if the time devoted to functions in such other entities prevents their proper performance in the company. The principle is applied.

II.R.4. Supervisory board members must be able to devote the time necessary to perform their duties. The principle is applied.

II.R.5. If a supervisory board member resigns or is unable to perform his or her functions, the company should immediately take steps necessary to ensure substitution or replacement on the supervisory board. The principle is applied.

II.R.6. Being aware of the pending expiration of the term of office of management board members and their plans of further performance of functions on the management board, the supervisory board should take steps in advance to ensure efficient operation of the company's management board. The principle is applied.

II.R.7. A company should allow its supervisory board to use professional and independent advisory services necessary for the supervisory board to exercise effective supervision in the company. In its selection of the advisory service provider, the supervisory board should take into account the financial standing of the company. The principle is applied.

Detailed principles

II.Z.1. The internal division of responsibilities for individual areas of the company's activity among management board members should be clear and transparent, and a chart describing that division should be available on the company's website. The principle is applied.

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II.Z.2. A company's management board members may sit on the management board or supervisory board of companies other than members of its group subject to the approval of the supervisory board. The principle is applied.

II.Z.3. At least two members of the supervisory board should meet the criteria of being independent referred to in principle II.Z.4. The principle is applied.

II.Z.4. Annex II to the European Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board applies to the independence criteria of supervisory board members. Irrespective of the provisions of point 1(b) of the said Annex, a person who is an employee of the company or its subsidiary or affiliate or has entered into a similar agreement with any of them cannot be deemed to meet the independence criteria. In addition, a relationship with a shareholder precluding the independence of a member of the supervisory board as understood in this principle is an actual and significant relationship with any shareholder who holds at least 5% of the total vote in the company.

The principle is applied.

II.Z.5. Each supervisory board member should provide the other members of the supervisory board as well as the company's management board with a statement of meeting the independence criteria referred to in principle II.Z.4. The principle is applied.

II.Z.6. The supervisory board should identify any relationships or circumstances which may affect a supervisory board member's fulfilment of the independence criteria. An assessment of supervisory board members' fulfilment of the independence criteria should be presented by the supervisory board according to principle II.Z.10.2. The principle is applied.

II.Z.7. Annex I to the Commission Recommendation referred to in principle II.Z.4 applies to the tasks and the operation of the committees of the Supervisory Board. Where the functions of the audit committee are performed by the supervisory board, the foregoing should apply accordingly. The principle has not been applied. [Comment: In 2018, the Audit Committee and the Operations Committee operated within the Supervisory Board. On 16 January 2019, the Supervisory Board decided to establish the Compensation and Nomination Committee].

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II.Z.8. The chair of the audit committee should meet the independence criteria referred to in principle II.Z.4. The principle is applied.

II.Z.9. To enable the supervisory board to perform its duties, the company's management board should give the supervisory board access to information on matters concerning the company. The principle is applied.

II.Z.10. In addition to its responsibilities laid down in the legislation, the supervisory board should prepare and present to the Annual General Meeting once per year the following:

II.Z.10.1. an assessment of the company's standing including an assessment of the internal control, risk management and compliance systems and the internal audit function; such assessment should cover all significant controls, in particular financial reporting and operational controls; The principle is applied.

II.Z.10.2. a report on the activity of the supervisory board containing at least the following information:

- full names of the members of the supervisory board and its committees;

- supervisory board members' fulfilment of the independence criteria;

- number of meetings of the supervisory board and its committees in the reporting period;

- self-assessment of the supervisory board;

- an assessment of the company's compliance with the disclosure obligations concerning compliance with the corporate governance principles defined in the Exchange Rules and the regulations on current and periodic reports published by issuers of securities; The principle is applied.

II.Z.10.3. an assessment of the rationality of the company's policy referred to in recommendation I.R.2 or information about the absence of such policy. The principle is applied.

II.Z.11. The supervisory board should review and issue opinions on matters to be decided in resolutions of the general meeting. The principle is applied.

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III. Internal Systems and Functions

Listed companies should maintain efficient internal control, risk management and compliance systems and an efficient internal audit function adequate to the size of the company and the type and scale of its activity.

Recommendations

III.R.1. The company's structure should include separate units responsible for the performance of tasks in individual systems or functions, unless the separation of such units is not justified by the size or type of the company's activity.

The principle is applied.

Detailed principles

III.Z.1. The company's management board is responsible for the implementation and maintenance of efficient internal control, risk management and compliance systems and internal audit function. The principle is applied. III.Z.2. Subject to principle III.Z.3, persons responsible for risk management, internal audit and compliance should report directly to the president or other member of the management board and should be allowed to report directly to the supervisory board or the audit committee. The principle is applied. III.Z.3. The independence rules defined in generally accepted international standards of the professional internal audit practice apply to the person heading the internal audit function and other persons responsible for such tasks. The principle is not applied (given the lack of a separate internal audit unit that would be organized and located within the structure in line, inter alia , with the guidelines of the Institute of Internal Audit).

III.Z.4. The person responsible for internal audit (if the function is separated in the company) and the management board should report to the supervisory board at least once per year with their assessment of the efficiency of the systems and functions referred to in principle III.Z.1 and table a relevant report. The principle is not applied.

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[Comment: The members of the management body of the Company together with the Internal Controller periodically evaluate the results of the audits carried out within the Company in the field of parameterization of the degree of economic risk in particular business processes / operations of the Company. The Management Board effectively monitors the progress of both the problems/questions identified by the controllers and the corrective actions taken in these matters]. III.Z.5. The supervisory board should monitor the efficiency of the systems and functions referred to in principle III.Z.1 among others on the basis of reports provided periodically by the persons responsible for the functions and the company's management board, and make an annual assessment of the efficiency of such systems and functions according to principle II.Z.10.1. Where the company has an audit committee, it should monitor the efficiency of the systems and functions referred to in principle III.Z.1, which however does not release the supervisory board from the annual assessment of the efficiency of such systems and functions. The principle is applied. III.Z.6. Where the company has no separate internal audit function in its organisation, the audit committee (or the supervisory board if it performs the functions of the audit committee) should review on an annual basis whether such function needs to be separated. The principle is applied.

IV. General Meeting, Shareholder Relations

The management board and the supervisory board of a listed company should encourage the engagement of shareholders in matters of the company, in particular through active participation in the general meeting.

The general meeting should proceed by respecting the rights of shareholders and ensuring that passed resolutions do not infringe on reasonable interests of different groups of shareholders.

Shareholders who participate in a general meeting should exercise their rights in accordance with the rules of good conduct.

Recommendations

IV.R.1. Companies should strive to hold an Annual General Meeting as soon as possible after the publication of an annual report and set the date in keeping with the applicable legislation. The principle is applied.

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[Comment: When setting the date of the Annual General Meeting, taking into account the relevant legal provisions, the Company strives to ensure that the time interval between the publication of the annual report and the announcement of the Annual General Meeting does not diverge from the average 50-day period, which is customary on the market. The company will seek to shorten the period between the publication of the annual report and the date of the Annual General Meeting]. IV.R.2. If justified by the structure of shareholders or expectations of shareholders notified to the company, and if the company is in a position to provide the technical infrastructure necessary for a general meeting to proceed efficiently using electronic communication means, the company should enable its shareholders to participate in a general meeting using such means, in particular through:

1) real-life broadcast of the general meeting; 2) real-time bilateral communication where shareholders may take the floor during a general meeting from a location other than the general meeting; 3) exercise of the right to vote during a general meeting either in person or through a plenipotentiary. The principle is not applied. Acknowledging the significance of the content of the “Best Practice for WSE Listed Companies 2016” as a set of key principles indispensable to ensure management transparency, effective supervision and full respect for the rights of Shareholders, the Company has adopted to apply the “Best Practice for WSE Listed Companies 2016” with the exception of the rules concerning the on-line real-life broadcast of the general meetings and the possibility of two-way real-time communication/exercise of the right to vote during a general meeting either in person or through a plenipotentiary to Shareholders from a location other than the general meeting to the Shareholders of the Company, due to the high risk resulting from the imperfect IT infrastructure. The Company believes that the application of the above-mentioned arrangements for participation in the General Meeting: (i) is not justified , given the shareholding structure; (ii) furthermore, the Company is not able to provide the technical infrastructure necessary for the smooth conduct of the General Meeting by means of electronic communication; (iii) no expectations in this regard have been reported to the Company; (iv) the implementation of such solutions is also associated with excessively high costs of using such forms of communication; however, the Company does not rule out possible use of such broadcasting techniques when organizing future General Meetings, in particular if more effective technical capabilities for broadcasting the meetings are available, as compared to those offered now. The Issuer does not rule out the possibility of providing the shareholders with the means of two-way real-time electronic communication during the General Meetings in the future, especially if there appear more effective technical capabilities for delivery of multimedia communications compared to those currently offered (at present, provision of suitable data transfer quality would require substantial rebuilding of the local telecommunications infrastructure, which is associated with very high costs; lack of adequate infrastructure entails risks likely to disrupt the smooth running of the AGM sessions. However, the Company recognizes the importance of such a

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method for participation of shareholders in general meetings and, therefore, the decision on real time broadcast of the general meeting , two-way real time communication and exercise of voting rights, in person or by proxy, in the course of the general meeting by means of electronic communication, will be taken before each General Meeting].

IV.R.3. Where securities issued by a company are traded in different countries (or in different markets) and in different legal systems, the company should strive to ensure that corporate events related to the acquisition of rights by shareholders take place on the same dates in all the countries where such securities are traded.

The principle is not applicable to the Company.

Detailed principles

IV.Z.1. Companies should set the place and date of a general meeting so as to enable the participation of the highest possible number of shareholders. The principle is applied. IV.Z.2. If justified by the structure of shareholders, companies should ensure publicly available real-time broadcasts of general meetings. The principle is not applied (see comment to the Principle IV.R.2). IV.Z.3. Presence of representatives of the media should be allowed at general meetings. The principle is applied. IV.Z.4. If the management board becomes aware a general meeting being convened pursuant to Article 399 § 2 - 4 of the Commercial Companies Code, the management board should immediately take steps which it is required to take in order to organise and conduct the general meeting. The foregoing applies also where a general meeting is convened under authority granted by the registration court according to Article 400 § 3 of the Commercial Companies Code. The principle is applied.

IV.Z.5. The rules of general meetings and the method of conducting the meeting and adopting resolutions must not restrict the participation of shareholders in general meetings and the exercising of their rights. Amendments of the rules of the general meeting should take effect at the earliest as of the next general meeting. The principle is applied.

IV.Z.6. Companies should strive to ensure that the cancellation of a general meeting, change of its date or break in its proceedings do not prevent or limit the exercising of the shareholders' rights to participate in the general meeting.

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The principle is applied.

IV.Z.7. A break in the proceedings of the general meeting may only take place in special cases, defined at each time in the justification of the resolution announcing the break, drafted on the basis of reasons provided by the shareholder requesting the break. The principle is applied.

IV.Z.8. A resolution of the general meeting announcing a break should clearly set the date and time when the proceedings recommence, and such date and time must not be a barrier for most shareholders, including minority shareholders, to participate in the continuation of the proceedings. The principle is applied.

IV.Z.9. Companies should strive to ensure that draft resolutions of the general meeting contain a justification, if it helps shareholders to pass a resolution with adequate understanding. If a matter is put on the agenda of the general meeting at the request of a shareholder or shareholders, the management board or the chair of the general meeting should request presentation of the justification of the proposed resolution. In important matters and matters which may give rise to any doubt of shareholders, the company should provide a justification, unless it otherwise provides the shareholders with information necessary to pass a resolution with adequate understanding. The principle is applied.

IV.Z.10. Any exercise of the rights of shareholders or the way in which they exercise their rights must not hinder the proper functioning of the governing bodies of the company. The principle is applied.

IV.Z.11. Members of the management board and the supervisory board should participate in a general meeting as necessary to answer questions asked at the general meeting. The principle is applied.

IV.Z.12. The management board should present to participants of the Annual General Meeting the financial results of the company and other relevant information contained in the financial statements to be approved by the general meeting. The principle is applied.

IV.Z.13. If a shareholder request information about the company, the management board of the company should provide an answer to the shareholder's request within 30 days or inform the shareholder of its refusal to provide such information where the management board has made such decision pursuant to Article 428 § 2 or § 3 of the

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Commercial Companies Code. The principle is applied. IV.Z.14. Resolutions of the general meeting should allow for a sufficient period of time between decisions causing specific corporate events and the date of determination of the rights of shareholders pursuant to such events. The principle is applied.

IV.Z.15. A resolution of the general meeting concerning an issue of shares with subscription rights should specify the issue price or the mechanism of setting the price or authorise the competent governing body to set the price prior to the subscription right record date within the timeframe necessary for investors to make decisions. The principle is applied.

IV.Z.16. The dividend record date and the dividend payment date should be set so as to ensure that the period between them is no than 15 business days. A longer period between these dates requires a justification. The principle is applied.

IV.Z.17. A resolution of the general meeting concerning a conditional dividend payment may only contain such conditions whose potential fulfilment takes place before the dividend record date. The principle is applied.

IV.Z.18. A resolution of the general meeting to split the nominal value of shares should not set the new nominal value of the shares below PLN 0.50, which could result in a very low unit market value of the shares, and which could consequently pose a threat to the correct and reliable valuation of the company listed on the Exchange. The principle is applied.

V. Conflict of Interest, Related Party Transactions

For the purpose of this Section, 'related party' is defined under the International Accounting Standards approved in Regulation No (EU) 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards.

Companies should have in place transparent procedures for preventing conflicts of interest and related party transactions where a conflict of interest may occur. The procedures should provide for ways to identify, disclose and manage such cases.

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Recommendations

V.R.1. Members of the management board and the supervisory board should refrain from professional or other activities which might cause a conflict of interest or adversely affect their reputation as members of the governing bodies of the company, and where a conflict of interest arises, immediately disclose it.

The principle is applied.

Detailed principles

V.Z.1. No shareholder should have preference over other shareholders in transactions concluded by the company with shareholders or their related parties. The principle is applied. V.Z.2. Members of the management board or the supervisory board should notify the management board or the supervisory board, respectively, of any conflict of interest which has arisen or may arise, and should refrain from voting on a resolution on the issue which may give rise to such a conflict of interest in their case. The principle is applied. V.Z.3. Members of the management board or the supervisory board must not accept any benefits which might affect their impartiality and objectivism in making decisions or reflect unfavourably on the assessment of the independence of their opinions or judgements. The principle is applied. V.Z.4. Where a member of the management board or the supervisory board concludes that a decision of the management board or the supervisory board, respectively, is in conflict with the interest of the company, he or she may request that the minutes of the management board or the supervisory board meeting show his or her position. The principle is applied. V.Z.5. Before the company concludes a significant agreement with a shareholder who holds at least 5% of the total vote in the company or with a related party, the management board should request the supervisory board's approval of the transaction. Before giving its approval, the supervisory board should evaluate the impact of the transaction on the interest of the company. The foregoing does not apply to typical transactions and transactions at arm's-length made as part of the company's operations between the company and members of its group. If the decision concerning the company's significant agreement with a related party is made by the general meeting, the company should give all shareholders access to information necessary to assess the impact of the transaction

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on the interest of the company before the decision is made. The principle is applied.

V.Z.6. In its internal regulations, the company should define the criteria and circumstances under which a conflict of interest may arise in the company, as well as the rules of conduct where a conflict of interest has arisen or may arise. The company's internal regulations should among others provide for ways to prevent, identify and resolve conflicts of interest, as well as rules of excluding members of the management board or the supervisory board from participation in reviewing matters subject to a conflict of interest which has arisen or may arise. The principle is applied.

VI. Remuneration

A company should have a remuneration policy applicable at least to members of the company's governing bodies and key managers. The remuneration policy should in particular determine the form, structure, and method of determining the remuneration of members of the company's governing bodies and key managers.

Recommendations

VI.R.1. The remuneration of members of the company's governing bodies and key managers should follow the approved remuneration policy. The principle is not yet applied. (The Company will prepare the relevant regulations).

VI.R.2. The remuneration policy should be closely tied to the company's strategy, its short- and long-term goals, long-term interests and results, taking into account solutions necessary to avoid discrimination on whatever grounds. The principle is not yet applied. (The Company will prepare the relevant regulations).

VI.R.3. If the supervisory board has a remuneration committee, principle II.Z.7 applies to its operations.

The principle is not applicable to the Company (given that in 2018 no compensation committee or nomination committee operated within the Supervisory Board of the Company).

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VI.R.4. The remuneration levels of members of the management board and the supervisory board and key managers should be sufficient to attract, retain and motivate persons with skills necessary for proper management and supervision of the company. Remuneration should be adequate to the scope of tasks delegated to individuals, taking into account additional functions, for instance on supervisory board committees.

The principle is applied.

Detailed principles

VI.Z.1. Incentive schemes should be constructed in a way necessary among others to tie the level of remuneration of members of the company's management board and key managers to the actual long-term financial standing of the company and long-term shareholder value creation as well as the company's stability. The principle is applied. [Comment: The Company operates appropriate (long-term) incentive programs for members of the Management Board. However, the company did not introduce an analogous wide incentive program for all the key executives who are not members of the Management Board].

VI.Z.2. To tie the remuneration of members of the management board and key managers to the company's long-term business and financial goals, the period between the allocation of options or other instruments linked to the company's shares under the incentive scheme and their exercisability should be no less than two years. The principle is applied. [Comment: In accordance with the provisions of the operating rules of the incentive scheme for the key management personnel, the eligible persons undertake not to transfer or otherwise dispose of the Own Shares acquired under the Scheme for 2 (two) years from the date of acquisition of Own Shares (lock-up)].

VI.Z.3. The remuneration of members of the supervisory board should not be linked to options or other derivatives or any other variable components, and neither should it be linked to the company's results.

The principle is applied.

VI.Z.4. In this activity report, the company should report on the remuneration policy including at least the following: 1) general information about the company's remuneration system; 2) information about the conditions and amounts of remuneration of each management board member broken down by fixed and variable remuneration

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components, including the key parameters of setting the variable remuneration components and the terms of payment of severance allowances and other amounts due on termination of employment, contract or other similar legal relationship, separately for the company and each member of its group;

3) information about non-financial remuneration components due to each management board member and key manager;

4) significant amendments of the remuneration policy in the last financial year or information about their absence;

5) assessment of the implementation of the remuneration policy in terms of achievement of its goals, in particular long-term shareholder value creation and the company's stability.

The principle is not applied (nevertheless, with regard to disclosure of compensation of each member of the management body of the Company, the generally applicable laws apply). D. Main characteristics of the internal control and risk management systems applied with the Company in relation to the process of preparing the financial statements and consolidated financial statements

The system of internal inspection and risk management in relation to the process of drawing up financial statements is based on the accepted principles of the accounting policy and internal regulation regarding maintenance of the Company's organisational structure which clearly allocates responsibility, entitlements and subordination relationships as regards preparation of individual parts of the financial statements, and in identifying, measuring and monitoring the methodology of the reports' preparation. The Issuer has implemented and maintains a corporate risk management system, which ultimately is to encompass all the companies of “Amica Spółka Akcyjna” Group. Risk management is part of the Capital Group's management system and applies both to business risks, generating only negative effects and potential decline in its value (negative risks) as well as risks associated with the strategy implementation, accompanying development opportunities associated with the value creation (positive risks). Risk management is ensured at every level of the organization's management, with particular focus on the strategic level. The implementation of an effective corporate risk management process allows to determine an acceptable risk level that the Company is able to accept in the context of its long- and short-term plans. The risk management system supports the creation of corporate governance. As a result of its introduction, the applied risk management solutions have been modified to allow the Management

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Board and the Supervisory Board as well as the stakeholders to obtain timely, reliable, aggregated and structured information on the risks and opportunities for the Issuer and its group and the methods of using the same. In pursuing its strategic goals, Amica S.A. and other companies of the Group improve the Risk Management System functioning since 2010 by implementing the guidelines of the international standard ISO 31000:2012 "Risk Management - Principles and guidelines". The above-mentioned standard establishes the principles, the observance of which is essential to ensure effective risk management and recommends that organizations should continuously improve the risk management framework, which aims at integrating the risk management with the overall organizational governance as well as its strategy and planning, management and reporting processes. The internal inspection system has a strong foundation in the organisational structure communicated, which clearly indicates the lines of subordination and superiority and ensures effective communication of information in the whole Company. Each individual set of data to be included in the report covers the framework indicated in and resulting from the regulations concerning periodic information published by stock issuing companies - the reports themselves are prepared by the Company's Financial Department, verified by the Head Accountant and accepted by the Management Board.

The most fundamental tasks of the internal inspection process as regards the process of preparing report may be divided systematically into two categories:

a. the reliability, completeness and currency of annual reports (other financial statements or reports of different types); the information contained in them must be of the appropriate quality and integrity. b. following the appropriate legislation and regulations - Management and employees at other levels follow the generally applicable regulations, requirements, principles and internal procedures. The Risk assessment involves the conclusions drawn from the regular quarterly analytical tests (audits) performed by the Internal Inspection Department (headed by the Manager for Audit and Internal Inspection) regarding the degree of financial risk in the Company's individual business processes and activities. Following the leading global corporate standards and in response to stakeholders' expectations, “Amica Spółka Akcyjna” has established and maintains a corporate risk management system, which ultimately is to involve all Amica Capital Group companies. Risk management is part of the Capital Group and its entities management system, and is a key element to a sustainable protection and

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Wronki, 29 March 2019 creation of its value. It applies both to business risks, generating only negative effects and potential decline in its value (negative risks) as well as risks associated with the strategy implementation, accompanying development opportunities associated with the value creation (positive risks). Risk management is ensured at every level of the organization's management, with particular focus on the strategic level. The risk management system supports the creation of corporate governance. As a result of its implementation, the applied risk management solutions have been modified to allow the Management Board and the Supervisory Board as well as the stakeholders to obtain timely, reliable, aggregated and structured information on the risks and opportunities for the Company and the Group and the methods of using the same. It should be added that the IT systems implemented in the Company and the exploitation of Information Technology create the possibility of scrupulous checks on data for a given settlement period with data from previous periods and with planned results, updated in monthly cycles (within the Company analytical models are applied, and used in everyday operations by internal analysts and departments of internal inspection). In 2014 the Company finished implementation of the risk management system, including risk analysis model, based on the COSO II and ISO 31000 (e-risk software).

Regardless of the above, an independent external auditor verifies the contents of the annual and mid-year financial statements, having unlimited access to the source materials which form the basis of their production (Management effectively follows the progress of both the problems/questions identified by the auditors and the corrective action taken in these matters).

E. Significant direct and indirect shareholdings On 31 December 2018, the following entities were entitled to (at least) 5% of the total number of votes at the General Meeting of Amica Spółka Akcyjna:

% Shareholder Number of Par value of of the acquired Value of Number of % voting shares shares share capital the voting rights acquired rights at the capital at the General (in PLN) General Meeting Meeting

Holding Wronki S.A. 2,715,771 PLN 2 34.93% 5,431,542 5,431,542 51.77% with its registered office in Wronki

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Nationale- Nederlanden Otwarty 555,952 PLN 2 7.15% PLN 555,952 5.21% Fundusz Emerytalny* 1,077,904 (formerly: ING OFE) Aviva OFE Aviva BZ WBK S.A.* 537,497 PLN 2 6.91% 1,074,994 537,497 5.12% (currently: Aviva Otwarty Fundusz Emerytalny Aviva Santander S.A.)

* Data reported based on the notifications received by the Company from its Shareholders, prepared pursuant to Article 69 of the Act of 29 July 2005 on Public Offering.

[The criterion of qualifying holdings was adopted pursuant to the provisions of Article 69 of the Act of 29 July 2005 on public offering and conditions for introduction of financial instruments to the organized trading system and on public companies].

F. Holders of any securities with special control rights and a description of those rights

The Company has not issued securities that would give special control rights to any shareholder of Amica Wronki S.A.

G. Restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities

There are no restrictions whatsoever on the exercise of voting rights, except to the extent applicable when electing the Independent Members of the Supervisory Board, where each shareholder is entitled to vote resulting from not more than 5% (five percent) of the total number of shares in the Company, each share carrying one vote in such voting.

H. Restrictions on the transfer of ownership of the Issuer’s securities

The shareholders possessing series A preference shares have the priority when purchasing series A registered preference shares offered for sale – the procedure for sale of registered preference shares may be carried out based on the principles stipulated in the § 8 of the Articles of Association.

[The text of the Company's Articles of Association is available on the Company's website http://www.amica.pl/].

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I. Description of the principles for appointment and dismissal of executives and their powers, in particular the right to decide on the issue or purchase of shares

Pursuant to § 30 Section 1 of the Company’s Articles of Association, the Management Board is composed of 3 (three) to 6 (six) persons, who are appointed and dismissed by the General Meeting. First of all, the General Meeting appoints the President of the Board. The General Meeting appoints the remaining Members of the Board at the request of the elected President of the Management Board. Members of the Management Board are appointed for a joint term of office. The Management Board of the Company does not have powers to decide on the issue or buyback of shares.

[The rules of operation of the Management Board are regulated by the Code of Commercial Companies, the Company's Articles of Association and the Management Board Regulations (Company’s Articles of Association and the Management Board Regulations are available on the Company’s website - http://www.amica.pl/].

J. Principles for amending the Articles of Association

Amending the Articles of Association belongs to the exclusive competence of the General Meeting – a prerogative indicated in § 19(2) point 3 of the Articles of Association. The recent amendments to the “Articles of Association of Amica Spółka Akcyjna” have been adopted pursuant to Resolutions of the Extraordinary General Meeting of the Issuer No. 05/2017 - 09/2017 of 05 December 2017. The amendments to the Articles of Association were necessitated by the provisions of the Act of 11 May 2017 on statutory auditors, audit firms and public oversight (by the virtue of the decision of 07 March 2018, the Registry Court recorded in the register the amendments to: § 21 paragraph 2, § 26 paragraph 6, § 28 paragraph 1 point 16, § 28 paragraph 1 point 18 of the Articles of Association and the addition of § 20 paragraph 9 of the Articles of Association.

[The text of the Company's Articles of Association is available on the Company's website at http://www.amica.pl/].

K. Operation of the General Meeting and its basic powers; description of the shareholders' rights and methods for their implementation, in particular, the principles resulting from the General Meeting's regulations, if such regulations have been adopted, unless such information results directly from the legislation

The Company's General Meeting operates on the basis of the Commercial Companies Code, the Articles of Association and the Operating Rules of the General Meeting adopted pursuant to the Resolution No. 20/2010 of the Extraordinary General Meeting of 16 February 2010 on approval of the Operating Rules of the General Meeting (the amendment of the previous wording of the Rules was

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Wronki, 29 March 2019 tied to the need to take account of amendments to the Articles of Association of the Company introduced by the Extraordinary General Meeting of Shareholders of Amica S.A. on 16 February 2010). These legal documents also define the rights of shareholders.

[The Articles of Association and the Operating Rules of the General Meeting are available on the Company’s website http://www.amica.pl].

Proceedings of the General Meeting

Shareholders may participate and exercise their voting rights at the General Meeting either in person or through appropriately authorised representatives. The representative of a shareholder may be a member of his entity or an attorney, whose power of attorney must be granted in writing to be valid. The letter of attorney is appended to the minutes of the General Meeting. Company employees or Management members may not be attorneys at the General Meeting.

Owners of registered shares are entitled to participate at the General Meeting if they are entered on the stockholders ledger at least a week before the date of the General Meeting.

Shareholders possessing publicly circulated bearer shares are entitled to participate in the General Meeting if they lodge certification at the Management Office issued by a stockbroking entity indicating the type and number of shares and the fact that these shares may not be sold before the end of the General Meeting's session. On entering the session chamber, Participants in the General Meeting present the appropriate documents confirming their authorisation to take part in the General Meeting.

The General Meeting is opened by the Chair of the Supervisory Board or, if he/she is absent, by another member of the Supervisory Board entitled by him to do so. In the event of these persons being absent, the General Meeting is opened by the President of the Management Board or a person nominated by Management. If none of these persons is present at the General Meeting, and Management has not nominated anyone to open the proceedings, then the General Meeting may be opened by any of the participants.

In the event that the General Meeting has been called by proxy of a Court, the General Meeting is opened by one of the shareholders who entered the motion to call the General Meeting.

The General Meeting may only be chaired by a person entitled to participate in the General Meeting.

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The person opening the General Meeting first of all oversees the election of a Vote Counting Commission, unless votes are to be counted electronically .

The Chair of the General Meeting is elected by secret ballot. The election may take the form of an open ballot, if only one candidate is proposed and none of those present at the General Meeting object to the open ballot. During the election of the Chair of the General Meeting, Shareholders and their representatives are entitled to the number of votes stipulated by the Shareholders List.

The election of the Chair of the General Meeting begins by the candidates being announced.

Once the candidates have been announced, the person opening the General Meeting administers the voting for each candidate in the order in which they were announced. The person who receives an absolute majority of votes becomes Chair of the General Meeting.

In the event that nobody receives the required majority, the Chair is elected in a second round of voting from between the two candidates with the highest number of votes. The person elected Chair of the General Meeting takes over the function immediately after the ballot results are announced.

Immediately after being elected, the Chair oversees the drawing up of an attendance register containing a list of Participants in the General Meeting. The Chair checks that all the Participants in the General Meeting have signed the attendance register.

The attendance register contains the Shareholder's full name or company, number of shares he represents, and the number of votes these shares entitles him to. The attendance register should also indicate: the full name of the individual acting on behalf of a Shareholder's entity, or the full name of the attorney or other representative .

The attendance register is signed by all Participants in the General Meeting and by the Chair.

Persons arriving at the General Meeting after its commencement are also entered onto the attendance register. The fact of someone leaving the session before the General Meeting has finished is also entered on the attendance register. The circumstances of the register being updated during the course of the General Meeting are recorded in the minutes of the session, with an indication of the

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Wronki, 29 March 2019 reasons for the update and the date and time it was made.

At the request of Shareholders owning one tenth of the share capital represented at the current General Meeting, the attendance register should be checked by a commission elected for this purpose and consisting of at least three members. Those making such a request are entitled to choose at least one member of the commission.

The General Meeting may pass a resolution to waive the secrecy of the ballot when appointing members of the commission mentioned in paragraph 1.

The General Meeting ultimately decides whether or not someone is to be entered on the attendance register after consultation with the commission.

The General Meeting also settles any doubts with regard to whether individual Participants have the right to participate in the General Meeting, if the committee described in paragraph a has not been appointed.

Members of the Management Board and Supervisory Board, and also persons appointed by Management to serve the General Meeting, are entitled to participate in the General Meeting.

Experts and Company employees whose presence is justified may also be invited by the Management Board and Supervisory Board to participate in the General Meeting.

Conducting the Proceedings of the General Meeting. The Chair of the General Meeting, in carrying out his function, takes actions to ensure that the interests of all Shareholders are respected. The duties of the Chair of the General Meeting include conducting the proceedings of the General Meeting and realising each subsequent item on the agenda, including:

a. confirming the propriety of calling the General Meeting, b. care for the correct and efficient running of the session, c. granting and retracting leave to speak, d. issuing the relevant instructions to retain order, e. administering ballots and ensuring they are properly conducted, f. announcing the results of voting,

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g. settling any doubts regarding the regulations.

As far as is necessary to maintain proper conduct of the session, the Chair is entitled to issue instructions to retain order.

In the course of discussion in particular points of order and in questions of order, each of the Participants in the General Meeting may rise to speak after receiving the Chair's consent. A Participant may not take the floor for longer than five (5) minutes, and the same Participant may not take the floor more than twice during a discussion of the same matter. In exceptional cases the Chair may extend the time allowed to take the floor.

In exceptional cases, a Participant in the General Meeting may lose his right to speak, if his behaviour seriously hinders the conduct of the General Meeting's session, or if the Participant's statements are irrelevant to the question under discussion.

The Chair may give the floor to referents of particular agenda items and Members of the Management Board and Supervisory Board outside their turn and more than twice, in order for them to provide explanations.

The Chair gives the floor out of sequence to participants declaring a formal motion. The Meeting decides on formal motions after hearing the motion and one (1) opponent of the motion, where necessary. A rejected formal motion may not be declared again during a discussion of the same matter. A formal motion is understood as a motion concerning the manner of the proceedings rather than the merits of a matter. Specifically, formal motions are motions concerning:

a. changes to the order of the agenda; b. breaks in the proceedings; c. closing the list of speakers; closing debates; voting without a debate, d. removing an item from the agenda.

Once the discussion of a given matter is finished, the Chair may give the floor to its referent in order to respond to the Participants in the General Meeting who took the floor during the debate, and then proceeds to a vote. From this moment on, Participants may only take the floor to propose formal motions regarding the manner or order of voting.

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In the event of several motions being proposed in the same matter, the farthest reaching is voted on first.

After signing the attendance register, the Chair checks the propriety of the calling of the General Meeting, and on ascertaining that the General Meeting has been called properly he announces the number of shares represented at the General Meeting and administers a vote with regard to accepting the agenda.

The General Meeting is entitled to change the order of individual items on the agenda.

No item may be removed from the agenda if it has been put there at the Shareholders' request. Motions in matters which have been removed from the agenda are considered not to have been put forward.

The General Meeting may introduce additional matters onto the agenda and debate them, but without the right to adopt resolutions.

The Chair of the General Meeting independently settles matters of order arising during the conduct of the proceedings.

Specifically, matters of order include giving the floor, administering the election of committees for particular matters, and accepting motions.

In matters of order, the interested parties may appeal to the General Meeting against the Chair's decisions. A resolution of the General Meeting is binding.

In conducting individual matters included in the agenda, the Chair invites the Participants in the General Meeting to propose motions and take the floor before passing a resolution.

Once the motions and statements of individual Participants in the General Meeting are finished, the Chair closes the discussion and administers the voting.

While individual matters are being conducted, the Chair may give the floor to members of Management, the Supervisory Board or other persons invited to the General Meeting's session. These persons may also explain particular questions presented by Participants in the General Meeting. The Chair gives the floor to Participants in the General Meeting if their contribution is relevant to the agenda item in question. The Chair puts resolutions to the vote with their text as worded by Company Management. At the request of participants in the General Meeting, it is permissible to change the wording of a draft resolution and amend it, as long as this does not result in a resolution being passed which is not relevant to the agenda item.

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Voting on a draft resolution is preceded by its text being read out by the Chair of the General Meeting. After the draft resolution has been read out, participants in the General Meeting may enter motions to amend the text of the resolution.

Each of the participants is also entitled to propose a new version of the text of the draft resolution. The proposal of a new version of the text of the draft resolution is considered a proposal of an amendment.

The Chair puts the amendments to the vote of the General Meeting. Each amendment is put to the vote separately, and amendments achieving an absolute majority of votes become a subject of the rest of the session.

After voting on the amendments to the draft resolution is finished, the Chair reads out the text of the draft resolution to the General Meeting indicating which of the provisions have been amended, then administers a vote on the adoption of the resolution.

Counting the votes is the responsibility of the Vote Counting Commission, unless voting has taken place electronically. Once the voting is finished, the Vote Counting Commission or person operating the electronic vote-counting system presents the Chair with a report of the ballot results.

On receiving this report, the Chair announces the results of the ballot and states either that the resolution has been adopted, or that it has failed to receive the required majority and has not been passed.

If a Participant raises an objection concerning the passing of a resolution, the Chair allows him to present his justification. The grounds for the objection are included in the minutes.

In accordance with § 19 of the Company Articles of Association, the following should be subjects of an Annual General Meeting:

a. examination and approval of the financial statements and the Management report into the Company's activities, and the Supervisory Board's report for the previous financial year, b. passing a resolution in the matter of profit sharing or covering losses for the previous financial year, c. passing a resolution in the matter of granting receipts to the Company leadership,

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d. passing a resolution in the matter of electing new Company leadership, if they are elected by the General Meeting and its members' mandates expire on the day of the General Meeting. The exclusive competencies of the General Meeting also include: a. appointing and recalling members of the Supervisory Board, except where provisions regarding co-optation apply, b. appointing and recalling Management, c. changes to the Articles of Association, d. issuing bonds, including bonds exchangeable for shares, e. establishing the salary principles and the salaries of the Supervisory Board members, f. merging or dissolving the Company and selecting liquidators, g. sale and rental of a Company enterprise or establishing usage rights over it, h. sale of the Company's factory properties, i. claims for damages made against members of the Company authorities or founders for reparation of damage or harm caused by their illegal behaviour.

In the financial year 2018, the Issuer's General Meeting was convened by the Management Board once – on 28 June 2018.

(Shareholders of the Company did not submit any requests for convening the General Meeting).

The General Meetings were neither cancelled nor interrupted; none of the adopted resolutions was not contested before the court.

L. The personnel and changes thereto over the previous financial year and the description of the activities of the issuer's management, supervisory or administrative bodies and their committees.

Pursuant to the current wording of § 30 of the Company's Articles of Association, the Management Board consists of three to six persons appointed and dismissed by the General Meeting. Members of the Management Board shall be appointed for a joint term of office of 3 (three) years. Appointment of members of the Management Board for the joint term office shall cause the mandate of a member of the Management Board appointed before the end of the term of office of the Management Board to expire simultaneously with the mandates of other members of the Management Board.

I. Management Board. In the period from 01 January 2018 to 31 December 2018, the Management Board of the Issuer operated in the following composition: Mr. Jacek Rutkowski, President of the Management Board,

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Mr. Marcin Bilik, Vice-President of the Management Board for Operations

Ms. Alina Jankowska-Brzóska, Vice-President of the Management Board for Goods Management and Logistics

Mr. Wojciech Kocikowski, Vice-President of the Management Board for Finance and Controlling

Mr. Piotr Skubel, Vice-President of the Management Board for Trade and Marketing

[By the date of this statement, the composition of the Management Board has not changed].

II. The Supervisory Board.

A. In the period from 01 January 2018 to 31 December 2018, the Supervisory Board of the Issuer operated in the following composition: Mr. Tomasz Rynarzewski, Chair of the Supervisory Board / Chair of the Operations Committee Mr. Artur Małek, Vice-Chair of the Supervisory Board / Independent Member of the Supervisory Board Mr. Tomasz Dudek, Member of the Supervisory Board Mr. Andrzej Konopacki, Independent Member of the Supervisory Board / Chair of the Audit Committee Mr. Piotr Rutkowski, Member of the Supervisory Board Mr. Paweł Wyrzykowski, Member of the Supervisory Board / Chair of the Compensation

and Nomination Committee *

The Compensation and Nomination Committee was established within the Supervisory Board of Amica on 16 January 2019.

[By the date of this statement, the composition of the Supervisory Board has not changed].

B. The Audit Committee of the Supervisory Board of “Amica Spółka Akcyjna” was appointed on 01 June 2016 in connection with Article 86 paragraph 1 of the Act of 7 May 2009 on statutory auditors and their self-government, entities authorized to audit financial statements and public supervision. The Regulations of the Audit Committee have been approved by Resolution

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No 01/X/NK/2016 of the Supervisory Board of “Amica Spółka Akcyjna” of 04 October 2016 on the adoption of the Regulations of the Audit Committee of the Supervisory Board of “Amica Spółka Akcyjna” (as amended by: (i) Resolution No. 03/2017 of the Supervisory Board of “Amica Spółka Akcyjna” with its registered office in Wronki of 21 December 2017 on: amendments to the Rules of Procedure of the Audit Committee – the amendments to the Rules of Procedure of the Audit Committee was associated with the need to adjust its provisions to the Act of 11 May 2017 on statutory auditors, audit firms and public oversight, and (ii) Resolution No. 01/2018 of the Supervisory Board of “Amica Spółka Akcyjna” with its registered office in Wronki of 20 December 2018 on: amendments to the Rules of Procedure of the Audit Committee – the amendments to § 2 paragraph 1 point (2) and § 2 paragraph 1 point (3) and introduction of § 2 a. In the period from 01 January 2018 to 31 December 2018, the Committee was composed of the following members: Andrzej Konopacki, (Chair of the Audit Committee), Artur Małek (Member of the Audit Committee), Paweł Wyrzykowski, (Member of the Audit Committee). C. The Operations Committee of the Supervisory Board of “Amica Spółka Akcyjna” was appointed on 01 June 2016 during formation of the Supervisory Board. The Regulations of the Operations Committee have been approved by Resolution No 02/X/NK/2016 of the Supervisory Board of “Amica Spółka Akcyjna” of 04 October 2016 on the adoption of the Regulations of the Operations Committee of the Supervisory Board. [In the period from 01 January 2018 to 31 December 2018, the Operations Committee was composed of the following members: Tomasz Rynarzewski (Chair of the Operations Committee), Tomasz Dudek (Member of the Operations Committee), Piotr Rutkowski (Member of the Operations Committee). D. On 16 January 2019, the Supervisory Board established the Compensation and Nomination Committee (operating within the Supervisory Board) composed of: Paweł Wyrzykowski (Chair of the C&NC), Andrzej Konopacki (Member of the C&NC), Tomasz Rynarzewski (Member of the C&NC).

[The operation of the Supervisory Board is governed by the Commercial Companies Code, the Company Articles of Association and the Operating Rules of the Supervisory Board. [The Articles of Association and the Operating Rules of the Supervisory Board are available on the Company's website - http://www.amica.pl/].

E. Information on Audit Committee Members / permitted non-audit services / main assumptions of the policy for selection of an audit firm / recommendations regarding selection of the audit firm / number of meetings of the Audit Committee.

The structure of the following information corresponds to the agenda of issues mentioned in § 70 paragraph 6 item 5 point (l) of the Regulation of the Minister of Finance of 29 March 2018 on

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current and interim reports published by issuers of securities and on conditions for recognition of information required by the non-Member State regulations as equivalent.

1. Persons satisfying the statutory independence criteria. The appointment of Mr. Andrzej Konopacki and Mr. Artur Małek as members of the Supervisory Board (and the Audit Committee) was based on the procedure involving examination of the independence and eligibility criteria for members of the Audit Committee (the independence requirements for Audit Committee members, listed exhaustively in Article 129 paragraph 3 of the Act of 11 May 2017 on statutory auditors, audit firms and public oversight have been verified based on the completed questionnaires drafted to assess the compliance with the independence and eligibility criteria for members of the Audit Committee of Amica S.A.).

2. Persons having knowledge and competence in the field of accounting or audit of financial statements. Mr. Andrzej Konopacki – master's degree in Economics, University of Warsaw, Faculty of Economic Sciences / Statutory Auditor – Entry No. 1750 /ACCA Diploma in Financial Reporting/, in the years 1994 - 2016 Executive at the Audit Department, Member of the PwC Management Board. Mr. Artur Małek – a graduate of the University of Economics in Krakow, majoring in Finance and Banking. He completed his postgraduate studies at the School of Entrepreneurship and Management at Cracow University of Economics, Faculty of Accounting and Finance; Holder of MBA Degree, Oxford Brookes University / Polish Open University in Warsaw; studies at ICAN Institute at the Strategic Leadership Academy in Warsaw / participant in a number of courses and trainings in the field of management and finance.

3. Persons having knowledge and competence in the field of the Company's business operations. Mr. Paweł Wyrzykowski – A graduate of the International Trade Faculty at Warsaw School of Economics, holding numerous positions at the boards of international companies. 4. Permitted non-audit services provided by the firm auditing the financial statements. Permitted non-audit services provided by the entities of Grant Thornton Group (i.e. GT UK / GT DE) involved the review of the auditor's report for the Group's subsidiaries The CDA Group Limited and Amica International GmbH on the audit of the financial statements of the said subsidiaries for the period from 01 January 2018 to 31 December 2018. 5. Main assumptions of the policy for selection of an audit firm to conduct the audit and the policy for provision of permitted non-audit services. The statutory audit of the Company's financial statements is performed by an auditing firm entered in the list maintained by the National Council of Statutory Auditors. The choice of an audit firm to audit of the Company's financial statements is made taking into account the principles of the audit firm's impartiality and independence as well as competence, experience and reputation of the audit firm. The audit firm is selected by the Supervisory Board of the Company by way of a resolution, based on the recommendation of the Company's Audit Committee, which receives the report on the procedure for selection of the audit firm from the Management Board, in a timely manner ensuring impartial and fair choice. The Company organizes a tender for audit of the Company's financial

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Wronki, 29 March 2019 statements and presents the tender evaluation criteria, which should be as transparent as possible and include in particular: a) audit firm's profile, reputation, experience (with particular emphasis on experience in auditing financial statements of companies listed on the Warsaw Stock Exchange, as well as entities operating outside of Poland, including groups managing companies operating outside of Poland); b) professional qualifications and experience (with particular emphasis on experience in auditing financial statements of companies listed on the Warsaw Stock Exchange, as well as entities operating outside of Poland, including groups managing companies operating outside of Poland) of persons directly involved by the audit firm in the audits conducted for the Company and the Group; c) audit firm's knowledge of the industry in which the Company operates and experience in auditing financial statements of companies manufacturing home appliances; d) knowledge of the industry in which the Company operates and the experience of persons directly involved in the audit of the financial statements in auditing financial statements of companies manufacturing home appliances; e) ability to provide a full range of services required by the Company (review of financial statements, audit of the separate and consolidated financial statements, audit of other group companies, including foreign operations); f) ability to conduct the review of financial statements, audit of the separate and consolidated financial statements as well as reviews and audits of other group companies within the time limits set by the Company to meet the deadlines for periodic reports published by companies listed on the Stock Exchange; g) audit firm's use of internal procedures designed to ensure impartiality and compliance with other relevant rules; h) audit firm's use of IT tools; i) strategy for communication between the Company and the audit firm; j) measures taken to ensure timely audit of the financial statements; k) references; l) proposed fee for the services.

The company evaluates the tenders submitted by audit firms in accordance with the selection criteria set out in the tender documentation and prepares a report containing conclusions from the selection procedure approved by the Audit Committee. When selecting an audit firm, the Supervisory Board takes into account the limitations imposed by the applicable law, in particular, those that may result in invalidity of the audit of financial statements or contractual clauses included in the agreement with such a firm (prohibited contractual clauses). An audit firm cannot audit financial statements for more than 5 consecutive years. After 5 years of cooperation with the Company, the same audit firm will not be allowed to provide services involving the audit of the Company's financial statements for the following 4 years. The first contract for the audit of the financial statements is concluded with a given audit firm for a period of not less than two years, with the possibility of extension for subsequent periods of at least two years. The audit firm's fee for conducting the statutory audits cannot be subject to any conditions, including the audit results, and cannot be influenced or determined by the provision of additional services or non-audit services to the Company or its related parties by the audit firm or any of the audit firm's related parties. As a result of the evaluation, the Audit Committee recommends that the Supervisory Board renews the agreement with a given audit firm or initiates the procedure for selecting an audit firm, subject to the requirements provided under the applicable laws, in particular, regarding the terms of contracts with audit firms and the period of uninterrupted

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Wronki, 29 March 2019 cooperation with a given audit firm. Where the Audit Committee provides recommendation regarding renewal of the agreement with a given audit firm, the said recommendation must indicate the proposed audit firm to be used for the statutory audit. Based on the Audit Committee's recommendation, the Supervisory Board makes the decision in the form of a resolution on the selection of an audit firm authorized to audit the separate and consolidated financial statements of the Company. The Supervisory Board may decide to deny an audit firm recommended by the Audit Committee under the procedure for renewal of the existing agreement. In such case, it is necessary to conduct the selection procedure on the terms described in the “Audit Firm Selection Procedure”. If the Audit Committee recommends the initiation of the procedure for selecting an audit firm, the Supervisory Board makes a decisions to consider the recommendation of the Audit Committee. If a decision is made to initiate the procedure for the selection of an audit firm, this choice shall be made on the terms described in the “Audit Firm Selection Procedure”.

6. Recommendations for selection of an audit firm. Given the fact that the agreement for auditing the financial statements with the present audit firm has been renewed (the Company and the existing audit firm entered into two agreements for audit of the financial statements, which covered the financial years 2015 and 2016 (first agreement) and 2017 and 2018 (second agreement), as at the date of this statement, the Audit Committee did not submit any recommendations to the Company's supervisory body regarding the appointment of statutory auditors or audit firms.

7. Number of the Audit Committee meetings held. From 01 January 2018 to 31 December 2018, the Audit Committee held 8 meetings. The meetings of the Audit Committee were held on: 05 February 2018, 19 February 2018, 01 March 2018, 25 April 2018, 27 June 2018, 25 October 2018, 23 November 2018 and 20 December 2018. All Committee members were present during all the meetings. Minutes of the meetings of the Audit Committee were drawn and all of them were properly adopted and signed. All the resolutions of the Audit Committee were also signed and numbered in sequence. The meetings were attended by the Members of the Audit Committee, Members of the Management Board and executive staff as well as invited guests, including representatives of the entity which audited the financial statements of the Company. Those closely cooperating with the Audit Committee included in particular: Vice-President of the Management Board for Finance and Controlling, Chief Accounting Officer, Controlling Department Director, Director of Human Resources and Administration, Audit and Internal Control Manager, Risk Manager and representatives of Grant Thornton Polska Sp. z o.o. sp.k. with its registered office in Poznań and representatives of Deloitte Polska. Members of the Audit Committee also contacted each other several times via means of remote communication (teleconferences) to discuss issues that required their position (including discussions regarding the content of draft periodic reports). Moreover, the Chair of the Audit Committee held a number of individual meetings with the key managers of the Company, without the participation of the Members of the Management Board.

F. Diversity policy applicable to the administrative, management and supervisory bodies of the issuer

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The Company has not yet developed and thus does not pursue the diversity policy (nevertheless, when making any decision on the selection of executives, managers or supervisors, the Company insists that all candidates should have high qualifications and extensive experience in relevant fields of the Company's activity; characteristics such as age or sex of the candidate are not of primary importance).

Signatures of Members of the Management Board of Amica Spółka Akcyjna:

Wronki, 29 March 2019 Jacek Rutkowski President of the Management Board Place/Date Name and surname Position/Title

Wronki, 29 March 2019 Marcin Bilik Vice-President of the Management Board

Place/Date Name and surname Position/Title

Wronki, 29 March 2019 Alina Jankowska-Brzóska Vice-President of the Management Board Place/Date Name and surname Position/Title

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Wronki, 29 March 2019

Wronki, 29 March 2019 Wojciech Kocikowski Vice-President of the Management Board Place/Date Name and surname Position/Title

Wronki, 29 March 2019 Piotr Skubel Vice-President of the Management Board Place/Date Name and surname Position/Title

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Declarations • Statement of the Management Board of Amica S.A. on the reliability of the annual reports

4 • Amica S.A. Management Board's information on the audit firm

• Statement of the Supervisory Board of Amica S.A. regarding the Audit Committee

• Assessment of the Supervisory Board of Amica S.A. regarding the operating statement and financial statements for 2018

• Statement of the Supervisory Board on the selection of an audit firm conducting the audit of the annual financial statement in accordance with the applicable regulations

Letter from the President of the Board Operating Statement Statement on Corporate Governance Declarations Financial Statement Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Statement of the Management Board of Amica S.A. on Amica S.A. Management Board information prepared on the basis of the statement of the reliability Supervisory Board of Amica S.A. on the selection of an audit firm conducting the audit of the annual financial statements in accordance with the regulations Board of Amica SA declares that to the best of its knowledge, the annual financial statements (by unit and The Management Board of Amica S.A. (the Company), based on the statement of the consolidated) Amica SA fiscal year 2018 and comparable Supervisory Board of the Company announces that the Company has selected an audit firm to data for the year 2017 have been prepared in accordance conduct the audit of the annual financial statements (individual and consolidated, respectively) with applicable accounting principles and give a true and for the financial year 2018 in accordance with the regulations, including for the selection and fair view of the situation the Company's financial and Amica procedure for the selection and of the audit firm. Capital Group and its financial result. At the same time, the Capital Group Amica operating Furthermore, the Management Board of the Company indicates that: statement (containing disclosures for the Parent Company), • audit firm and the members of the audit team performing the audit of the annual financial presents a true view of the development, achievements, statements for the financial year 2018 fulfilled the conditions for the preparation of impartial and situation of Amica S.A. and the Capital Group, and independent audit reports for annual financial statements in accordance with the including description of basic risks and threats. applicable regulations, professional standards and the rules of professional ethics; • Amica S.A. complies with the applicable laws relating to the rotation of the audit firm and the key statutory auditor and the mandatory withdrawal periods; • Amica S.A. has an established policy for the selection of an audit firm and the policy for the provision of services to the issuer by the audit firm, an affiliate of an audit firm or a member of their network, that is additional non-audit services, including those conditionally exempted from the ban on the provision by the audit firm.

Jacek Rutkowski Piotr Skubel Marcin Bilik Wojciech Kocikowski Alina Jankowska-Brzóska

President of the Vice-President of the Vice-President of the Vice-President of the Vice-President of the Management Board Management Board Management Board Management Board Management Board Letter from the President of the Board Report on the Activities Statement on Corporate Governance Declarations Financial Statements Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Statement of the Supervisory Board of "Amica Spółka Akcyjna" regarding the Audit Committee

(prepared in accordance with the requirement of § 71 section 1 item 8 of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non-member state)

The Supervisory Board of "Amica Spółka Akcyjna" declares that:

• pursuant to the requirements applicable in "Amica", an Audit Commiettee has been appointed and is continuously operating, and consists of the following members of the Supervisory Board: Andrzej Konopacki, as the Chairman of the Audit Committee and Artur Małek and Paweł Wyrzykowski;

• the rules related to the appointment, composition and operation of the Audit Committee are being followed, including the fulfilment by its members the criteria for independence and requirements for knowledge and skills in the industry, in which "Amica" Company operates, and in accounting or financial statements auditing;

• The Audit Committee has performed and performs the tasks laid down in the applicable regulations.

Letter from the President of the Board Operating Statement Statement on Corporate Governance Declarations Financial Statements Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Statements of the Supervisory Board of "Amica Spółka Akcyjna"

(prepared in accordance with the requirement of § 70 section 1 item 14 and § 71 section 1 item 12) of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non-member state)

The Supervisory Board of Amica S.A., in accordance with Article 382 § 3 of the Commercial Company Code, acting Furthermore, during the assessment, the Supervisory Board: based on the substance of § 70 section 1 item 14 and § 71 section 1 item 12 of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities and 1. has reviewed and analysed the financial statement including: the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non- 1) statement of comprehensive income for 2018, member state and the Articles of Association of the Company has assessed: 2) statement of financial position as at 31 December 2018, 3) statement of changes in equity for the year ended 31 December 2018, 1) the consolidated financial statement of the Capital Group Amica S.A. for the year ended December 31st, 2018 4) statement of cash flows for the period from 1 January to 31 December 2018, (Consolidated Financial Statement), 5) notes to the financial statement. 2) the financial statement of Amica S.A. for the year ended December 31st, 2018 (Individual Financial Statement), 2. has reviewed and analysed the consolidated financial statements including: 3) the Management Board operating statement for the Capital Group Amica S.A. for 2018, drawn up together 1) consolidated statement of comprehensive income for 2018, with the Management Board operating statement for Amica S.A. (Operating Statement). 2) consolidated statement of financial position as at 31 December 2018, Audit of financial statements has been conducted by the audit firm Grant Thornton Polska Spółka z ograniczoną 3) consolidated statement of changes in equity for the year ended 31 December 2018, odpowiedzialnością spółka komandytowa, headquartered in Poznań, selected by the Supervisory Board to audit an 4) consolidated statement of cash flows for the period from 1 January to 31 December 2018, individual financial statement and the consolidated financial statement. 5) notes to the consolidated financial statement. 3. has reviewed and analysed the Management Board operating statement, including a statement on non- The independent statutory auditor presented the reports: financial information. • in relation to the individual financial statement, stating that it presents a true and fair view of the financial position of "Amica S.A." as at 31 December 2018, and that it has been prepared, in all essential aspects, based Financial statements have been prepared within the timelines specified in the regulations, in accordance with the on the properly maintained accounting records in accordance with the provisions of Chapter 2 of the Accounting International Financial Reporting Standards adopted by the European Union, and also the adopted accounting Act, and that it is consistent, in all essential aspects, in the form and content with the applicable laws and the principles. Articles of Association, • in relation to the consolidated financial statement, stating that it presents a true and fair view of the consolidated Financial statements present the accounting principles applied in a continuous manner, excluding the International economic and financial position of the Capital Group Amica S.A. as at 31 December 2018, and that it is Standard for Financial Reporting 9 "financial instruments", the impact of which on the opening balance is fully consistent, in all essential aspects, in the form and content with the applicable in the Capital Group Amica S.A. described in Note 8 "Changes in accounting principles" and the International Financial Reporting Standard 15 laws and the Articles of Association of the Company. "revenue from contracts with the customers "described in Note 8" Changes in accounting principles."

In addition, the statutory auditor stated on the basis of the procedures performed during the audit of the financial The Supervisory Board's opinion is that the operating statement of the Management Board is complete and statements, that the operating statement, in all essential aspects, has been prepared in accordance with the essentially fulfils the requirements of Article 9 and Article 55 section 1a of the Accounting Act and the Ordinance of applicable provisions of law and is consistent with the information contained in the individual and consolidated the Minister of Finance of 29 March 2018 regarding current and periodic information to be submitted by issuers of financial statement. securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non-member state. Based on the assessment of the analysis of reports presented by the Management Board of the Company, the analysis of the content of the aforementioned reports of the independent statutory auditor, and the recommendation The Supervisory Board also assessed the basis of the above, that the consolidated financial statement, the presented on March 29th, 2019 by the Audit Committee, the Supervisory Board has had a positive opinion on the financial statement, and the Management Board's operating statement are consistent with the records, documents presented financial statements. and the facts.

Mr Tomasz Mr Artur Małek Mr Tomasz Dudek Mr Andrzej Konopacki Mr Paweł Wyrzykowski Mr Piotr Rutkowski Rynarzewski Chairman of the Vice-Chairman of the Member of the Member of the Member of the Member of the Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board Letter from the President of the Board Operating Statement Statement on Corporate Governance Declarations Financial Statements Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Statement of the Supervisory Board of "Amica Spółka Akcyjna" on the selection of an audit firm conducting the audit of the annual consolidated financial statement in accordance with the applicable regulations

(prepared in accordance with the requirement of § 71 section 1 item 7 of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non-member state)

Amica S.A. Supervisory Board, acting pursuant to § 71 section 1 item 7) of the Ordinance of the Minister of Finance of 29 March 2018 on periodic information submitted by the issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member State declares that the selection of an audit firm conducting the audit of the annual consolidated financial statement for the financial year 2018 was made in accordance with the applicable regulations, including those for the selection and the procedures for the selection of the audit firm.

The Supervisory Board of Amica S.A. further declares that: • audit firm and the members of the audit team performing the audit fulfilled the conditions for the preparation of impartial and independent audit report for the annual consolidated financial statement in accordance with the applicable regulations, professional standards and the rules of professional ethics;

• the applicable laws relating to the rotation of the audit firm and the key statutory auditor and the mandatory withdrawal periods are complied with;

• Amica S.A. has an established policy for the selection of an audit firm and the policy for the provision of services to Amica S.A. by the audit firm, an affiliate of an audit firm or a member of their network, that is additional non-audit services, including those conditionally exempted from the prohibition of the service provision by the audit firm (of which new, current wording was adopted on the basis of the content of Resolution No. 02 / XII / 2018 of the Supervisory Board of "Amica Spółka Akcyjna" of 20 December 2018 on: adoption in "Amica Spółka Akcyjna" of the Policy and procedure for the selection of an audit firm and the Policy for the provision of additional services by the audit firm, entities associated with the audit firm, and a member of the audit firm network).

Mr Tomasz Mr Artur Małek Mr Tomasz Dudek Mr Andrzej Konopacki Mr Paweł Wyrzykowski Mr Piotr Rutkowski Rynarzewski Chairman of the Vice-Chairman of the Member of the Member of the Member of the Member of the Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board Supervisory Board Letter from the President of the Board Operating Statement Statement on Corporate Governance Declarations Financial Statements Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Mr Jacek Rutkowski Mr Piotr Skubel Mr Marcin Bilik Mr Wojciech Kocikowski Mrs Alina Jankowska-Brzóska

President of the Vice-President of the Vice-President of the Vice-President of the Vice-President of the Management Board Management Board Management Board Management Board Management Board

Letter from the President of the Board Operating Statement Statement on Corporate Governance Declarations Financial Statements Auditor's Report Statement of the Management Board of Amica S.A. on reliability Amica S.A. Management Board's information on the audit Statement of the Supervisory Board regarding the Audit Assessment of the Supervisory Board regarding statements for Statement of the Supervisory Board on the selection of an audit firm firm Committee 2018 Financial Statements of Amica S.A. Group 5(prepared in accordance with IAS/IFRS)

List Prezesa Zarządu Sprawozdanie z działalności Oświadczenie w sprawie ładu korporacyjnego Oświadczenia Sprawozdanie finansowe Sprawozdanie audytora GRUPA KAPITAŁOWA AMICA S.A.

Consolidated financial statements

for the year ended 31 December 2018

Legal status as at 29 March 2019 Published: Wronki, 29 March 2019

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

TABLE OF CONTENTS

Consolidated Statement of Comprehensive Income ...... 7 CONSOLIDATED Balance Sheet ...... 9 Consolidated Cash Flow Statement ...... 10 Consolidated statement of changes in equity ...... 11 ACCOUNTING POLICIES AND ...... 12 ADDITIONAL NOTES ...... 12 12 Overview ...... 13 1. Information on the Parent Company ...... 13 2. Composition of the Parent Company's Management Board and Supervisory Board ...... 13 3. Overview of the Group’s Operations...... 13 4. Information on the Capital Group ...... 14 5. Approval of the Financial Statements ...... 14 6. The basis for preparation of the consolidated financial statements ...... 15 7. Significant values based on professional judgement and estimations ...... 15 Professional judgement ...... 15 Uncertainty of estimates and assumptions ...... 16 8. Changes in standards or interpretations applied ...... 17 9. The new standards and interpretations that have been issued but are not yet effective ...... 21 10. Reassessment ...... 24 11. Changes in presentation ...... 24 12. Significant Accounting Principles ...... 24 Presentation of financial statements...... 24 Operating segments ...... 25 Principles of consolidation ...... 25 Business Combinations ...... 26 Fair value measurement ...... 26 Conversion of items expressed in foreign currencies ...... 27 Tangible fixed assets ...... 28 Investment property ...... 28 Fixed assets classified as held for sale ...... 29 Intangible assets ...... 29 12.10.1. Borrowing costs ...... 30 12.10.2. Goodwill ...... 30 Lease ...... 30 Impairment loss of non-financial fixed assets...... 31 Financial assets and liabilities and impairment loss ...... 31 12.13.1. Fixed assets classified as held for sale ...... 35 12.13.2. Hedges of net investments in foreign operations ...... 35 Inventory ...... 35 Trade and other receivables ...... 35 Cash and cash equivalents ...... 36 Interest bearing bank loans, borrowings and debentures...... 36

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Trade liabilities and other liabilities ...... 36 Equity ...... 36 Provisions ...... 37 Employee benefits ...... 37 Accruals ...... 37 Share-based payments ...... 38 Sales revenue ...... 38 12.24.1. Sale of goods and products ...... 40 12.24.2. Interest ...... 40 12.24.3. Dividends ...... 40 12.24.4. Revenue from lease (operating lease) ...... 40 12.24.5. Government subsidies ...... 40 Tax ...... 40 12.25.1. Current income tax ...... 40 12.25.2. Deferred tax ...... 40 12.25.3. Goods and services tax (Value Added Tax) ...... 41 Net profit per share ...... 41 13. Operating segments ...... 41 14. Revenue and costs ...... 44 Other operating income ...... 44 Other operating expenses ...... 44 Financial revenue ...... 45 Financing costs ...... 45 Costs by type ...... 45 Depreciation of tangible fixed assets and amortisation of intangible assets ...... 45 Cost of employee benefits ...... 46 15. Income tax ...... 46 Tax burdens ...... 46 Reconciliation of effective tax rate ...... 47 Deferred income tax ...... 47 16. Assets and liabilities under the Company Social Benefits Fund ...... 48 17. Profit per share ...... 49 18. Dividends paid and recommended ...... 50 19. Tangible fixed assets ...... 50 20. Lease ...... 52 Liabilities due to financial leasing agreements and leasing agreements with a purchase option ...... 52 21. Assets classified as held for sale ...... 52 22. Investment property...... 53 23. Intangible assets ...... 54 24. Other assets ...... 57 Other financial assets ...... 57 Other non-financial assets ...... 58 25. Employee benefits ...... 58 Pensions and other post-employment benefits ...... 58 26. Inventory ...... 59

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

27. Trade and other receivables ...... 60 28. Cash and cash equivalents ...... 60 29. Share capital ...... 61 Share capital ...... 61 29.1.1. Par value of shares ...... 61 29.1.2. Shareholders' rights ...... 61 29.1.3. Major shareholders ...... 61 30. Other types of capitals ...... 62 Supplementary capital ...... 62 Retained profit (loss) and dividend restrictions ...... 62 Non-controlling interests ...... 62 31. Loans, borrowings and other debt instruments ...... 63 32. Provisions ...... 66 Changes in provisions ...... 66 Provision for warranty repairs ...... 66 Provisions for sales bonuses ...... 66 Provisions for marketing services and commissions ...... 66 Provisions for salaries and annual leaves ...... 66 33. Trade liabilities, other liabilities and accruals ...... 66 Liabilities from deliveries and services and other financial liabilities (short-term) ...... 66 Other non-financial liabilities ...... 67 Accruals ...... 67 34. Reasons for differences between balance sheet changes in certain items and changes arising from the cash flow statement ...... 68 35. Capital expenditures ...... 69 36. Contingent liabilities ...... 69 37. Litigations ...... 69 38. Waste electrical and electronic equipment ...... 69 39. Information on related parties ...... 69 Parent Company of the entire Group ...... 71 Entity with significant influence over the Group ...... 71 Terms of transactions with related parties ...... 71 Remuneration of the Group's Senior Management ...... 71 39.1.1. Remuneration paid to members of the Management Board and members of the Supervisory Board of the Group** ...... 71 39.1.2. Remuneration paid to other members of key management personnel ...... 72 39.1.3. Participation of senior management (including members of the Management Board and the Supervisory Board) in the employee share scheme ...... 73 40. Information on remuneration of an auditor or an entity authorized to audit financial statements ..... 73 41. Objectives and principles of financial risk management ...... 73 Interest rate risk ...... 74 Currency risk ...... 74 Credit risk...... 77 Liquidity risk...... 78 42. Derivatives ...... 79 The fair values of particular classes of financial instruments ...... 83

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Items of income, expense, gains and losses recognized in the profit and loss account by categories of financial instruments ...... 83 43. Equity management ...... 84 44. Employment structure ...... 85 45. Other information ...... 86 46. Events occurring after the balance sheet date ...... 87 47. Approval for publication ...... 87

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

SELECTED CONSOLIDATED FINANCIAL DATA OF THE GROUP

in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA Year 2018 Year 2017 Year 2018 Year 2017 1 Net revenue from sales of products, goods and materials 2,927,638 2,654,434 686,965 623,355 2 Profit (loss) from operations 151,998 143,516 35,666 33,703 3 Profit (loss) before tax 136,609 120,990 32,055 28,413 4 Net profit (loss) attributable to shareholders 114,188 151,114 26,794 35,487 5 Net profit (loss) attributable to non-controlling interest 407 21 96 5 6 Net cash flow from operating activities 144,967 135,745 34,016 31,878 7 Net cash flows from investing activities -71,496 -77,968 -16,776 -18,310 8 Net cash flows from financing activities -88,456 -51,536 -20,756 -12,102 9 Total net cash flows -14,985 6,241 -3,516 1,466 10 Total assets 1,827,944 1,728,047 425,103 414,310 12 Long-term liabilities 149,469 180,775 34,760 43,342 13 Short-term liabilities 843,692 799,807 196,207 191,759 14 Equity attributable to shareholders 834,138 747,227 193,985 179,152 15 Equity attributable to non-controlling interest 645 238 150 57 16 Share capital 15,551 15,551 3,617 3,728 17 Number of shares 7,775,273 7,775,273 7,775,273 7,775,273 18 Treasury shares available (pcs) 250,000 0 250,000 0 19 Number of own shares for redemption 0 0 0 0 20 Profit (loss) per ordinary share attributable to shareholders of the Parent Company 14.78 19.44 3.47 4.56

21 Book value per share (PLN / EUR) 114.83 96.10 26.70 23.04 22 Dividend paid per share (PLN / EUR) 3.00 5.50 0.70 1.29

* Financial data were converted to EUR according to the following currency exchange rates: 31/12/2018 31/12/2017 Exchange rates for conversion of the profit and loss account and the cash flow statement: 4.2617 4.2583 Currency exchange rates for the balance sheet are 4.3000 and 4.1709 respectively

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2018

Year ended 31 Year ended 31

December 2018 December 2017 Continuing operations Note

Revenue from sale of goods and products 2,889,234 2,618,701 Revenue from sale of services 38,404 35,733 Revenue from sale 2,927,638 2,654,434

Cost of goods sold 2,124,406 1,882,382 Gross profit (loss) on sales 803,232 772,052

Other operating income 14.1. 9,796 26,144 Costs of sale 313,332 291,852 Administrative expenses 336,233 336,963 Other operating expenses 14.2. 11,465 25,865 Profit (loss) from operations 151,998 143,516

Financial revenue 14.3. 6,722 3,165 Financing costs 14.4. 22,111 25,521 Share in the profit or loss of associates accounted for using the 0 -170 equity method Gross profit (loss) 136,609 120,990

Income tax 15. 22,014 -30,145 Net profit (loss) from continuing operations 114,595 151,135

Discontinued operations Profit (loss) from discontinued operations for the financial year - - Net profit (loss) for the financial year 114,595 151,135

Profit (loss) attributable to: 114,595 151,135 Shareholders of the Parent Company 114,188 151,114 Non-controlling interests 407 21

Net other comprehensive income

Items to be reclassified to profit (loss) in subsequent 26,887 -39,625 reporting periods: Exchange differences on translation of foreign operations 1,062 -24,224 Hedge of net investments 3,850 4,271 Cash flow hedges 30,398 -25,291 Share in other comprehensive income of associates Income tax on other comprehensive income -8,423 5,619 Items not to be reclassified to the profit (loss) in subsequent 246 416 reporting periods: Revaluation of liabilities arising from employee benefits 246 416 Revaluation of land and buildings 0 0 Total net other comprehensive income 27,133 -39,209

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 141,728 111,926

Comprehensive income attributable to: 141,728 111,926 Shareholders of the Parent Company 141,321 111,905 Accounting Principles (Policy) and Additional Notes to the Consolidated Financial Statements included on pages 11 to 87 form an integral part thereof.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

7 AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Non-controlling interests 407 21

Profit (loss) per share: – basic profit for the period, attributable to shareholders of 14.69 19.44 the Parent Company – basic profit from continuing operations for the period, 14.69 19.44 attributable to shareholders of the Parent Company – diluted profit for the period, attributable to shareholders of 14.69 19.44 the Parent Company – diluted profit from continuing operations for the period, 14.69 19.44 attributable to shareholders of the Parent Company

Accounting Principles (Policy) and Additional Notes to the Consolidated Financial Statements included on pages 11 to 87 form an integral part thereof.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

8 AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

CONSOLIDATED BALANCE SHEET as at 31 December 2018

Note 31 December 2018 31 December 2017 ASSETS Fixed assets 658,474 633,007 Tangible fixed assets 19 402,222 367,094 Investment property 22 21,003 25,815 Intangible assets 23 145,574 143,576 Investment in associates 192 191 Financial derivatives 42 10,407 16,358 Other long-term financial assets 24 395 386 Deferred tax assets 78,681 79,587 Current assets 1,158,813 1,084,383 Inventory 26 447,513 407,188 Trade and other receivables 27 555,296 512,901 Income tax receivables 15 13,930 413 Financial derivatives 42 23,114 21,618 Other short-term financial assets 24 10,964 12,004 Other short-term non-financial assets 24 31,952 38,704 Cash and cash equivalents 76,044 91,555 Assets classified as held for sale 21 10,657 10,657 TOTAL ASSETS 1,827,944 1,728,047

LIABILITIES Total equity 834,783 747,465 Equity attributable to shareholders of the Parent Company: 834,138 747,227 Share capital 29 15,551 15,551 Other reserves 30 691,352 565,786 Retained earnings (loss brought forward) 127,235 165,890 Minority shares 30 645 238

Long-term liabilities 149,469 180,775 Loans, borrowings and other debt instruments 31 129,638 146,733 Long-term provisions 32 7,366 6,593 Employee benefit liabilities 25 7,726 8,213 Financial derivatives 42 2,401 16,868 Long-term accruals 33 2,338 2,368 Short-term liabilities 843,692 799,807 Trade liabilities and other liabilities 33 559,157 498,138 Loans, borrowings and other debt instruments 31 126,286 124,932 Financial derivatives 42 2,870 24,789 Income tax liabilities 15 9,508 10,510 Short-term accruals 24 18,321 12,132 Short-term provisions 32 127,550 129,306 Total liabilities 993,161 980,582

TOTAL LIABILITIES 1,827,944 1,728,047

Accounting Principles (Policy) and Additional Notes to the Consolidated Financial Statements included on pages 11 to 87 form an integral part thereof.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

9 AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2018

Year ended 31 Year ended 31 December 2018 December 2017 CASH FLOW FROM OPERATING ACTIVITIES

Gross profit (loss) 136,609 120,990 Adjustments of items: 8,038 22,863 Share in the net profit (loss) of subsidiaries accounted for 407 21 using the equity method Depreciation 53,167 47,900 Foreign exchange gains (losses) -20,240 -29,832 Interest and profit sharing (dividend) 14,424 13,011 Profit (loss) on investing activities 1,528 453 Change in provisions -6,817 18,480 (Increase) decrease in inventory -43,066 -46,207 Increase (decrease) in receivables -36,276 28,965 (Increase) decrease in liabilities 62,105 -4,796 Change in accruals 7,941 7,249 Profit or loss from derivatives -14,918 -11,718 Cash flow related to hedging 23,638 28,285 Other -1,421 -20,226 Income tax paid -32,114 -16,830 Net cash from operating activities 144,967 135,745

Cash flows from investing activities Sale of tangible and intangible assets 6,522 487 Acquisition of tangible and intangible assets -92,439 -97,739 Acquisition of investments in subsidiaries, associates and joint 0 1,149 ventures Interest received 113 790 Repayment of loans granted 9,848 15,220 Loans granted -8,859 -5,777 Cash flows attributable to trade derivatives 13,320 7,902 Net cash from investing activities -71,496 -77,968

Cash flows from financing activities Acquisition of treasury shares -30,000 0 Repayment of finance lease liabilities -4,997 -3,939 Proceeds from loans and borrowings 110,020 36,881 Repayment of loans and borrowings -102,531 -17,387 Issue of debt securities 48,722 6,959 Redemption of debt securities -71,584 -15,902 Dividends paid -23,326 -43,049 Interest paid -14,760 -15,099 Other Net cash from financing activities -88,456 -51,536

Net increase (decrease) in cash and cash equivalents -14,985 6,241 Balance sheet change in cash, including: -15,551 6,264 Net exchange differences -112 -313 Change in cash due to consolidation 678 290 Cash opening balance 91,555 85,314 Cash closing balance 76,570 91,555

Accounting Principles (Policy) and Additional Notes to the Consolidated Financial Statements included on pages 11 to 87 form an integral part thereof.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

10 AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period of 12 months ended 31 December 2018

Exchange Other differences Reserve Revaluation reserves, Non- Supplement Treasury on from Retained Share capital of a defined including Total controlling Total equity ary capital shares translation revaluation earnings benefit plan the share interests of a foreign of hedges program operation As at 01 January 2018 15,551 603,938 0 -39,502 2,288 -954 16 165,890 747,227 238 747,465 Adjustment due to changes arising on the -1,316 implementation of IFRS 9 As at 01 January 2018 15,551 603,938 0 -39,502 2,288 -954 16 164,574 747,227 238 747,465 Net profit (loss) for the year 114,188 114,188 407 114,595 Net other comprehensive income for the 1,062 25,825 246 27,133 0 27,133 period Comprehensive income for the year 0 0 1,062 25,825 246 0 114,188 141,321 407 141,728 Reallocation of supplementary capital for -30,000 -30,000 30,000 -30,000 -30,000 treasury shares Allocation of profit to the capital 128,250 -128,250 0 0 Dividend payment -23,617 -23,617 -23,617 Other changes 183 0 0 340 523 0 523 As at 31 December 2018 15,551 702,371 -30,000 -38,440 28,113 -708 30,016 127,235 834,138 645 834,783 0 0 0 0 0 0 0 0 0 0

As at 01 January 2017 15,551 504,846 0 -15,278 17,689 -1,370 9,141 147,938 678,517 -1,350 677,167 Net profit (loss) for the year 151,114 151,114 21 151,135 Net other comprehensive income for the -24,224 -15,401 416 -39,209 -39,209 period Comprehensive income for the year 0 -24,224 -15,401 416 151,114 111,905 21 111,926 Reallocation of supplementary capital for 0 0 treasury shares Allocation of profit to the capital 89,932 -89,932 0 0 Dividend payment -43,049 -43,049 -43,049 Other changes 9,160 -9,125 -181 -146 1,567 1,421 As at 31 December 2017 15,551 603,938 0 -39,502 2,288 -954 16 165,890 747,227 238 747,465

Accounting Principles (Policy) and Additional Notes to the Consolidated Financial Statements included on pages 11 to 87 form an integral part thereof.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

ACCOUNTING POLICIES AND

ADDITIONAL NOTES

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Overview

1. Information on the Parent Company

Amica Spółka Akcyjna Group (“Group”) is composed of Amica Spółka Akcyjna (“Parent Company”) and its subsidiaries (see Note 4). The consolidated financial statements of the Group cover the period of 12 months ended 31 December 2018 and comprise comparative data for the period of 12 months ended 31 December 2017. The Parent Company is entered in the Register of Entrepreneurs of the National Court Register maintained by the District Court in Poznań - Nowe Miasto and Wilda in Poznań, 9th Commercial Division of the National Court Register, under the number KRS 000017514. The Parent Company has been awarded the business statistical number REGON 570107305. The Parent Company's shares are listed on the Warsaw Stock Exchange. The Parent Company's registered office is situated in Wronki (64-510) at ul. Mickiewicza 52. The Parent Company's registered office is also the primary location of the Group's business activities.

2. Composition of the Parent Company's Management Board and Supervisory Board

As at 31 December 2018, the Parent Company's Management Board was composed of: • Jacek Rutkowski, President of the Management Board • Marcin Bilik, Vice-President of the Management Board for Operations • Alina Jankowska-Brzóska, Vice-President of the Management Board for Goods Management and Logistics • Wojciech Kocikowski, Vice-President of the Management Board for Finance and Controlling • Piotr Skubel, Vice-President of the Management Board for Trade and Marketing

In the period after the balance sheet date until approval of the consolidated financial statements, there were no changes to the membership in the Management Board.

As at 31 December 2018, the Supervisory Board was composed of: • Tomasz Rynarzewski, Chair of the Supervisory Board / Chair of the Operations Committee • Artur Małek, Independent Member of the Supervisory (Vice-Chair of the Board) / Member of the Audit Committee • Andrzej Konopacki, Independent Member of the Supervisory Board / Chair of the Audit Committee • Tomasz Dudek, Member of the Supervisory Board / Member of the Operations Committee • Piotr Rutkowski, Member of the Supervisory Board / Member of the Operations Committee • Paweł Wyrzykowski, Member of the Supervisory Board / Member of the Operations Committee

After the balance sheet date, there were no changes in the composition of the Supervisory Board.

3. Overview of the Group’s Operations

The Group's principal activities include: • Manufacture and sale of electric and gas-fired domestic appliances; • Sale of domestic appliances; • Maintenance, heating, hotel, and catering services; • Rental and lease activities.

More information of the business activities of the Group can be found in Note 13 on operating segments.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

4. Information on the Capital Group

The direct parent of the Group is Holding Wronki S.A., which is responsible for preparation of the financial statements to be made public. The ultimate controlling party of the Group is Mr Jacek Rutkowski, who (being a natural person) is not obliged to prepare financial statements for public use (IAS.24.13).

Amica S.A. Group includes the Parent Company and the following subsidiaries:

Company's percentage Registere share in the capital Functional Entity Principal economic activity d office currency 31 December 31 December 2018 2017 Amica International GmbH Germany trading activity 100% 100% EUR Czech Amica Commerce s.r.o. trading activity 100% 100% CZK Republic Gram Domestic A/S Denmark trading activity 100% 100% DKK Hansa OOO Russia trading activity 100% 100% RUB Hong Amica Far East Ltd. procurement agency services 100% 100% HKD Kong Inteco Business Solutions Poland IT and consulting services 80% 80% PLN Sp. z o.o. Nova Panorama Sp. z o.o.* Poland property management 100% 100% PLN Nowe Centrum Sp. z o.o.* Poland property management 100% 100% PLN Amica Handel i Marketing marketing and promotional Poland 100% 100% PLN Sp. z o.o. services Marcelin Management Sp. hospitality and catering services, Poland 100% 100% PLN z o.o. property management Hansa Ukraina OOO Ukraine trading activity 100% 100% UAH Amica Electrodomesticos Spain trading activity 100% 100% EUR S.L. THE CDA GROUP United trading activity 100% 100% GBP LIMITED Kingdom Profi Enamel Sp. z o.o. Poland manufacturing activity 100% 100% PLN Sideme S.A. France trading activity 95% 95% EUR Sidepar** France Service operations 95% 95% EUR

* Nowe Centrum sp. z o.o. and Nova Panorama Sp. z o.o. are subsidiaries of Marcelin Management Sp. z o.o. ** Sidepar is a subsidiary of Sideme S.A.

In the period covered by the consolidated financial statements, there were no transactions that would affect the reorganization of the Group.

The Parent Company and of the consolidated companies of the Group have been established for an indefinite term.

The Group holds 80% shares in Inteco Business Solution Sp. z o.o. with its registered office in Poland and 95% of shares in Sideme S.A. with its registered office in France. Information on the equity allocated to non-controlling interest has been described in Note 31.3.

5. Approval of the Financial Statements

The present financial statements prepared for the year ended 31 December 2018 (along with comparative data) were approved for publication by the Parent Company's Management Board on 28 March 2019.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

6. The basis for preparation of the consolidated financial statements

The Consolidated Financial Statements of the Group have been prepared in accordance with the International Financial Reporting Standards (“IFRSs”), as adopted by the European Union for annual periods beginning on or after 01 January 2018.

Some companies of the Group maintain their accounting books in accordance with the accounting principles (policy) set out in the Act of 29 September 1994 on accounting (the "Act") as amended and the regulations issued thereunder ("Polish Accounting Standards"). The consolidated financial statements include adjustments not disclosed in the Group's accounting books, presented in order to approximate financial statements of such entities with the IFRS. Other statements of the companies are prepared in accordance with the principles of the IFRS. The Parent Company's functional currency and the presentation currency used in these consolidated financial statements is Polish zloty, while all amounts are expressed in thousands of PLN. Financial statements of foreign companies for the purpose of consolidation have been converted into Polish currency in accordance with the principles presented in the accounting policy below. The Group uses the direct consolidation method and has chosen the method of accounting for gains or losses on translation that is consistent with that method. These consolidated financial statements have been prepared with the assumption that the Group would continue as a going concern in the foreseeable future. On the date of approval of these financial statements, there are no circumstances that could be regarded as a threat to the continued business operations of the Group companies.

7. Significant values based on professional judgement and estimations

Professional judgement In the process of applying accounting principles (policy), the Management Board made the following assessments, which exerted the greatest impact on the reported carrying amounts of assets and liabilities.

Recoverable amount of inventories The cost of inventories may not be recoverable if the inventories are damaged, poorly rotating or their selling price fell below their purchase price/cost of manufacture. The Group operates a procedure for quarterly analysis of the above mentioned cases.

Fair value of derivatives Derivatives executed by the Group have been measured at their fair value using the expert method as well as own tools for calculation of this value. As at the balance sheet date, the Group compared the fair value of these derivatives, as recognized in the books, with the valuation provided by the banks, taking into account the market exchange rates and interest rates. No significant differences were reported. Under the estimates associated with the hedge accounting, the Group not only measures the instruments but also assesses the assumptions regarding the cash flows to be hedged.

Classification of leases The Group classifies leasing as operational or financial leasing in accordance with the evaluation of the distribution of risk relating to the control over the leased object between the lessor and the leaseholder. This evaluation is based on the economic elements of each and every transaction.

Provisions for warranty repairs, employee benefits, bonuses and marketing services Provisions for warranty repairs, employee benefits, bonuses and marketing services are revalued on a quarterly basis, using the Company’s own analytical tools. All the requirements concerning the provisions have been taken into account in the Group's books.

Depreciation rates The Group conducted the annual process of updating the depreciation rates for fixed assets and intangible assets, based on the useful life analysis. There were no significant differences between the previous and newly verified new rates applied to measure the useful life. The verification did not give rise to recognition of additional depreciation write-offs, except for those applied in connection with the periods of economic life.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Impairment losses on receivables and loans The Group uses the expected credit loss model to evaluate the impairment loss on loans and receivables. The Group assesses the receivables and loans for which impairment losses need to be recognized. The assessment is based inter alia on the debtor's financial situation.

Deferred tax assets

The Group recognizes deferred tax assets based on the assumption that future taxable income will allow for its use. This assumption is based on forecast results and historical analysis. A decrease in the tax result in the future could cause the whole or a part of the asset not to be realized. As regards assets related to SEZ, the number of employees is assessed in accordance with the assumptions made under the zone operation permit.

Uncertainty of estimates and assumptions Described below are basic assumptions concerning the future and other key sources of uncertainty occurring on the balance date, which are associated with major risks of significant adjustment to carrying amount of assets and liabilities in the next financial year. The Group has made assumptions and estimates about the future based on the knowledge acquired during the preparation of the Financial Statements. The present assumptions and estimates may change as a result of future events due to changes in the market or changes that are beyond the control of the Company. Such changes are reflected in the estimates or assumptions at the time of occurrence.

Measurement of provisions for employee benefits

Provisions for employee benefits are determined with the use of the Group's in-house tool. The assumptions adopted for this purpose are described in Note 26.

Fair value of financial instruments

The fair value of financial instruments, for which no active market exists, is determined using appropriate valuation techniques. While selecting the methods and assumptions regarding the time period to maturity and the likelihood of a hedged item and its effectiveness measurement, the Group relies on professional judgement. The method for determining the fair value of financial instruments is disclosed in the Note 43. The Group relies on professional judgement, taking into account external factors associated with foreign exchange rates and interest rates, the values of which have been adopted as at the balance sheet date. The effectiveness measurement and exercise dates were adopted in accordance with the budgets agreed for 2019.

Depreciation rates

Depreciation rates are determined based on the expected useful economic lives of tangible fixed assets and intangible assets. The useful life depends on the intensity of use and the production characteristics of a given asset. The Group reviews the adopted useful economic lives based on current estimates annually.

Goodwill

Goodwill is initially recognized in accordance with IFRS 3. Goodwill is not amortized, instead, an impairment test is performed annually in accordance with IAS 36. Information about the tests carried out is provided in Note 23.

Provisions for warranty repairs

The basis for estimating the provision for future warranty repairs includes: warranty period, historical unit repair cost, estimated product defectiveness, average cost of a spare part in the cost of repair. Except for the warranty period, the value of the above- mentioned variables may change in future periods, simultaneously influencing the value of the provision. The Group reviews the adopted variables to reflect the Group's actual liability under the provision for warranty repair obligations.

Reserves for bonuses

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Based on the agreements with customers, the Group estimates the value of bonuses due to the buyers of goods and products. These values are calculated and accounted for in the books. The accrued provisions for bonuses are reserved on the settlement of individual periods. As at the balance sheet date, the customer bonuses are described in Note 32.3.

Impairment loss of fixed assets and intangible assets

The Group measures the value of fixed assets recognized in the financial statements as at the balance sheet date and determines any impairment loss of their value. Fixed assets are measured taking into account the final values and the estimated costs of dismantling, transfer and renovation of particular tangible fixed assets. The assessment of any write-downs takes into account the use of assets in the Group's operations. Intangible assets with an indefinite useful life, which include among others trademarks, are not amortized, but are tested annually for impairment.

Impairment loss of inventory The Group verifies the inventory turnover and the difference in the book price and possible sales price of inventory as the balance sheet date and recognizes impairment loss, if any, according to internal rule on a quarterly basis. The assessment of possible impairment takes into account the level of sales i.e. the customers’ current demand for the Group's goods and products.

Impairment loss of the shares held and loans The Group assesses whether there is any indication for impairment of shares held in subsidiaries. If there are any indications, the impairment test is performed. If the recoverable amount of the assets is less than its book value, the Group recognizes an impairment loss equal to the difference between the recoverable amount and the book value of the assets. The assessment of impairment for loans is based on the expected credit loss model.

8. Changes in standards or interpretations applied

Changes in standards or interpretations in force and applied by the Group from 2018

IFRS 9 “Financial Instruments” The new standard replaced the existing IAS 39. Changes introduced by the standard in accounting for financial instruments include primarily:

• other categories of financial assets used to determine the method for measurements of assets: o measured at amortized cost; o measured at fair value through other comprehensive income; o measured at fair value through profit or loss (with the option of recognizing the effects of measurement in other comprehensive income for equity instruments);

the assets are allocated to a certain category, depending on the business model associated with the assets and the nature of cash flows related thereto;

o new hedge accounting principles that reflect risk management to a greater extent, increase the ability to designate instruments as hedging items and eliminate rigid accounting principles providing for range of 80- 125% for hedge effectiveness; o a new model for impairment of financial assets, based on the expected losses and causing the need for faster recognition of costs in the profit or loss; impairment losses were recognized in accordance with the existing principles only when there was objective evidence of impairment, such as the debtor's significant financial difficulties or failure to meet the terms of the contract e.g. delay in repayment; the new model assumes that from the moment a financial asset is recognized, the entity estimates the expected credit losses using a 3- step model based on credit risk changes; the standard provides for simplifications for trade receivables and contractual assets.

The Group decided that for classification and measurement, IFRS 9 would be applied retrospectively without restating the corresponding figures on account of the fact that it would not be possible without the use of knowledge obtained post factum. The

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

effects of the implementation of the standard have been recognized as a change in the opening balance of retained profits as at 01 January 2018.

Until now, the Group had only assets classified under the “loans and receivables” category and derivatives, whether hedges or not, classified as “financial assets at fair value through profit or loss”. The Group carried out SPPI tests, according to which these instruments have been qualified as measured at amortized cost, since the contractual cash flows include only payments of the principal and interest. Other assets i.e. “financial instruments” not covered by the hedging policy are measured at fair value through profit or loss.

The change of the categories did not affect the value of the Group's assets and its earnings. The categories of financial liabilities have not changed.

As at the date of the first application of IFRS 9, the categories and carrying amounts of each class of financial assets and liabilities were as follows:

01/01/2018 (in thousands of PLN) IAS 39 IFRS 9 Effect of change Fair value measured: other Increase amortised cost profit or loss comprehensive Total (decrease) income

Trade receivables 514,217 512,901 0 0 512,901 -1,316 Gross value 535,397 535,397 535,397 0 Impairment losses -21,180 -22,496 0 0 -22,496 1,316

Loans granted 12,031 12,031 0 0 12,031 0 Gross value 12,031 12,031 12,031 0 Impairment losses 0 0 0 0 0 0

Derivatives excluded from hedge accounting 354 0 354 0 354 0 Gross value 354 354 354 0 Impairment losses 0 0 0 0 0 0

Cash 91,555 91,555 91,555 0

Financial assets 618,157 616,487 354 0 616,841 -1,316

01/01/2018 (in thousands of PLN) IAS 39 IFRS 9 Effect of change Fair value through (at) other Increase amortised cost profit or loss comprehensive Total (decrease) income

Bank loans 271,665 271,665 271,665 0 Trade payables 397,581 397,581 397,581 0 Derivatives excluded from hedge 148 148 0 accounting 148

Financial liabilities 669,394 669,246 148 0 669,394 0

Effect of application of IFRS 9 on equity

Accumulated other Retained 01/01/2018 (in thousands of PLN) comprehensive Total equity earnings income

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Adjustment for write-downs of assets carried at -1,316 amortized cost for: Receivables -1,316 Borrowings 0

Restatement of amortized cost for debt 0 Total 0 -1,316 -1,316

In hedge accounting, the analysis of changes did not affect the method for measurement of hedging instruments. Insofar as a hedging instrument provides an effective hedge, a change in the fair value is recognized in other comprehensive income and accumulated in equity from revaluation of cash flow hedges. The ineffective portion of the hedge is recognized immediately in the profit or loss.

Detailed data on derivatives satisfying the requirements of the hedging policy is presented in Note 42.

In the case of each class of financial assets and liabilities, a change in a measurement category in connection with the first application of IFRS 9 on 01 January 2018 did not cause any change in the carrying amount, except for the effects of the new model for estimating the expected credit losses for the items specified in the tables above.

The Group's financial statements have been significantly affected the method for estimating credit risk losses attributable to receivables, which have been categorized as “receivables and loans” in accordance with IAS 39, and have been measured at amortized cost in accordance with IFRS 9. The Group has built a model for estimating the expected loss resulting from the portfolio of receivables. For trade receivables and contractual assets, a simplified version of the model assumes the measurement of loss for the entire life of the instrument. The model for other assets – for instruments for which the increase in credit risk from the initial recognition was not significant or for which the risk is low – assumes that default losses over the following 12 months shall be first recognised. The Group assumed that an increase in risk occurs, among others, when a payment is overdue for more than 30 days If the increase in credit risk is significant, losses corresponding to the entire life of the instrument are recognised. The Group assumes that a default occurs where an overdue period exceeds 180 days or there are other circumstances indicating a default. This condition was adopted on the basis of the conducted historical analysis.

The Group prepared a summary of impairment losses identified in accordance with IAS 39 and provisions created in accordance with IAS 37 as well as impairment allowances for expected credit losses in accordance with IFRS 9 as at the date of its first application. For each class of financial assets, broken down by measurement categories, this information is presented as follows:

As at 31 December 2017, an impairment loss of trade receivables (financial assets at amortized cost according to IFRS 9 and loans and receivables in accordance with IAS 39) amounted to PLN 22,496 thousand. The adjustment of receivables and retained earnings as at 01 January 2018 amounted to PLN 1,316 thousand resulted in an increase in the impairment loss up to the amount of PLN 23,812 thousand. As at 31 December 2018, the impairment loss of receivables was lower by PLN 275 thousand than if it had been recognized in accordance with the previous rules.

As at 31 December 2017, an impairment loss of loans (financial assets at amortized cost according to IFRS 9 and loans and receivables in accordance with IAS 39) amounted to PLN 0.

The Group also assessed whether open hedging relationships satisfy the principles set out in the new standard, and found that all of them are eligible for hedge accounting, also in accordance with IFRS 9. The requirements of IFRS 9 with regard to hedge accounting have been applied prospectively. The Group has treated the entire value of derivative instruments as a hedge. The application of the new standard has not affected the value of the Group's assets, liabilities, profit or equity.

The Group adjusted items of the separate statement of profit or loss and other comprehensive income to IFRS 9 regarding the classification of financial instruments into categories and recognition of the effects of hedge accounting, while leaving the items used in 2017 in accordance with IAS 39.

IFRS 15 “Revenue from Contracts with Customers” The new standard replaced the existing IAS 11 and IAS 18 and related interpretations and applies to all contracts with customers, except for contracts excluded from the scope of IFRS 15, including contracts governed by the provisions of other standards. The new IFRS 15 provides one consistent 5-step revenue recognition model that includes the following steps:

• Identify the contract(s) with a customer; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract;

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• Recognise revenue when (or as) the entity satisfies a performance obligation.

The new model makes the revenue recognition dependant on obtaining the control of the good or service by the customer.

In addition, the standard introduces additional disclosure requirements and guidance on the following specific issues:

• combination of contracts, • contract changes, • methods for measuring progress towards complete satisfaction of a performance obligation, • variable consideration, • right of return, • warranties, • principal versus agent considerations, • customer options for additional goods or services, • non-refundable upfront fees, • licensing, • repurchase arrangements, • consignment arrangements, • bill-and-hold arrangements, • financial components embedded in contracts with customers (deferred payment or up-front payments), • non-cash consideration, • contract costs, including costs of obtaining a contract.

The Group has analysed the effect of the standard on its financial statements. The results indicate that the revenue recognition accounting policy has not changed, and therefore, has no material effect on the Group's financial performance.

During the analysis, the Group did not identify, among others, the following events that would affect the accounting policy in accordance with IFRS 15:

• The Group does not bear the initial cost of preparing for the performance of a contract; • There are no significant values of separate warranties, except for the standard sales contracts; • Contract annexes do not provide for separate liabilities of the Group; • There are no contracts treated as separate performance obligations; • There are no contracts for construction services.

IFRS 2 “Share-Based Payment” The IAS Council has dealt with three issues: • accounting for cash-settled share-based payment transactions that include a performance condition; • classification of share-based payment transactions with net settlement features and • accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

IFRS 4 “Insurance Contracts” In connection with entry into force of the new standard concerning financial instruments (IFRS 9) in 2018, the IAS Council has introduced transitional provisions (until entry into force of the new IFRS 17) for application of the new accounting policies in the insurers’ financial statements. Otherwise their results would be exposed to considerable volatility. Two alternative approaches have been proposed:

o adjustment of the volatility caused by IFRS 9 for some assets under a separate item in the statement of profit or loss and other comprehensive income, o exemption from the application of IFRS 9 until the entry into force of the new standard concerning the insurance contracts (or 2021). The amendment of the standard will have no effect on the Company's financial statements, since the Group does not engage in insurance activity. The amendments are effective upon application of IFRS 9.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Amendments to IAS 28 "Investments in Associates and Joint Ventures" Amendments resulting from the “Exposure Draft – Annual Improvements to IFRS Standards; 2014–2016 Cycle” provide a clarification that in situations where IAS 28 allows the valuation of an investment either by equity method or at fair value (through venture capital organisations, mutual funds, etc. or shares in investment entities), that choice may be made separately for each such an investment. The Group does not hold investments in associates; therefore, the aforesaid amendment had no effect on the separate financial statements.

Amendment to IAS 40 “Investment Property” The amendment clarifies the rules according to which the property is transferred to or from the category of investment property from or to fixed assets or inventories. First and foremost, such a transfer should only be made when there has been a change in use of the property and there is evidence of the said change in use. The standard clearly stipulates that a change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use. The amendment of the standard should be applied to all changes in use that occur after the entry into force of the amendment of the standard and to all investment properties held as of the effective date of the amendment. New IFRIC 22 “Foreign Currency Transactions and Advance Consideration” The Interpretation specifies the rate to use be used for foreign currency transactions that include the receipt or payment of advance consideration in a foreign currency. According to the new interpretation, the advance consideration shall be recognised at the rate applicable at the date of its payment. Then, on the recognition of the profit and loss account of the income earned or the cost incurred or the asset purchased in a foreign currency, it shall be recognized at the exchange rate applicable as at the date of recognition of the advance consideration, rather than at the rate at which the income or the cost or the asset is recognized. The Group does not enter into any significant transactions that are the subject of the Interpretation, and therefore, its entry into force had no material effect on the separate financial statements.

9. The new standards and interpretations that have been issued but are not yet effective

Standards and interpretations that have been issued but are not yet effective for the periods beginning on 01 January 2018 and their effect on the Group's financial statements. By the date of these Financial Statements, the following new or amended standards and interpretations were adopted, effective for annual periods beginning after 2018: The list also includes amendments, standards and interpretations published but not yet approved by the European Union. New IFRS 16 “Leases” The new standard regulating the lease agreements (including rental and lease agreements) provides for a new definition of the lease. Significant changes relate to the lessees: the standard requires that the right to use the asset and the corresponding financial liability must be recognized in the balance sheet for each lease agreement. The right to use the asset is then depreciated, while the liability is measured at amortized cost. In certain situations, as provided for in the standard, a lease liability re-measured, and the effects thereof are, as a rule, recognized as an adjustment to the right-of use asset. The standard provides for the simplification of short-term contracts (up to 12 months) and assets of low value. The accounting treatment of leases by the lessor is similar to the principles set out in the current IAS 17. IFRS 16 requires a wider scope of disclosures as compared to IAS 17 (this applies to both the lessee and the lessor). The new standard assumes the possibility of applying a modified retrospective approach with some optional practical expedients under the transitional provisions. The Group plans to implement IFRS 16 using a modified retrospective method i.e. without restating the corresponding figures, with the recognition of the combined effect of the first application of the standard as an adjustment to the opening balance of retained earnings on the date of the first application. The Group expects that the new standard will have material effect on its financial statements. At the end of 2018, the Group is a lessee under 66 operating lease, rental and tenancy agreements concluded for periods from 1 to 13 years. As at 31 December 2018, the value of the Group's estimate affecting fixed assets and financial liabilities is approximately PLN 30,000 thousand.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The Group intends to apply the discount rate presented in the table below in the calculations:

Currency Discount Rate

PLN 2.22% EUR 1.14% NOK 2.78% DKK 1.20% SEK 1.43% GBP 2.41% RUB 10.09% CZK 3.51% UAH 21.75%

In addition, the Group intends to apply the following practical expedients permitted by the standard:

o as at the date of the first application of IFRS 16, the Group will not re-assess whether an arrangement is a lease or contains a lease; o The Group intends to apply the standard only to contracts that were identified as leases prior to that date in accordance with IAS 17 and IFRIC 4; o The value of the right to use under all the contracts previously classified by the Group as operating leases in accordance with IAS 17, as at the date of first application of IFRS 16, will be determined in the amount of lease liability adjusted for fees and prepayments recognized in the consolidated statement of financial position immediately before the date of the first application. o contracts whose lease term ends in 2019 are recognised by the Group on a straight-line basis over the lease term; o The Group intends to take advantage of the exemption permitted by IFRS 16.

In the future, for contracts requiring the application of IFRS 16, the Group will present the rights to particular tangible and intangible assets in the statement of financial position, and the liabilities in lease liabilities broken down by short-term and long-term liabilities. The Group expects that there will be no effect of the first application of the standard on retained earnings as at the date of the first application.

The standard is effective for annual periods beginning on or after 01 January 2019.

New IFRIC 23 “Uncertainty over Income Tax Treatments” The interpretation of IAS 12 “Income Taxes” determines the approach in a situation where the interpretation of income tax regulations is not clear and it cannot be definitively decided what solution would be accepted by tax authorities, including courts. The management should first assess whether its interpretation is likely to be accepted by tax authorities. If yes, the interpretation should be used to prepare the financial statements. If not, the uncertainty of amounts related to income tax should be taken into account with the most likely value method or the expected value method. The Group should assess any changes in facts and circumstances affecting the determined value. If the value is subject to adjustment, it is treated as a change in the accounting estimates in accordance with IAS 8. The Group believes that the new interpretation will have no material effect on its financial statements, since it does not engage in the transactions concerned.

Amendment of IAS 28 “Investments in Associates and Joint Ventures”

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The amendment to the standard has clarified that IFRS 9 should be applied to financial instruments other than those accounted for using the equity method in associates and joint ventures, even if such instruments are a part of the net investment in such an entity. The Group believes that the new standard will not affect its financial statements, since it does not hold the financial instruments concerned. The amendment is effective for annual periods beginning on or after 01 January 2019. Amendments to IAS 12 “Income Taxes", IAS 23 “Borrowing Costs”, IFRS 3 “Business Combinations” and IFRS 11 “Joint Arrangements” Minor improvements to standards, introduced as part of annual amendments to standards (cycle 2015-2017):

IAS 12: The IASB has clarified the treatment of income tax consequences of dividends. The tax is recognized when a dividend liability is recognized as a decrease in profit or loss or other comprehensive income or equity depending on where the past transactions that generated the result were recognized. IAS 23: It has been clarified that the debt originally earmarked for financing an asset that has already been completed is included in general debt, the cost of which can later be capitalized under other assets. IFRS 3: The IASB has clarified that the rules regarding the accounting for combination of projects implemented in stages, including the need to measure shares, also apply to shares previously held in joint operations. IFRS 11: The Board has clarified that in a situation where a joint operator that so far not exercised joint control gains joint control over a joint operation should not remeasure its interest in this joint operation. The Group believes that the new standard will have no material effect on its financial statements, since: • The Group is not a party to transactions subject to amendment of IAS 12; • all adjustments to the asset of material value are financed by the Company using external funding earmarked specifically for this purpose; • The Group does not engage in joint operations within the meaning of IFRS 11. The amendments are effective for annual periods beginning on or after 01 January 2019.

New IFRS 17 “Insurance Contracts” A new standard regulating the recognition, measurement, presentation and disclosures of insurance and reinsurance contracts. The standard supersedes the previous IFRS 4. The Group believes that the new standard will not affect its financial statements, since it does not engage in insurance activity. The standard is effective for annual periods beginning on or after 01 January 2021.

Amendment to IAS 19 “Employee Benefits” In accordance with the introduced amendment, if a net asset or liability under a defined benefit plan is remeasured as a result of changes, limitations or settlements, an entity should: • determine the current service cost and net interest for the period after the remeasurement using the assumptions used for the remeasurement and • determine net interest for the remaining period based on a discounted net asset or liability. The Group believes that the new standard will have no material effect on its financial statements.

The standard is effective for annual periods beginning on or after 01 January 2019.

Amendments of IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” The amendment provides for a new definition of the term “material” (with regard to omitting or misstating information in the financial statements). The previous definition contained in IAS 1 and IAS 8 differed from that contained in the Conceptual Framework for Financial Reporting, which could have caused difficulties in judgments made by entities preparing financial statements. The amendment aligns definitions in all applicable IASs and IFRSs.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The Group estimates that the new standard will not affect its financial statements, because the materiality judgments made so far have been in line with those that would have been made using the new definition. The amendments are effective for annual periods beginning on or after 01 January 2020.

Amendment to IFRS 3 “Business Combinations” The amendment concerns the definition of a business and mainly includes the following issues: • clarifies that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs; • narrows the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs; • adds guidance and illustrative examples to help entities assess whether a substantive process has been acquired; • removes the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and • adds an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period. Therefore, the amendment will have no effect on the Group's financial statements. The Group intends to implement the above regulations within the time limits provided for by standards or interpretations.

10. Reassessment

Disclosures related to changes in estimates are presented in the respective notes to these statements.

11. Changes in presentation

As a result of changes in the presentation of the individual components of the report and their valuation relating to the previous reporting periods, the Group presents the following summary of adjustments aimed to restate the corresponding figures relating to the presented previous period, in which the figures have been adjusted using the current allocation pattern. The restatements are related to the Cash Flow Statement and the Balance Sheet

Changes related to 2017 Before Adjustment Description of restatement After restatement restatement Cash Flow Statement Operating activities / Other -12,118 -8,108 -20,226 operations change in the presentation of Investing activities / Repayment of 2,835 12,385 loans granted and received 15,220 loans Investing activities / Loans granted -1,500 -4,277 -5,777

12. Significant Accounting Principles

Presentation of financial statements

The Consolidated Financial Statements are presented in accordance with IAS 1.

The “Consolidated Statement of Comprehensive Income” is prepared by function, while the “Consolidated Cash Flow Statement” is prepared using the indirect method.

In the event of retrospective changes in the accounting policies, presentation or correction of errors, the Group presents the statement of financial position prepared additionally as at the beginning of the comparative period if these changes are material for the comparative data presented as at the beginning of the comparable period. In such a situation, the presentation of notes to the third statement of financial position is not required.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Operating segments

In differentiating operating segments, the Group's Management Board considers product lines representing the main products supplied by the Group. Each segment is managed separately within a product line, given the specific nature of the manufactured products requiring different technology, resources and approaches.

In accordance with IFRS 8, the results of operating segments are derived from internal reports periodically verified by the Group's Management Board. The Management Board of the Group analyses the results of operating segments at the level of profit or loss from operating activities. The measurement of the results of operating segments used in management calculations coincides with the accounting principles used in the preparation of the consolidated financial statements, except for the following areas:

• impairment of assets – when determining the segment results, impairment losses on fixed assets, including goodwill, are not taken into account,

Sales revenue disclosed in the consolidated statement of income does not differ from revenues presented under operating segments, except for revenues unallocated to segments and eliminations on consolidation relating to transactions between segments.

The Group's assets that are not directly attributable to the operations of a given operating segment are not allocated to assets of operating segments.

Principles of consolidation

The consolidated financial statements include the financial statements of the Group and financial statements of the companies over which the Group exercises control i.e. Subsidiaries, prepared as at 31 December 2018. Control means the ability to influence the Group's financial and operational policy in order to obtain economic benefits from its operations.

The financial statements of the Parent Company and its Subsidiaries included in the consolidated financial statements are prepared as at the same balance sheet date i.e. as at 31 December. Where it is necessary, adjustments are made in the financial statements of Subsidiaries in order to harmonise the accounting policies applied by them with the principles applied by the Group as a whole.

Companies whose financial statements are irrelevant from the point of view of the Group's consolidated financial statements can be excluded from consolidation. Investments in subsidiaries classified as held for sale are recognized in accordance with IFRS 5.

Subsidiaries are consolidated using the full method.

The full consolidation method consists in combining the financial statements of the Parent Company and subsidiaries by adding up particular items of assets, liabilities, equity, revenues and costs in full. In order that the consolidated financial statements present financial information about the group as that of a single economic entity, the following steps are then taken:

• goodwill or gain on a bargain purchase is recognized upon acquisition of the control in accordance with IFRS 3, • minority shareholders are defined as non-controlling interests and presented separately, • intragroup balances and transactions (revenues, expenses, dividends) are eliminated in full, • profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. • In accordance with IAS 12, income tax is recognized for temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.

Non-controlling interests are shown under a separate item of equity and represent that part of total revenue and net assets of subsidiaries that are attributable to entities other than the Group companies. The Group allocates comprehensive income of subsidiaries among the shareholders of the Parent Company and non-controlling interests based on their share in ownership.

Transactions with non-controlling entities that do not result in loss of control by the Parent Company are treated by the Group as capital transactions:

• partial sale of shares to non-controlling entities — the difference between the sales price and the carrying amount of net assets of a subsidiary, attributable to the shares sold to the non-controlling entities, is recognized directly in equity under the retained earnings. • acquisition of shares from non-controlling entities — the difference between the purchase price and the carrying amount of net assets acquired from non-controlling entities is recognized directly in equity, in the retained earnings.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Business Combinations

Business combinations covered by IFRS 3 are accounted for under the acquisition method.

On the acquisition date, the assets and liabilities of the acquiree are generally measured at fair value and, according to IFRS 3, assets and liabilities are identified, regardless of whether disclosed in the acquiree's financial statements prior to the acquisition.

The consideration paid in exchange for the control includes the assets, liabilities incurred and equity instruments issued, measured at fair value as at the acquisition date. An element of payment is also a contingent consideration, measured at fair value as at the acquisition date. The costs associated with the acquisition (consultancy, measurements etc.) do not represent a part of the acquisition consideration, but are recognized as the cost as of the acquisition date.

Goodwill (profit) is calculated as the difference of the two values:

• sum of the consideration paid for non-controlling interest (measured in proportion to the net assets acquired) and the fair value of the interest (shares) held in the acquiree prior to the acquisition date; and • the fair value of the identifiable net assets acquired.

The surplus of the sum calculated as above over the fair value of the identifiable net assets acquired is disclosed in the assets of the consolidated statement of financial position as goodwill. Goodwill represents a payment made by the acquirer in anticipation of future economic benefits from assets that are not capable of being individually identified and separately recognised. After initial recognition, the acquirer shall measure goodwill acquired in a business combination at cost less any accumulated impairment losses.

Where the aforementioned amount is lower than the fair value of the identifiable net assets acquired, the difference is immediately recognized. The Group recognizes the acquisition gains under other operating income.

Fair value measurement The Group measures the derivatives at fair value. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in a transaction carried out in the ordinary conditions of sale of an asset between market participants at the measurement date in the current market conditions. A fair value measurement assumes that the sale of an asset or transfer a liability occurs either:

- on the principal market for the asset or liability,

- in the absence of a principal market, on the most advantageous market for the asset or liability. Both the principal and the most advantageous market must be available to the Group. The fair value of an asset or a liability is measured on the assumption that market participants, when determining the price of an asset or liability, act in their best economic interest. The fair value of a non-financial asset takes into account the ability of a market participant to generate economic benefits through the biggest and best use of the asset or transfer to another market participant that would provide the greatest and best use of the asset. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to determine the fair value, with maximum use of relevant observable inputs and minimal use of unobservable inputs. All assets and liabilities that are measured at fair value or their fair value is disclosed in the financial statements are classified in fair value hierarchy as described below based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 - Quoted (unadjusted ) market prices on the active market for identical assets or liabilities,

- Level 2 - Valuation techniques for which the lowest level of input that is significant to the fair value measurement as a whole is directly or indirectly observable,

- Level 3 - Valuation techniques for which the lowest level of input that is significant to the fair value measurement as a whole is unobservable. At each balance sheet date, for assets and liabilities existing at each balance sheet date in the financial statements, the Group assesses whether there have been any transfers between levels of the hierarchy by reassessing the classification of different levels, focusing on the significance of input data at the lowest level, which is essential for the fair value measurement as a whole.

Summary of significant accounting policies and procedures relating to the fair value measurement.

The Vice–President of the Management Board for Financial Affairs and Controlling of the Parent Company defines the rules and procedures for measurement of derivatives at fair value.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The results obtained are compared with the measurement of instruments provided by financial institutions, and in the case of significant differences, the clarification process is implemented. Each quarterly change in fair value of derivative instruments during existence of a derivative is recognized in the accounts. For the purposes of the disclosure of the fair value measurement results, the Group has established classes of assets and liabilities based on the nature, characteristics and risks of particular components of assets and liabilities and the level in the fair value hierarchy as described above.

Conversion of items expressed in foreign currencies

The consolidated financial statements are presented in Polish Zloty (PLN), which is also the functional currency of the Parent Company.

Transactions denominated in foreign currencies other than the functional currency are converted to Polish zloty using the foreign exchanges rates applicable as at the transaction date. On the balance and date the assets and liabilities expressed in foreign currencies are converted to Polish Zlotys using the individual average currency exchange rates at the end of the reporting period as published by the National Bank of Poland. The resultant currency translation differences are recognised in the position of financial revenue (costs), or in situations subject to specific accounting principles, capitalised as the value of assets. Non-monetary items measured at historical cost in a foreign currency are recorded at the exchange rate as of the transaction date. Non-cash assets and liabilities recognised at fair value and expressed in foreign currency are converted at the exchange rate applicable as of the date to the fair value measurement. Gains or losses arising on translation of non-monetary assets and liabilities measured at fair value are recognized in accordance with the recognition of gain or loss arising from changes in fair value (i.e. respectively, under other comprehensive income or under profit or loss, depending on where the change in fair value is recognized).

The following exchange rates have been adopted for the purpose of balance sheet valuation:

31 December 31 December

2018 2017 HKD 0.4801 0.4455 CZK 0.1673 0.1632 EUR 4.3000 4.1709 DKK 0.5759 0.5602 RUB 0.0541 0.0604 USD 3.7597 3.4813 GBP 4.7895 4.7001 UAH 0.1357 0.1236

The functional currencies of foreign subsidiaries are the currencies specified in Note 4.

On the balance date the assets and liabilities of these international subsidiaries are converted to the Group's presentation currency at the exchange rates prevalent on the balance date and their statements of comprehensive income are converted at the average currency exchange rates for the reporting period. Exchange differences arising on such translation are recognized in other comprehensive income and accumulated in a separate component of equity. On disposal of a foreign operation, the cumulative amount of the deferred exchange differences recognised in equity and relating to that particular foreign operation are recognised in the profit or loss. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation and translated at the average exchange rate set forth for a given currency by the National Bank Polish as at the balance sheet date.

The average exchange rates for the respective financial periods were as follows:

31 December 2018 31 December 2017

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

HKD 0.4608 0.4849 CZK 0.1662 0.1617 EUR 4.2617 4.2583 DKK 0.5718 0.5725 RUB 0.0577 0.0648 USD 3.6117 3.7782 GBP 4.8168 4.8595 UAH 0.1329 0.1421

Tangible fixed assets Tangible assets are recognised at their purchase price or cost of production reduced by depreciation write-offs and write-offs due to the impairment loss. The initial value of fixed assets includes their purchase price increased by any costs directly associated with the purchase and adaptation of the asset to make it fit for use. This cost also includes the cost of replacement of machine or equipment components at the moment the costs are incurred, if recognition criteria are fulfilled. The costs incurred after the fixed assets are commissioned, such as costs of maintenance and repairs, debit the profit and loss account at the moment the costs are incurred. The purchase price of property, plant and equipment provided by the customers is measured at their fair value at the date of taking over control thereof. At the time of purchase, tangible assets are segregated into component parts of material value, to which a specific useful life can be applied. They include also part of the costs of major repairs. Depreciation is calculated using the linear method throughout the use period of a given asset component:

Period (in Type years) Buildings and structures 10 – 79 Machines and equipment 3 – 54 Means of transport 2 – 19 Computers 1 – 4 Leasehold improvements 2 – 10

The residual value, useful life and depreciation method are reviewed annually and, if necessary – adjusted with effect from the next financial year. A fixed asset can be removed from the balance sheet when it is sold off or in the event when no economic benefits are expected from the continued use of such a fixed asset. A gain or loss on derecognition of an asset (calculated as the net disposal proceeds minus the asset’s carrying amount) is recognised in the profit or loss for the period in which the asset is derecognized. The commenced improvements concern the assets under construction or assembly and are recognized at the purchase price or at the cost of manufacture, less any impairment losses. Tangible assets, which are under construction are not subject to depreciation until they are finalised and appointed to commence its useful life as a tangible asset.

Investment property Investment property is held to earn rentals or for capital appreciation or both, and is measured at fair value.

Investment property is initially measured at cost, including the transaction costs. As at subsequent balance sheet dates, investment property is measured at fair value, determined by an independent valuer, taking into account the location and type of the property and the current market environment. Gains or losses arising from changes in the fair value of investment property are recognised in profit or loss for the period in which they arise, under other income or expenses.

Investment property is derecognised on disposal or permanent withdrawal from use, when no future economic benefits from the property are expected.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Fixed assets classified as held for sale

Non-current assets (or disposal groups) are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. That condition is met only if an asset (or a disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets, and its sale is highly probable within one year from the date of classification.

Assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Some non-current assets classified as held for sale, such as financial assets and deferred tax assets, are measured according to the same accounting principles that were applied by the Group prior to their classification as non-current assets held for sale. Fixed assets classified as held for sale are not depreciated.

Intangible assets

Intangible assets include trademarks, patents and licences, computer software, costs of development work and other intangible assets which meet the recognition criteria specified in IAS 38. This item also includes such intangible items which have not yet been placed in service (intangible assets under construction) and prepayments for intangible assets.

As at the balance-sheet date, intangible assets are carried at cost less amortisation and impairment losses. Intangible assets with finite useful lives are amortised using the straight-line method over their useful lives. Useful lives of individual intangible items are reviewed annually, and when necessary – adjusted from the beginning of the next financial year.

Expected useful lives for particular groups of intangible assets are as follows:

Intangible Computer Other – Trademarks Patents and licenses Development costs assets in software Copyright progress Indefinite. For patents and licenses used under an agreement concluded for Periods of a definite period, the Indefinite. 1 to 5 years 4 to 11 years 5 years - use period of the agreement plus additional period for which its use can be extended is assumed. Assets with an indefinite Assets with an useful life are neither 5 years indefinite useful amortized nor revalued. 4 - 11 years Depreciation 1 - 5 years with the life are neither They are amortized over with the linear - method used linear method amortized nor the term of the contract method

revalued. (3-10 years) – with the linear method. Developed Purchased and Purchased and internally or developed Purchased Developed internally Purchased Purchased developed purchased internally internally Indefinite useful Indefinite useful life – life – annual test annual test or if there are or if there are any any indications of Annual test in the Annual test if Annual test if Annual test if indications of impairment. case of assets not there are there are there are impairment. Impairment commissioned for reasons to reasons to reasons to For the remaining loss test For the remaining – an use and if there are believe that believe that believe that – an annual annual assessment if any indications of impairment loss impairment loss impairment loss assessment if there are any indications impairment. has occurred. has occurred. has occurred. there are any of impairment. indications of impairment.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Intangible assets with indefinite lives are not amortised, but instead they are annually tested for impairment. Intangible assets with indefinite useful lives held by the Group include Goodwill and Trademarks.

Software maintenance costs incurred in subsequent periods are recognized as costs of the period in which they are incurred.

Research costs are recognized under profit or loss, when incurred.

The expenditures related directly to development are recognised as intangible assets only when the following criteria are met: the completion of an intangible asset is technically feasible so that it will be available for use or sale; the Group has the intention to complete the intangible asset and either use it or sell it; the Group has the ability to use or sell the intangible asset; an intangible asset will generate economic benefits, and the Group can prove this advantage among others through the existence of a market or the usefulness of an asset for the Group's needs; adequate technical, financial and other resources are available to complete the development and to use or sell the intangible asset; it is possible to reliably measure the expenditure attributable to the intangible asset during its development. Expenditures incurred for development works within the framework of a specific project are carried forward to the next period, if it can be deemed that they would be recovered in the future. The assessment of future benefits is based on the principles set out in IAS 36. After the initial recognition of the development expenditures, the historical cost model is applied, whereby the assets are recognized at cost less any accumulated amortization and accumulated impairment losses.

Profits or losses on disposal of intangible assets are defined as the difference between the sales revenues and the net value of these intangible assets and are recognized in the result in other operating income or expenses.

12.10.1. Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the asset. The borrowing costs include interest and foreign exchange gains or losses up to the amount that adjusts interest costs. The Group applies the aforesaid principles prospectively from 01 January 2009.

12.10.2. Goodwill Goodwill is initially recognized in accordance with IFRS 3 (see the subsection on business combinations above). Goodwill is not amortized, instead, an impairment test is performed annually in accordance with IAS 36 (see the subsection on impairment of non-financial fixed assets).

Lease Group as a Lessee: Finance leases, which transfer substantially all the risks and rewards incidental to ownership of the leased item to the Group are recognized in the balance sheet at the inception of the lease at the lower of the following two values: fair value of the leased fixed asset or the present value of the minimum lease payments. The lease rent is divided into financial costs and reduction of the lease liability balance in a way that enables obtaining a fixed interest rate from the remaining liability. Finance charges are recognized under profit or loss, unless the capitalization requirements are met. Fixed assets used under finance leases are depreciated over the shorter of the two periods: estimated useful life of a fixed asset or the lease term. Lease contracts according to which the lessor keeps the whole risk and all benefits from ownership of the object of lease are considered operating lease contracts. Lease payments under an operating lease and subsequent lease payments are recognized as expenses in the profit or loss on a straight-line basis over the lease term. Contingent lease payments are recognized as costs in the period in which they become due.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Impairment loss of non-financial fixed assets The following assets are tested for impairment annually: • goodwill, whereas the first impairment test is performed before the end of the period in which the acquisition occurred), • intangible assets with indefinite useful lives, • intangible assets not yet available for use. For other intangible assets and items of property, plant and equipment the entity assesses on an annual basis whether there is any indication that an asset may be impaired. If certain developments or circumstances indicate that the carrying amount of an asset may not be recoverable, the asset is tested for impairment.

For impairment testing, assets are grouped at the lowest level at which they generate cash flows independently of other assets or asset groups (cash-generating units). Assets which generate cash-flows independently from other assets are tested for impairment individually. Goodwill is allocated to those cash-generating units that are expected to generate benefits from business combination synergies, whereas a cash generating unit shall be at least an operating segment.

If the carrying amount exceeds the estimated recoverable amount of assets or cash-generating units to which these assets belong, then the carrying amount is reduced to the recoverable amount. The recoverable amount shall be the higher of: the fair value less the costs to sell or the value in use. In determining value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is first assigned to goodwill. The remaining amount of the impairment loss reduces proportionally the carrying amount of assets attributable to the cash-generating unit. Impairment losses are recognized in the profit and loss account under other operating expenses. Impairment losses on goodwill are not reversed in subsequent periods. As far as other assets are concerned, as at subsequent balance-sheet dates, they are analysed for any indications for reversal of the impairment losses. Reversals of the impairment losses are recognized in the profit and loss account under other operating income.

Financial assets and liabilities and impairment loss

Rules effective until 31 December 2017:

Financial assets are divided into the following categories: • Financial assets held until due date, • Financial assets measured at fair value through profit or loss category, • loans and receivables • financial assets available for sale. Financial assets held to maturity are quoted on the active market. Financial assets are non-derivatives with fixed or determinable payments and fixed maturities that the Company has the intent and ability to hold until maturity, other than: • designated upon initial recognition as measured at fair value through profit or loss, • designated as available for sale, • qualifying as loans and receivables. Financial assets held until due are valued by a depreciated cost using the effective interest rate method. Financial assets held until due are classified as non-current assets, provided that their due date exceeds 12 months from the balance date.

A financial asset measured at fair value through profit or loss is a financial asset that satisfies either of the following conditions: a) is classified as held for trading. Financial assets are classified as held for trading if they are: - acquired principally for the purpose of sale in the short term,

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

- part of the portfolio of identified financial instruments that are managed jointly and for which there is evidence of current profit, - derivatives, except for derivatives constituting part of hedge accounting and financial guarantee agreements, b) was, in accordance with IAS 39, classified into this category upon initial recognition. The financial assets measured at fair value through profit or loss are measured at fair value taking into account their market value at the balance sheet date, without taking into account the transaction costs. Changes in the value of these financial instruments are recognized in the statement of comprehensive income as revenue (positive net changes in the fair value) or financial costs (negative net changes in the fair value). If a contract contains one or more embedded derivatives, the whole contract may be classified as financial assets measured at fair value through profit or loss. This does not include cases where the embedded derivative does not significantly modify the cash flows from the contract or it is clear without any or after a superficial analysis that if a similar hybrid instrument was first considered, the separation of the embedded derivative would be prohibited. Financial assets may be, at the initial recognition, classified as measured at fair value through profit or loss, if the criteria set below are met: (i) such a classification eliminates or materially decreases the incoherence of the recognition or measurement (accounting mismatch); or (ii) assets are a part of a group of financial assets which are managed and evaluated on the basis of fair value, according to the documented risk management strategy; or (iii) financial assets contain embedded derivatives which should be recognized separately. As at 31 December 2017, no financial assets were classified to the category of assets measured at fair value through profit or loss. Loans and receivables are non-derivative financial assets with determined or determinable payments that are not quoted on the active market. They are stated in current assets unless their due date exceeds 12 months from the balance sheet date. Loans granted and receivables with the maturity period longer than 12 months from the balance sheet date are recognised as fixed assets. Financial assets available for sale are non-derivative financial assets which were classified as available for sale or not belonging to any of the three categories of assets mentioned earlier. Financial assets available for sale are recognized at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset. In the event of a lack of share market quotations on an active market and the inability to reliably define their fair price using alternative methods, the financial assets available for sale are valued as per purchase price less their value depreciating write-offs. The positive or negative difference between the fair value of financial assets available for sale (if their price is determined on the regulated market or whose fair value can be measured in a reliable manner) and their purchase price, net of deferred tax, shall be recognized in other comprehensive income. A reduction in the value of assets available for sale as a result of an impairment loss is recognised as the financial cost. The purchase and sale of financial assets is a recognised on the day the transaction is made. Upon initial recognition, financial assets are measured at fair value plus – in the case of assets not classified as measured at fair value through profit or loss – transaction costs that are directly attributable to the acquisition. A financial asset is removed from the balance sheet when the Group loses its control over contractual rights incorporated in a given financial instrument. Typically this occurs when financial instrument is sold or when all cash flows associated with a given instrument are transferred to an independent third party.

Rules effective from 01 January 2018

Financial assets

As at the acquisition date, the Company measures financial assets at their fair value i.e. most frequently at the fair value of the consideration paid. Transaction costs are included by the Company in the initial valuation of all financial assets, except for the assets measured at fair value through profit or loss. The exception to this rule are trade receivables, which are measured at their transaction price in accordance with IFRS 15, whereas this does not apply to the trade receivables with the payment period longer than one year and which include a significant financing component as defined in IFRS 15. For the purpose of measurement after initial recognition, the Company classifies financial assets other than hedging derivatives as: • financial liabilities measured at amortised cost, • financial assets measured at fair value through other comprehensive income, • financial assets measured at fair value through profit or loss and

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• equity instruments measured at fair value through other comprehensive income. These categories define the rules for measurement as at the balance sheet date and the recognition of revaluation gains or losses in profit or loss or in other comprehensive income. The Company classifies financial assets into categories based on the business model adopted by the Group for managing financial assets and contractual cash flows characteristic for a financial asset.

A financial asset is measured at amortized cost if both of the following conditions are met (and were not designated at the time of initial recognition as measured at fair value through profit or loss): • the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets measured at amortized cost by the Company include: • loans, • trade receivables and other receivables (except for those for which IFRS 9 is not applicable), • debt securities, • cash.

The aforementioned classes of financial assets are presented in the consolidated statement of financial position, broken down into long-term and short-term assets under “Trade receivables and other receivables” and “Other financial assets”. Short-term receivables are measured at the amount required for payment due to insignificant discount effects. Given insignificant amounts, the Group does not distinguish interest revenue as a separate item, but recognizes it in financial revenue.

Impairment loss of financial assets – trade receivables measured at amortized cost less gains on reversal of impairment losses are recognised by the Group under “Other operating costs” in the profit and loss account. Other gains and losses from financial assets recognized in the profit or loss, including exchange differences, are presented as financial revenue or costs.

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: • the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest revenue, impairment gains and losses and exchange gains and losses related to these assets are measured and recognized in profit or loss in the same way as in the case of financial assets measured at amortized cost. Other changes in the fair value of these assets are recognized in other comprehensive income. On derecognition of a financial asset at fair value through other comprehensive income, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss. A financial asset shall be measured at fair value through profit or loss if it does not satisfy the criteria for measurement at amortized cost or at fair value through other comprehensive income and is not an equity instrument designated at fair value through other comprehensive income upon initial recognition. In addition to this category, the Company classifies financial assets designated upon initial recognition for measurement at fair value through profit due to meeting the criteria set out in IFRS 9.

This category includes: • all derivatives presented in the statement of financial position under a separate item “Financial derivatives”, except for hedging derivatives recognized in accordance with the hedge accounting; • shares and interests in entities other than subsidiaries and associates, • investment fund shares/units Instruments from this category are measured at fair value, and the effects of the measurement are recognized in the “Financial income” or “Financial expenses”, as appropriate. Gains and losses on the measurement of financial assets are determined by a change in the fair value determined based on the active market prices as at the balance sheet date or using valuation techniques if an active market does not exist.

Equity instruments measured at fair value through other comprehensive income include investments in equity instruments other than financial assets held for trading or conditional payment in a business combination, in respect of which upon initial recognition, the Company made an irrevocable choice regarding presentation of subsequent changes in fair value of these instruments in other comprehensive income. The Company makes this choice individually and separately in relation to each equity instrument.

Cumulative gains or losses on the fair value measurement, previously measured through other comprehensive income, cannot be reclassified as profit or loss under any circumstances, including upon derecognition of such assets. Dividends from equity instruments classified in this category are recognized in the result in “Financial income” after meeting the conditions for recognizing dividend income, as specified in IFRS 9, unless the dividends obviously represent the recovered investment costs.

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Financial assets classified into the categories measured at amortized cost and measured at fair value through other comprehensive income due to the business model and the nature of cash flows related to them are subject to assessment at each balance sheet date to account for expected credit losses, regardless of whether there is any indication of a loss. The method of making this assessment and estimating the impairment allowances for expected credit losses differs for individual classes of financial assets: • For trade receivables, the Company applies a simplified approach assuming the calculation of impairment allowances for expected credit losses for the entire life of the instrument. Impairment estimates are made on a collective basis, and receivables have been grouped according to the overdue period. An impairment estimate is based primarily on the historical overdue periods and the relationship between the amounts overdue and the actual repayments made over the last 10 years, taking into account the information available about the future. • With respect to loans, the Company used a model based on three components for recognizing impairment allowances for the expected credit losses:  A three-step ECL qualification model - expected credit loss,  Application of the internal rating adopted on the basis of data from external rating agencies;  Qualification of loans according to the adopted scoring model. • With respect to other classes of assets – for instruments for which the increase in credit risk from the initial recognition was not significant or for which the risk is low – the Group assumes that default losses over the following 12 months shall be first recognised. If the increase in credit risk, from its initial recognition, is significant, losses corresponding to the entire life of the instrument are recognised.

The Group assumed that an increase in risk occurs, when a payment is overdue for more than 30 days, or when the financial situation has deteriorated. The Group assumes that an event of default occurs when a payment is overdue for more than 180 days or when there is a high probability that the receivables will not be realized. This condition was adopted on the basis of the conducted historical analysis.

Financial liabilities Financial liabilities other than hedging derivatives are recognized under the following items of the statement of financial position: • loans, borrowings and other debt instruments, • finance lease, • trade liabilities and other liabilities. As at the acquisition date, the Company measures financial liabilities at their fair value i.e. most frequently at the fair value of the consideration received. Transaction costs are included by the Company in the initial valuation of all financial liabilities, except for the liabilities measured at fair value through profit or loss.

After initial recognition, financial liabilities are measured at amortized cost using the effective interest method, except for financial liabilities held for trading or designated as measured at fair value through profit or loss. The Group classifies derivatives other than hedging instruments as financial liabilities at fair value through profit or loss. Short-term liabilities are measured at the amount required for payment due to insignificant discount effects.

Gains and losses on the measurement of financial liabilities are recognized in profit or loss from financing activities.

Hedge accounting The Company applies prospectively the hedge accounting requirements set out in IFRS 9. As at the date of the first application of IFRS 9, the Company assessed all open hedging relationships and concluded that they meet all the eligibility criteria included in this Standard.

The Group applies specific accounting principles for derivatives used as cash flow hedges. The application of hedge accounting requires that the Group should satisfy the conditions laid down in IFRS 9 (until 31 December 2017 – IAS 39) relating to hedging policy documentation, probability of occurrence of hedged transactions and hedge effectiveness. In the period covered by the financial statements, the Group designated certain forward contracts as hedging cash flows and net assets. Forward contracts were concluded by the Group in order to manage the currency risks in connection with the sales and purchase transactions carried out in foreign currencies. The Group has treated all derivatives as hedges.

All hedging instruments are measured at fair value. Insofar as a hedging instrument provides an effective hedge, a change in the fair value is recognized in other comprehensive income and accumulated in equity from revaluation of cash flow hedges. The ineffective portion of the hedge is recognized immediately in the profit or loss.

When a hedged item affects the profit or loss, the cumulative gains and losses on measurement of hedging derivatives, previously recognised in the other comprehensive income, are reclassified from equity to the profit or loss.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Where a hedged transaction results in the recognition of non-financial assets or liabilities, gains and losses on the measurement of derivative hedging instruments previously recognized in other comprehensive income are transferred from equity and included in the initial valuation (purchase price) of the hedged item. Should it be likely that the planned future hedged transaction will not occur, gains and losses from the measurement of cash flow hedges are immediately transferred to the profit and loss account. If a hedging relationship no longer meets the effectiveness requirements, the Company ceases to apply hedge accounting principles prospectively for such a relationship. Cumulative gains or losses previously recognized in connection with this relationship are presented in equity from measurement of cash flow hedging instruments until the planned future transaction takes place.

12.13.1. Fixed assets classified as held for sale Non-current assets (or disposal groups) are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. That condition is met only if an asset (or a disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets, and its sale is highly probable within one year from the date of classification.

12.13.2. Hedges of net investments in foreign operations Hedges of net investment in foreign operations, including a hedge of a monetary item accounted for as a part of the net investment, are accounted for similarly to cash flow hedges. Gains or losses on the hedging instrument attributable to the effective portion of the hedge are recognized in other comprehensive income while any gains or losses relating to the ineffective portion of the hedge are recognized in profit or loss. On disposal of foreign operations, the amount of gains or losses recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment.

Inventory Inventories are measured at the lower of the two values: the purchase price or the cost of manufacture and the realizable net selling price. The purchase price or the cost of manufacture of an item of the inventories includes all costs of purchase, costs of processing and other costs incurred in bringing the inventories to their present location and condition – both for the current and previous years. Inventory is measured according to the following principles: • Materials and raw materials – at a weighted average price, • Finished products and work in progress – at technical cost of manufacture, • Goods – at a weighted average price.

Obtainable net sales price is the estimated sales price established as a part of normal business reduced by the cost of finishing the product and estimated costs necessary to finalise the sales transaction.

Trade and other receivables Trade receivables are recognized and reported in accordance with the provisions of IFRS 15. If the impact of time value of money is substantial, the receivables' value is defined by discounting the forecast future cash flow do the current value. Discount rate reflecting current market time value of money evaluation is used. If a discounting method had been used, the increase of receivables resulting from the passing of time is presented as financial revenue. Other liabilities include, in particular, advance payments for future purchases of inventory and services. Advances are presented in accordance with the nature of the assets to which they refer – as fixed assets or current assets respectively. As non-monetary assets, advance payments are not subject to discounting. Budget receivables are presented under other non-financial assets, excluding corporate income tax receivables, which are presented as a separate item in the balance sheet. The Group applies factoring agreements in relation to the selected groups of trade receivables without recourse (in full) i.e. upon the transfer of receivables to the factor, the asset is derecognized in the balance sheet and upon transfer of receivables to the factor, the profit is recognized under operating activities.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The detailed information is presented in Note 27.

Cash and cash equivalents Cash and current investments presented in the balance sheet include cash in bank accounts and in the cash register as well as current investments with an initial maturity date of not more than three months.

Interest bearing bank loans, borrowings and debentures. On initial recognition all bank loans, borrowings and debentures are formulated according to their fair value reduced by costs related to acquiring the loan. After initial recognition debentures, bank loans and borrowings subject to interest are priced according to depreciated cost with the use of the effective interest rate method. On defining the depreciated costs related to the acquisition of the loan as well as discounts and premiums obtained on settlement of the liability are taken into consideration. Revenues and expenses are recognized in profit or loss on deletion of a liability from the balance sheet and as a result of recognition using the effective interest rate method.

Trade liabilities and other liabilities Short-term trade liabilities are measured at the amount required for payment due to insignificant discount effects. The financial liabilities measured at fair value through profit or loss include financial liabilities held for trading and financial liabilities initially classified as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of sale in the near future. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial liabilities may be, at the initial recognition, classified as measured at fair value through profit or loss, if the criteria set below are met: • such a qualification eliminates or significantly reduces the treatment inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases, or • the liability is part or a group of financial liabilities that is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management strategy, or • when financial liabilities contain embedded derivatives that should be recognized separately. The financial liabilities measured at fair value through profit or loss are measured at fair value taking into account their market value at the balance sheet date, without taking into account the transaction costs. Changes in the fair value of these instruments are recognized in profit or loss as financial income or expenses. Other financial liabilities which are not financial instruments measured at fair value through profit or loss are measured at amortized cost using the effective interest rate method.

The Group excludes a financial liability from its balance sheet only when this liability expires, i.e. when contractual obligation has been fulfilled, discontinued or has expired. Replacement of an existing debt instrument by an instrument subject to substantially different terms, between the same parties, is treated by the Group as the derecognition of the original liability and the recognition of a new liability. Similarly, significant modifications of the terms and conditions of a contract related to an existing financial liability is recognized as the derecognition of the original and the recognition of a new liability. The differences in the respective carrying amounts resulting from the change are recognized in profit or loss. Other non-financial liabilities include in particular liabilities towards tax authorities on account of the goods and services tax, corporate income tax, personal income tax, social security liabilities and liabilities from advance payments received, which will be settled by the supply of products, goods, materials or services. Other non-financial liabilities are recognized at the amount payable. In relation to certain suppliers, the Group applies reverse factoring agreements ("supply chain financing"). Trade payables are reclassified to other liabilities after acceptance of payments by the financial institutions acting as parties to the factoring agreements.

Equity Share capital is disclosed at the nominal value of the shares issued, in accordance with the Articles of Association of the Parent Company and the entry in the National Court Register.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The Parent Company's shares acquired and held by the Parent Company or Subsidiaries reduce the equity. Treasury shares are measured at cost.

The share premium is the amount received by the Company over and above the face value of its shares, less the costs of issue.

Other capitals include: • capital from recognition of measurement of share-based payment programs, and • capital from the accumulation of other comprehensive income, including: o measurement of cash flow hedging instruments (see the hedge accounting section), o foreign exchange differences on translation of foreign subsidiaries (see the section on transactions in foreign currencies), o share in other comprehensive income of entities accounted for using the equity method (see the section on investments in associates).

Retained earnings include the previous years’ profit or loss carried forward (also those allocated to the capital by shareholders' resolutions) and the profit or loss for the current year.

All the transactions with the owners of the Parent Company are presented separately in the Consolidated statement of changes in equity.

Provisions The reserves are created when the Group has an obligation (legal or otherwise) resulting from past events or when it is probable that fulfilment of such obligation will cause outflow of economic benefits and the amount of such obligation can be reliably assess. If the Group expects that costs covered by the reserve will be recovered, for instance pursuant to insurance policy, then such recoverable value is recognised as a separate asset component, but only when it is absolutely certain that the value will be indeed recovered. The expenses relating to specific provisions are presented in the statement of comprehensive income less of any reimbursements. In the event that the influence of the value of money is significant at the time, the amount of reserves is established by discounting the expected future cash flow to the current value using the discount rate which reflects current market estimations concerning the value of money at the time and any risk which may be associated with the given liability. If a discounting method had been used, the increase of the reserve resulting from the passing of time is presented as a financial costs.

Employee benefits Under the Group's remuneration schemes, the Company's employees are entitled to retirement bonuses. Retirement packages are issued as a once-off payment at the time of retirement. The amount of pension benefits is dependent on the period of employment and the employee's average remuneration. The Group recognizes a provision for future liabilities for retirement bonuses and jubilee awards to assign costs to the periods to which they relate. Pursuant to International Accounting Standard 19 retirement payments are specific benefits payable after termination of employment. The present value of these liabilities for each balance sheet date is calculated with the use of the Company's in-house tool and verified by the actuary every few years. The accrued liabilities concern the period until the balance date and are equal to the discounted payments to be made in the future, taking into account the change of probability of payments. Demographic information and information on employment turnover is based on historical data. Re-measurement of liabilities due to employee benefits relating to defined benefit plans including actuarial gains and losses is recognized in other comprehensive income and is not subject to subsequent reclassification to profit or loss. The Group recognizes the following changes in net liabilities due to defined benefit plans respectively within the own cost of sales, general and administrative expenses and the sales expenses, which include: • the labour costs (including, among others, the current service costs, past service costs) • net interest on the net liability for defined benefit plans.

Accruals

The Group discloses the prepaid expenses related to future reporting periods, including mainly rental rentals, in the assets under “Accruals”.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

“Deferred charges”, under liabilities, include deferred income, including cash received for financing fixed assets that are accounted for in accordance with IAS 20 “Government Grants”. Accrued expenses are recognized under “Trade and other payables”.

Subsidies are recognized only when there is sufficient certainty that the Group will meet the conditions related to a given subsidy and that the subsidy will actually be received.

A subsidy related to a cost item is presented as income proportionally to costs which the subsidy is supposed to offset.

A subsidy financing an asset is gradually recognized in the result as income over the periods, proportionally to the impairment losses recognized on that asset. For the presentation purposes, in the consolidated statement of financial position, the Group does not subtract subsidies from the carrying amount of assets, but shows subsidies as deferred income under “Accruals and deferred income”.

Share-based payments

The Group operates an incentive program under which the key management personnel are granted options to shares of the Parent Company. The key management personnel's compensation is determined indirectly by reference to the fair value of the equity instruments granted. The fair value of the program is measured as at the grant date, whereas non-market vesting conditions (achieving the assumed profit) are included in the fair value estimation. The cost of wages and the corresponding decrease in the reserve capital are recognized based on the best available estimates as to the number of options to be acquired in a given period. The company adjusts these estimates if future information indicates that the number of options granted differs from previous estimates. Adjustments of estimates regarding the number of options granted are recognized in profit or loss for the current period - no adjustments to previous periods are made. After exercising the options to shares, the amount of capital from the measurement of the options granted is transferred to the share premium.

Sales revenue

The Group companies shall apply the principles defined in IFRS 15 ‘Revenue from Contracts with Customers’. The revenues and profits are understood as probable occurrence – in the reporting period – of reliably measured economic benefits, resulting in an increase in assets, or a decrease in liabilities, that leads to an increase in equity or a reduction in its deficit other than by contributions from shareholders or owners.

Sales revenues are the amounts received or receivables from the sale of tangible assets and services, net of the tax on goods and services (VAT). Sales revenues are measured at actual sales prices, net of discounts, rebates and bonuses. The Group companies shall recognize revenue based on the 5-step model, assuming the following stages of analysis: • Identify the contract(s) with a customer; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contracts; • Recognise revenue when (or as) the entity satisfies a performance obligation.

Identify the contract with the customer

The Group accounts for a contract with a customer only when all of the following criteria are met: • the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations; • the Group can identify each party's rights regarding the goods or services to be transferred; • the Group can identify the payment terms for the goods or services to be transferred; • the contract has commercial substance (i.e. the risk, timing or amount of the entity's future cash flows is expected to change as a result of the contract); and

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• it is probable that the Group will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Identify the performance obligations in the contract At contract inception, the Group assesses the goods or services promised in a contract with a customer and identifies as a performance obligation each promise to transfer to the customer either: a good or service (or a bundle of goods or services) that is distinct, or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

A good or service is distinct if both of the following criteria are met: • the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and • the Group’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Determine the transaction price When determining the transaction price, the Group considers past customary business practices. The transaction price is the amount to which the Group expects to be entitled in exchange for the transfer of goods and services to the customer, excluding amounts collected on behalf of third parties. Consideration specified in a contract with a customer may include fixed amounts, variable amounts or both.

Where a contracts includes a significant financing component, the Group adjusts the promised amount of contractual consideration for the time value of money. The Group applies a practical solution, according to which no adjustment for the significant financing component is made in the case of contracts providing for payment time limits shorter than one year.

The warranties granted by the Group for products/services sold are recognized in accordance with IAS 37, since their terms reflect only the assurance that products/services provided by the Group will operate as intended by the parties, in accordance with the specifications.

Allocate the transaction price to the performance obligations in the contracts

The Group allocates the transaction price to each performance obligation (or to a separate good or separate service) in the amount reflecting the consideration that is due, as expected by the Group, in exchange for the transfer of the promised goods or services to the customer.

Revenue is recognized when a performance obligation is satisfied either over time, or at a point in time.

The Group recognises revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer.

The Group recognizes incremental costs of obtaining a contract provided that it expects to recover these costs in a period of 12 months or less from the moment they are incurred. Incremental costs that are not expected to be recovered and the costs expected to be recovered in a period of 12 months or less from being incurred are recognized as costs of the period. The incremental costs include the commissions of the Sales Department employees paid only in connection with obtaining of a contract. The costs are presented in accruals and are amortized using the straight-line method over the contract period.

Note 27 describes standard terms of payment regarding the sale of products and goods i.e. basic operating activities. Within the framework of the sale of products and goods, the Group as a manufacturer ensures a standard warranty period of 2 years, in accordance with the regulations applicable on the local market. The Group recognizes the sales adjustments resulting from the products and goods returned as a result of damage or warranty exchange obligations in the reporting period on an on-going basis. Adjustments of previous years’ revenue have no material effect on the Company's financial statements.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

12.24.1. Sale of goods and products

Sale of goods and products

Revenue from the sale of goods and products is recognised if the following conditions are met: • The Group has transferred to the purchaser the significant risk and benefits arising from the ownership rights to the goods. The condition is considered to have been met when the Customer is supplied with the goods or products. • The revenue can be reliably estimated. • it is probable that the economic benefits associated with the transaction will flow to the Group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably.

In Note 27, the Group described standard terms of payment regarding the sale of products and goods i.e. basic operating activities. Within the framework of the sale of products and goods, the Group as a manufacturer ensures a standard warranty period of 2 years. The Group recognizes the sales adjustments resulting from the products and goods returned as a result of damage or warranty exchange obligations in the reporting period on an on-going basis. Adjustments of previous years’ revenue have no material effect on the Group's financial statements.

12.24.2. Interest Interest revenue is presented successively as it grows (with consideration of the effective interest rate method, which defines the discount rate for future cash revenue during the estimated financial instruments usage period) in relation to the balanced net value of a given element of the financial assets.

12.24.3. Dividends Dividends are recognized upon determination of the shareholders' right to receive them.

12.24.4. Revenue from lease (operating lease) Revenue from renting investment properties is recognised using linear method throughout the rent period based on agreements in force.

12.24.5. Government subsidies If there is a justified certainty that a subsidy will be won and that all requirements related to it will be met, government subsidies are presented by their fair value. If a subsidy is related to a cost item, it is presented as income proportionally to costs which the subsidy is supposed to compensate. If a subsidy is related to an element of the assets, its fair value is presented in the future revenue account, and then, gradually, by equal annual write-offs, added to the profit and loss account throughout the estimated period of usage of an element of assets related to it.

Tax

12.25.1. Current income tax Payables and receivables on account of the current tax for current and past periods are measured at the amounts expected to be paid to the tax authorities (recoverable from tax authorities) applying the tax rates and tax laws that are legally or substantively enacted at the balance sheet date.

12.25.2. Deferred tax For financial reporting purposes, deferred tax is calculated using the liability method in respect of temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts disclosed in the financial statements. reserve for deferred tax is expressed in relation to all positive transitional differences:

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AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• except when reserve for deferred tax arises as a result of initial recognition of business value or initial recognition of the asset or liability during transaction not constituting a merger of business entities at the time of it taking place, which does not affect the gross profit, nor the taxable income or taxable loss, as well as • in a case of transitional positive differences which arise as a result of investments into a subsidiary or associated company and participation in joint ventures – with the exception of cases when the transitional due dates are reversed and are subject to investor’s audit and when it’s probable that in the foreseeable future the transitional differences will not be reversed. Deferred tax assets are recognised for all deductible temporary differences, unused tax allowances, and carry-forward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, assets, and carry-forward of unused tax losses can be utilized • except when assets from deferred taxes concerning negative transitional differences are created as a result of initial entry of the asset or liability at the time of the transaction, which does not constitute the merger of the business entities and at the time of it taking place and they do not have any effect on the gross financial result nor on the taxable income or loss. • For negative transitional differences as a result of investments in a subsidiaries or affiliated entities as well as participation in joint ventures, the assets from deferred tax are presented on the balance sheet only in the amount that is probable in the foreseeable future that the above mentioned transitional differences will reverse and such an income will be achieved, which will allow deduction of the negative transitional differences. The carrying amount of a deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that taxable income sufficient for a partial or full realization of the deferred income tax asset will be achieved. An unrecognised deferred tax asset is re-assessed as at each balance sheet date, and recognised up to the amount which reflects the probability to derive in future such taxable income that will allow recovering the asset in question. The asset from deferred income tax and reserves for deferred tax are valued using tax rates, which as per assumptions will be effective at the time, when the asset or reserve will be utilised, adopting tax rates as the basis (and tax legislation) effective as of the balance date or such rates (tax legislation), which is known to be effective in the future on the balance date.

The income tax on items registered outside profit and loss is recorded outside profit and loss: in other total income for items included in other total income or directly in the equity for items included directly in the equity. The Group offsets deferred income tax assets against deferred income tax liabilities only and exclusively when it holds an enforceable title to offset receivables against current income tax liabilities, and when the deferred income tax is related to the same taxpayer and the same tax authority.

12.25.3. Goods and services tax (Value Added Tax) Revenues, expenses, assets and liabilities are recognised net of the amount of value added tax except: • where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case value added tax is recognised as part of acquisition price of the asset or as part of the expense item as applicable, or • receivables and payables that are recognized taking into account the amount of tax on goods and services. The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Net profit per share Net profit per share for each period is calculated by dividing the net profit allocated to shareholders of the Parent Company for the given period by the weighted average number of shares in a given reporting period. The Group does not present diluted profit/loss per share, since there are no ordinary shares that could potentially dilute the results. The dilutive effect of the outstanding options is taken into account as additional share dilution.

13. Operating segments

Amica S.A. Group is a manufacturer and distributor of household appliances and its production activities are held in a single location in Wronki.

For management purposes, the Group has been organised into business units, based on the manufactured products and services provided. The following operating segments are distinguished:

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• Free-standing heating equipment segment includes free-standing cookers manufactured by Amica S.A. • Built-in heating equipment segment includes built-in cookers and ovens manufactured by the Group. • Other heating equipment segment includes built-in hobs manufactured by the Group. • Goods segment includes equipment imported for the purpose of resale, including refrigerators, washing machines, microwave ovens, dishwashers and small appliances.

None of the Group's operating segments have been combined with another segment to create the reporting segments.

The Management Board separately monitors business segment results in order to determine the allocation of resources as well as assess the effects of this allocation and the financial performance. The basis for the assessment of performance is the operating profit or loss, which in certain respects are measured differently from the operating profit or loss presented in the financial statements. Financing of the Group (including financial costs and revenue), certain operating expenses and income taxes are monitored at the Group level and are not allocated to the segments.

The table below presents the revenue and profit (loss) attributable to particular operating segments for 2018 and for 2017 (in thousands of PLN).

Free- Built-in Other For the period from 01/01/ to standing heating heating Goods Other Total 31/12/2018 heating equipment equipment equipment Revenue from external customers 688,080 389,935 217,326 1,594,758 37,539 2,927,638 Cost of goods sold 483,939 265,436 136,082 1,214,075 24,874 2,124,406 Operating profit (loss) of the segment 204,141 124,499 81,244 380,683 12,665 803,232 Operating profit (loss) of the segment 29.7% 31.9% 37.4% 23.9% 33.7% 27.4% in % Operating expenses allocated to the 107,446 71,736 44,643 281,629 0 505,454 segment Operating profit (loss) of the segment 96,695 52,763 36,601 99,054 12,665 297,778 Operating profit (loss) of the segment 14.1% 13.5% 16.8% 6.2% 33.7% 10.2% in % Profit (loss) on other operating activities 145,780 and non-allocated costs Group's operating profit or loss 151,998 Profit (loss) on financing activities -15,389 Gross profit of the Group 136,609 Mandatory charge on the profit 22,014 Net profit of the Group 114,595

Free-standing Built-in Other For the period from 01/01/ to heating heating heating Goods Other Total 31/12/2017 equipment equipment equipment Revenue from external customers 673,494 355,178 202,262 1,390,300 33,200 2,654,434 Cost of goods sold 462,713 234,829 121,747 1,039,995 23,825 1,883,109 Operating profit (loss) of the segment 210,781 120,349 80,515 350,305 9,375 771,325

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Operating profit (loss) of the segment 31.3% 33.9% 39.8% 25.2% 28.2% 29.1% in % Operating expenses allocated to the 112,451 74,530 39,624 278,384 0 504,990 segment Operating profit (loss) of the segment 98,330 45,819 40,891 71,921 9,375 266,335 Operating profit (loss) of the segment 14.6% 12.9% 20.2% 5.2% 28.2% 10.0% in % Profit (loss) on other operating activities 122,819 and non-allocated costs Group's operating profit or loss 143,516 Profit (loss) on financing activities -22,526

Gross profit of the Group 120,990 Mandatory charge on the profit 30,145 Net profit of the Group 151,135

Breakdown of the Group's revenue by geographical area in thousands of PLN (geographical segmentation):

Year ended 31 December Year ended 2018 31 December 2017 Sale of products and goods* 2,815,142 2,549,789 Poland 755,750 699,032 East 483,291 461,130 North 237,534 208,894 South 202,931 188,798 West 1,135,635 991,936 Other sales, including: 112,496 104,645 -spare parts and materials 74,092 68,912 -services 38,404 35,733 TOTAL 2,927,638 2,654,434 * The above geographical directions refer mainly to particular regions of Europe.

The above information on income is based on the information on the registered offices of the Group's customers. The Group's customer base does not include actors, accounting for a turnover in excess of 10% of the Group's total revenue. The assets of the individual segment are monitored only at the level of tangible fixed assets and inventory, while reconciliation of these items to their carrying amounts is presented in the tables below.

The majority of the fixed assets assigned and unassigned to segments is located in Poland..

Total Total Data for the period from 01/01 to 31/12/2018 heating Goods Other allocated to Unallocated Total equipment the segments Product inventories 62,644 303,338 365,982 365,982

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Semi-finished product and work-in-progress 9,342 9,342 9,342 inventories Supplies of materials 54,220 54,220 54,220 Spare parts 0 17,969 17,969 Total inventories 126,206 303,338 0 429,544 17,969 447,513 Total fixed assets and intangible assets 222,761 516 185 223,462 324,334 547,796 Other information: Depreciation 24,417 198 24,615 28,552 53,167 Impairment loss of non-financial fixed assets 0 0 Assets of the operating segment 0 0 Expenditure on operating sector's fixed assets 60,143 60,143 35,165 95,308

Total Total Data for the period from 01/01 to 31/12/2017 heating Goods Other allocated to Unallocated Total equipment the segments Product inventories 64,308 261,877 326,185 326,185 Semi-finished product and work-in-progress 8,176 8,176 8,176 inventories Supplies of materials 55,032 55,032 55,032 Spare parts 0 17,795 17,795 Total inventories 127,516 261,877 0 389,393 17,795 407,188 Total fixed assets and intangible assets 194,269 715 0 194,984 315,686 510,670 Other information: Depreciation 21,790 198 21,988 25,913 47,901 Impairment loss of non-financial fixed assets 0 0 Assets of the operating segment 0 0 Expenditure on operating sector's fixed assets 69,820 69,820 26,400 96,220

14. Revenue and costs

Other operating income Year ended Year ended

31 December 2018 31 December 2017 EU subsidies 341 242 Compensation received, fines 3,996 4,367 Return of goods 61 148 Surplus on inventory 345 675 Free shipments 1,072 1,329 Reversal of the provision for unjustified bonuses 580 2,563 Profit from bargain purchases - 14,198 Settlements with the insurer 1,092 333 Derecognition of settlement balances - 129 Settlements attributable to use of cars 716 758 Profit from sale of non-financial fixed assets - 157 Other items 1,593 1,245 9,796 26,144 To identify the transactions related to other operating revenue by type – the Company adopted a criterion that the transaction value must exceed PLN 100 thousand. Transactions which do not meet this criterion are presented under other items.

Other operating expenses Year ended 31 Year ended 31

December 2018 December 2017 Loss on sale of non-financial fixed assets 1,415 0 Revaluation of inventory 408 886 Revaluation of receivables 1,169 9,685 Corporate Social Responsibility (CSR) 3,304 4,250

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Costs associated with termination of employment 495 1,565 Shortages and damage 522 662 Recycling 161 146 Replacement of defective equipment * - 3,735 Inventory scrapping 1,495 2,337 Creation of a provision for retirement benefits 38 263 Penalties and damages 1,164 493 Derecognition of unsettled account balances 262 1,061 Other operating expenses 1,032 782 11,465 25,865 * In 2018, all replacement costs are presented as an adjustment to selling costs

Financial revenue Year ended 31 Year ended 31

December 2016 December 2017 Interest revenue 533 861 Revenue from derivatives 6,141 2,304 Other 48 0 Total financial revenue 6,722 3,165

Financing costs Year ended 31 Year ended 31

December 2018 December 2017 Interest on credit and loans 6,481 8,320 Interest on the bonds issued 2,830 2,814 Financial cost from factoring 4,496 4,519 Interest on other liabilities 798 798 Financial costs from financial leases 880 1,303 Costs from derivatives excluded from hedge accounting 1,687 1,923 Surplus of currency translation losses over gains 4,939 5,776 Loss on disposal of financial assets 68 Total financial costs 22,111 25,521

Costs by type Year ended 31 Year ended 31

December 2018 December 2017 Depreciation 53,167 47,901 Consumption of materials and energy 754,603 716,862 Third-party services 239,905 194,522 Taxes and charges 30,199 30,588 Cost of employee benefits 327,400 308,154 Other costs by type 212,079 219,416 Value of goods and materials sold 1,229,213 1,055,771 Total costs by type, including: 2,846,566 2,573,214 Items included in the cost of goods sold 2,124,406 1,882,382 Items included in cost of sales 313,332 291,852 Items included in administrative expenses 336,233 336,963 Change in inventory of products and cost of work -72,595 -62,017 performed by the undertaking for its own purposes

Depreciation of tangible fixed assets and amortisation of intangible assets Year ended Year ended 31 December

31 December 2018 2017 Cost of goods sold 25,921 23,774 Administrative expenses 23,165 22,671 Costs of sale 4,081 1,456 Other - -

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Total amortisation of intangible assets and depreciation of tangible fixed assets 53,167 47,901

Cost of employee benefits Year ended Year ended

31 December 2018 31 December 2017 Remuneration 276,296 263,942 Cost of social security contributions 39,041 33,844 Cost of retirement benefits 407 332 Other employee benefit costs 11,656 10,036 Total cost of employee benefits 327,400 308,154

15. Income tax

Tax burdens The main elements of the tax burden for the years ended 31 December 2018 and 31 December 2017 are as follows:

Year ended 31 Year ended 31

December 2018 December 2017 Recognized in profit or loss

Current income tax

Current income tax expense 23,991 22,568 Adjustments for current tax of prior periods 0 0 Deferred income tax Associated with the creation and reversal of temporary differences -1,977 -52,713 Taxes recognised in the consolidated profit and loss account 22,014 -30,145 0 Statement of changes in equity Current income tax Tax associated with the sale of own shares - - Income tax expense recognized in equity 0 0

Statement of comprehensive income Deferred income tax Tax on net profit (loss) due to changes in the effective portion of cash 8,423 -5,619 flow hedges Tax on unrealized gains (losses) on financial assets available for sale 0 0 Tax on effective portion of cash flow hedges settled during the year 0 0 Tax advantage (tax expense) disclosed in other comprehensive 8,423 -5,619 income

Year ended 31 Year ended 31

December 2018 December 2017 Exchange differences on translation of foreign operations Profit (loss) for the period arising from exchange differences on translation of 1,062 -24,224 foreign operations 1,062 -24,224

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Reconciliation of effective tax rate Reconciliation of income tax from gross profit before tax according to statutory tax rate, with income tax calculated according to the Group's effective tax rate for the years ended 31 December 2018 and 31 December 2017 is as follows:

Year ended 31 Year ended 31

December 2018 December 2017 Gross profit before tax 136,609 120,990 Tax at the statutory local tax rates applicable in the countries of offices 36,768 33,292 of the related companies Adjustments for current tax of prior periods Tax associated with the use of previously unrecognised tax losses Tax investment incentives Tax costs associated with costs not being permanently deductible costs 7,578 -183 Adjustment of tax related to revenue not being permanently associated with -21,332 -14,320 the tax base Change in deferred tax related to temporary differences -4,654 -53,486 Deduction from income -69 -64 Other 3,723 4,617 Tax at the effective tax rate of 16.11 % (2017: 24.77 %) 22,014 -30,145 Income tax (liability) recognized in the consolidated profit or loss 22,014 -30,145

Deferred income tax Deferred income tax results from the following items: For all items of temporary differences between the carrying amounts and tax bases of assets and liabilities, deferred tax provisions or deferred tax assets were created.

Statement of Balance sheet Total other income comprehensive income 31 31 31 31 31 31 December December December December December December 2018 2018 2017 2018 2017 2017 Deferred tax liability Revenues recognized on a cash 2,852 2,818 -83 -161 0 - basis IAS Amortization difference in net 6,227 5,968 276 -613 0 - value resulting from periods of use Provision – derivatives 5,593 3,403 422 -709 69 -423 Revaluation of tangible fixed assets 352 387 -35 - 0 - Provision for investment allowance 398 418 -21 21 0 - in 1997 Asset from trademark disclosure 21,440 22,873 0 0 Other 1,949 2,282 -477 92 0 - Deferred tax liability 38,811 38,149 82 -1,370 69 -423

Deferred tax assets

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Provisions for jubilee awards and 3,600 2,219 -14 49 0 - retirement bonuses Provisions for warranty repairs 4,801 4,511 371 35 0 - Provisions for bonuses, royalties 1,628 5,007 -2,863 -1,356 0 - SEZ eligible assets 61,232 54,736 6,496 54,735 0 - Derivatives 292 2,450 0 -8,492 6,042 Asset from trademark disclosure 26,862 29,550 -2,688 -2,688 0 Bonuses for customers 17,294 1,765 0 Provisions for expected costs 1,221 435 0 Reserves for unused holidays 674 -53 0 Stock reserves 817 338 0 Provision for impairment loss 0 0 0 Other -929 19,263 -1,892 3,308 0 - Deferred tax assets 117,492 117,736 1,895 54,083 -8,492 6,042

Debit due to deferred income tax - - 1,977 52,713 -8,423 5,619 Net deferred tax assets /

liabilities, including Deferred tax assets – continuing 117,492 117,736 1,895 54,083 -8,492 6,042 operations Provision for deferred tax - 38,811 38,149 82 -1,370 69 -423 continued operations

As at 31 December 2018, the Parent Company recognized a deferred tax asset in the amount of PLN 67,013 thousand. In 2018, the Company recognized an additional asset in the amount of PLN 12,277 thousand. In 2018, the Company used the asset in the amount of PLN 5,781 thousand. As at 31 December 2018, the balance of deferred tax assets related to operations in the Special Economic Zone was PLN 61,232 thousand.

The created asset is the effect of the Company's fulfilment of two conditions for operation in Kostrzyn-Słubice Special Economic Zone pursuant to the Permission No. 245 of 08 April 2014. In June 2017, the Company reached the minimum level of eligible expenses of PLN 120,000 thousand.

The created tax asset expresses the current nominal value of the state aid granted to the Company in the form of exemption from income tax on activities carried out in the special economic zone of up to 40% of the investment expenses eligible for aid.

Tax regulations in force in Poland are subject to frequent changes, causing significant differences in their interpretation and significant doubts in their application. The tax authorities have control instruments in place to verify the tax base (in most cases for the previous five financial years). From 15 July 2016, the Tax Code takes into account, inter alia, the provisions of the General Anti-Abuse Rule (GAAR), which is intended to prevent the creation and use by entities of artificial legal structures designed to avoid taxation. The GAAR clause applies to transactions made after its entry into force as well as to transactions that were carried out prior to the entry into force of the GAAR, but for which, after the date of entry into force, the benefits were or are still being achieved. Determining tax liabilities as well as deferred tax assets and liabilities requires significant judgement, including with respect to transactions that have already occurred. Due to the above-mentioned legal regulations, the amounts of tax liabilities as well as deferred tax assets and provisions disclosed and presented in the financial statements may change in the future, as a result of tax authorities' inspections and in the case of a different assessment of events by the tax authority. Tax liabilities, deferred tax asset and deferred tax liability recognized in the financial statements have been determined based on the best available knowledge of the economic content of the events and tax regulations.

16. Assets and liabilities under the Company Social Benefits Fund

The Act of 4 March 1994 on the company social benefits fund, as amended, stipulates that the Company Social Benefits Fund is created by Polish employers employing over 20 FTEs. The Group and some domestic subsidiaries form such a fund and make periodic contributions in the amount of the basic allowance. The aim of the Fund is to finance social activities. The Group excluded the assets and liabilities of the fund, since they did not comply with the definition of assets and liabilities of the Group.

The tables below show the analysis of assets, liabilities and expenses of the Fund.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

31 December 2018 31 December 2017 Cash 662 530 Fund liabilities 477 187 Fund receivables - - Off-set balance 185 343

31 December 2018 31 December 2017 Impairment losses on the Fund in the accounting period 4,479 4,206

17. Profit per share

The basic profit per one share is calculated by dividing the net profit for the period allocated to the Group's ordinary shareholders by the weighted average number of issued ordinary shares appearing in the period. In the future, the acquired treasury shares will be allocated to the settlement of the managerial compensation program.

The profit and the number of shares used to calculate the profit per share are presented below: Year ended Year ended

31 December 2018 31 December 2017 Net profit 114,595 151,135 Net profit attributable to ordinary shareholders, applied in calculation 114,595 151,135 of diluted profit per share

Year ended Year ended

31 December 2018 31 December 2017 Weighted average number of issued ordinary shares applied in the 7,763,787 7,763,787 calculation of profit per share Effect of dilution: -50,685 - Stock options - - Redeemable preference shares - - Adjusted weighted average number of ordinary shares used to 7,724,588 7,763,787 calculate diluted earnings per share

Year ended Year ended

31 December 2018 31 December 2017 Profit (loss) per ordinary share (PLN) 14.78 19.44

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

18. Dividends paid and recommended

The value of dividend per share paid in 2018 (for the for the financial year 2017) amounts to PLN 3.0 (dividend per share paid in 2017 for the year 2016 amounted to PLN 5.5 per share). As at the date of the consolidated financial statements, the Management Board of the Parent Company recommended a dividend for 2018 in the amount of PLN 4.00 per share.

19. Tangible fixed assets

Buildings Machinery Tangible Advances for Means of Other fixed Total fixed Land and and assets in fixed assets in transport assets assets structures equipment progress progress As at 31/12/2018 Gross balance 5,199 234,079 288,803 24,758 150,013 11,167 3,134 717,153 Accumulated depreciation and impairment 0 57,372 156,967 16,022 84,570 314,931 Net carrying amount 5,199 176,707 131,836 8,736 65,443 11,167 3,134 402,222 Assets reclassified as fixed assets held for sale Adjusted net carrying amount 5,199 176,707 131,836 8,736 65,443 11,167 3,134 402,222

As at 31/12/2017 Gross balance 4,748 207,834 253,367 25,899 123,623 4,868 13,692 634,031 Accumulated depreciation and impairment 0 42,430 143,556 15,131 65,820 266,937 Net carrying amount 4,748 165,404 109,811 10,768 57,803 4,868 13,692 367,094 Assets reclassified as fixed assets held for sale Adjusted net carrying amount 4,748 165,404 109,811 10,768 57,803 4,868 13,692 367,094

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Buildings Machinery Tangible Advances for Means of Other fixed Total fixed Land and and assets in fixed assets in transport assets assets structures equipment progress progress for the period from 01/01 to 31/12/2018 Net carrying amount as at 01/01/2018 4,748 165,404 109,811 10,768 57,803 4,868 13,692 367,094 Company acquisition ------0 Increases (acquisition, production, lease) 0 15,675 43,607 2,356 21,761 86,508 169,907 Decreases (sale, liquidation, transfer to fixed assets) 412 4,737 -8,483 -4,139 -923 -81,509 -10,558 -100,463 Other changes (reclassification, transfer etc.) - - 0 Depreciation in accordance with the depreciation plan (-) 0 -7,702 -19,978 -4,301 -14,117 1,301 - -44,797 Depreciation of liquidated or sold assets 0 -1,533 7,387 3,952 898 0 - 10,704 Net exchange differences (+/-) 39 126 -508 100 21 -1 - -223 Net carrying amount as at 31/12/2018 5,199 176,707 131,836 8,736 65,443 11,167 3,134 402,222

for the period from 01/01 to 31/12/2017 0 0 0 0 0 0 0 0 Net carrying amount as at 01/01/2017 3,844 119,704 91,934 11,857 49,180 13,550 16,744 306,813 Company acquisition 1,339 14,913 - 345 796 - 17,393 Increases (acquisition, production, lease) 10 41,939 36,716 4,343 19,169 85,632 187,809 Decreases (sale, liquidation, transfer to fixed assets) -430 -5,144 -7,022 -4,750 -2,429 -94,297 -3,052 -117,124 Other changes (reclassification, transfer etc.) - - 0 Depreciation in accordance with the depreciation plan (-) - -6,488 -18,357 -4,819 -10,999 - - -40,663 Depreciation of liquidated or sold assets - 670 6,719 4,103 2,351 - - 13,843 Net exchange differences (+/-) -15 -190 -179 -311 -265 -17 - -977 Net carrying amount as at 31/12/2017 4,748 165,404 109,811 10,768 57,803 4,868 13,692 367,094

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The carrying amount of plant and equipment as at 31 December 2018 under finance leases and leases with purchase option amounts to PLN 7,958 thousand (cf. PLN 9,759 thousand as at 31 December 2017). Land and buildings with the carrying amount of PLN 49,045 thousand (cf. PLN 70,338 thousand as at 31 December 2017) are subject to registered pledge to secure bank loans granted to the Company (Note 32). Capitalized borrowing costs associated with the investment loans in the financial year ended 31 December 2018 amounted to 541 (cf. PLN 627 thousand in the year ended 31 December 2017). The borrowing costs have been based on the market interest rates. As at 31 December 2018, the Group committed to incur capital expenditures for tangible fixed assets amounting to PLN 11,864 thousand. These amounts will be allocated for infrastructure development and upgrade of the Cooker Factory. As at the balance sheet date, all funds are in use. As at 31 December 2018, there were also no indications for impairment of the assets presented. The Group has presented the amounts of the incurred contractual obligations for the acquisition of tangible fixed assets in Note 35.

20. Lease

Liabilities due to financial leasing agreements and leasing agreements with a purchase option The most important financial lease agreements include the group of agreements associated with the lease of computer equipment. Computer equipment leasing agreements are concluded for a period of 3.5-4 years, after which the Group has the right to purchase the leased property. The Group does not use this right. Lease payments are based in most cases on a variable rate computed based on WIBOR. As at 31 December 2018 and 31 December 2017, future minimum lease payments under such agreements and the present value of net minimum lease payments are as follows:

31 December 2018 31 December 2017

Minimum fees Current fees Minimum fees Current fees

For a period of 1 year 7,051 6,720 9,993 9,503 For a period of 1 to 5 years 6,472 5,666 7,750 6,682 More than 5 years - - Total minimum lease payments 13,523 12,386 17,743 16,185 Minus financial costs 1,137 1,557 Running value of minimum lease 12,386 12,386 16,185 16,185 payments, including: Short-term - 7,385 - 8,142 Long-term - 5,001 - 6,263

Buildings Machinery Other Tangible Means of 1. Land and and fixed assets in Total transport structures equipment assets progress As at 31/12/2018 Gross balance - - 22,149 10,694 120 - 32,963 Accumulated depreciation - - 14,191 7,279 78 - 21,548 and impairment Net carrying amount - - 7,958 3,415 42 - 11,415 As at 31/12/2017 Gross balance - - 20,257 10,745 102 - 31,104 Accumulated depreciation - - 10,498 6,098 44 - 16,640 and impairment Net carrying amount - - 9,759 5,002 58 - 14,819

21. Assets classified as held for sale

The value of assets held for sale as at the balance sheet date amounted to PLN 10,657 thousand (cf. PLN 10,657 thousand as at 31 December 2017) and corresponds to the market value of the property.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

In 2015, pursuant to a preliminary contract for sale of the property, whereby the contract was to be completed by 31 December 2015, the property was classified as an asset held for sale. In 2016, the Subsidiary's Management Board received information that prior to the finalization of the contract, additional actions would be required to complete the contract, so the finalization of the contract was postponed until 31 December 2019. It has not changed the intention to sell the property. The Management Board decided that the circumstances disclosed justify extending the period of holding the property as an available-for-sale asset.

22. Investment property

The investment property includes: • The real property located in Gorzów Wielkopolski includes the shopping centre and a part of the logistics centre. • The property located in Wronki includes the sports facilities.

Changes in the balance during the reporting period were as follows:

Opening balance as at 01 January 25,815 27,507 Changes: - sale of investment property -4,685 -18 - capitalised expenditure 1,301 3 - reclassified as assets available for sale - - - fair value measurement gains (losses) - impairment - - - transfers to fixed assets - - - other - depreciation -1,428 -1,677 Closing balance as of 31 December 21,003 25,815

As at 31 December 2017, an independent appraiser was ordered to provide the measurement to confirm the fair value of the property. In the previous years, the Group recognized impairment losses in the amount of PLN 17,500 thousand in its accounts. The gross amount of the real property is PLN 39,430 thousand (net amount PLN 21,930 thousand).

The main measurement assumptions having effect on the estimated indications of the impairment in 2018 were as follows: • The recoverable amount of the investments in property was determined based on the value in use while applying the forecasts of future cash flows based on the property operator's financial budget for the year 2017. • The forecasts of future cash flows were based on a discount rate of 9 %. The growth rate applied to extrapolate the cash flows generated by the Nova Panorama beyond the five-year period is 0.5%.

The value in use of the real property is most sensitive to the following variables: • EBIT forecast • applied discount rate;

Discount rate – The discount rate reflects the risk inherent to the company operating in the real estate market, estimated by the Management Board. This is an indicator used by the Management Board to assess the effectiveness of operating (performance) and future investment proposals. In the opinion of the Management Board, based on the assumption that the lease activity would be continued, the fair values of other properties classified as investment property do not differ from their carrying amounts.

In the reporting period, the Group generated rental income and recognized direct cost of property maintenance as follows:

Year ended Year ended 31 December 2018 31 December 2017 Rental income from investment property 7,295 6,803 Direct operating expenses related to investment property 5,527 5,637

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

23. Intangible assets

Cost of Other Intangible Advances for Total Patents and Computer Trademarks completed Goodwill intangible assets in intangible intangible licenses software development assets progress assets assets As at 31/12/2018 Gross balance 100,591 13,240 10,951 14,340 56,416 11,157 7,405 53 214,153 Accumulated depreciation and impairment 16,924 8,431 7,610 11,352 15,924 8,338 0 0 68,579 Net carrying amount 83,667 4,809 3,341 2,988 40,492 2,819 7,405 53 145,574 Assets reclassified as fixed assets held for sale 0 Adjusted net carrying amount 83,667 4,809 3,341 2,988 40,492 2,819 7,405 53 145,574

As at 31/12/2017 Gross balance 98,757 11,973 9,787 12,998 53,775 10,886 6,986 136 205,298 Accumulated depreciation and impairment 16,878 7,783 7,108 9,320 14,136 6,497 0 0 61,722 Net carrying amount 81,879 4,190 2,679 3,678 39,639 4,389 6,986 136 143,576 Assets reclassified as fixed assets held for sale 0 Adjusted net carrying amount 81,879 4,190 2,679 3,678 39,639 4,389 6,986 136 143,576

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Cost of Advances Other Intangible Total Patents and Computer completed for Trademarks Goodwill intangible assets in intangible licenses software developme intangible assets progress assets nt assets for the period from 01/01 to 31/12/2018 Net carrying amount as at 01/01/2018 81,879 4,190 2,679 3,678 39,639 4,389 6,986 136 143,576 Company acquisition ------0 Increases (acquisition, production, lease) 0 1,905 1,300 1,517 0 147 4,495 9,364 Decreases (sales, liquidation, adoption as intangible assets) (- 0 -639 -219 -172 0 0 -4,076 -83 -5,189 ) Other changes (reclassification, transfer) ------0 Depreciation in accordance with the depreciation plan (-) 0 -1,288 -641 -2,207 0 -1,732 0 -5,868 Depreciation of liquidated or sold assets 0 639 219 172 0 0 0 1,030 Net exchange differences (+/-) 1,788 2 3 0 853 15 0 2,661 Net carrying amount as at 31/12/2018 83,667 4,809 3,341 2,988 40,492 2,819 7,405 53 145,574

for the period from 01/01 to 31/12/2017 Net carrying amount as at 01/01/2017 70,931 2,791 1,747 4,995 42,598 1,284 5,381 88 129,815 Company acquisition 21,766 - 253 - 0 - - 22,019 Increases (acquisition, production, lease) 2,470 1,300 1,101 18 5,929 48 10,866 Decreases (sales, liquidation, adoption as intangible assets) (- -263 -1,196 -28 -4,324 -5,811 ) Other changes (reclassification, transfer) -4,950 18 4,950 18 Depreciation in accordance with the depreciation plan (-) -8 -1,071 -617 -2,418 0 -1,827 -5,941 Depreciation of liquidated or sold assets 263 1,178 28 1,469 Net exchange differences (+/-) -5,860 0 -4 0 -2,959 -36 0 -8,859 Net carrying amount as at 31/12/2017 81,879 4,190 2,679 3,678 39,639 4,389 6,986 136 143,576 Description of hedges on intangible assets: The Group has no hedges on intangible assets. As at the balance sheet date, the Group had no contractual liabilities related to the acquisition of intangible assets. There were also no grounds for impairment of the assets presented.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Trademarks The carrying amount of the Trademarks includes the amounts attributable to: Sideme – PLN 22,179 thousand (cf. PLN 21.513 thousand in 2017); The CDA Group – PLN 54,112 thousand (cf. PLN 53,102 thousand in 2017); Gram – PLN 7,573 thousand (cf. PLN 7,346 thousand in 2017).

Goodwill

Goodwill arising on a business combination was allocated to a group of cash-generating units corresponding to the overall business of the entities acquired. The adopted approach is the most natural way to allocate the goodwill and is in line with the direction of management analysis at the Group level.

31 December 2018 31 December 2017 The carrying amount of goodwill arising on the

acquisition of the following entities: Gram Domestic A/S 7,720 7,526 Amica International GmbH 11,253 10,914 THE CDA Group 17,216 16,895 Amica Handel i Marketing Sp. z o.o. 74 74 Marcelin Management Sp. z o.o. 4,229 4,230 Total carrying amount 40,492 39,639

In the period ended 31 December 2018 and 31 December 2017, the following changes in goodwill took place:

31 December 2018 31 December 2017 Goodwill at the beginning of the period 39,639 42,598 Increase in goodwill as a result of the acquisition 0 0 Currency translation differences related to a foreign entity 853 -2,959 Carrying value at the end of the period 40,492 39,639

Permanent impairment tests were performed for the following cash generating units: Amica International, Gram, Marcelin Management, The CDA Group, Amica Commerce, Hansa, Hansa Ukraina, Sideme.

• Goodwill of Amica International The recoverable value of the cash generating unit was determined based on a value in use calculated using the cash flow projections based on financial budgets covering a five-year period, as approved by the senior management. The forecasts of cash flows were based on the pre-tax discount rate of 4.75%, while the cash flows exceeding the five-year period are extrapolated using a 1% growth rate i.e. at the level expected by the Management Board, based on the market data.

• Goodwill of Gram The recoverable value of the cash generating unit was also determined based on a value in use with the cash flow projections based on financial budgets covering a five-year period, as approved by the senior management. The forecasts of cash flows were based on a discount rate before tax effect at the level of 4.75%. The growth rate applied to extrapolate cash flows of the company in this segment beyond the five-year period is set at 0%, as expected by the Management Board of the Company, based on the market data.

• Goodwill of Marcelin Management

The recoverable amount of Marcelin Management has been determined based on the valuation conducted for the purposes of the merger with Profi Enamel Sp. z o.o. Based on the calculations taking into account future cash flow forecasts approved by the senior management, the independent valuer determined the value of the company in excess of the value of shares presented in the financial statements. The forecasts of cash flows were based on a discount rate before tax effect at the level of 8.41%. The growth rate applied to extrapolate cash flows of the company in this segment beyond the five-year period is 1%. Therefore, no indications for impairment were found.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• Goodwill of CDA Group The recoverable amount of CDA Group, as a cash generating unit to which the goodwill of PLN 17,216 thousand was assigned was also determined based on a value-in-use, with the cash flow projections based on financial budgets covering a seven-year period, as approved by the senior management. The forecasts of cash flows were based on a discount rate before tax effect at the level of 4.75%. The growth rate applied to extrapolate cash flows of the company in this segment beyond the five-year period is 1%. This growth rate corresponds to the level expected by the Management Board, based on the market data.

Key assumptions used to calculate the value in use The calculation of value-in-use for the aforesaid cash generating units is most sensitive to the following variables: · gross margin; · discount rates; · growth rate used to extrapolate cash flows beyond the budget period.

Gross margin – gross margins are based on average values to be achieved in the period of 2018-2021 (in the case of Marcelin Management, the period of 2018-2030; in the case of CDA, the period of 2018-2021).

Discount rate – the discount rate reflects the risk inherent to teach cash generating unit, as estimated by the management. This is an indicator used by the management to assess the effectiveness of operating (performance) and future investment proposals. In determining the discount rate for each cash generating unit, the EURIBOR rate was taken into account.

Estimated growth rate – growth rates are based on the published management estimates, relying on the market data

Sensitivity to changes in assumptions As regards the estimates of the above-mentioned values in use of the cash generating units, the management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of a unit to materially exceed its recoverable amount.

24. Other assets

Other financial assets Financial assets measured at amortised cost: 31 December 2018 31 December 2017 Loans granted* 10,989 12,031 Assets available for sale 192 191 Other receivables 0 0 Other 370 359 Total 11,551 12,581 - short-term 10,964 12,004 - long-term 587 577 The loans disclosed above were granted to the unconsolidated subsidiaries and bear interest at market rates. The amount of PLN 10,989 thousand of the total amount presented above accounts for the loans granted to Arcula Sp. z o.o. (PLN 10,936 thousand) and KKS Lech (PLN 26 thousand). These have a short-term nature. As at 31 December 2018, the loan for Arcula was hedged by assignment of the rights to the investment account of Arcula.

* On 20 March 2019, Marcelin Management Sp. z o.o. (a company of Amica Group) sold its shares in Arcula Sp. z o.o. In addition, Arcula repaid loans to Marcelin Management for a total amount of PLN 10.6 million.

The Management Board of the parent confirms the assumptions underlying the valuation of assets disclosed in the consolidated financial statements for the year 2018.

The impairment estimated under the expected credit loss procedure has an insignificant value and has not been included in the financial statements.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Other non-financial assets

31 December 2018 31 December 2017

Budget receivables 17,728 22,744 Advances for inventories 2,189 2,187 Accruals 12,035 13,773 Total 31,952 38,704 - short-term 31,952 38,704 - long-term 0 0

25. Employee benefits

Pensions and other post-employment benefits Entities of the Group pay retirement bonuses to the retiring employees in the amount specified in the Labour Code or individually under the schemes combining life insurance and pension programmes. Therefore, based on a valuation carried out using an internal tool or an actuarial valuation, the companies of the Group create a provisions for the current value of the liabilities related to retirement bonuses. Summary of benefits, the amount of the provision, and the reconciliation of changes during the accounting period are presented in the following table:

Retirement and Other Total pension benefits Opening balance as at 01 January 2018 8,213 - 8,213 Costs of present and future employment 375 - 375 Actuarial gains and losses -862 - -862 Closing balance as at 31 December 2018 0 0 SHORT-TERM PROVISIONS 0 LONG-TERM PROVISIONS 7,726 - 7,726

Retirement and Other Total pension benefits Opening balance as at 01 January 2017 7,505 - 7,505 Costs of present and future employment 292 - 292 Actuarial gains and losses 416 - 416 Closing balance as at 31 December 2017 0 0 SHORT-TERM PROVISIONS 0 LONG-TERM PROVISIONS 8,213 - 8,213

The main assumptions adopted for the measurement of employee benefits as at the reporting date are related to the parent company and are as follows: 31 December 2018 31 December 2017 Discount rate (%) 3.5 3.5 Expected inflation rate (%) 2.5 2.5 Change of the probability of payment (%)

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

annual 1.25 semi- annual 1.25 semi- Predicted salary increase factor (%) annual 1.25 annual 1.25 The average remaining period of employment - -

Sensitivity analysis

Change of the adopted discount rate by one percentage point: Increase Decrease

(in thousands of PLN) (in thousands of PLN) 31 December 2018 Effect on the aggregate current service cost and interest cost 293 356 Impact on the liabilities under the defined benefit plan 293 356 31 December 2017 Effect on the aggregate current service cost and interest cost 173 508 Impact on the liabilities under the defined benefit plan 173 508

Change of the probability of payment of employee benefits by 10 percentage points with other factors unchanged: Increase Decrease (in thousands of PLN) (in thousands of PLN) 31 December 2018 effect on the aggregate current service cost and interest cost 552 548 Impact on the liabilities under the defined benefit plan 31 December 2017 effect on the aggregate current service cost and interest cost 582 577 Impact on the liabilities under the defined benefit plan

26. Inventory

The following inventory items are recognised in the Group's financial statements:

31 December 2018 31 December 2017 Materials: at purchase price / cost of manufacture 55,350 55,812 at net realisable value 54,220 55,032 Work in progress (at cost) 9,342 8,176 Finished products: at purchase price / cost of manufacture 63,548 64,308 at net realisable value 62,644 64,308 Goods: at purchase price / cost of manufacture 312,083 267,269 at net realisable value 303,338 261,877 Spare parts 17,969 17,795 Total inventory at the lower of the two values: purchase price (cost of 447,513 407,188 manufacture) or net realizable value

As at 31 December 2018, the Company recognized a write-down on inventory to the net realizable amount of PLN 10,779 thousand (cf. PLN 10,219 thousand in 2017). Revaluation of inventory was related to materials, finished products and goods and resulted from the policy of creating impairment losses on inventory, based on turnover ratios. In 2018, the amount of PLN 2,565 thousand was recognized in the result (cf. a write-down of PLN 3,276 thousand recognized in 2017). As at 31 December 2018, the Group's inventory with the value of PLN 146,723 thousand (cf. PLN 120,320 thousand in 2017) was used as the collateral for the Group's financial liabilities.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

27. Trade and other receivables

Trade receivables and other receivables recognised by the Group as receivables and loans are as follows:

31 December 2018 31 December 2017 Trade receivables 540,753 497,146 Other receivables from third parties 14,543 15,755 Total receivables (net) 555,296 512,901 Impairment of receivables 8,993 22,496 Gross receivables 564,289 535,397

Terms of transactions with related parties are set out in the Note 39. Trade receivables are non-interest bearing and are generally on 75 days’ terms. In order to improve cash flow from operating activities, the Group used factoring without recourse during the financial year. As at the balance sheet date, the Group reported the receivables assigned to factoring companies in the amount of PLN 180,002 thousand (cf. PLN 194,351 thousand as at 31/12/2017). These receivables have been removed from the balance sheet of the Group, since the risks associated therewith have been transferred to the factor.

The Group runs a policy to sell only to verified customers. As a result, the management believes there is no additional credit risk beyond the level specified by the allowance for uncollectible trade receivables of the Group.

The data presented in the table below contain historical impairment losses created as a result of events listed in the accounting policy as the basis for recognizing impairment losses based on the credit loss model implemented in 2018. Details of credit losses according to IFRS 9 can be found in Note 38.3. – Credit Risk.

Details of the recognized impairment losses included in the table above can be found in Note 38.3. – Credit Risk.

Year ended Year ended

31 December 2018 31 December 2017 Impairment allowance as at 1 January 22,496 13,140 Increase 465 10,002 Use 13,968 646 Unused amounts reversed (reversal of impairment) 0 0 Impairment allowance as at 31 December 8,993 22,496

Below is the analysis of trade receivables, which as at 31 December 2018 and 31 December 2017 were past due but not considered to be uncollectible or subject to impairment. The receivables have been analysed, taking into account the collateral used.

Overdue, but collectible Total Not overdue 30 – 60 60 – 90 90 – 120 >120 < 30 days days days days days 31 December 2018 540,753 503,008 29,664 2,845 1,695 764 2,777 31 December 2017 497,146 459,743 28,941 791 3,993 650 3,028

Details of the recognized impairment losses included in the table above can be found in Note 41 – Credit Risk.

28. Cash and cash equivalents

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents as at 31 December 2018 amounts to PLN 76,044 thousand (cf. PLN 91,555 thousand as at 31 December 2017).

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

As at 31 December 2018, the Group had at its disposal the unused loans in the amount of PLN 242,211 thousand (cf. PLN 260,642 thousand as at 31 December 2017).

The balance of cash and cash equivalents disclosed in the consolidated cash flow account comprised the following items: 31 December 2018 31 December 2017 Cash at bank and in hand 73,638 63,284 Short-term investments 2,372 27,880 Other 34 391 76,044 91,555

29. Share capital

Share capital 31 December 31 December Shares 2018 2017 Registered "A" shares (Amica S.A.) with a nominal value of PLN 2 per share 2,717,678 2,717,678 B ordinary "A"/"B" shares (Amica S.A.) with a nominal value of PLN 2 per share 5,057,595* 5,057,595* 7,775,273 7,775,273 * including 2,381,881 shares of A series and 2,675,714 shares of B series

Number Value

Treasury shares As at 01 January 2018 0 0 Shares purchased on 18 October 2019 in exchange for cash in connection with 250,000 30,000 the implementation of the incentive program As at 31 December 2018 250,000 30,000

29.1.1. Par value of shares All issued shares have a nominal value of PLN 2 per share and have been fully paid.

29.1.2. Shareholders' rights Some of the registered shares of series A are preference shares in that each such share carries 2 (two) votes at the AGM. Other shares of A and B series are ordinary bearer shares.

29.1.3. Major shareholders

Number of Number of Par value of Share in As at 31/12/2018 shares votes shares capital Holding Wronki S.A. 2,715,771 5,431,542 5,431,542 34.93% NATIONALE-NEDERLANDEN OTWARTY FUNDUSZ 555,952 555,952 1,111,904 7.15% EMERYTALNY (formerly: ING OFE)* Aviva OFE Aviva BZ WBK 537,497 537,497 1,074,994 6.91% Other shareholders** 3,966,053 3,967,960 7,932,106 51.01% Total 7,775,273 10,492,951 15,550,546 100.00% ** Under the Share Repurchase Program, the Company acquired 250,000 ordinary bearer shares of Amica SA designated with the ISIN code PLAMICA00010 (see: Current Report No. 35/2018 of 16 October 2018).

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Number of Number of Par value of Share in As at 31/12/2017 shares votes shares capital Holding Wronki S.A. 2,715,771 5,431,542 5,431,542 34.93% ING OFE* 555,952 555,952 1,111,904 7.15% Other shareholders 4,503,550 4,505,457 9,007,100 57.92%

Total 7,775,273 10,492,951 15,550,546 100.00%

* Data reported based on the notifications received by the Company from its Shareholders, prepared pursuant to Article 69 of the Act of 29 July 2005 on Public Offering.

30. Other types of capitals

Supplementary capital The supplementary capital was created out of the share premium in the amount of PLN 107,732 thousand, resulting from the issue of shares in the Parent Company. In addition, the supplementary capital was raised from statutory deductions from profits generated in the previous financial years and was adjusted by the amount resulting from the redemption of shares by the amount of PLN 28,481 thousand and PLN 11,713 thousand, resulting from the merger with a subsidiary, Sidegrove, in previous years. In 2014, the Parent Company sold all its treasury shares. The shares were sold pursuant to the Resolution of the Annual General Meeting of the Company dated 27 June 2013, which changed the previous objective of the Buy-Back Programme, which was redemption, to further sale of the own shares bought back. The earnings from the sale of shares, net of the incomes tax, in the amount of PLN 8,420 thousand were allocated to the supplementary capital.

Retained profit (loss) and dividend restrictions In case of domestic companies, dividends may be paid based on the profit determined in the separate annual financial statements prepared for statutory purposes.

Pursuant to the requirements laid down in the Code of Commercial Companies, the parent company is required to create supplementary capital to cover losses. At least 8% of the profit for a given financial year as recognized in the separate financial statements of the parent company shall be transferred to this category of the capital, until the capital reaches at least one third of the share capital of the parent company. The use of supplementary capital and the capital reserve remains at the discretion of the General Meeting; however, some of the supplementary capital representing one third of the share capital can only be used to absorb the loss disclosed in the separate financial statements of the Parent Company and is not divisible for other purposes. In the case of foreign companies within the Group, the limitations related to the distribution of capital and dividend payments arise from local commercial law and are respected by the managers of these companies. As at 31 December 2018, there are no other restrictions on the payment of dividends.

Non-controlling interests

The non-controlling shares shown in the Group's equity capital apply to the subsidiary Inteco Business Solutions Sp. z o.o. and Sideme S.A. Year ended Year ended

31 December 2018 31 December 2017 Opening balance 238 -1,350 Dividends paid by subsidiaries - - Total net comprehensive income (profit/loss) for the period 407 1,588 Closing balance 645 238

Percentage share in the Equity attributable to Company name Company's share non-controlling capital interests

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Sideme S.A. 5% 1,955 Inteco Business Solutions Sp. z o.o. 20% -1,310 645

Selected financial data of subsidiaries with non-controlling interests are presented below in thousands of PLN:

INTECO: Year ended 31 December 2018 Year ended 31 December 2017 Fixed assets 772 819 Current assets 5,334 4,011 Equity 1,523 1,637 Short-term liabilities and provisions 4,583 3,193 Revenue from sale 23,526 19,117 Net profit 1,344 1,457 Dividend paid to non-controlling interests 291 285 SIDEME S.A.: Year ended 31 December 2018 Year ended 31 December 2017* Fixed assets 31,492 39,412 Current assets 102,465 121,611 Equity 36,093 38,267 Short-term liabilities and provisions 97,864 122,756 Revenue from sale 329,902 244,812 Net profit -864 760 Dividend paid to non-controlling interests 0 0 * Values refer to 9 months of 2017.

31. Loans, borrowings and other debt instruments

31 December 2018 31 December 2017 Short-term 126,286 124,932 Liabilities arising under finance lease and hire-purchase 6,178 8,573 agreements Current account overdraft 59,048 54,785 Bonds 16,091 22,972 Borrowings 12,564 15,157 Investment loans 32,405 23,445 Long-term 129,638 146,733 Liabilities arising under finance lease and hire-purchase 6,208 7,612 agreements Bonds 47,700 63,771 Borrowings Investment credits 75,730 75,350

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The Group does not classify any instruments such as loans and borrowings as financial instruments to be measured at fair value through profit or loss. All loans, borrowings and other debt instruments are measured at amortized cost using the effective interest rate. The fair value of loans, borrowings and other debt instruments is presented in the tables above.

The following table summarizes the securities of the loans taken:

31 December 2018 31 December 2017 Pledge on fixed assets 49,045 70,338 Assignment of liabilities 22,989 25,210 Appropriation of current assets 146,723 120,320 Total collateral established on the Group's assets 218,757 215,867 All loans bear interest at variable interest rates. The summary of loans held as at 31 December 2018 is presented in the table below. As at 31 December 2018, the Company satisfies all the covenants provided for in the agreements. Disclosures concerning the types and scope of risks to which the Group is exposed due to loans incurred are presented in the table below

In 2018, the Group issued short-term bonds on the domestic market, at the same time rebuying the previously issued bonds on the terms WIBOR3M + margin and WIBOR 6M + margin. As at the balance sheet date, the Group's liabilities associated with the issued bonds amounted to PLN 16,091 thousand (short-term liabilities) and PLN 47,700 thousand (long-term liabilities). The Group issues and offers bonds only to financial institutions. The bond program is not intended for individual customers or natural persons. As at the balance sheet date, the terms and conditions of the issue remained unchanged compared to the terms and conditions as of 31 December 2017.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Amount as at Contract amount (in Credit repayment No. 31/12/2018 (in Interest rate Type of credit thousands of PLN) deadline thousands of PLN) 1 5,000 0 2019 WIBOR O/N + BANK'S MARGIN WORKING-CAPITAL CREDIT 2 5,000 0 2019 WIBOR O/N + BANK'S MARGIN WORKING-CAPITAL CREDIT 3 5,000 24 2019 WIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 4 5,000 50 2019 WIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 5 7,000 0 2019 WIBOR 1 M + BANK'S MARGIN WORKING-CAPITAL CREDIT 6 55,500 22,200 2020 WIBOR 3 M + BANK'S MARGIN INVESTMENT CREDIT 7 85,000 38,676 2019 WIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 8 35,000 0 2019 WIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 9 100,000 83,443 2023 WIBOR 3 M + BANK'S MARGIN INVESTMENT CREDIT 10 4,200 2,494 2020 WIBOR 3 M + BANK'S MARGIN INVESTMENT CREDIT 11 12,900 0 2019 LIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 12 6,880 0 2019 EONIA + BANK'S MARGIN WORKING-CAPITAL CREDIT 13 1,247 0 2019 FIXED INTEREST RATE + BANK'S MARGIN WORKING-CAPITAL CREDIT 14 37,870 6,822 2019 MOSPRIME 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 15 10,820 0 2019 MOSPRIME 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 16 1,075 2,064 2019 EURIBOR 3M + BANK'S MARGIN WORKING-CAPITAL CREDIT 17 6,665 800 2019 FIXED INTEREST RATE + BANK'S MARGIN WORKING-CAPITAL CREDIT 18 1,290 1,144 2019 EURIBOR 1M + BANK'S MARGIN WORKING-CAPITAL CREDIT 19 0 1,750 2019 EONIA + BANK'S MARGIN WORKING-CAPITAL CREDIT 20 0 581 2019 EONIA + BANK'S MARGIN WORKING-CAPITAL CREDIT 21 23,948 7,136 2019 FIXED INTEREST RATE + BANK'S MARGIN WORKING-CAPITAL CREDIT Total 409,394 167,183

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

32. Provisions

Changes in provisions

Short-term provisions Long-term provisions 31/12/2018 31/12/2017 31/12/2018 31/12/2017 Provisions for sales bonuses 63,760 56,454 - - Provisions for warranty repairs 32,921 30,948 7,366 6,593 Provisions for salaries and annual leaves 19,012 34,856 - - Provisions for marketing and commission fees 4,576 94 - - Other provisions 7,281 6,954 - - 127,550 129,306 7,366 6,593

Provision for warranty repairs The Group creates a provision for the costs of expected warranty repairs, taking into account a 2-year warranty period for the customers. It is expected that most of these costs (approximately 75%) will be incurred in the first year of warranty protection, while the remaining part in the second year. The basis for estimating the provision for future warranty repairs includes: warranty period, historical unit repair cost, estimated product defectiveness, average cost of a spare part in the cost of repair. Except for the warranty period, the value of the above- mentioned variables may change in future periods, simultaneously influencing the value of the provision. The Group reviews the adopted variables to reflect the Group's actual liability under the provision for warranty repair obligations.

Provisions for sales bonuses Conditions of creating provisions for sales bonuses resulting from the agreements with customers. Provisions are recognized on the sale of products to the customer and used after verifying that the customer has met the turnover conditions provided for in the contracts and on issuing or receiving the relevant document in this regard. These provisions are based on monthly, quarterly and annual sales thresholds. The value of provisions remaining at the balance sheet date results from not receiving the appropriate document from the recipient to allow recognition of use of the provisions.

Provisions for marketing services and commissions The Group creates a provision for the costs of marketing activities and commission on sales on certain markets. The assumptions used to calculate the provision for commissions are based on a detailed calculation of sales completed, under the terms agreed with each client. In contrast, the provision for marketing activities is based on the actual completed activities in various markets, for which the Group has not yet received any summaries or documents, until the closing date of the financial statements.

Provisions for salaries and annual leaves This group of provisions contains estimated value of the provision for employee holiday leaves and the estimated value of the entitlements conferred on the authorities of the Parent Company and a group of key managers of the Parent Company, based on the level of the consolidated result before tax. The rights will be implemented after the approval of the financial statements for 2018.

33. Trade liabilities, other liabilities and accruals

Liabilities from deliveries and services and other financial liabilities (short-term) 31 December 2018 31 December 2017 Trade liabilities To related parties 1,647 1,163 To other entities 463,516 396,418 465,163 397,581 Other liabilities Payroll liabilities 14,463 11,265 Factoring liabilities 38,169 34,281 Other liabilities (Note 33.2) 41,362 55,011 93,994 100,557

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Total 559,157 498,138

Terms and conditions of the above financial liabilities: • trade liabilities are non-interest bearing liabilities and are usually settled within 75 days; • other liabilities are on-interest bearing liabilities, with an average one-month payment period.

Terms of transactions with related parties are set out in the Note 39.

Other non-financial liabilities

31 December 2018 31 December 2017 Liabilities related to taxes, duties and other 243 159 Value Added Tax 27,612 35,053 Personal Income Tax 4,085 2,459 Liabilities from social security 8,568 8,015 Other 854 9,325 Other non-financial liabilities - - Total 41,362 55,011 - short-term 41,362 55,011 - long-term 0 0

The amount of the difference between VAT liabilities and receivables is paid to the competent tax authorities on a quarterly basis.

Accruals 31 December 2018 31 December 2017 Deferred income arising from: Government subsidies 2,338 2,457 Other 18,321 12,043 Total 20,659 14,500 - short-term 18,321 12,132 - long-term 2,338 2,368

In 2005, Amica S.A. Group signed a contract with the Ministry of Economy and Labour to subsidise the company's expansion and change the products of Amica S.A. This financing took place under the auspices of the Branch Operational Programme for Increased Competitiveness in Companies. As part of the project, the Group was obliged to increase expenditure on Material Fixed Assets and employ the appropriate number of workers. The share in additional financing of the Material Fixed Assets by the Programme was 25% of the increased expenditure.

In the reporting period, the value recognized in other operating income due to the assignment of subsidies in parallel to depreciation and amortization amounted to PLN 341 thousand (cf. PLN 242 thousand in 2017). The Group met all the conditions of the contracts signed as part of the programme for obtaining government assistance, and shows no contingent liabilities arising from this.

In accordance with the accounting policy of the Amica S.A. Group, cash received to finance the acquisition or manufacture of fixed assets, including fixed assets under construction and development work, is recognised in deferred income. Sums categorised as part of this item gradually increase the remaining operating revenue parallel to depreciation or remittance write-offs of fixed assets or costs of development work financed from these sources.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

34. Reasons for differences between balance sheet changes in certain items and changes arising from the cash flow statement

The reasons for the differences between balance sheet changes in certain items and changes arising from the cash flow statement are presented in the following tables:

Year ended Year ended 31 December 31 December 2018 2017 Change resulting from the statement of financial position/balance sheet change in the -40,325 -38,337 Inventory change in exchange differences -2,741 -7,870 Change in the Inventory resulting from the statement of cash flows / cash flow -43,066 -46,207 account

Change resulting from the statement of financial position/balance sheet change in the -1,470 16,865 Provisions change in exchange differences -5,347 1,615 Change in the Provisions resulting from the statement of cash flows / cash flow -6,817 18,480 account

Change resulting from the statement of financial position / balance sheet change in -36,937 22,190 the Receivables income tax other change in exchange differences 661 6,775 Change in the Receivables resulting from the statement of cash flows / cash flow -36,276 28,965 account

Change in balance resulting from the statement of financial position / Balance sheet 7,745 7,053 change in Accruals changes in subsidies 196 196 Change in the balance of Accruals and prepayments resulting from the cash flow 7,941 7,249 statement / cash flow account

Change in the Liabilities, except for credits and loans, resulting from the statement of 58,889 -15,774 the financial position / balance sheet compensation of tax liabilities, taxes 0 0 factoring 3,889 4,374 change in exchange differences -594 6,683 other Change in the Liabilities, except for credits and loans, resulting from the cash flow 62,184 -4,717 statement / cash flow account

Change resulting from the statement of financial position/balance sheet change in the -15,551 6,264 Cash exchange differences 566 -23

Change in Cash resulting from the statement of cash flows / cash flow account -14,985 6,241

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

In view of the variety of cash management practices and banking arrangements around the world and in order to comply with IAS 1 “Presentation of financial statements”, the Group discloses the policy which it adopts in determining the composition of cash and cash equivalents. IAS 7.46

The Group classifies deposits under cash due to the fact that these funds are available upon request.

Detailed information on cash and cash equivalents can be found in Note 28.

The information on the loans incurred within the Group has been disclosed in Note 39.

The value of loans incurred from unrelated parties in 2018 amounted to 110,020. Accordingly, in 2018, the Group repaid its credit obligations of PLN 102,531 thousand.

35. Capital expenditures

As at 31 December 2018, the Group has committed to incur capital expenditures for tangible fixed assets in the amount of PLN 11,864 thousand (cf. PLN 41,184 thousand as at 31 December 2017). These amounts will be allocated to new investments in tangible assets, including capital expenditures within the framework of the development of infrastructure and technological upgrades at the Factory of Cookers.

36. Contingent liabilities

As at the balance sheet date, the Group had no contingent liabilities.

37. Litigations

As at the balance sheet date, there were no significant proceedings concerning liabilities or receivables of the Issuer or its subsidiaries.

38. Waste electrical and electronic equipment

On 21 October 2005, most of the provisions of the Law on Waste Electrical and Electronic Equipment ("WEEE") entered into force. The law requires the operators (manufacturers and importers) placing electrical and electronic equipment on the market to arrange and finance the collection of waste equipment from sales points as well as its processing, recovery, including recycling and disposal. From 1 January 2008, the operator placing household equipment on the market is obliged to ensure collection of waste household appliances from private households. The Group fulfils the obligations resulting from the above-mentioned regulations to collect the used appliances in a given year in accordance with the Group's declaration on marketing of the new appliances in previous years, through the agreements signed with Biosystem Elektrorecykling S.A. Within the framework of these agreements, the Group incurred the costs of PLN 3,073 thousand for organisation of recycling of the used appliances in 2018 (cf. PLN 2,458 thousand in 2017).

39. Information on related parties

Amica Wronki is controlled by Holding Wronki S.A., which holds 34.93% of shares in Amica Wronki S.A. The remaining shares are held by numerous shareholders, including employees. Shareholders holding more than 5% of shares in Amica S.A. are listed in the Note 26. In the year ended 31 December 2018, there were no transactions between the Group companies and the Parent Company of the entire Group, except for transactions resulting from the employment relationship. (In the year ended 31 December 2017, the value of these transactions amounted to zero).

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

All consolidated subsidiaries have prepared the financial statements as at 31 December 2018.

The Group employs a procedure designed to verify the related parties among the members of the Management Board, the Supervisory Board and the key personnel. The verification process allowed to identify the parties presented below:

Parties related to the Parent Company include key management staff, subsidiaries subject to the consolidation requirement as well as other related parties to which the Company includes entities controlled by the owners of the Company. The Group identifies the following related parties: • Consolidated subsidiaries satisfying the definition of control in accordance with IFRS 10, listed in Note 4 • Other related parties: KKS Lech Poznań, Fundacja Amicis, Arcula Sp. z o.o (formerly Quota SPV 4 Sp.z o.o.) • Key personnel of the Group (executives) and the Supervisory Board • Parent companies: Holding Wronki S.A., Invesco Sp. z o.o.

The following table presents total value of transactions with subsidiaries for the current and the previous financial year.

Revenues from core business Cost of core business Name of the subsidiary 31/12/2018 31/12/2017 31/12/2018 31/12/2017 Holding Wronki SA 43 43 3,933 3,571 KKS LECH Poznań 4,879 5,143 3,764 3,371 Invesco Sp. z o.o. 2 2 - - Antiqua Sp. z o.o.* 4 - - Fundacja Amicis (Amicis - - Foundation) 67 45 Arcula Sp. z o.o. 13 13 - - Total 5,004 5,250 7,697 6,942

Trade receivables Trade payables Name of the related party 31/12/2018 31/12/2017 31/12/2018 31/12/2017 Holding Wronki SA 7 1,017 806 KKS LECH Poznań 1,525 4,373 630 357 Fundacja Amicis (Amicis 5 7 - - Foundation) Arcula Sp. z o.o. 4 4 - - Total 1,534 4,391 1,647 1,163

The following table provides the summary of loans granted to related parties for the current and previous financial years:

Group 31 December 2018 31 December 2017 KKS Lech Poznań S.A. 26 1,050 Arcula Sp. z o.o.* 10,936 10,947 TOTAL 10,962 11,997

In 2018, the Group granted loans to the aforementioned companies for the total value of PLN 8,859 thousand. In the audited year, the Companies repaid their loan liabilities of PLN 9,848 thousand. Loans granted to Arcula are short-term loans. Pursuant to the agreements concluded, the interest will be repaid on semi-annual and quarterly basis. As at 31 December 2018, the loans to Arcula were secured by the assignment of rights to the investment account.

Direct involvement of the Group in KKS Lech Poznań S.A. The Group presents in the balance sheet as at 31 December 2018 and 31 December 2017, the following the involvement in KKS Lech Poznań S.A.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

KKS (in thousands of PLN) 31 December 2018 31 December 2017 Trade receivables 1,525 4,372 Loans granted 26 1,050 TOTAL 1,551 5,422

The terms and conditions of the loan agreements and contracts for services with KKS Lech Poznań S.A. do not differ from the market terms and conditions.

Given that the above-mentioned receivables are partially overdue, the Management Board considered whether there is any potential loss in their value and the need to recognize an impairment loss.

The Management Board took into account the previous history of payments due from KKS Lech Poznań S.A., debt repayment made after the balance sheet date and before the date of approval of these financial statements, the duration of the overdue period, the current financial situation of KKS Lech Poznań S.A. and the financial strategy for KKS Lech Poznań S.A. adopted for the coming years, based on the expected future financial performance and the club's ability to generate revenue.

On the basis of the foregoing, the Management Board believes that the risk of non-repayment of these debts in the future is limited and therefore did not recognize write-downs on the assets involved.

Parent Company of the entire Group In the financial year ended 31 December 2018, there were no transactions between the Group Companies and the Parent Company of the entire Group, except for transactions resulting from the employment relationships disclosed in Note 40.4.

Entity with significant influence over the Group No entity with significant influence over the Group has been identified.

Terms of transactions with related parties Transactions with related parties are associated mainly to the sale of products, goods and services by the Parent Company to its subsidiaries. These operations take place under conditions equivalent to those that apply to transactions entered into on the market terms.

Amica S.A. Group also acts as the lender in relation to its related parties. The loans were granted on the market terms. As at the balance sheet date, the Group recognized the loans granted to KKS Lech Poznań S.A. and Arcula Sp. z o.o. under its financial assets. (repaid after the balance sheet date). The value of this loan is presented in the table in Note 39. Other transactions between Group companies are related to services and are entered into on the arm’s length basis.

Remuneration of the Group's Senior Management

39.1.1. Remuneration paid to members of the Management Board and members of the Supervisory Board of the Group** Remuneration of the Parent Company's Management Board

Management Board Period from 01/01 to Short-term employee benefits Benefits paid under incentive Post-employment benefits 31/12/2018 (salaries and surcharges) programmes Jacek Rutkowski 1,037 1905 Jarosław Drabarek* - - 697 Marcin Bilik 677 1905 Alina Jankowska-Brzóska 677 1905 Wojciech Kocikowski 667 1905 Piotr Skubel 663 1905 Total 3,721 9,525 697

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Short-term employee Benefits paid under Post-employment Period from 01/01 to 31/12/2017 benefits (salaries and incentive programmes benefits surcharges) Jacek Rutkowski 1,037 1,710 - Jarosław Drabarek* 664 1,211 Marcin Bilik 677 1,710 - Alina Jankowska-Brzóska 677 1,710 - Wojciech Kocikowski 667 1,710 - Piotr Skubel 678 1,710 - Tomasz Dudek - - 110 Andrzej Sas - - 110 Total 4,400 9,761 220 * these persons received remuneration for discharging their duties in the Management Board of Amica S.A. in 2017. ** the remuneration is presented on an accrual basis i.e. according to the calculation of remuneration due for a given accounting year. Supervisory Board

Short-term employee benefits Benefits paid under incentive Post-employment Period from 01/01 to 31/12/2018 (salaries and surcharges) programmes benefits Tomasz Rynarzewski 371 342 - Dariusz Formela 0 275 - Dariusz Bartmiński 0 275 - Tomasz Dudek 313 342 - Piotr Rutkowski 314 342 - Paweł Wyrzykowski 303 342 - Konopacki Andrzej 300 - Małek Artur 307 - Total 1908 1918 0

Short-term employee Benefits paid under Post-employment Period from 01/01 to 31/12/2017 benefits (salaries and incentive programmes benefits surcharges) Tomasz Rynarzewski 163 415 - Dariusz Formela 87 242 - Dariusz Bartmiński 68 242 - Tomasz Dudek 97 242 - Piotr Rutkowski 91 247 - Paweł Wyrzykowski 84 242 - Bogna Sikorska 2 173 - Wojciech Kochanek 0 173 - Bogdan Gleinert 0 173 - Zbigniew Derdziuk - - - Konopacki Andrzej 17 - - Małek Artur 21 - - Grzegorz Golec 2 173 - Total 632 2322 0

39.1.2. Remuneration paid to other members of key management personnel

Short-term employee benefits Benefits paid under incentive Post-employment Period from 01/01 to 31/12/2018 (salaries and surcharges) programmes benefits Cumulatively 2,202 2,205 - Total 2,202 2,205 0

Short-term employee Benefits paid under Post-employment Period from 01/01 to 31/12/2017 benefits (salaries and incentive programmes benefits surcharges) Cumulatively 2,443 2,119 - Total 2,443 2,119 0

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

39.1.3. Participation of senior management (including members of the Management Board and the Supervisory Board) in the employee share scheme

On 28 June 2018, the Annual General Meeting of Amica S.A. decided to launch the Incentive Scheme for key managers, including: • to adopt the share repurchase program • and to create reserve capital for the purchase of treasury shares for the amount of PLN 30,000 thousand.

On 28 June 2018, the Company issued an offer for repurchase Amica S.A. shares in the amount not exceeding PLN 30,000 thousand with the purchase price of PLN 120.00 per share.

According to the information contained in Current Report No. 35/2018 of 16 October 2018, the Company undertook to purchase PLN 250,000 shares from shareholders who volunteered to sell their shares Amica S.A.'s share repurchase program.

The transaction was settled on 18 October 2018. On that day, the Company recognized treasury shares intended for distribution under the program in the amount of PLN 30,000 thousand under equity.

As at 31 December 2018, no actions under the program have been taken. The first recognition of the program (Grant Date) will take place in 2019.

40. Information on remuneration of an auditor or an entity authorized to audit financial statements

The following table shows the remuneration of the auditors of Grant Thornton, which is an entity authorized to audit the Group’s Financial Statements, paid or payable for the year ended 31 December 2018 and the year ended 31 December 2017, broken down by types of services: Year ended Year ended

31 December 2018 31 December 2017 Mandatory Audit of the Financial Statements 662 523 Other services allowed for the Auditor under the law (Consultations on IFRS - 15 15) Other services allowed for the Auditor under the law 57 222 Total 719 760

41. Objectives and principles of financial risk management

In addition to derivatives, the main financial instruments used by the Group include bank loans, bonds, finance lease, cash and short-term investment. The main purpose of these financial instruments is to raise funds for the Group's operations. The Group also holds other financial instruments such as trade receivables and payables which arise directly in the course of its business. The Group enters also into transactions involving derivatives, especially interest rate swaps, currency forward contracts and currency interest rate swaps. The purpose of these transactions is to manage interest rate risk and currency risk arising in the course of the Company's operations and arising under the financing sources used. The principle applied by the Company at present and throughout the period covered by the report is no trading in financial instruments. The main risks arising from the Company's financial instruments include interest rate risk, liquidity risk, foreign currency risk and credit risk. The Management Board reviews and agrees policies for managing each of these risks – the relevant principles are briefly discussed below. The Group recognizes the market risk as interest rate risk and currency risk, and additionally, the Groups describes the liquidity risk and credit risk.

The Group's financial risk management is coordinated by the Parent Company in close cooperation with the Management Boards and financial directors of the subsidiaries. In the risk management process, the most important goals are: • hedging short-term and medium-term cash flows,

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

• stabilizing the Group’s profit or loss fluctuations, • meeting the financial projections by achieving the budget assumptions, • achieving a rate of return on non-current investments and obtaining optimum sources for financing the investing activities.

The Group does not enter into transactions on financial markets for speculative purposes. In economic terms, the transactions carried out can be treated as hedges against certain risks. In addition, the Parent Company formally designated some derivative instruments as cash flow hedges in accordance with the requirements of IFRS 9 (hedging derivatives).

Below are presented the most significant risks to which the Group is exposed.

Interest rate risk

The Group's exposure to the risk of interest rate fluctuations relates primarily to the long-term financial liabilities. The Group manages its interest cost using a mix of fixed rate and variable rate liabilities. The Group's objective is that from 80% to 100% of the loans and long-term credits should have fixed interest rates. In order for the solution adopted by the Company to be economically effective, the Company enters into interest rate swaps, under which it agrees to exchange, at specified intervals, the difference between the amount of interest accrued at a fixed and variable interest rate on the agreed principal amount. These swaps are designated to hedge underlying debt liabilities. As at 31 December 2018, the Group secured approximately 68% of liabilities, the cost of which is based on variable interest rate (including approximately 75% of loan liabilities and other debt instruments contracted by the Group). Interest rate risk – sensitivity to fluctuations The table below presents the sensitivity of gross profit (loss) to reasonably possible changes in interest rates, assuming that other factors remain unchanged.

2018 – in thousands of 2017 – in thousands PLN of PLN Variable interest rate liabilities 395,142.34 412,788.26 Financial derivatives – interest rate 173,604.96 214,106.21 impact on the result (in thousands of PLN) – increase in the reference rate by 25 basis points -553.84 -496.71

Currency risk

The Group is exposed to a foreign exchange risk arising from the transactions. Such risk arises as a result of the operating unit's sale or purchase transactions in currencies other than its functional currency. As at 31 December 2018, the Group hedged approximately 90% of the net exposure resulting from sale transactions denominated in foreign currencies and approximately 90% of the net exposure resulting from purchase transactions denominated in foreign currencies forecasted for the new budget year. It should be noted that a large part of the sales and purchase transactions are entered in the same foreign currencies, which provides a natural hedge against currency risk.

The sensitivity analysis for 2018 is presented below.

Sensitivity analysis consists primarily in the presentation of the structure of foreign currency financial instruments as well as the Group’s assets and liabilities of exposed to currency risk. Figures from the table of values at risk are subsequently tested for changes in exchange rates.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

To determine the range of potential exchange rate changes for the purpose of the analysis, historical volatility for the reporting year was calculated (all calculations based on fixings published by the NBP).

The method for calculating the historical volatility

is an annualized (logarithmic) standard deviation of the rate of return from NBP fixations for a given currency pair. The Annualization of one-day to one-year volatility is determined based on the formula (square root of the actual number of data publications in the period):

Year 2018 Historical volatility and NBP fixing for the analysis

NBP fixing historical volatility EUR/PLN 4.3000 4.1% CNY/PLN 0.5481 7.9% GBP/PLN 4.7895 6.9% CZK/PLN 0.1673 4.0% USD/PLN 3.7597 9.6% RUB/PLN 0.0541 12.7%

Value-at-risk:

value-at-risk as at 31/12/2016 total in million million million million million million million s of EUR CNY RUB GBP USD CZK PLN trade receivables 364.12 52.06 1.06 1,553.78 7.58 0.02 73.90 cash 44.04 6.86 6.10 50.61 0.04 0.63 15.25 financial instruments - profit or loss -36.61 -2.93 109.94 -910.00 -2.27 0.78 -162.00 financial instruments – principal 537.66 -42.08 1,298.07 0.00 -13.35 34.51 -351.00 amount - -69.92 -191.54 -194.42 -5.03 -2.79 -15.01 trade payables 463.51 Debt liabilities -33.00 -3.62 0.00 -126.10 -1.52 -0.89 -0.02

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The table below presents the analysis of the Company's sensitivity to currency risk as at 31 December 2018:

change in exchange rate change in exchange change in exchange rate of EUR/PLN rate of CNY/PLN of USD/PLN depreciati appreciation depreciati appreciatio depreciatio appreciatio total in millions of PLN on of PLN of PLN on of PLN n of PLN n of PLN n of PLN depreciati appreciation 4.1% -4.1% 7.9% -7.9% 9.6% -9.6% on of PLN of PLN trade receivables 23.1 -23.1 9.2 -9.2 0.0 0.0 0.0 0.0 cash 2.3 -2.3 1.2 -1.2 0.3 -0.3 0.2 -0.2 financial instruments - -3.6 3.6 -0.5 0.5 4.7 -4.7 0.3 -0.3 profit or loss financial instruments – 54.3 -54.3 -7.4 7.4 56.0 -56.0 12.4 -12.4 principal amount trade payables -25.1 25.1 -12.3 12.3 -8.3 8.3 -1.0 1.0 Debt liabilities -2.3 2.3 -0.6 0.6 0.0 0.0 -0.3 0.3 Total (result) -5.5 5.5 -3.1 3.1 -3.2 3.2 -0.8 0.8 total (principal amount) 54.3 -54.3 -7.4 7.4 56.0 -56.0 12.4 -12.4

Detailed analysis for other currencies is not presented due to low significance, but the value of the analysis is included in the column “Total”. Exposure to currency translation risk changes over the year depending on the volume of transactions conducted in that currency. However, the above sensitivity analysis can be considered representative for determining the Group's exposure to currency risk as at the balance sheet date.

Year 2017 Historical volatility and NBP fixing for the analysis

NBP fixing historical volatility EUR/PLN 4.1709 3.9% CNY/PLN 0.5349 7.0% GBP/PLN 4.7001 8.7% CZK/PLN 0.1632 3.9% USD/PLN 3.4813 7.8% RUB/PLN 0.0604 9.9%

Value-at-risk:

value-at-risk as at 31/12/2017 total in million million million million million million million s of EUR CNY RUB GBP USD CZK PLN trade receivables 334.14 46.29 0.69 1,518.68 8.32 0.00 60.44 cash 41.62 7.18 3.27 58.95 0.00 0.63 25.63 financial instruments - profit or loss 9.53 1.16 100.93 -680.00 -2.35 7.56 -144.00 financial instruments – principal 482.34 -31.51 1,038.60 - -22.55 59.55 -264.13 amount

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

- -54.43 -176.63 -341.45 -8.10 -9.08 -12.68 trade payables 413.90 Debt liabilities -36.59 -0.76 0.00 -535.39 0.00 -0.31 0.00

The table below presents the analysis of the Group's sensitivity to currency risk as at 31 December 2017:

change in exchange rate change in exchange rate change in exchange rate of EUR/PLN of CNY/PLN of GBP/PLN depreciatio appreciatio depreciatio appreciatio depreciatio appreciatio total in millions of PLN n of PLN n of PLN n of PLN n of PLN n of PLN n of PLN depreciati appreciatio 3.9% -3.9% 7.0% -7.0% 7.8% -7.8% on of PLN n of PLN trade receivables 20.5 -20.5 7.5 -7.5 0.0 0.0 0.0 0.0 cash 2.0 -2.0 1.2 -1.2 0.1 -0.1 0.2 -0.2 financial instruments - 0.1 -0.1 0.2 -0.2 3.8 -3.8 2.1 -2.1 profit or loss financial instruments – 39.1 -39.1 -5.1 5.1 38.9 -38.9 16.2 -16.2 principal amount trade payables -23.4 23.4 -8.9 8.9 -6.6 6.6 -2.5 2.5 Debt liabilities -3.4 3.4 -0.1 0.1 0.0 0.0 -0.1 0.1 total, change in the -4.3 4.3 -0.1 0.1 -2.7 2.7 -0.3 0.3 result Total, change in 39.1 -39.1 -5.1 5.1 38.9 -38.9 16.2 -16.2 principal amounts

Detailed analysis for other currencies is not presented due to low significance, but the value of the analysis is included in the column “Total”.

Exposure to currency translation risk changes over the year depending on the volume of transactions conducted in that currency. However, the above sensitivity analysis can be considered representative for determining the Group's exposure to currency risk as at the balance sheet date.

Credit risk

The Group's basic practice in the field of credit risk management is to strive to enter into transactions only with entities with proven credibility. The Group performs ongoing credit evaluations of its customers and in justified cases, requires appropriate securities. Furthermore, most of the Group's receivables are covered by a trade receivables insurance policy. Business partners, with whom the Group has no history of cooperation or sale transactions are concluded occasionally, make purchases in the form of prepayments. In contrast, trade credit is granted to customers with whom there is a positive history of collaboration and have credit rating based on both internal and external sources. Furthermore, due to ongoing monitoring of receivables, the Group's exposure to the risk of bad debts is not significant. The Group has built a model for estimating the expected loss resulting from the portfolio of receivables. The model is based on a historical analysis taking into account the repayment of receivables from the Group's customers. Regarding trade receivables representing the most significant assets exposed to the credit risk, the Group is not exposed to the credit risk, as it has only one significant counterparty. As a result, impairment estimates are made on a collective basis, and receivables have been grouped according to the overdue period and the debtor’s geographical location. An impairment estimate is based primarily on the historical overdue periods and the relationship between the amounts overdue and the actual repayments. In addition, the model includes information on the future such as GDP forecasts for the following year and the expected extrapolation of bankruptcies.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Gross values of individual groups and the amount of impairment losses as at 31 December 2018 were as follows:

Trade receivables

Current 0 – 30 31 – 60 61 – 90 91 – 120 121 – 151 – above Total

ratio days days days days 150 days 180 days 180 days As at 31/12/2018 Location: Poland Impairment rate * 0.34% 0.58% 5.37% 22.45% 36.73% 47.60% 59.18% 62.93% Gross receivables 20,881 805 59 27 21 9 21 69 21,892 Impairment loss 86 4 1 1 1 0 14 3 109 Location: Abroad Impairment rate * 0.40% 0.93% 5.06% 12.47% 18.83% 23.90% 31.96% 34.94% Gross value 47,865 4,740 936 28 190 61 14 2,619 56,454 Impairment loss 158 27 39 4 51 7 1 645 931 Total impairment 243 30 40 4 52 7 15 648 1,041 * The values of the rates presented in the table above are averaged values

The following events affected the changes in the impairment allowance during the period:

• The Group recognized mutual claims with the counterparty outstanding for more than 180 days. • Due to the change in the business model, the amount of impairment losses was reduced.

Based on the analysis of the economic situation, both home and abroad, the Group adjusted the impairment losses in accordance with the information in the table above. As at the balance sheet date, the Company has not identified any significant impact of the deterioration of the economic situation in the domestic and foreign markets on the counterparties’ ability to settle their liabilities. Changes in impairment losses on receivables are disclosed in Note 27 Regarding other financial assets of the Group, such as loans, the Group performed an impairment analysis of the loans granted. The amounts identified in the analysis are considered to have no material impact on the Group's financial statements.

Information on the model used and the value of loans granted as at 31 December 2018 can be found in Note 8.

As a part of its operations, the Group does not acquire impaired financial assets due to the credit risk.

Liquidity risk The Group monitors its risk of shortage of funds, using a recurring liquidity planning tool . This tool takes into account the maturity of investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows from operating activities.

The Group's objective is to maintain a balance between continuity and flexibility of funding through the use of various sources of financing, such as bank overdrafts, bank loans, bonds, finance leases.

The table below shows the Group's financial liabilities as at 31 December 2018 and 31 December 2017 according to their maturity dates based on contractual undiscounted payments, except for derivatives reported at fair value as at the balance sheet date.

Upon Up to 3 From 3 to From 1 to 5 More than 31 December 2018 Total request months 12 months years 5 years Interest-bearing loans, borrowings and 0 35,740 90,171 130,013 0 255,924 other debt instruments Trade liabilities and other liabilities 0 553,428 5,729 0 0 559,157 Derivatives 0 890 1,980 2,401 0 5,271

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Upon Up to 3 From 3 to From 1 to 5 More than 31 December 2017 Total request months 12 months years 5 years Interest-bearing loans, borrowings 0 82,453 43,696 145,517 0 271,665 and other debt instruments Trade liabilities and other liabilities 0 493,336 4,802 0 0 498,138 Derivatives 0 16,986 8,558 16,113 0 41,657

42. Derivatives

Risk management strategy

The Group applies the principles of hedge accounting, as defined in IFRS 9, in respect of the transactions presented in the table below

Within the framework of the risk management strategy, the Group assumes that the following factors may influence the hedge effectiveness under the established hedging relationships:

• value of the hedged item and the corresponding hedging transactions, • time of settlement of hedging instruments in relation to the time of settlement of the hedged item.

Apart from the factors described above, there were no other sources of hedge ineffectiveness in 2018.

The Group expects to carry out all the planned transactions to which hedge accounting is applied. As at 31 December 2018, there were no transactions for which hedge accounting had previously been used but which are no longer expected to occur.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Material disclosures of hedging derivatives (including not formally representing hedges in accordance with IFRS 9) are presented in the table below:

Maturity dates – in nominal values figures in thousands of PLN Balance Change of the Balance Balance sheet Balance sheet balance sheet Measurement sheet valuation of sheet valuation of valuation of Nominal Short-term Long-term valuation of the valuation of Deferred as the recognised in Deferred instruments Hedging transaction instruments instruments the instrument the at instrument equity as at Currency Hedged item Company tax recognized in derivatives value in (maturing by (maturing after instrument recognised in instrument 31/12/2017 recognised 30/06/2018 in the profit or currency 31/12/2019) 31/12/2019) recognised equity, net of recognised in equity, net relation to loss for the in equity deferred tax in equity of deferred 31/12/2017, year 2018 tax net of as at 31/12/2018 as at 31/12/2017 deferred tax Forward contract EUR Sales revenue Amica S.A. 46,000 38,000 8,000 1,886 -358 1,528 5,788 -1,100 4,688 -3,160 363

Forward contract EUR Purchase of goods Hansa 3,900 3,900 0 670 -119 551 42 -8 33 518 0

Forward contract EUR Purchase of goods CDA Ltd. 2,350 2,350 0 -103 21 -83 -44 8 -36 -47 -37 Amica Forward contract EUR Sales revenue 5,250 4,250 1,000 69 -13 55 259 0 259 -203 33 Commerce Forward contract CNY Purchase of goods Amica S.A. 704,000 434,000 270,000 814 -155 660 -19,565 3,716 -15,849 16,508 -494 Amica Forward contract CNY Purchase of goods 415,950 279,250 136,700 5,689 -1,769 3,920 185 -57 128 3,792 0 International Forward contract CNY Purchase of goods Hansa 13,940 13,940 0 0 0 0 0 0 0 0 -404 Sideme Forward contract CNY Purchase of goods 106,371 106,371 0 694 -197 497 0 0 0 497 809 S.A. Forward contract CNY Purchase of goods CDA Ltd. 167,750 156,750 11,000 2,201 440 2,642 252 -48 205 2,437 -415 Forward contract RUB Sales receivables Amica S.A. 910,000 910,000 0 0 0 0 0 0 0 0 1,854 * Forward contract GBP Sales revenue Amica S.A. 5,100 5,100 0 979 186 793 6,020 -1,144 4,876 -4,083 816 Net assets of the UK CIRS Contract GBP Amica S.A. 10,519 2,630 7,889 23,687 -5,587 18,099 24,156 -2,037 14,123 3,976 -238 company Forward contract CZK Sales revenue Amica S.A. 513,000 343,000 170,000 623 118 504 1,689 -321 1,368 -864 716

Forward contract USD Purchase of goods Amica S.A. 20,825 13,625 7,200 -815 155 -660 -6,053 1,150 -4,903 4,242 -64

Forward contract USD Purchase of goods CDA Ltd. 50 50 0 0 0 0 -27 5 -21 21 -16

Forward contract EUR Purchase of goods CDA Ltd. 2,350 2,350 0 201 21 222 -27 5 -21 243 -37 Sideme Forward contract USD Purchase of goods 14,414 11,714 2,700 35 -12 23 -11,161 3,720 -7,441 7,464 -432 S.A. IRS Contract PLN Investment loan Amica S.A. 110,000 30,000 80,000 -1,539 292 -1,247 -670 127 -543 -704 -124

Total 35,090 -6,977 27,505 -5,849 2,736 -3,112 30,637 2,329

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

* forward contracts used as hedges denominated in RUB are instruments classified as not meeting the hedging policy

Under the hedging policy, derivatives are designated by the Group as cash flow and fair value hedges in accordance with the requirements of IFRS 9 (Financial Instruments). The Group has hedged the net asset value with CIRS transactions. Other derivatives are treated as instruments held for trading (trading derivatives). All derivative instruments are measured at fair value, determined based on market data (exchange rates, interest rates).

31/12/2018 31/12/2017 Fixed assets: Trade derivatives Hedging derivatives 10,407 16,358 Instruments not satisfying the hedge accounting policy

requirements Long-term derivatives 10,407 16,358 Current assets: Trade derivatives Hedging derivatives 21,260 21,264 Instruments not satisfying the hedge accounting policy 1,854 354 requirements Short-term derivatives 23,114 21,618 Assets - derivative instruments 33,521 37,976 Long-term liabilities: Trade derivatives Hedging derivatives 2,401 16,868 Instruments not satisfying the hedge accounting policy

requirements Long-term derivatives 2,401 16,868 Current liabilities: Trade derivatives Hedging derivatives 2,870 24,641 Instruments not satisfying the hedge accounting policy 148 requirements Short-term derivatives 2,870 24,789 Liabilities - derivative instruments 5,271 41,657

Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing, interested and unrelated parties in an arm’s length transaction. For the financial instruments for which there is an active market, their fair value is determined based on the parameters from the active market (sale and purchase prices). For financial instruments for which there is no active market, the fair value is determined using the valuation techniques that make maximum use of market inputs and variables from active markets (exchange rates, interest rates, etc).

The table below presents the financial assets and liabilities measured by the Group at fair value, classified at specified levels in the fair value hierarchy:

• level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; • level 2 - inputs for the valuation of assets and liabilities, other than quoted prices included within level 1, observable on the basis of variables from active markets, • level 3 - inputs for the valuation of assets or liabilities that are not based on observable market data.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Total fair Class of financial instrument Level 1 Level 2 Level 3 value As at 31 December 2018 Assets: Quoted shares Unquoted interests and shares Hedging derivatives 31,667 31,667 Instruments not satisfying the hedge accounting policy

requirements Trade derivatives 1,854 1,854 Debt securities measured at fair value Total assets 33,521 33,521 Liabilities: Trade derivatives Instruments not satisfying the hedge accounting policy 5,271 5,271 requirements Hedging derivatives 0 0 Borrowings measured at fair value Total liabilities 5,271 5,271 Net fair value 28,250 28,250 As at 31 December 2017 Assets: Quoted shares Unquoted interests and shares Instruments not satisfying the hedge accounting policy 37,622 37,622 requirements Hedging derivatives 354 354 Trade derivatives Debt securities at fair value Total assets 37,976 37,976 Liabilities: Instruments not satisfying the hedge accounting policy

requirements Trade derivatives 148 148 Hedging derivatives 41,509 41,509 Borrowings measured at fair value Total liabilities 41,657 41,657 Net fair value -3,681 -3,681

In the reporting period there were no transfers between Level 1 and Level 2 in the fair value hierarchy, and none of the instruments has been moved from/to Level 3 of the fair value hierarchy.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

The fair values of particular classes of financial instruments The following table shows the comparison between carrying values and fair values of all financial instruments used by the Company, broken down into different classes and categories of assets and liabilities. Carrying amount Fair value Class of financial instrument 31 December 31 December 31 December 31 December 2018 2017 2018 2017 Assets: Borrowings 10,989 12,031 10,989 12,031 Trade receivables and other receivables 555,296 512,901 555,296 512,901 Financial derivatives 33,521 37,976 33,521 37,976 Debt securities 0 0 0 0 Quoted shares 0 0 0 0 Unquoted interests and shares 192 191 192 191 Investment fund units 0 0 0 0 Other financial assets 0 0 0 0 Cash and cash equivalents 73,638 91,555 73,638 91,555 673,636 654,654 673,636 654,654

Liabilities: Credit accounts 108,135 98,795 108,135 98,795 Current account overdraft 59,048 54,785 59,048 54,785 Debt securities 63,791 86,743 63,791 86,743 Finance lease 12,386 16,185 12,386 16,185 Financial derivatives 5,271 41,657 5,271 41,657 Trade and other liabilities 465,163 397,581 465,163 397,581 713,794 695,746 713,794 695,746 According to the Group's assessment, the fair value of the cash and cash equivalents, short term investments, trade receivables, trade payables, bank overdrafts, and other short-term liabilities does not differ from the carrying values, mainly due to the short maturity.

Items of income, expense, gains and losses recognized in the profit and loss account by categories of financial instruments Year ended 31 Year ended 31

December 2018 December 2017 Interest revenue regarding financial instruments valued by their fair

market price by the financial result Cash and equivalents (deposits) 52 95 Loans and receivables 481 766 Interest revenue attributable to financial instruments not measured at fair 533 861 value through profit or loss Profits on valuation and exercise of financial instruments measured at

fair value through profit or loss Trade derivatives 6,141 2,304 Hedging derivatives 19,386 15,993 Derivative instruments closed as ineffective 5,431 19,504 Investment fund units Profits on valuation and exercise of financial instruments measured at 30,958 37,801 fair value through profit or loss

Currency translation gains (losses) (+/-): Cash and cash equivalents - - Loans and receivables - - Financial liabilities measured at amortized cost - - Currency translation gains (losses) (+/-) 0 Profit on sale of available-for-sale financial assets - -

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Interest on financial assets covered by impairment write-off - - Other financial income 48 0 Total financial revenue 31,539 38,662

Year ended 31 Year ended 31

December 2018 December 2017 Interest costs attributable to financial instruments not measured at

fair value through profit or loss Finance lease liabilities 880 1,303 Credit accounts 2,972 3,059 Overdraft facilities 5,453 5,261 Debt securities 2,616 2,814 Interest on factoring 4,496 4,519 Trade liabilities and other liabilities 1,716 798 Interest costs attributable to financial instruments not measured at 18,133 17,754 fair value through profit or loss Losses on valuation and exercise of financial instruments measured

at fair value through profit or loss Trade derivatives 1,786 1,058 Hedging derivatives 6,015 7,406 Derivative instruments closed as ineffective -1,715 1,923 Losses on valuation and exercise of financial instruments measured 6,086 10,387 at fair value through profit or loss Currency translation gains/losses (+/-): Cash and cash equivalents -34,790 -35,326 Loans and receivables 27,199 48,567 Financial liabilities measured at amortized cost 30,299 19,568 Currency translation gains (losses) 22,708 32,809 Other financial costs 68 Total financial costs 46,927 61,018

Figures for the year 2018 presented in above tables differ from the financial income and expenses included in the statement of comprehensive income by the amount of PLN 24,817 thousand (cf. PLN 35,497 thousand for the year 2017) i.e. the value of changes in valuation and exercise of hedging financial instruments measured at fair value. In the statement of comprehensive income, these figures have an impact on the balance of other financial costs.

Components of other comprehensive income resulting from the application of the hedge accounting principles by the Group have been included in separate items of the consolidated statement of profit or loss and other comprehensive income. The cash flow hedge revaluation reserve as at 31 December 2018 amounted to PLN 28,113 thousand (cf. PLN 2,288 thousand in 2017).

43. Equity management

The main objective of the Group’s equity management is to maintain a strong credit rating and healthy capital ratios in order to support the Group's operations and increase value for its shareholders. The Group manages its capital structure and revises the same as a result of changes in the economic conditions. In order to maintain or adjust the equity structure, the Group may adjust the dividend payments to shareholders, return capital to shareholders or issue new shares. In the year ended 31 December 2018 and 31 December 2017, no changes were introduced in the objectives, policies and processes in this area. The Group monitors the equity level based on the carrying amount of the equity and the capital reserve from revaluation of derivatives used as cash flow hedges. Based on the equity amount determined in this way, the Group calculates the total debt- to-equity ratio. In addition, to monitor its debt servicing ability, the Group calculates the debt (i.e. liabilities from leases, credit, loans and other debt instruments, net of cash) to EBITDA (profit or loss on operating activities adjusted by depreciation costs) ratio.

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Capital: 31/12/2018 31/12/2017 Equity 834,783 747,465 Subordinated loans received from the owner Capital from valuation of hedging instruments securing cash flows (-) 38,440 -2,288 Capital 873,223 745,177 Equity 834,783 747,465 Loans, borrowings and other debt instruments 243,538 255,480 Finance lease 12,386 16,185 Total sources of financing 1,090,707 1,019,130 Ratio of capital to total financing sources 0.80 0.73 EBITDA Profit (loss) from operations 151,998 143,516 Depreciation 53,167 47,901 EBITDA 205,165 191,417 Debt: Loans, borrowings and other debt instruments 243,538 255,480 Finance lease 12,386 16,185 Debt 255,924 271,665 Cash and cash assets 76,044 91,555 Debt to EBITDA ratio 0.88 0.94

44. Employment structure

Employment in the Group as at 31 December 2018 and as at 31 December 2017 was as follows:

31 December 2018 31 December 2017 Management Board of the Parent Company 5 5 Management Boards of the Group Companies 36 37 Administration 497 482 Sales Department 166 156 Production Department 1,653 1790 Others 663 650 Total 3,020 3,120

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

45. Other information

Shareholders holding directly or indirectly at least 5% of the total number of voting rights at the General Meeting of Amica S.A.

Number of Number of Par value of Share in As at 31/12/2018 shares votes shares capital Holding Wronki S.A. 2,715,771 5,431,542 5,431,542 34.93% NATIONALE-NEDERLANDEN OTWARTY FUNDUSZ 555,952 555,952 1,111,904 7.15% EMERYTALNY (formerly: ING OFE)* Aviva OFE Aviva BZ WBK S.A.* (currently: Aviva Otwarty 537,497 537,497 1,074,994 6.91% Fundusz Emerytalny Aviva Santander S.A.). Other shareholders** 3,966,053 3,967,960 7,932,106 51.01% Total 7,775,273 10,492,951 15,550,546 100.00% * Data reported based on the notifications received by the Company from its Shareholders, prepared pursuant to Article 69 of the Act of 29 July 2005 on Public Offering. ** Under the Share Repurchase Program, the Company acquired 250,000 ordinary bearer shares of Amica SA designated with the ISIN code PLAMICA00010 (see: Current Report No. 35/2018 of 16 October 2018).

Shares held by the officers of Amica S.A.*

Number of shares as at Acquisition (disposal) of Number of shares as at Holder’s name 31/12/2018 shares 31/12/2017 Marcin Bilik* 13,900 2,000 11,900 Alina Jankowska-Brzóska* 1,015 - 1,015 Piotr Skubel* 13,367 10,367 3,000

* shares held by a person remaining in the community property regime.

Shares held by members of the Supervisory Board of Amica Wronki S.A.

Number of shares as at Acquisition (disposal) of Number of shares as at Holder’s name 31/12/2018 shares 31/12/2017 Tomasz Rynarzewski 400 - 400

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

46. Events occurring after the balance sheet date

On 20 March 2019, Marcelin Management Sp. z o.o. (a company of Amica Group) sold its shares in Arcula Sp. z o.o. All shares held i.e. 19% of the share capital of Arcula, were sold. In addition, Arcula repaid loans to Marcelin Management for a total amount of PLN 10.6 million, on 20 February 2019 (PLN 3.5 million) and on 21 March 2019 (PLN 7.3 million). In December 2018, the process of merging Marcelin Management Sp. o.o. And Profi Enamel Sp. z o.o. was launched. As a result of the planned merger, as at 30 April 2019, the structure of Amica Group will be simplified and additional operational synergies between the merging companies will be generated.

47. Approval for publication

This Consolidated Annual Report prepared for the period from 01 January 2018 to 31 December 2018 (including corresponding figures) was approved for publication by the Company's Management Board on 29 March 2019.

Signatures of all Members of the Management Board

Date Full name Title Signature

President of the 29/03/2019 Jacek Rutkowski Management Board

Vice-President of the 29/03/2019 Marcin Bilik Management Board

Vice-President Alina of the 29/03/2019 Jankowska- Management Brzóska Board

Vice-President Wojciech of the 29/03/2019 Kocikowski Management Board

Vice-President of the 29/03/2019 Piotr Skubel Management Board

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

AMICA S.A. Group Consolidated Financial Statements for the year ended 31 December 2018

Signature of the person responsible for the preparation of the financial statements

Date Full name Title Signature

Chief 29/03/2019 Michał Rakowski Accountant / Proxy

Letter from Report on Corporate Governance Declarations Consolidated financial Auditor's Report the Activities Statement statements President of the Management Board

Auditor's Report on the 6 Consolidated Financial Statements

List Prezesa Zarządu Sprawozdanie z działalności Oświadczenie w sprawie ładu korporacyjnego Oświadczenia Sprawozdanie finansowe Sprawozdanie audytora

Grant Thornton Polska Sp. z o.o. sp. k. Independent Statutory ul. Abpa Antoniego Baraniaka 88 E 61-131 Poznań Poland Auditor's Report on the T +48 61 62 51 100 F +48 61 62 51 101 Annual Consolidated www.GrantThornton.pl Financial Statement

For Shareholders of Amica Spółka Akcyjna

Auditor's Report on the Annual Consolidated Financial Statements

Opinion

We have audited the accompanying annual consolidated financial statement of the Capital Group Amica (Capital Group), for which Amica Spółka Akcyjna is the parent company (Parent Company), headquartered in Wronki, ul. Mickiewicza 52, which includes a consolidated balance sheet as at 31 December 2018, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement for the period from 01 January 2018 to 31 December 2018, additional information on adopted accounting principles and other explanatory notes. In our opinion, the attached annual consolidated financial statement: • presents a true and fair view of the economic and financial situation of the Capital Group as at 31 December 2018 and its financial result and cash flow account for the period from 01 January 2018 to 31 December 2018 in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations and the adopted accounting principles (policies), • comply, in terms of the form and content, with the Group's legal regulations and the provisions of the Parent Company's Articles of Association.

This opinion is consistent with the additional report to the

Audit Committee, issued as at the date of this audit report.

Audit - Taxes - Outsourcing - Consulting Member of Grant Thornton International Ltd

Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością Spółka komandytowa. Audit firm no. 4055. General Partner: Grant Thornton Polska Sp. z o.o. Management Board of the general partner: Tomasz Wróblewski - President of the Management Board, Dariusz Bednarski - Vice President of the Management Board, Jan Letkiewicz - Vice President of the Management Board. Registered Office: 61-131 Poznań, ul. Abpa Antoniego Baraniaka 88 E. Tax ID (NIP): 782-25-45-999, Employer no. (REGON): 302021882. Bank account No.: 31 1090 1476 0000 0001 3554 7340. District Court of Poznań - Nowe Miasto and Wilda in Poznań, 8th Commercial Division, National Court Register No, 0000407558.

Basis for the Opinion

We have conducted our audit in accordance with the

• Act of 11 May 2017 on statutory auditors, audit firms and public oversight ( Journal of Laws of 2017 item 1089, as amended) (Act on statutory auditors), • National Audit Standards s (KSB) presented in the International Audit Standards by the adopted resolutions of the National Council of Statutory Auditors No. 2039/37a/2018 of 19 February 2018 and No. 2041/37a/2018 of 5 March 2018, and • Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of financial statement of public-interest entities and repealing Commission Decision 2005/909/EC (OJ L 158, 27.5.2014, p. 77 and OJ L 170, 11.06.2014, p. 66) (Regulation No. 537/2014).

Our responsibility pursuant to these standards was further described in section of our report: Responsibility of the statutory auditor for auditing the annual consolidated financial statement. We are independent of the Capital Group companies in accordance with the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC Code) adopted by resolution of the National Council of Statutory Auditors No. 2042/38/2018 of 13 March 2018 on the professional ethics of statutory auditors and other ethical requirements that apply to the audit of financial statements in Poland. In particular, during the audit, key certified auditor and the audit firm remained independent of the Capital Group companies in accordance with the requirements of independence set out in the Act on auditors and Regulation 537/2014. We have fulfilled our other ethical duties in accordance with these requirements and IFAC Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to constitute basis for our opinion.

Key audit matters

Key audit matters are matters which, according to our professional judgement were the most significant during the audit of the annual consolidated financial statements for the current reporting period. These include the most significant assessed risks of material misstatement, including the assessed risks of material misstatement due to fraud. We have referred to these issues in the context of our audit of the annual consolidated financial statements as a whole and took them into consideration when formulating our opinion on this financial statement. Below, we also have summed up our response to these risks, and in cases where considered necessary, presented our major findings regarding these risks. We do not express a separate opinion on these matters.

Name of the key issue How our audit referred to this issue Goodwill impairment Our procedures in relation to the aforesaid key issue included: The carrying amount of goodwill recognized in the consolidated financial statement is • PLN 40,492 thousand. obtaining the supporting documents confirming the completion of the impairment test from the The risk in this area is related to goodwill Management Board of the Parent Company, impairment as a result of failure to achieve • verification of the validity of the adopted the financial results by the cash-generating measurement methods and analysis of the unit to which goodwill has been assigned. rationality of the assumptions underlying the presented impairment test by comparing the Goodwill disclosures are presented in source data with the presented financial plans, Note 23 of the consolidated financial • statements. analysis whether the Management Board's estimates are realized by comparing whether the assumptions underlying the previous year's impairment test have been met.

We consider the assessment of impairment as key audit issue due to an essential element of judgement, in particular concerning the assumptions on discounted cash flow model to estimate affect the use value of the benefit- generating unit attributed to goodwill. Transactions on financial instruments related Our procedures in relation to the aforesaid to the adopted hedging policy key issue included: The Group enters into transactions to hedge • currency risk and interest rate risk in line with obtaining from the Company hedging the adopted hedging policy. documentation and discussion on assumptions, including an assessment The Parent Company measures its financial whether the anticipated hedged instruments on its own. The risk is related to the transactions are highly probable, correctness of the estimated fair values of • validation of the existence and instruments. completeness of the financial instruments based on independent confirmations of Under the hedging policy, the Group has balances with the financial institutions, implemented a hedge accounting policy for • analysis of the correctness of the model and some of its transactions. The risk is related the source data used, to the correct presentation and recognition of • analysis of the presented documentation measurements in other comprehensive showing the analysis of the hedge accounting income. effectiveness, • verification of the correctness of In connection with the number of transactions and qualifications for hedge as a result of changes to the terms and conditions accounting. of the contracts concluded, the risk is related to validation of the existence of the transactions, their completeness and correctness of their derecognition.

Disclosures related to financial instruments and hedge accounting are presented in Notes 38 and 42 of additional information and explanator notes to the consolidated financial statements.

We recognise transactions related to hedge accounting as a key audit issue due to significant effect - on the valuation and recognition - both external estimates on market assumptions and assumptions of the Management Board regarding the probability of the transaction. Consolidation process As part of our audit we conducted the following procedures: The risk in terms of the correctness of determination of foreign exchange differences from converting the items and transactions of • in order to eliminate this risk, we have foreign entities and other consolidation reviewed the transactions recognized in adjustments equity item "currency conversion differences" • we obtained documentation, which is the basis for postings made in "currency conversion differences" and assessed their validity in this item,

In connection with the technique of preparing a consolidated financial • we have obtained documentation for statement, there is a risk related to a consolidation adjustments made and assessed complete assignment to consolidation whether their records are consistent with the adjustments to the basic transaction and the economic substance of the transaction. incorrect determination and assignment of foreign exchange differences on conversion of items included in the consolidated financial statement.

We consider consolidation process as a key audit issue, because the adjustments made in consolidation are complex and require special management control, consolidation process is complicated, thus the risk of omission and incorrect records of transactions in the consolidated financial statement is greater.

Responsibility of the Management Board and the Supervisory Board of the Parent Company for the Annual Consolidated Financial Statements

Management Board of the Parent Company is responsible for the preparation of an annual consolidated financial statement, which presents true and fair view of the financial position and financial result and cash flows of the Capital Group in accordance with International Accounting Standards, International Financial Reporting Standards, and related interpretations published in the form of European Commission regulations adopted accounting principles (policies), and the applicable laws and the Articles of Association of the Parent Company. The Parent Company's Management Board is also responsible for the internal control, as deemed necessary for preparation of the Annual Consolidated Financial Statements free of material misstatements, whether caused by error or fraud.

Upon preparing the annual consolidated financial statement, the Parent Company's Management Board is responsible for assessing the Capital Group's ability to continue business operation, disclosure, if applicable, any issues related to business continuity and for the adoption of the going concern principle, except for cases when the Parent Company's Board intends either to liquidate the Capital group or to cease its activities or has no realistic alternative to liquidation or discontinuing business operations.

Pursuant to the Act of 29 September 1994 on accounting (consolidate text: Journal of Laws of 2019, item 351) (Accounting Act), the Management Board of the Parent Company and members of the Supervisory Board shall ensure that the Annual Consolidated Financial Statement satisfies the requirements laid down in the Accounting Act. Members of the Supervisory Board of the Parent Company are responsible for supervising the Capital group's financial reporting process.

Responsibility of the statutory auditor for auditing the annual consolidated financial statement

Our purpose is to obtain reasonable assurance that the annual consolidated financial statement as a whole is free of material misstatements, whether caused by error or fraud, and to issue an independent auditor's report containing our opinion. Reasonable certainty is a high level of certainty but does not guarantee that the audit carried out pursuant to KSB shall always detect the existing relevant distortions. Misstatements may arise as a result of fraud or error and are considered material if it can reasonably be expected that they could, either individually and collectively, influence the economic decisions that users make on the basis of the Annual Consolidated Financial Statements.

The scope of statutory audit does not include the assurance on the future viability of the Group nor the efficiency or effectiveness with which the Management of the Parent Company has conducted or will conduct the affairs of the Group.

During the audit carried out in accordance with the KSB, we use professional judgement and maintain professional scepticism and:

• identify and evaluate risks of substantial distortion of the annual consolidated financial statement due to fraud or error, we design and conduct audit procedures corresponding to those risks and obtain audit evidence that is sufficient and appropriate to constitute basis for our opinion. The risk of failure to detect a significant distortion resulting from fraud is greater than that resulting from error, since fraud may be associated with collusion, forgery, deliberate omission, misleading or circumvention of internal controls; • we obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the given circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Capital Group's internal control; • we assess the adequacy of the applied accounting principles (policy) and appropriateness of accounting estimates, and related disclosures made by the Management Board of the Parent Company; • we assess the appropriateness of the adoption of the going concern principle by the Management Board of the Parent Company and on the basis of the obtained audit evidence, whether there is significant uncertainty associated with events or conditions that may raise a significant doubt towards the Capital Group's ability to continue the business operations. If we come to the conclusion that there is such significant uncertainty, it is required from us to pay attention in our auditor's report on the related disclosures in the annual consolidated financial statement or, if such disclosures are inadequate, we modify our opinion. Our conclusions are based on the audit evidence obtained to the date of preparation of our statutory auditor’s report, however, future events or conditions may lead the Capital Group to cease its business operations; • we assess the overall presentation, the structure and content of the annual consolidated financial statement, including disclosures, and whether the annual consolidated financial statement provides transactions and events that constitute the basis for the disclosures in such a way as to ensure fair presentation. • we obtain sufficient and adequate audit evidence regarding the financial information of business units or business operations within the Capital Group for the purpose of expressing an opinion on the annual consolidated financial statement. We are responsible for the management, supervision and performance of the Capital Group audit and remain solely responsible for our audit opinion.

We provide the Supervisory Board of the Parent Company with information about, among others, the planned scope and time of the audit and significant findings of the audit, including any significant weaknesses of internal control that we will identify during the audit.

We give a statement to the Supervisory Board of the Parent Company that we complied with the relevant ethical requirements regarding independence and inform the Board on all relationships and other issues that could reasonably be considered to constitute a threat to our independence and, where applicable, inform about safety measures applied.

Among issues presented to the Supervisory Board of the Parent Company, we have identified those issues that were the most significant in the consolidated financial statement audit for the current period, and therefore found them to be key audit issues. We describe these issues in our statutory auditor's report, unless the law or regulations prohibit public disclosure or where, in exceptional circumstances, we determine that the issue should not be presented in our report, because it could be reasonably expected that the negative effects outweigh the benefits for public interest arising from the publication of such information.

Other information, including operating statement

Other information include the Capital Group's operating statement for the financial year ended 31 December 2018, including a statement on corporate governance and statement on non-financial information referred to in Article 49b section 1 and Article 55 section 2b of the Accounting Act, which are a separate part of this operating statement of the Capital Group, and a consolidated annual report for the financial year ended 31 December 2018 (with the exception of the annual consolidated financial statement and our statutory auditor's report).

Responsibility of the Parent Company's Management Board and Supervisory Board

The Management Board of the Parent Company is responsible for preparing other information in accordance with the Accounting Act and other applicable laws. Furthermore, the Parent Company’s Management Board and Supervisory Board members are obliged to ensure that the Report on the Group’s Activities complies with the requirements laid down in the Accounting Act.

Responsibility of the auditor

Our opinion on the annual consolidated financial statement does not include other information and we do not express any form of assurance resulting from KSB. In connection with the audit of the annual consolidated financial statement, it is our responsibility to become familiar with other information, and in so doing, consider whether it is significantly inconsistent with the annual consolidated financial statement or our knowledge obtained during the audit, or seems to the materially distorted in any other way. If, on the basis of the conducted work, we find a material misstatement in other information, we are obliged to inform about this in our audit report. Our duty, in accordance with the requirements laid down in the Act on Statutory Auditors, is also to issue an opinion on whether the operating statement of the Capital Group was prepared in accordance with the law and whether it is consistent with the information contained in the annual consolidated financial statement. Furthermore, we are obliged to inform whether the Parent Company has prepared a statement on the non- financial information and issue an opinion whether the Parent Company, in a statement on corporate governance, has included the required information. The Capital Group's operating statement, Management Board's statements on the reliability of the annual reports, Management Board's statements on the audit firm, statements of the Supervisory Board on the Audit Committee, the assessment of the Supervisory Board on the consolidated statements for year 2018, statements of the Supervisory Board on the selection of an audit firm conducting the audit of the annual financial statement in accordance with the applicable regulations were obtained before the date of this audit report, and other elements of the annual report: Letter from the President of the Management Board shall be provided to us after this date. In cases where we find significant misstatement in the consolidated annual report, we are obliged to inform the Parent Company's Supervisory Board about this.

Opinion on the Report on Activities

It is our opinion that the operating statement of the Capital Group was prepared in accordance with the applicable regulations, that is, in accordance with the provisions of Article 49 and Article 55 section 2a of the Accounting Act and of the Ordinance of the Minister of Finance of 29 March 2018 regarding current and periodic information to be submitted by issuers of securities and the conditions for recognition as equivalent of the information whose disclosure is required under the laws of a non-member state (Journal of Laws of 2018, item 757) (Ordinance on current and periodic information), and is consistent with the information contained in the attached annual consolidated financial statement. Furthermore, we declare that in the light of our knowledge on the Capital Group and its environment acquired during the audit of the annual consolidated financial statements, we have identified no material misstatements in the report on activities.

Opinion on the Corporate Governance Statement

In our opinion, the Parent Company’s corporate governance statement includes the information specified in Section 70 para. 6 item 5 of the Regulation on current and periodic information. The information provided in Section 70 para. 6 point 5 clauses c-f, h and i of the Regulation on current and periodic reports, as included in the corporate governance statement, is consistent with the applicable laws and the information contained in the Annual Consolidated Financial Statements.

In accordance with the requirements of the Act on statutory auditors, we inform that the Parent Company has prepared a statement on the non-financial information referred to in Article 49b section 1 and Article 55 section 2b of the Accounting Act as a separate part of the operating statement.

Report on other legal requirements and regulations

Statement on the provision of services unrelated to the audit of financial statements

To the best of our knowledge and belief, we declare that we have not provided the Capital Group companies with non-audit services that are prohibited under Article 136 of the Act on Statutory Auditors and Article 5 (1) of Regulation 537/2014.

Choice of the audit firm

We have been selected to audit the annual consolidated financial statements of the Group by the virtue of the resolution of the Parent Company's Supervisory Board of 22 June 2017. The consolidated financial statements of the Capital Group have been audited by us continuously starting from the financial year ended 31 December 2015 i.e. for four subsequent financial years. To audit the consolidated financial statements for 2015 and 2016 we were appointed separately, to audit the financial statement for 2017 and 2018 we were appointed jointly.

Jan Letkiewicz

Statutory Auditor No. 9530 Key Statutory Auditor conducting the audit on behalf of Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k., Poznań, ul. Abpa Antoniego Baraniaka 88 E, Audit Firm No. 4055

Poznań, 29 March 2019

ul. Mickiewicza 52, tel. +48 67 25 46 100 [email protected] 64-510 Wronki tel. +48 67 25 40 320