grant thornton an instinct for growth · 2017. 6. 2. · report on the audit of the financial...

Grant Thornton An instinct for growth

Statutory Auditor's Opinion and Report on the Audited Financial Statements for the Year 2016 Amica Spółka Akcyjna

Opinion of an independent statutory auditor

Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k.

ul. Abpa. Antoniego Baraniaka 88 E 61-131 Poznań

Poland T +48 61 62 51 100 F +48 61 62 51 101

www.GrantThornton.pl For the shareholders of Amica Spółka Akcyjna REPORT ON THE AUDITED FINANCIAL STATEMENTS We have audited the accompanying financial statements of Amica Spółka Akcyjna (Company) with its registered office in Wronki, ul. Mickiewicz 52, which comprise the balance sheet as at 31 December 2016, the statement of comprehensive income, the statement of changes in equity, the cash flow statement for the period from 01 January 2016 to 31 December 2016, the additional information about the accounting policies and other explanatory notes. Responsibility of the Management Board and the Supervisory Board for the Financial Statements The Company's Management Board is responsible for the preparation and fair presentation of the financial statements, based on properly maintained accounting records and in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations and other applicable laws. The Company's Management Board is also responsible for the internal control, as they deems necessary for preparation of the financial statements without significant impairment as a result of fraud or error. Pursuant to the Act of 29 September 1994 on accounting (Journal of Laws of 2016, item 1047, as amended) (“Accounting Act”), the Management Board of the Company and members of the Supervisory Board shall ensure that the financial statements and the report on the activities satisfy the requirements stipulated therein. Responsibility of the Statutory Auditor We are responsible for expressing an opinion on these financial statements based on our audit. Audit - Taxes - Outsourcing - Consulting Member of Grant Thornton International Ltd Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp.k. – an entity authorized to audit the financial statements, No. 4055 General Partner: Grant Thornton Polska Sp z o.o. Management Board of the General Partner Cecylia Pol - President of the Management Board, Tomasz Wróblewski - Vice-President of the Management Board Registered office address: 61-131 Poznań, ul. Abpa. Antoniego Baraniaka 88 E. Taxpayer ID: 782-25-45-999, REGON: 302021882 Bank Account No. 95175010190000000031652243 District Court of Poznań - Nowe Miasto & Wilda in Poznań, 8th Commercial Division, National Court Register No. 0000407558

http://www.grantthornton.pl/

We have conducted our audit in accordance with the provisions of Chapter 7 of the Accounting Act and in accordance with the National Standards on Auditing as amended by the International Standards on Auditing adopted by Resolution No. 2783/52/2015 of the National Council of Statutory Auditors of 10 February 2015, as amended. These standards require us to comply with the ethical requirements as well as to plan and perform the audit so as to obtain reasonable assurance as to whether the financial statements are free from material misstatements. The audit involved performing procedures designed to obtain evidence of the amounts and disclosures presented in the financial statements. The selection of audit procedures depends on the auditor's judgment, including assessment of the risk of material misstatement of the financial statements, due to fraud or error. When assessing that risk, the auditor considers internal control in relation to the Company's preparation and fair presentation of the financial statements in order to design audit procedures appropriate to the circumstances and not to express an opinion on the effectiveness of the Company's internal control. The audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Management Board as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide an opinion. Opinion In our opinion, the attached financial statements:

- accurately and fairly present the assets and financial position of the Company as at 31 December 2016 and its financial result for the period from 1 January 2016 to 31 December 2016 in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations announced in the form of European Commission regulations and the adopted accounting principles (policies),

- have been prepared on the basis of the properly kept accounting books, - comply, in terms of the form and content, with the Company's legal regulations and the provisions of the

Company's Articles of Association. Report on other legal requirements and regulations Opinion on the Report on Activities Our opinion on the audit of the financial statements does not include the report on activities. The Management Board of the Company is responsible for preparing the report on activities in accordance with the Accounting Act and other applicable laws. Furthermore, the Management Board and Supervisory Board members are obliged to ensure that the report on activities complies with the requirements laid down in the Accounting Act. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.

Our responsibility in connection with the conducted audit of the financial statements was to review the content of the report on activities and to ascertain whether the information contained therein is consistent with the provisions of Article 49 paragraph 2 of the Accounting Act and the Regulation of the Minister of Finance of 19 February 2009 on current and interim reports published by issuers of securities and on conditions for recognition of information required by non-Member State regulations as equivalent (consolidated text: Journal of Laws of 2014, Item 133, as amended) (Regulation current and interim reports) and whether it is consistent with the information contained in the attached financial statements. Our obligation was also to make a statement as to whether, in the light of our knowledge on the Company and its environment acquired during the audit of the financial statements, we have identified any significant distortions in the report on activities. In our opinion, the information included in the report on activities takes into account the provisions of Article 49 paragraph 2 of the Accounting Act and the Regulation on current and interim reports and is consistent with the information presented in the attached financial statements. Furthermore, in the light of our knowledge on the Company and its environment acquired during the audit of the financial statements, we have not identified any material misstatements in the report on activities. In connection with the conducted audit of the financial statements, it was also our responsibility to review the Company's corporate governance statement, which is a separate section of the report on activities. In our opinion, the Company has included in the statement all the information required under the implementing provisions issued pursuant to Article 60 paragraph 2 of the Act of 29 July 2005 on public offering, conditions governing the introduction of financial instruments to organised trading, and on public companies (consolidated text: Journal of Laws 2016, Item 1639). The information complies with the applicable legislation and the information presented in the financial statements. 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 88E, an entity authorized to audit financial statements, entry number 4055 Poznań, 27 April 2017 ©2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.

Report on the audit of the financial statements for the year 2016. Amica Spółka Akcyjna Audit - Taxes - Outsourcing - Consulting Member of Grant Thornton International Ltd Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp.k. – an entity authorized to audit the financial statements, No. 4055 General Partner Grant Thornton Polska Sp. z o.o. Management Board of the General Partner: Cecylia Pol - President of the Management Board, Tomasz Wróblewski - Vice-President of the Management Board Registered office address: 61-131 Poznań, ul. Abpa. Antoniego Baraniaka 88 E, Taxpayer ID: 782-2545 999, REGON: 302021882 Bank Account No. 951750 1019 0000 0000 31652243 District Court of Poznań - Nowe Miasto & Wilda in Poznań, 8th Commercial Division, National Court Register No. 0000407558

Amica Spółka Akcyjna

1. Information on the Company

Amica Spółka Akcyjna (Company) was established on the 18th of October 1996 as a result of transformation of the Company “Fabryka Kuchni Wronki” Sp. z o.o. into the Company “Amica Wronki” S. A. On 01 June 2016, the Company changed its name from “Amica Wronki Spółka Akcyjna” to “Amica Spółka Akcyjna”. The Company was established for an indefinite period of time. The Company's registered office is situated in Wronki at ul. Mickiewicza No. 52. The Company's core business are the following:

- manufacture and sale of electric and gas-fired domestic appliances; - sale of domestic appliances - sales of maintenance and repair services and heating media, - rental and leasing activities.

On 07 June 2001, the Parent Company was 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 0000017514. The company has a VAT number 7630003498 and REGON business statistical number 570107305. The share capital of the Company at the end of the financial year i.e. as at 31 December 2016, amounted to PLN 15,551 thousand. The equity of the Company as at that date amounted to PLN 653,704 thousand. According to Note 29.1.3 of the additional information, the shareholding structure of the Company as at 31 December 2016 was as follows:

Shareholder Number of shares

Number of voting rights

Nominal value of shares

Proportion of share capital

Holding Wronki SA 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% Some of the registered shares of series A are preference shares in that each such share carries two votes at the General Meeting. Other shares of A and B series are ordinary bearer shares. In the period from 01 January 2016 to 31 December 2016 and after the balance sheet date until the date of signing the financial statements, there were no changes in the shareholders having more than 5% of votes at the General Meeting. The Company's Management Board as at 27 April 2017 (date of signing of the financial statements) was composed of:

- Mr Jacek Rutkowski – President of the Management Board, - Mr Jarosław Drabarek – First Vice-President of the Management Board - Mr Wojciech Kocikowski, Vice-President of the Management Board,

©2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


- Mr Marcin Bilik – Vice-President of the Management Board - Mr Piotr Skubel – Vice-President of the Management Board, - Ms Alina Jankowska-Brzóska – Vice-President of the Management Board

In the period from 01 January 2016 to 27 April 2017 (date of issue of this report), there were following changes in the composition of the Management Board:

- As a result of expiry of the term of office, the mandate of the Vice-President of the Management Board, Tomasz Dudek, expired on 31 May 2016,

- As a result of expiry of the term of office, the mandate of the Vice-President of the Management Board, Andrzej Sas, expired on 31 May 2016,

- Pursuant to the Resolution of the Annual General Meeting of 01 June 2016, Mr Jarosław Drabarek was appointed as a Member of the Management Board. Pursuant to the Resolution of 01 June 2016, he was appointed as the First Vice-President of the Management Board.

- Pursuant to the Resolution of the Annual General Meeting of 01 June 2016, Ms Alina Jankowska-Brzóska was appointed as a Member of the Management Board. Pursuant to the Resolution of 01 June 2016, she was appointed as the Vice-President of the Management Board.

- Pursuant to the Resolution of 01 June 2016, Mr Marcin Bilik was appointed as the Vice-President of the Management Board.

2. Financial Statements for the previous year

The Company's financial statements for the year ended 31 December 2015 (previous financial year) were audited by Jan Letkiewicz, a key statutory auditor No. 9530, acting on behalf of Grant Thornton Frąckowiak Spółka z ograniczoną odpowiedzialnością sp. k. with its registered office in Poznań at ul. Abpa. Antoniego Baraniaka 88 E. As a result of the audit of the financial statements, the statutory auditor issued an unqualified opinion. The Company’s financial statements for the year ended 31 December 2015 were approved by the General Meeting on 01 June 2016. The Shareholders of the Company adopted a resolution whereby the net profit of PLN 78,462 thousand would be allocated to:

- dividend for shareholders PLN 31,101 thousand, - supplementary capital PLN 47,361 thousand.

The Company's financial statements for the financial year ended 31 December 2015 (previous financial year) as well as the opinion of the statutory auditor, resolutions of the General Meeting on approval of the financial statements and the distribution of profit and the report on the Company's activities were submitted on the 16 June 2016 to the National Court Register.

3. Information on the entity authorised to audit financial statements and the statutory auditor Grant Thornton Frąckowiak Spółka z ograniczoną odpowiedzialnością sp. k. with its registered office in Poznan, ul. Abpa. Antoniego Baraniaka 88E, is an entity authorised to audit financial statements, entered in the list maintained by the National Council of Statutory Auditors in Poland, under the number 4055. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.

Amica Spółka Akcyjna The person in charge of the audit of the financial statements on behalf of Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. was the statutory auditor, Jan Letkiewicz, entry no. 9530. Grant Thornton Frąckowiak Spółka z ograniczoną odpowiedzialnością sp. k was selected by the Supervisory Board on 11 May 2016 to perform the audit of the financial statements of the Company for the financial year ended 31 December 2016. We have conducted the audit of these financial statements pursuant to the agreement concluded with the Company's Management Board on 02 June 2016.

4. Scope and timing of the audit

The purpose of our audit was to express a written opinion and a report on whether the financial statements for the financial year ended 31 December 2016 accurately and clearly communicate the financial and asset position as well as the financial result of the Company in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations announced in the form of European Commission regulations and the adopted accounting principles (policies). The audit involved performing procedures designed to obtain evidence of the amounts and disclosures presented in the financial statements. The selection of audit procedures depends on the auditor's judgment, including assessment of the risk of material misstatement of the financial statements, due to fraud or error. When assessing that risk, the auditor considers internal control in relation to the Company's preparation and fair presentation of the financial statements in order to design audit procedures appropriate to the circumstances and not to express an opinion on the effectiveness of the Company's internal control. The audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Management Board as well as evaluating the overall presentation of the financial statements. During the audit of the items of the financial statements and the accounting books, we used the tests and samples relevant for the financial auditing. On the basis of these tests and samples we are satisfied with regard to the accuracy of the audited items. The audit limited to selected samples was also applied to tax settlements and tax obligations, and consequently differences may arise between our conclusions and the results of inspections conducted by the tax authorities. Our audit was not aimed at identification or clarification of occurrences, which, if indeed occurred, could be basis for criminal proceedings by relevant authorities. Furthermore, the audit did not cover other issues, which could occur outside the Company’s accounting system, but had no effect on the financial statements audited by us. We performed the audit of the Company's Financial Statements for the financial year ended 31 December 2016 in the period from 3 November 2016 to 27 April 2017. ©2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


5. Declaration of independence Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. K, members of the general partner’s management board, the network to which the authorized entity belongs, the statutory auditor in charge of the audit and other persons participating in the audit satisfy the conditions for expressing an unbiased and independent opinion on the audited financial statements of the Company as set forth in Article 56 of the Act of 7 May 2009 on statutory auditors and their self-government organisation, entities authorised to audit financial statements and public oversight (Journal of Laws of 2016, Item 1000, as amended);

6. Accessibility of information and statements received The Management Board of the Company has provided us with a written statement dated 27 April 2017 on the completeness, accuracy and correctness of the audited financial statements, further stipulating that between the balance sheet date and the audit end date there were no events that could materially affect the Company's financial and asset position, and would require disclosure in the audited Financial Statements. The Company's Management Board reaffirmed their responsibility for the signed financial statements, and further declared that in the course of the audit, they provided us with all the books, financial data, information and other required documents and communicated to us the clarifications necessary to express our opinion on the audited financial statements. We believe that the evidence obtained provided us with sufficient basis to express an opinion on the financial statements and, therefore, there were no limitations to the scope of our review.

7. Accounting system The Company's accounting books are in maintained using SAP computer system installed in the company's registered office. The Company keeps up-to-date documentation referred to in Article 10 of Act of 29 September 1994 on Accounting (consolidated text: Journal of Laws of 2016, item 1047 as amended) (Accounting Act), including the accounting policies. In our opinion, the Company's accounting policy disclosed in the introduction to the financial statements is adapted to the specific nature of its business. The approved closing balances as at 31 December 2015 have been correctly entered in the books of accounts as the opening balances as at 01 January 2016. Our audit has not revealed any substantial deficiencies which could affect financial data and information contained in the financial statements, pertaining to:

- documentation of commercial operations, - reliability, correctness and transparency of accounting books, - association of accounting entries with accounting proofs and the audited financial statements, - methods of securing data access and processing using computers, - protection of accounting documentation, accounting books and financial statements.

©2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


8. Balance ASSETS (thousands PLN) 31/12/2016 31/12/2015 31/12/2014 FIXED ASSETS 667,182 629,811 447,965 Intangible assets 29,166 23,537 21,782 Property, plant and equipment 269,731 240,803 205,869 Investment property - - - Investments in subsidiaries 319,365 325,067 179,814 Investment in affiliated companies 6,841 6,841 - Derivative financial instruments 19,191 8,379 3,757 Other long-term financial assets 16,836 18,699 21,536 Deferred income tax assets 6,052 6,485 15,207 CURRENT ASSETS 584,896 544,143 490,534 Inventory 167,227 178,516 145,544 Receivables from deliveries and services and other receivables.

342,711 307,857 275,211

Receivables from current income tax - 9,272 2,547 Derivative financial instruments 9,693 13,104 23,402 Other short-term financial assets 8,739 9,549 3,230 Other short-term non-financial assets 19,198 16,583 19,840 Current deferred charges and accruals 4,369 2,633 - Cash and equivalents 32,959 6,629 20,760

Assets classified as designated for sale - - -

TOTAL ASSETS 1,252,078 1,173,954 938,499 LIABILITIES (thousands PLN) 31/12/2016 31/12/2015 31/12/2014 EQUITY CAPITAL 653,704 537,047 483,506 NON-CURRENT LIABILITIES 130,822 182,419 58,952 Credit, loans and other debt instruments 121,967 155,042 43,453 Other liabilities 894 19,351 - Liabilities from employee benefits 2,228 1,431 1,223 Non-current provisions 3,276 3,960 3,607 Long-term deferred charges and accruals 2,457 2,635 2,751 CURRENT LIABILITIES 467,552 454,488 396,041 Trade and other liabilities 339,093 327,257 307,340 Liabilities from income tax 15,125 - - Credit, loans and other debt instruments 39,082 65,155 31,301 Derivative financial instruments 8,223 7,289 6,633 Current provisions 65,931 54,533 50,462 Current deferred charges and accruals 96 254 305 Liabilities associated with assets classified as items for sale - - - TOTAL LIABILITIES: 1,252,078 1,173,954 938,499 The Financial Statements of the Company for the year 2014 were not audited by Grant Thornton Polska. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


9. Statement of comprehensive income (thousands PLN) 2016 2015 2014 CONTINUING OPERATIONS Revenue from sales 1,608,636 1,526,404 1,484,900 Cost of basic operating activities 1,511,912 1,429,200 1,382,542 Other operating revenue 9,203 5,252 6,455 Other operating costs 12,547 13,836 11,799 Profit (loss) on operating activities 93,380 88,620 97,014 Financial revenue 74,729 34,664 54,105 Financial costs 25,331 33,134 81,102 Profit (loss) before tax 142,778 90,150 70,017 Income tax 14,130 11,688 13,805 Net profit (loss) on continued activities 128,648 78,462 56,212 DISCONTINUED ACTIVITIES - - - Net profit (loss) on discontinued activities - - - Net profit (loss) 128,648 78,462 56,212 TOTAL OTHER INCOME Revaluation of fixed assets - - 49 Cash flow hedging instruments 23,666 (2,053) (99) Income tax relating to other comprehensive income items (4,497) 390 19 Other comprehensive income after tax 19,169 (1,663) (31) Comprehensive income 147,817 76,799 56,181 The Financial Statements of the Company for the year 2014 were not audited by Grant Thornton.

10. Additional information concerning selected items of the financial statements The Company's asset and liability structure is presented in the audited financial statements for the year ended 31 December 2016. The inventory of the Company's assets, including stocks, was taken in accordance with the Accounting Act. The difference between the value of assets resulting from accounting books and their value established by stocktaking was settled in accounting books for 2016. The revenue and associated costs were recognised in accounting books taking into account the matching principle and accrual basis assumption. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


11. Basic data and key performance indicators Presented below is selected information and financial indicators for the years 2014, 2015 and 2016, which illustrate the Company's financial situation in this period. All indicators have been calculated on the basis of information contained in the Company's financial statements for the years ending on the 31 December 2016 and on the 31 December 2015.

KPI Calculation formula KPI value

2016 2015** 2014** Sales revenue (thousands PLN) 1,608,636 1,526,404 1,484,900 Net financial result (thousands PLN)

128,648 78,462 56,212

Equity capital (thousands PLN) 653,704 537,046 483,506 Total assets (thousands PLN) 1,252,078 1,173,954 938,499 Return on assets (ROA) (%)

closing balance of net financial results / total assets 10.3% 6.7% 6.0%

return on equity (ROE)(%) net financial result / opening balance of equity 24.0% 16.2% 12.7%

profit margin on sales (%)

Net profit margin on sales / revenue from the sale 6.0% 6.4% 6.9%

current ratio Total current assets / current liabilities 1.3 1.2 1.2 cash ratio cash / current liabilities 0.1 0.0 0.1

receivables turnover ratio (days) receivables from deliveries and services* x 365 days / sales revenue 78 74 68

liabilities turnover ratio (days)

liabilities from deliveries and services and other liabilities x 365 days / internal cost of sales 112 117 112

inventory turnover ratio (days) inventory x 365 days / internal cost of sales 55 64 53

sustainability of financing ratio (equity capital + long-term liabilities) / total liabilities 62.7% 61.3% 57.8%

debt-to-assets ratio (%) (total liabilities - equity) / total liabilities 47.8% 54.3% 48.5% Inflation indicator: annual average (%) -0.6 -0.9 0.0 from December to December (%) 0.8 -0.5 -1.0 * Before reduction by write-downs. ** indicators for the years 2014 and 2013 were calculated on the basis of financial data derived from the financial statements audited by another auditor. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


12. Going concern In Note 7 of the additional information to the audited financial statements for the year ended 31 December 2016, the Management Board communicated that these financial statements were prepared on the assumption that the Company would continue its operations for a period of not less than 12 months from 31 December 2016 and that there are no circumstances indicating any threat for the Company's going concern. During our audit, we have not identified any circumstances that could lead us to believe that the Company is unable to continue its activities for at least 12 months from the balance sheet date i.e. 31 December 2016, as a result of deliberate or enforced cessation or significant limitation of its current activities.

13. Additional information concerning the adopted accounting policy and other clarifications. Additional information about the adopted accounting policies and other explanatory notes to the financial statements for the financial year ended 31 December 2016 have been prepared in all material respects in accordance with International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations.

14. Report on the Company's activity We familiarised ourselves with the Management Board's report on the Company's activity for the financial year ending on the 31 December 2016. In our opinion, the information included in the report on activities is consistent with the provisions of Article 49 paragraph 2 of the Accounting Act and the Regulation of the Minister of Finance of 19 February 2009 on current and interim reports published by issuers of securities and on conditions for recognition of information required by non-Member State regulations as equivalent (consolidated text: Journal of Laws of 2014, Item 133) and is consistent with the information contained in the attached financial statements. Furthermore, in the light of our knowledge on the Company and its environment acquired during the audit of the financial statements, we have not identified any material misstatements in the report on activities. In our opinion, the Company has included in the Company's Corporate Governance Statement, which forms a separate part of the Report on the Company's Activities, all the information required under the implementing provisions issued pursuant to Article 60 paragraph 2 of the Act of 29 July 2005 on public offering, conditions governing the introduction of financial instruments to organised trading, and on public companies (consolidated text: Journal of Laws 2016, Item 1639). The information complies with the applicable legislation and the information presented in the financial statements. © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.


15. Compliance with laws and regulations In a written statement we received, the Company's Management Board assured that according to its best knowledge the Company complied with all laws and regulations the infringement of which could significantly affect the financial statements we have audited. This report contains 10 pages. Jan Letkiewicz Statutory auditor No 9330 Key auditor in charge of the audit on behalf of Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k., Poznań, ul. Abpa. Antoniego Baraniaka 88E, an entity authorized to audit financial statements, entry number 4055 Poznań, 27 April 2017 © 2017 Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. All rights reserved.

Letter of the President of the Management Board of Amica Spółka Akcyjna – 2016 Annual Report

Letter of the President of the Management Board of Amica Spółka Akcyjna

Ladies and Gentlemen, Dear Shareholders, On behalf of the Management Board of “Amica Spółka Akcyjna”, I am pleased to present the

Financial Statements of our Company and the Consolidated Financial Statements of Amica Group for the financial year 2016, along with the description of the most important events of the past reporting period (included in the Report on the Activities of the Company and of the Group). Despite the difficult macroeconomic environment, our last year's achievements translated into a recognizable increase in the Group’s sales revenue, for another year in row, reaching the level of PLN 2,474.9 million, which means a year-to-year increase of more than 18% (cf. PLN 2,088.7 million in 2015). Compared to the previous year, Amica's net profit growth amounted to 164%. The results achieved demonstrate that the direction of development we have chosen is right and prove the appropriateness of the decisions made.

The year 2016 was another year of our intense activity in foreign markets not only in terms of

generating revenue from the sale of products but also in terms of further expansion of growth-potential assets, as evidenced by acquisition (completed in the current year) of 100% control over the French company “Sideme” (Societe Industrielle d’Equipement Moderne Sideme Société Anonyme), a distributor of household appliances with 45 years of tradition on the French market (one of the three biggest markets of Europe). On the one hand, it will strengthen our position on this market by letting Amica Group gain access to Sideme’s distribution channels, while on the other hand, Sideme will be able to take advantage of our vast portfolio of kitchen appliances and the ability to develop a common purchasing base for commercial goods.

With the earlier acquisition of The CDA Group Ltd (in 2015), we have clearly defined the

main directions of our development towards the challenging and prestigious markets of the Western Europe, which aligns perfectly with our HIT2023 Strategy aimed at achievement of the sales revenue of EUR 1.2 billion and generating the EBITDA of EUR 107 million by 2023.

Nevertheless, we also remain active in the field of investments designed to expand the

production potential in Wronki. In 2016, the Company continued the intensive work to construct the A-class high rack warehouse (a high bay warehouse featuring highly advanced technological solutions and full automation of the loading process), one of the largest in the country, which is going to allow us for the substantial reduction in the cost of storage of the manufactured heating equipment and more efficient use of storage space (full commissioning of this project for the purpose of the company’s commercial operations is scheduled for the turn of 2nd and 3rd quarter of this year).

In the past year, after 20 years of pursuing business activity under the name of “Amica

Wronki S.A.”, the Shareholders made a symbolic decision to shorten the existing name under which the Company operates in the market (by omitting the segment “Wronki”) and highlight the brand “Amica” in the company’s commercial name, thereby aligning the corporate brand with the product brand and ensuring the consistency of the image of the company and of the brand.

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Letter of the President of the Management Board of Amica Spółka Akcyjna – 2016 Annual Report

In September 2016, we were honoured with the Emerging Market Champions Award in category of “Polish Foreign Investments” by the Kronenberg Foundation operating at Bank Handlowy w Warszawie S.A. in recognition of the consistently implemented foreign expansion plan. As emphasized in the justification, “Amica” is a strong Polish brand, which effectively operates internationally within the framework of the ten-year development strategy adopted in 2014.

Nowadays, Amica is present in over 50 countries, in Europe, Asia, Middle East and

Australia, operating eight commercial subsidiaries scattered throughout Europe, employing more than three thousand employees and generating annual sales revenue of nearly EUR 600 million (of which 70% originates abroad). Our major foreign customers come from Germany, UK, Scandinavia and Russia. In line with our strategy, we intend to expand in other significant European markets such as France, Spain, Benelux countries and Italy. The base of our success are Amica, Gram, Hans and CDA brands, which are firmly rooted and recognizable on the local markets.

Amica’s greatest success is the trust of millions of our customers. It is they who ensure the

strength of our brand.

***** We are facing a very demanding time; however, we have the energy and willingness to work

further on the systematic increase in revenue and we are ready to satisfy the needs of our customers, which raises hope that despite the challenging macroeconomic and geopolitical environment, 2017 will bring the expected benefits for Amica Group.

Whilst presenting this annual report for the year 2016, I would like to emphasize the

enormous contribution and stress the great role played by our staff in the achievement of the economic and financial results as well as the dynamic development of our organization in such a highly competitive economic environment. Thus, I would like to take the opportunity to thank all the employees, both myself and on behalf of other members of the Management Board, for their involvement, creativity and competence. It is thanks to you that we can successfully implement our goals and objectives.

Traditionally, I would like to say the words of thanks to the Management Board, both of the

past and present term as well as to all the Members of the Supervisory Board, who supported us throughout 2016. Your work deserves the highest recognition.

I would like to thank all our partners, stakeholders and shareholders for everything that

shaped the nature of our cooperation and common relationships. I sincerely believe that we will continue to be a reliable and trustworthy partner for all of you.

Best Regards,

Jacek Rutkowski President of the Management Board


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AMICA SPÓŁKA AKCYJNA

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

Legal status as at 27 April 2017

AMICA S.A. Financial Statements for the year ended 31 December 2016

(in thousands PLN)

2

Selected financial data .................................................................................................................. 5 Statement of comprehensive income ............................................................................................ 6 Balance .......................................................................................................................................... 7 Cash flow account ......................................................................................................................... 8 Statement of changes in equity ..................................................................................................... 9 Accounting Principles (Policy) and Additional Explanatory Notes .............................................. 11 1. Overview ................................................................................................................................ 11 2. Identification of the Consolidated Financial Statements ....................................................... 11 3. Composition of the Management Board and Supervisory Board of the Company ............... 11 4. Approval of the financial statement ....................................................................................... 12 5. Company's investments ........................................................................................................ 12 6. Significant values based on professional judgement and estimations .................................. 13

6.1. Professional judgement............................................................................................... 13 6.2. Uncertainty of estimates and assumptions ................................................................. 14

7. The basis for drawing up of this financial statement ............................................................. 15 7.1. Compliance statement ................................................................................................ 15 7.2. Functional and financial statements currency ............................................................. 15

8. Changes to the accounting policies and error correction ...................................................... 15 9. The new standards and interpretations which were published but have not yet come into force 18 10. Changes in the presentation. ................................................................................................ 22 11. Significant Accounting Policies.............................................................................................. 22

11.1. Fair value adjustment .................................................................................................. 22 11.2. Conversion of items expressed in foreign currencies ................................................. 23 11.3. Property, plant and equipment .................................................................................... 23 11.4. Investment property .................................................................................................... 24 11.5. Intangible assets ......................................................................................................... 24 11.6. Lease........................................................................................................................... 25 11.7. Impairment loss of non-financial fixed assets ............................................................. 26 11.8. Borrowing costs ........................................................................................................... 26 11.9. Shares in subsidiaries, associates and joint ventures ................................................ 26 11.10. Financial assets .......................................................................................................... 26 11.11. Impairment loss of financial assets ............................................................................. 28 11.12. Embedded derivatives................................................................................................. 28 11.13. Derivative financial instruments and hedging instruments .......................................... 29 11.14. Inventory ..................................................................................................................... 30 11.15. Receivables from deliveries and services and other receivables. .............................. 30 11.16. Cash and equivalents.................................................................................................. 31 11.17. Interest bearing bank loans, borrowings and debentures. .......................................... 31 11.18. Liabilities from deliveries and services and other liabilities. ........................................ 31 11.19. Provisions .................................................................................................................... 32 11.20. Employee benefits ....................................................................................................... 32 11.21. Revenue ...................................................................................................................... 32 11.22. Tax .............................................................................................................................. 33 11.23. Net profit per share ..................................................................................................... 34

12. Operating segments .............................................................................................................. 34 13. Revenue and costs ................................................................................................................ 36


(in thousands PLN)

3

13.1. Other operating revenue ............................................................................................. 36 13.2. Other operating costs .................................................................................................. 37 13.3. Financial revenue ........................................................................................................ 37 13.4. Financial costs ............................................................................................................ 37 13.5. Costs by type .............................................................................................................. 38 13.6. Costs of depreciation and amortization, impairment losses, foreign exchange differences

and inventories recognized in profit or loss................................................................. 38 13.7. Cost of employee benefits .......................................................................................... 38

14. Components of other comprehensive income ....................................................................... 39 15. Income tax ............................................................................................................................. 39

15.1. Tax burdens ................................................................................................................ 39 15.2. Reconciliation of effective tax rate .............................................................................. 40 15.3. Deferred income tax .................................................................................................... 40

16. Social assets and liabilities due to Company Social Provision Fund .................................... 41 17. Profit per share ...................................................................................................................... 42 18. Dividends paid out and proposed dividends ......................................................................... 42 19. Property, plant and equipment .............................................................................................. 43 20. Lease ..................................................................................................................................... 46

20.1. Liabilities from financial leasing agreements .............................................................. 46 21. Investment property ............................................................................................................... 46 22. Intangible assets ................................................................................................................... 47 23. Shares in subsidiaries and associates .................................................................................. 49 24. Other assets .......................................................................................................................... 49

24.1. Other financial assets .................................................................................................. 49 24.2. Other non-financial assets .......................................................................................... 50

25. Employee benefits ................................................................................................................. 50 25.1. Pensions and other post-employment benefits ........................................................... 50

26. Inventory ................................................................................................................................ 51 27. Receivables from deliveries and services and other receivables. ........................................ 52 28. Cash and equivalents ............................................................................................................ 53 29. Stated capital and supplementary/reserve capital ................................................................ 53

29.1. Stated capital .............................................................................................................. 53 29.2. Supplementary capital................................................................................................. 54

30. Credit, loans and other debt instruments .............................................................................. 54 31. Provisions .............................................................................................................................. 57

31.1. Changes in provisions ................................................................................................. 57 31.2. Provision for warranty repairs and returns .................................................................. 57 31.3. Provisions for sales bonuses ...................................................................................... 57 31.4. Provisions for salaries and holiday leave .................................................................... 57 31.5. Reserve for marketing services and commissions ..................................................... 57

32. Trade payables, other payables and accruals ...................................................................... 57 32.1. Liabilities from deliveries and services and other liabilities. ........................................ 57 32.2. Other non-financial liabilities ....................................................................................... 58 32.3. Accrued liabilities ........................................................................................................ 58

33. The reasons for the differences between changes in certain items and changes arising from cash flow account........................................................................................................................... 59


(in thousands PLN)

4

34. Investment liabilities .............................................................................................................. 60 35. Contingent liabilities .............................................................................................................. 60

35.1. Lawsuits ...................................................................................................................... 60 35.2. Tax settlements ........................................................................................................... 61 35.3. Used electrical and electronic equipment. .................................................................. 61

36. Information on subsidiaries ................................................................................................... 62 36.1. Information on changes in Amica's investments ......................................................... 64 36.2. Parent Company of the entire Group .......................................................................... 67 36.3. Conditions of transactions with affiliated entities ........................................................ 68 36.4. Other transactions with members of the Management Board, members of the Supervisory

Board and Key Managers of the Company. ................................................................ 68 36.5. Remuneration of the Company's Management .......................................................... 68

37. Information on remuneration of an auditor or an entity authorized to audit financial statements 70 38. Objectives and principles of financial risk management ....................................................... 70

38.1. Interest rate risk .......................................................................................................... 71 38.2. Currency risk ............................................................................................................... 71 38.3. Commodities and materials risk .................................................................................. 72 38.4. Credit risk .................................................................................................................... 73 38.5. Liquidity risk ................................................................................................................ 73

39. Financial instruments ............................................................................................................ 74 39.1. The fair values of particular classes of financial instruments...................................... 74 39.2. Items of income, expense, gains and losses recognized in the profit and loss account by

categories of financial instruments .............................................................................. 75 39.3. Interest rate risk .......................................................................................................... 76 39.4. Derivatives .................................................................................................................. 77

40. Capital management ............................................................................................................. 80 41. Employment structure ........................................................................................................... 81 42. Other information ................................................................................................................... 81 43. Events after the balance date ............................................................................................... 82 44. Approval for publication ......................................................................................................... 82


(in thousands PLN)

5

SELECTED FINANCIAL DATA in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA 2016 2015 2016 2015

1 Net revenue from sales of products, goods and material 1,608,636 1,526,404 368,640 364,793 2 Profit (loss) on operating activities 93,380 88,620 21,399 21,179 3 Profit (loss) before tax 142,778 90,150 32,719 21,545 4 Net profit (loss) allocated to company shareholders 128,648 78,462 29,481 18,752 5 Net cash flows from operating activities 138,985 46,864 31,850 11,200 6 Net cash flows from investment activities -38,799 -175,134 -8,891 -41,855 7 Net cash flows from financial activities -73,910 113,850 -16,937 27,209 8 Total net cash flows 26,276 -14,420 6,021 -3,446 9 Total assets 1,252,078 1,173,954 283,019 275,479

11 Non-current liabilities 130,822 182,419 29,571 42,806 12 Current liabilities 467,552 454,488 105,685 106,650 13 Equity capital allocated to shareholders 653,704 537,047 147,763 126,023 14 Share capital 15,551 15,551 3,515 3,649 15 Number of shares 7,775,273 7,775,273 7,775,273 7,775,273 16 Number of own shares for disposal 0 0 0 0 17 Number of own shares for redemption 0 0 0 0 18 Profit (loss) per ordinary share 16.55 10.09 3.95 2.41 19 Book value per share (PLN / EUR) 84.07 69.07 19.00 16.21 20 Paid dividend per share (PLN / EUR) 4.00 3.00 0.92 0.72

Financial data was converted to the euro according to the following currency exchange rates: 31/12/2016 31/12/2015 Currency exchange rates for the profit and loss account and cash flow statement 4.3637 4.1843 exchange rate for calculating the balance sheet items 4.4240 4.2615


(in thousands PLN)

Accounting principles (policies) and additional explanatory notes to the Financial Statements included on pages 11 to 84 shall constitute an integral part of these statements

6

STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2016

Note Year ended 31 December 2016 Year ended 31

December 2015 Continued activities Revenue from sales of goods and products 1,600,414 1,518,059 Revenue from sale of services 8,222 8,345 Revenue from sales 1,608,636 1,526,404 Own sales costs 1,102,940 1,024,107 Gross profit/(loss) on sales 505,696 502,297 Other operating revenue 13.1. 9,203 5,252 Cost of sales 138,292 129,057 General administrative expenses 270,680 276,036 Other operating costs 13.2. 12,547 13,836 Profit/(loss) on operating activities 93,380 88,620 Financial revenue 13.3. 74,729 34,664 Financial costs 13.4. 25,331 33,134 Gross profit/(loss) 142,778 90,150 Income tax 15. -14,130 -11,688 Net profit/(loss) on continuing operations 128,648 78,462 Discontinued activities 0 0 Profit/(loss) for the financial year on discontinued operations 0 0

Net profit/(loss) for the financial year 128,648 78,462

Net other comprehensive income 14. Items to be reclassified to the profit / (loss) in subsequent reporting periods: 19,169 -1,663

Exchange gain (loss) of a foreign entities Financial assets available for sale Cash flow hedging 23,666 -2,053 Share in other total revenue of affiliates or subsidiaries Income tax associated with other total revenues -4,497 390

Items not to be reclassified to the profit / (loss) in subsequent reporting periods: 0 0

Revaluation of liabilities from employee benefits Revaluation of tangible fixed assets Total net other comprehensive income 19,169 -1,663

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 147,817 76,799

Profit/(loss) per share: – basic from the profit for the financial year 16.55 10.09 – basic from the profit from continued activities for the

financial year 16.55 10.09

– diluted from the profit for the financial year 16.55 10.09 – diluted from the profit from continued activities for the

financial year 16.55 10.09


(in thousands PLN)


7

BALANCE as of 31 December 2016

Note 31 December 2016 31 December 2015 ASSETS Fixed assets 667,182 629,811 Property, plant and equipment 19. 269,731 240,803 Investment property 21. - - Intangible assets 22. 29,166 23,537 Investments in subsidiaries 23. 319,365 325,067 Investment in affiliated companies 23. 6,841 6,841 Derivative financial instruments 19,191 8,379 Other long-term financial assets 24. 16,836 18,699 Deferred tax assets 6,052 6,485 Current Assets 584,896 544,143 Inventory 26. 167,227 178,516 Receivables from deliveries and services and other receivables. 27. 342,711 307,857 Receivables from income tax - 9,272 Derivative financial instruments 9,693 13,104 Other short-term financial assets 24. 8,739 9,549 Other short-term non-financial assets 19,198 16,583 Current deferred charges and accruals 4,369 2,633 Cash and equivalents 28. 32,959 6,629 Assets classified as designated for sale - - TOTAL ASSETS 1,252,078 1,173,954 LIABILITIES Equity capital allocated to shareholders of the Parent Company: 29. 653,704 537,047

Stated capital 15,551 15,551 Supplementary capital 490,855 443,553 Revaluation reserve capital 18,650 -519 Retained earnings/Undistributed profit 128,648 78,462 Non-current liabilities 130,822 182,419 Credit, loans and other debt instruments 30. 121,967 155,042 Non-current provisions 31. 3,276 3,960 Liabilities from employee benefits 25. 2,228 1,431 Other liabilities 894 19,351 Long-term deferred charges and accruals 32. 2,457 2,635 Current liabilities 467,552 454,488 Liabilities from deliveries and services and other liabilities. 32. 339,095 327,257 Credit, loans and other debt instruments 30. 39,082 65,155 Derivative financial instruments 8,223 7,289 Liabilities from income tax 15,125 - Current deferred charges and accruals 32. 96 254 Current provisions 31. 65,931 54,533 Liabilities directly attributable to fixed assets classified as items held for sale - -

Total liabilities 598,374 636,907 TOTAL LIABILITIES 1,252,078 1,173,954


(in thousands PLN)


8

CASH FLOW ACCOUNT for the year ended 31 December 2016

Note 31 December 2016 31 December 2015

Cash flows from operating activities Gross profit/(loss) 142,778 90,150 Adjustments by items: -3,793 -43,286 Depreciation 37,145 32,172 Currency translation gains (losses) -11,483 -12,490 Interest and profit sharing (dividend) -58,149 -17,528 Profit (loss) on investing activities 3,904 1,993 Change in provisions 11,512 4,631 (Increase) / decrease in inventories 11,289 -32,972 (Increase) / decrease in receivables -37,028 -33,075 (Increase) / decrease in liabilities, except for loans or credits 12,028 13,919 Change in prepayments and accruals -1,875 -1,610 Cash flows related to hedging 27,448 27,724 Other 8,007 -10,310 Adjustment of instruments -12,741 -22,435 Income tax paid 6,150 6,695 Net cash flows from operating activities 138,985 46,864

Cash flows from investment activities Disposal of fixed assets and intangible assets 189 2,144 Purchase of fixed assets and intangible assets -72,230 -66,541 Purchase of investments in subsidiaries, associates and joint ventures -11,250 -138,337

Purchase of other financial assets - -18,739 Dividends received 36,015 18,000 Interest received 23 96 Repayment of loans granted 13,435 9,274 Loans granted -10,696 -14,560 Cash flows attributable to trade derivatives 5,715 33,529 Net cash from investing activities -38,799 -175,134 Cash flows from financial activities Payment of liabilities arising from financial leases -4,016 -3,741 Acquisition of own shares - - Inflows from credits/loan taken 14,052 64,722 Repayment of loans/credits -25,499 -17,071 Issuance of debt securities - 131,308 Redemption of debt securities -15,902 -30,000 Dividends paid out -31,101 -23,326 Interest paid -11,444 -8,042 Other - - Net cash from financial activities -73,910 113,850 Net increase / (decrease) in cash and cash equivalents 26,276 -14,420 Balance sheet change in cash, including: 26,561 -14,378 Net exchange rate differences -286 -42 Opening balance of cash 6,227 20,647 Closing balance of cash 32,503 6,227


(in thousands PLN)

Accounting principles (policies) and additional explanatory notes to the Financial Statements included on pages 11 to 84 shall constitute an integral part of these statements 9

STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2016

Stated capital Supplementary capital Own shares Revaluation reserve capital

Retained earnings/Undistributed

profit Total equity capital

As at 01 January 2016 15,551 443,553 0 -519 78,462 537,047 Changes to the accounting principles (policy) / Error correction - - - - - 0 As at 01 January 2016 carried forward 15,551 443,553 0 -519 78,462 537,047

Net profit/(loss) for the financial year - - - - 128,648 128,648 Other net comprehensive income for the year - - 19,169 - 19,169

Comprehensive income for the year 0 0 0 19,169 128,648 147,817 Sales of own shares - - - 0 Dividends - - - - -31,101 -31,101 Re-booking of financial result to equity capital - 47,361 - - -47,361 0

Other changes - -59 - - - -59 As at 31 December 2016 15,551 490,855 0 18,650 128,648 653,704


(in thousands PLN)

Accounting principles (policies) and additional explanatory notes to the Financial Statements included on pages 11 to 84 shall constitute an integral part of these statements 10

Stated capital Supplementary capital Own shares Revaluation reserve capital

Retained earnings/Undistributed

profit Total equity capital

As at 01 January 2015 15,551 410,599 0 1,144 56,212 483,506 Changes to the accounting principles (policy) / Error correction - - - - - 0

As at 01 January 2015 carried forward 15,551 410,599 0 1,144 56,212 483,506

Net profit/(loss) for the period - - - - 78,462 78,462 Other net comprehensive income for the year - - - -1,663 - -1,663

Comprehensive income for the year 0 0 0 -1,663 78,462 76,799

Sales of own shares - - - - - 0 Dividends - - - - -23,326 -23,326 Re-booking of financial result to equity capital - 32,886 - - -32,886 0

Other changes - 68 - - - 68

As at 31 December 2015 15,551 443,553 0 -519 78,462 537,047


(in thousands PLN)

11

ACCOUNTING PRINCIPLES (POLICY) AND ADDITIONAL EXPLANATORY NOTES

1. Overview The financial statements of Amica S.A. cover the year ended 31 December 2016 and include comparative data for the year ended 31 December 2015. Amica S.A. ("Company", "Entity") was established by the virtue of the resolution of the Shareholders' Meeting of 18 October 1996 on the transformation of the company Fabryka Kuchni WRONKI Sp. z o.o. into a joint-stock company (resolution on transformation was recorded by the Notary Public, Bronisław Plecha, operating a Law Firm in Szamotuły and was executed in the form of a notary deed registered under the number A 11984/1996 at her office). The company's registered office is at 52 Mickiewicza Street in Wronki. The Company is registered in the register of entrepreneurs - the National Court Register maintained by the District Court in Poznań, IX Commercial Division of the National Court Register, under the number KRS 17514. The Company was issued the business statistical number REGON 570107305. The Company is established for an indefinite time. The Company's core business is: • manufacture and sale of electric and gas-fired domestic appliances; • sale of domestic appliances • sales of maintenance and repair services and heating media, • rental and leasing activities. The direct parent of the Company 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).

2. Identification of the Consolidated Financial Statements The Company has prepared the Consolidated Financial Statements for the year ended 31 December 2016, which was approved for publication on 27 April 2017.

3. Composition of the Management Board and Supervisory Board of the Company

The Company's Management Board as at 31 December 2016 comprised: • Mr Jacek Rutkowski - President of the Management Board • Mr Jarosław Drabarek – First Vice President of the Management Board • Mr Marcin Bilik - Vice President of the Management Board • Ms Alina Jankowska-Brzóska – Vice President of the Management Board • Mr Wojciech Kocikowski - Vice President of the Management Board • Mr Piotr Skubel – Vice President of the Management Board

The following changes in the composition of the Management Board took place in 2016: End of term of office: Tomasz Dudek (Vice-President of the Management Board), Andrzej Sas (Vice President of the Management Board)


(in thousands PLN)

12

Appointment of new members: Jarosław Drabarek– (First Vice President of the Management Board), Alina Jankowska-Brzóska – (Vice President of the Management Board). In the period after the balance sheet date until approval of the financial statements, there were no changes in the composition of the Management Board. The Company's Supervisory Board on the 31 December 2016 was composed of:

• Mr Tomasz Rynarzewski – Chair of the Supervisory Board/ Chair of the Operating Activities Committee • Mr Dariusz Formela – Independent Member of the Supervisory Board (Vice Chairman of the

Supervisory Board) • Mr Jacek Bartmiński – Independent Member of the Supervisory Board/ Chair of the Audit Committee • Mr Tomasz Dudek – Member of the Supervisory Board • Mr Piotr Sawala – Member of the Supervisory Board • Mr Paweł Wyrzykowski – Member of the Supervisory Board

The following changes in the composition of the Supervisory Board took place in 2016: End of term of office: Zbigniew Derdziuk (Member of the Supervisory Board), Grzegorz Golec (Vice-Chair of the Supervisory Board/ Independent Member of the Supervisory Board), Bogdan Gleinert (Member of the Supervisory Board), Wojciech Kochanek (Member of the Supervisory Board), Bogna Sikorska (Independent Member of the Supervisory Board) Appointment of new members: Dariusz Formela – Independent Member of the Supervisory Board (Vice-Chairman of the Supervisory Board), Jacek Bartmiński – Independent Member of the Supervisory Board/Chair of the Audit Committee, Tomasz Dudek – Member of the Supervisory Board, Piotr Rutkowski – Member of the Supervisory Board, Paweł Wyrzykowski – Member of the Supervisory Board. After the balance sheet date, there were no changes in the composition of the Supervisory Board.

4. Approval of the financial statement These Financial Statements were approved by the Management Board for publication on 27 April 2017.

5. Company's investments The Company has investments in the following subsidiaries and associates:

Unit Company's registered office Principal economic activity Company's percentage share in the

capital Functional currency 31 December 2016 31 December 2015

Amica International GmbH Germany commercial activities 100% 100% EUR

Amica Commerce s.r.o. the Czech Republic commercial activities 100% 100% CZK

Gram Domestic A/S Denmark commercial activities 100% 100% DKK

Hansa OOO Russia commercial activities 100% 100% RUB

Amica Far East Ltd. Hong Kong purchasing process mediation services 100% 100% HKD

Inteco Business Solutions Sp. z o.o. Poland Consulting and IT services 80% 80% PLN

Nova Panorama Sp. z o.o. Poland real estate management 100% 100% PLN

Nowe Centrum Sp. z o.o. Poland real estate management 100% 100% PLN Amica Handel i

Marketing Sp. z o.o. Poland marketing and promotional

services 100% 100% PLN

Marcelin Management Sp. z o. o. Poland

hospitality and catering services, real estate

management, 100% 100% PLN

Hansa Ukraina OOO Ukraine commercial activities 100% 100% UAH Amica

Electrodomesticos S.L. Spain commercial activities 100% 100% EUR


(in thousands PLN)

13

THE CDA GROUP LIMITED

United Kingdom commercial activities 100% 100% GBP

Profi Enamel Sp. z o.o. Poland manufacturing activities 100% 100% PLN

Sideme France Commercial activities 39.29% 39.29% EUR

As at 31 December 2016 and 31 December 2015, the share in the general number of voting rights held by the Company in subsidiaries is equal to the Company's share in the capital of these subsidiaries. Respectively, on 22/03/2017 and on 28/03/2017, Amica S.A. acquired 21.41% and 39.29% of shares in CDA Group Ltd. in the commercial company incorporated under the French law – Sideme S.A. Societe Industrielle d’Equipement Moderne. The total purchase price of the aforesaid shares amounted to EUR 1,600,000 (PLN 7,105 thousand) and EUR 2,215,167 (PLN 9,742 thousand). At the same time, on 28/03/2017, the Company sold 100 shares in Sideme to Amica Handel i Marketing Sp. z o.o. As a result of the aforesaid transactions, as at 27/04/2017, the Company holds jointly 107,090 (99.91%) shares in Sideme with a total nominal value of EUR 1,606,350.

6. Significant values based on professional judgement and estimations

6.1. 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. Impairment loss of investments in subsidiaries and affiliates The Company analysed the investments in subsidiaries and associates for the existence of any impairment losses. The basic indicator for starting the verification of impairment losses was the comparison of the Company's net assets with the value of shares recorded in the Company’s books. As at the balance sheet date, there was no impairment of the shares, except for shares in Nova Panorama Sp. z o.o. Detailed information on the impairment tests carried out is presented in Note 36.1. 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 Company operates a procedure for quarterly analysis of the above mentioned cases. The results of the analysis indicating the reduction of the recoverable amount of inventories are included in the Company’s books and described in Note 26. Fair value of derivatives Derivatives executed by the Company 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 Company compared the fair value of these derivatives, as recognized in the books, with the valuation provided by the banks. No significant differences were reported. Under the estimates associated with the hedge accounting, the Company not only measures the instruments but also assesses the assumptions regarding the cash flows to e hedged. 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 Company's books.


(in thousands PLN)

14

Depreciation rates The Company 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. Classification of leases The Company classifies leases as operating or finance leases based on an assessment of the extent to which the risks and benefits of the possession of the leased asset are distributed between the lessor and the lessee. This assessment is based on the economic substance of particular transactions. Impairment losses on receivables and loans The Company evaluates the receivables and loans which are subject to recognition of the impairment loss. The assessment is based on the debtor's financial situation.

6.2. 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 value of assets and liabilities in the next financial year. The Company has made assumptions and estimates about the future based on the knowledge acquired during the preparation of the Financial Statements. The existing 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.

Revaluation of provisions from employee benefits

Provisions for employee benefits are determined with the use of the Company's in-house tool. The assumptions adopted for this purpose are described in Note 25.

Deferred Tax Assets

The Company recognizes deferred tax assets based on the assumption that future taxable income will allow for its use. Worse tax results in the future could render this assumption unfounded.

Fair market value of the 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 period to maturity and the probability of a hedged item as well as its effectiveness measurement, the Company relies on professional judgement, taking into account external factors associated with foreign exchange rates and interest rates. The method for determining the fair value of financial instruments is disclosed in the Note 39.1.

Depreciation rates

Depreciation rates are determined based on the expected useful economic lives of tangible fixed assets and intangible assets. The Company reviews the adopted useful economic lives based on current estimates annually.

Provisions for warranty repairs

The basis for estimating the reserves for future warranty repairs are: the period covered by the guarantee, the historical unit cost of the repair, estimated product reliability, average share of spare parts in the repair cost, profitability of sale of spare parts. The value of the above mentioned variables may change in futures periods, simultaneously influencing the value of reserves. The Company reviews the adopted variables to reflect the Company's actual liability under the provision for warranty repair obligations annually. Impairment loss of assets


(in thousands PLN)

15

The Company 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.

Impairment loss of inventory The Company 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. Impairment loss of the shares held and loans The Company evaluates whether there is any permanent impairment of the shares held in subsidiaries and associates as well as loans. If there are any indications, the impairment test is performed. If the recoverable amount of the assets is less than its book value, the Company recognizes an impairment loss equal to the difference between the recoverable amount and the book value of the assets.

7. The basis for drawing up of this financial statement These Financial Statements have been prepared under the historical cost convention, except for derivative financial instruments that are measured at fair value. These financial statements are presented in Polish zloty ("PLN"), while all the values, unless otherwise indicated, are expressed in thousand PLN. This financial statement was prepared with the assumption that the business of the company is to continue operating 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 Company.

7.1. Compliance statement These Financial Statements have been prepared in compliance with the International Financial Reporting Standards (“IFRS”) as adopted by the EU (“EU IFRS”). As at the date of approval of these financial statements, taking into account the ongoing implementation of IFRS in the EU and the activities pursued by the Company, with regard to the accounting policies applied by the Company, the International Financial Reporting Standards differ from International Financial Reporting Standards adopted by the EU. IFRS include standards and interpretations approved by the International Accounting Standards Board (“IASB”) and by the International Financial Reporting Interpretations Committee (“IFRIC”).

7.2. Functional and financial statements currency The Company's functional currency and reporting currency used in these Financial Statements is the Polish zloty.

8. Changes to the accounting policies and error correction Changes in the standards or interpretations in force and applied by the Company since 2016

New or amended standards and interpretations effective from 01 January 2016 and their impact on the separate financial statements of the Company:

• Amendment to IAS 19 “Employee Benefits” The changes involve clarification of the rules for accounting treatment in cases, when employees make contributions to cover the costs of defined benefit plans. The amendment has become effective in the European Union for annual periods beginning on or after 01 February 2015. The amendment had no effect on the Company’s financial statements.


(in thousands PLN)

16

• Amendments to IFRS 2, IFRS 3, IFRS 8, IAS 16, IAS 38, IAS 24 resulting from the “Annual Improvements Project: 2010-2012 cycle” has become effective in the European Union for annual periods beginning on or after 01 February 2015. Amendments to the standards include:

o IFRS 2: The Board clarified that the standard changes or introduces new definitions of the following

terms: market condition, service condition, vesting condition and performance condition. The amendment had no effect on the Company’s financial statements.

o IFRS 3: The Board has further clarified the rules for contingent consideration after the acquisition date, to ensure compliance with other standards (primarily IFRS 9 (or IAS 39) and IAS 37). The amendment had no effect on the Company’s financial statements.

o IFRS 8: The Board imposed on the entities combining their operating segments additional disclosure requirements related to such combined segments and their economic characteristics underlying such combinations. The amendment had no effect on the Company’s financial statements, since there was no aggregation of operating segments.

o IFRS 8: the amended standard prescribes that the requirement to disclose reconciliation of total segment assets and the assets disclosed in the balance sheet is mandatory only if the values of assets are disclosed by segments. The amendment had no effect on the Company’s financial statements, since the Company's management analyses the assets and liabilities of particular segments and accordingly discloses the values of assets and liabilities for each reportable segment.

o IFRS 16, IAS 38: The Board amended the rules for calculating the gross amount and the accumulated amortization of an asset (an intangible asset), where the revaluation model is applied. The amendment had no effect on the Company’s financial statements, since the Company does not use the revaluation model.

o IAS 24: The definition of a related party has been extended to entities providing key management personnel services. Relevant disclosures have been added as well. The amendment had no effect on the Company’s financial statements, since the responsibilities of the key management personnel have not been assigned to other entities.

• Amendment to IFRS 11 “Joint Arrangements”

Pursuant to the amendment, the acquirer of an interest in a joint operation in which the activity constitutes a business is required to apply the principles set out in IFRS 3 to the recognition of assets and liabilities of a joint operation, and thus, among others, measure the assets and liabilities at fair value and determine the goodwill. The amendment is effective for annual periods beginning on or after 01 January 2016. The amendment had no effect on the Company’s financial statements, since no such transactions took place.

• The amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible assets”

According to the amendment, the method for depreciation of fixed assets based on the revenue earned from the use of the asset is not allowed. In the case of intangible assets, the use of such methods has been limited. The amendment is effective for annual periods beginning on or after 01 January 2016. The amendment had no effect on the Company’s financial statements, since the Company uses only the straight-line depreciation method.

• Amendment to IAS 27 “Separate Financial Statements”

According to the amendment, any shares in the subsidiaries, joint ventures or associates, as disclosed in the separate financial statements, can be measured using the equity method. To date, IAS 27 provided only for valuation at purchase price or in accordance with IFRS 9/IAS 39. The amendment is effective for annual periods beginning on or after 01 January 2016. The amendment had no effect on the Company’s financial statements, since the Company does not use the equity method.

• The amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture”

The amendment provides that the bearer plants (e.g. grapevines, fruit trees) will be excluded from the scope of IAS 41 and included in the scope of IAS 16 as internally generated fixed assets. Thanks to this


(in thousands PLN)

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change, it will not be necessary to measure these plants at fair value at each balance sheet date, as it was required until now by IAS 41. The amendment is effective for annual periods beginning on or after 01 January 2016. The amendment had no effect on the Company’s financial statements, since the Company does not engage in agricultural activity.

• Amendments to IFRS 5, IFRS 7, IAS 19 and IAS 34 resulting from the “Exposure Draft for the 2012-2014 Annual Improvements Cycle”, which have become effective for annual periods beginning on or after 01 January 2016. Amendments to the standards include: o IFRS 5: the amendment of the standard stipulates that if a company has reclassified assets from

‘assets held for sale’ directly to ‘assets held for distribution to owners’ or from ‘assets held for distribution to owners’ to ‘assets held for sale’, such a change means continuation of the original plan and the adjustments made are not reversed. The amendment had no effect on the Company’s financial statements, since no such transactions took place.

o IFRS 7: the amendment of the standard clarifies that the disclosure requirements relating to the items reported in net amounts, as applicable from 2013, do not apply to condensed interim financial statements, unless this information is required to be disclosed under the general principles of IAS 34. The amendment had no effect on the Company’s financial statements, since it applies only to condensed interim financial statements.

o IFRS 7: The amendment introduces a new indicator to evaluate whether the involvement in the assets transferred has been maintained. If the entity has transferred the assets, but has entered into a service agreement wherein the consideration is based on the amounts and maturity of the asset transferred, this means that the entity's has maintained involvement in the asset. The Company has analysed the concluded transactions and concluded that the amendment does not affect them.

o IAS 19: The standard allows the use of interest rates relevant for Treasury securities to discounted cash flows if the market for the securities of commercial entities is shallow. The amendment to the standard specifies that the depth of the market should be evaluated in terms of the currency of these securities, and not the country. The Company has analysed the situation in the securities market and concluded that the amendment does not affect its financial statements.

o IAS 34: The standard permits certain information required by IAS 34 for condensed interim financial statements to be presented in other documents accompanying such interim

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