TOYA_Grupa_spr_dzial_2023-12-31

 
TOYA S.A. CAPITAL GROUP 
Report on operations for the period of 12 months ended 31 December 2023 
 
_______________________________________________________________________________________ 
 

Contents 
 PROFILE OF THE PARENT COMPANY ................................................................................................................. 3 
 CHANGES IN THE BASIC GROUP MANAGEMENT METHODS ............................................................................. 7 
 DESCRIPTION OF THE MOST IMPORTANT EVENTS IN 2023 AND SIGNIFICANT ACHIEVEMENTS OR FAILURES  8 
 INFORMATION ON THE ISSUER’S ORGANISATIONAL AND EQUITY RELATIONSHIP WITH OTHER ENTITIES AND 
IDENTIFICATION OF THE ISSUER’S MAJOR DOMESTIC AND FOREIGN INVESTMENTS ....................................... 9 
 DESCRIPTION OF THE STRUCTURE OF MAIN CAPITAL DEPOSITS OR CAPITAL INVESTMENTS MADE BY THE 
ISSUER’S CAPITAL GROUP DURING THE FINANCIAL YEAR ............................................................................... 10 
 DESCRIPTION OF THE ANTICIPATED DEVELOPMENT OF THE ISSUER’S CAPITAL GROUP ................................ 10 
 MAJOR R&D ACHIEVEMENT ............................................................................................................................ 10 
 OVERVIEW OF THE KEY ECONOMIC AND FINANCIAL FIGURES AND DESCRIPTION OF FACTORS AND EVENTS, 
ESPECIALLY UNTYPICAL, AFFECTING THE GROUP’S OPERATIONS IN 2023 ..................................................... 11 
 INFORMATION ABOUT THE DEVELOPMENT STRATEGY ADOPTED BY THE ISSUER AND ITS GROUP AND 
ACTIONS TAKEN TO IMPLEMENT THIS STRATEGY, AND A DESCRIPTION OF THE ISSUER’S DEVELOPMENT 
PROSPECTS AT LEAST IN THE NEXT FINANCIAL YEAR ...................................................................................... 17 
 EXPLANATION OF DIFFERENCES BETWEEN THE FINANCIAL RESULTS INDICATED IN THE ANNUAL REPORT 
AND EARLIER FORECASTS ................................................................................................................................ 18 
 DESCRIPTION OF MAJOR RISK FACTORS AND THREATS, SPECIFYING THE EXTENT TO WHICH THE ISSUER IS 
EXPOSED TO THEM .......................................................................................................................................... 18 
 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT ..................................................................................... 22 
 ASSESSMENT OF FINANCIAL RESOURCES MANAGEMENT AND THE ABILITY TO COVER LIABILITIES .............. 23 
 ASSESSMENT OF THE ABILITY TO CARRY OUT INVESTMENT OBJECTIVES ....................................................... 23 
 MAIN COMMODITY GROUPS........................................................................................................................... 23 
 MAIN SELLING MARKETS ................................................................................................................................. 26 
 SUPPLIERS ........................................................................................................................................................ 31 
 CONCLUDED AGREEMENTS IMPORTANT TO THE GROUP’S OPERATIONS ...................................................... 32 
 THE ENTITY AUDITING THE FINANCIAL STATEMENTS ..................................................................................... 32 
 RELATED PARTY TRANSACTIONS ..................................................................................................................... 33 
 LOANS AND BORROWINGS.............................................................................................................................. 33 
 EXTENDED LOANS AND BORROWINGS ........................................................................................................... 35 
 THE NATURE, PURPOSE AND VALUE OF SIGNIFICANT OFF-BALANCE SHEET ITEMS ....................................... 35 
 NON-FINANCIAL INFORMATION DISCLAIMER ................................................................................................. 35 
 SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE ................................................................................ 36 
 STATEMENT ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES ............................................ 37 
   

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

1. PROFILE OF THE PARENT COMPANY

1.1. GENERAL INFORMATION – THE PARENT COMPANY

TOYA S.A. (the “Company” or the “Parent Company”) is a joint stock company established under the Commercial

Companies Code. The Parent Company has its registered office in Wrocław at ul. Sołtysowicka 13/15.

TOYA S.A. was formed on the basis of a Notarial Deed drawn up on 17 November 1999. Pursuant to a decision of 3

December 1999, the Parent Company was entered in the Commercial Register maintained by the District Court for

Wrocław-Fabryczna, 6th Commercial Division, with the reference number RHB 9053. By virtue of a decision of 4

December 2001, the District Court for Wrocław-Fabryczna, 6th Commercial Division of the National Court Register,

decided to enter the Parent Company in the Register of Entrepreneurs, with the reference number KRS 0000066712.

The entry in the Register took place on 5 December 2001.

The duration of the Parent Company is unlimited.

As at the date of submission of the annual report, the Parent Company has 1 branch located outside the registered

office, in Nadarzyn.

The core business activities of TOYA S.A. include import and distribution of industrial goods, including

primarily hand and power tools for professional and DIY use. The Group distributes goods manufactured and supplied

mainly by companies located in China. For many years, the Group has been implementing its strategy of expanding onto

international markets. It focuses primarily on Central, Southern and Eastern Europe (Romania, Ukraine, Baltic countries,

Hungary, Belarus, Moldova, the Czech Republic, Bulgaria and Germany).

Since 12 August 2011, the Parent Company’s shares have been listed on the Warsaw Stock Exchange.

1.2. ORGANISATION OF TOYA S.A. CAPITAL GROUP

As at 31 December 2023, the Group comprised the following entities:

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Characteristics of entities comprising the Capital Group (as at 31 December 2023 and as at the date of publication of the

report on operations of the Capital Group):

Entity name

Registered

office

Business profile

Type of equity link

% of shares

and votes

held

Link

establishm

ent date

Method of

Consolidation as at

the end of the

reporting period

TOYA S.A.

Wrocław,

Poland

Distribution of tools and

power tools

Parent Company

Not applicable

Not

applicable

Not applicable –

Parent Company in the

Group

Toya Romania S.A.

Bucharest,

Romania

Distribution of tools and

power tools

Subsidiary

99.99

November

2003

Full consolidation

method

Yato Tools

(Shanghai) Co., Ltd.

Shanghai,

China

Distribution of tools and

power tools

Subsidiary

100.00

January

2013

Full consolidation

method

Yato Tools (Jiaxing)

Co., Ltd.

Baibu,

China

Distribution of tools and

power tools

Subsidiary

100.00

December

2019

Full consolidation

method

1.3. THE PARENT COMPANY’S MANAGEMENT BOARD AND SUPERVISORY BOARD

In the period from 1 January 2023 to 31 December 2023 and until the date of approval of this report for publication, the

Management Board of the Parent Company was composed of the following members:

• Grzegorz Pinkosz President of the Management Board;

• Maciej Lubnauer Vice-President of the Management Board;

• Robert Borys Vice-President of the Management Board.

In the period from 1 January 2023 to 31 December 2023 and until the date of approval of this report for publication, the

Supervisory Board of the Parent Company was composed of the following members:

• Piotr Mondalski President of the Supervisory Board;

• Jan Szmidt Vice-President of the Supervisory Board;

• Dariusz Górka Member of the Supervisory Board;

• Michał Kobus Member of the Supervisory Board;

• Grzegorz Maciąg Member of the Supervisory Board;

• Wojciech Bartłomiej Papierak Member of the Supervisory Board;

• Beata Szmidt Member of the Supervisory Board.

1.4. SHARE CAPITAL

As at 31 December 2023, the share capital of the Parent Company amounted to PLN 7,504,222.60 and comprises

75,042,226 shares with a par value of PLN 0.1 each. In 2023, there were no changes in share capital.

1.5. OWN SHARES

The Parent Company does not hold any own shares.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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1.6. SHAREHOLDERS

According to information provided to TOYA S.A. by its shareholders, the Parent Company’s ownership structure as of 31

December 2023 was as follows:

Name

Status

Number of

Type of shares

Par value per

share (PLN)

Par value of the

shares (PLN)

Structure (%)

Jan Szmidt

natural person

28,284,304

ordinary bearer

0.1

2,828,430.40

37.69%

Romuald Szałagan

natural person

9,652,290

ordinary bearer

0.1

965,229.00

12.86%

Generali OFE

legal person

5,001,147

ordinary bearer

0.1

500,114.70

6.66%

Other – share below 5%

not applicable

32,104,485

ordinary bearer

0.1

3,210,448.50

42.79%

TOTAL

75,042,226

7,504,222.60

100.00%

According to information provided to TOYA S.A. by its shareholders, shareholders holding directly or indirectly at least

5% of the total number of votes as at 31 December 2023 were:

Number of shares

Share (%)

Number of votes

Share in the total number of votes at

the General Meeting of

Shareholders (%)

Jan Szmidt

natural person

28,284,304

ordinary bearer

37.69%

Romuald Szałagan

natural person

9,652,290

ordinary bearer

12.86%

Generali OFE

legal person

5,001,147

ordinary bearer

6.66%

Between the date of submission of the previous periodic report (i.e. from 9 November 2023) and 31 December 2023,

as well as after the end of 2023 and the date of approval of this report for publication, there were no changes in the

ownership structure of significant blocks of shares of TOYA S.A.:

After the end of 2023, there were no changes in significant blocks of shares.

1.7. SHARES HELD BY MANAGERS AND SUPERVISORS

1.7.1. Shares held by members of the Parent Company’s Management Board

The number of shares and votes in the share capital of the Company held by members of the Management Board as at

the day of submission of this report is reflected in the following table:

Number of shares

Par value of the shares (PLN)

Number of votes

Share (%)

Grzegorz Pinkosz

146,812

14,681.20

146,812

0.20%

Maciej Lubnauer

61,831

6,183.10

61,831

0.08%

Robert Borys

8,528

852.80

8,528

0.01%

TOTAL members of the

Management Board

217,171

21,717

217,171

0.29%

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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1.7.2. Shares held by members of the Parent Company’s Supervisory Board

The number of shares and votes in the share capital of the Company held by members of the Supervisory Board as at

the day of submission of this report is reflected in the following table.

Number of

Par value of the shares (PLN)

Number of votes

Share (%)

Jan Szmidt

28,284,304

2,828,430.40

28,284,304

37.69%

Beata Szmidt

3,239,253

323,925.30

3,239,253

4.32%

Grzegorz Maciąg

5,275

527.50

5,275

0.01%

TOTAL members of the

Supervisory Board

31,528,832

3,152,883.20

31,528,832

42.02%

1.8. INFORMATION ABOUT THE EMPLOYEE SHARE OWNERSHIP PLAN CONTROL

In 2023, there were no employee share ownership plans at the Parent Company or the Group.

1.9. AGREEMENTS THAT MAY LEAD TO CHANGES IN THE STRUCTURE OF SHARES

HELD BY THE CURRENT SHAREHOLDERS

The Parent Company has no knowledge of any agreements that may lead to future changes in the structure of shares

held by the current shareholders.

1.10. TOTAL VALUE OF REMUNERATION, REWARDS AND BENEFITS PAID OR DUE

TO MANAGERS AND SUPERVISORS

Remuneration of Members of the Management Board (in PLN ‘000):

Name and

surname

Position

Gross basic

salary (fixed and

variable)

Additional

benefits and

granted benefits

Cost of pension

programs (PPK)

Total (PLN ‘000)

2023

Grzegorz Pinkosz

President of the Management Board

1,124

1,130

Maciej Lubnauer

Vice-President of the Management Board

1,088

1,094

Robert Borys

Vice-President of the Management Board

1,076

1,084

2022

Grzegorz Pinkosz

President of the Management Board

1,386

1,392

Maciej Lubnauer

Vice-President of the Management Board

1,284

1,290

Robert Borys

Vice-President of the Management Board

479

485

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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Remuneration of Members of the Supervisory Board (in PLN ‘000):

Name and

surname

Position

Fixed remuneration for

performing the function

Cost of pension

programs (PPK)

Total (PLN ‘000)

2023

Piotr Mondalski

President of the Supervisory Board

198

Jan Szmidt

Vice-President of the Supervisory Board

Beata Szmidt

Member of the Supervisory Board

Dariusz Górka

Member of the Supervisory Board

132

134

Grzegorz Maciąg

Member of the Supervisory Board

132

134

Michał Kobus

Member of the Supervisory Board

Wojciech Papierak

Member of the Supervisory Board

2022

Piotr Mondalski

President of the Supervisory Board

180

Jan Szmidt

Vice-President of the Supervisory Board

Beata Szmidt

Member of the Supervisory Board

Dariusz Górka

Member of the Supervisory Board

120

122

Grzegorz Maciąg

Member of the Supervisory Board

120

122

Michał Kobus

Member of the Supervisory Board

Wojciech Papierak

Member of the Supervisory Board

Remunerations presented in this note include gross remunerations actually paid in 2023 (including variable salary for

the previous periods covered by provisions as at 31 December 2022) as well as additional benefits and costs incurred

by the employer under the PPK pension program. Remunerations do not include unpaid variable salary for the year

2023 (covered by provisions as at 31 December 2023).

There are no liabilities under the pensions or similar benefits for former managers, supervisors or former members of

administrative bodies and the liabilities that are incurred in relations to such pensions at the Company.

1.11. AGREEMENTS CONCLUEDED BY AND BETWEEN THE ISSUER AND PERSONS

PERFORMING MANAGEMENT FUNCTIONS, PROVIDING FOR COMPENSATION

IN THE EVENT OF THEIR RESIGNATION OR DISMISSAL FROM THE OCCUPIED

POSITION

As at 31 December 2023, no agreements have been concluded between the Parent Company and its management staff

providing for compensation in case of resignation or dismissal of a member of management staff from his/her position.

2. CHANGES IN THE BASIC GROUP MANAGEMENT

METHODS

In 2023, there were no significant changes in the Company's management methods.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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3. DESCRIPTION OF THE MOST IMPORTANT EVENTS IN

2023 AND SIGNIFICANT ACHIEVEMENTS OR FAILURES

3.1. CHANGES IN THE COMPOSITION OF THE AUDIT COMMITTEEE OF TOYA S.A.

On 2 January 2023, the Supervisory Board made the following changes to the composition of the Audit Committee:

1. Supervisory Board dismissed from the Audit Committee of TOYA S.A. the following members:

• Mr. Piotr Mondalski

• Mr. Jan Szmidt

• Mr. Grzegorz Maciąg

2. Supervisory Board appointed to the Audit Committee of TOYA S.A. the following member:

• Mr. Wojciech Papierak

• Mr. Michał Kobus

At the same time, the Supervisory Board entrusted the function of the Chairman of the Audit Committee to Mr. Wojciech

Papierak.

After the above-mentioned changes, the Audit Committee of TOYA S.A. consists of the following persons:

1. Mr. Wojciech Papierak - Chairman of the Audit Committee

2. Mr. Michał Kobus – Member of the Audit Committee

3. Mr. Dariusz Górka – Member of the Audit Committee

3.2. ANNEX TO THE OVERDRAFT AGREEMENT

On 29 March 2023, the Company concluded Annex no. 5 to the Overdraft Agreement no. 09/030/19/Z/VV with mBank

S.A. with its registered office in Warsaw. Under this annex, the final repayment date of the loan was set at 29 March

2024. The remaining terms of the Agreement do not differ from those commonly used for this type of agreements.

3.3. RESOLUTIONS ADOPTED BY THE EXTRAORDINARY GENERAL SHAREHOLDERS

MEETING OF 29 JUNE 2023

On 29 June 2023, the General Meeting of Shareholders of Toya S.A. approved the financial statements of TOYA S.A.

Group for 2022, and also decided to transfer the profit of TOYA S.A. for 2022 in the amount of PLN 46,069 thousand to

supplementary capital.

3.4. REPAYMENT OF THE NON-REVOLVING LOAN BEFORE ITS MATURITY DATE

On 13 September 2023, the Company decided to repay the non-revolving loan stated in agreement no.

WAR/8833/20/327/CB of 14 September 2020, concluded with BNP Paribas Bank Polska Spółka Akcyjna based in

Warsaw. The loan was repaid on 15 September 2023.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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3.5. ANNEX TO THE OVERDRAFT AGREEMENT

On 13 November 2023, the Company concluded an annex to the Overdraft Agreement No. WAR/8833/20/326/CB with

BNP Paribas Bank Polska Spółka Akcyjna with its registered office in Warsaw.

The subject of the annex is to extend the current period of credit provision until 15 November 2024 and change the

credit collaterals. Other terms and conditions of the Agreement do not deviate from those commonly applied to this

type of agreement.

3.6. ANNEX TO THE OVERDRAFT AGREEMENT

On 15 December 2023, the Company concluded Annex No. 22 with Bank Handlowy S.A. with its registered office in

Warsaw to the Overdraft Agreement No. BDK/KR-RB/000054601/0641/10.

Under the Annex in question, the final loan repayment date was set at 13 December 2024. Other terms and conditions

of the Agreement do not deviate from those commonly applied to this type of agreement.

3.7. IMPACT OF THE WAR BETWEEN UKRAINE AND RUSSIA ON THE GROUP’S

OPERATIONS

The Group has been present on the markets of Eastern Europe for a long time. Despite its long presence on these

markets, the Group did not have any assets there, and transactions with local clients were of a short-term nature. The

Russian-Ukrainian conflict, which began with military operations on 24 February 2022, disrupted trade relations on

these markets, which in turn resulted in a temporary freezing of relations with some customers or suspension of

cooperation. It should be emphasized that the Parent Company complies with all sanctions imposed by the European

Union, Poland and the governments of other countries, on entities, persons and goods indicated in the relevant legal

acts. The Group has implemented appropriate procedures in this regard. However, the implemented procedures and

the need to verify and comply with all economic sanctions slow down trade with customers from these markets, which

is beyond the Group's control. This may have an impact on trading with customers present in these markets in the

coming quarters.

4. INFORMATION ON THE ISSUER’S ORGANISATIONAL AND

EQUITY RELATIONSHIP WITH OTHER ENTITIES AND

IDENTIFICATION OF THE ISSUER’S MAJOR DOMESTIC

AND FOREIGN INVESTMENTS

4.1. EQUITY LINKS

The organisational structure of the Capital Group was described in item 0. Apart from that, there are no other equity

links between companies from Toya S.A. Group and other entities.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

4.2. OTHER SIGNIFICANT LINKS

As at the date of publication of the report on operations, the Parent Company had personal links with the following

entities (this summary includes entities with whom the Parent Company has concluded transactions in 2023):

• Toya Development Sp. z o.o. S.K. in liquidation – entity related through key management personnel of the Company;

• Toyota Katowice Sp. z .o. o. - entity related through key management personnel of the Company.

Details on transactions with related entities are included in note 31 of the standalone financial statements and in note

32 of the consolidated financial statements.

5. DESCRIPTION OF THE STRUCTURE OF MAIN CAPITAL

DEPOSITS OR CAPITAL INVESTMENTS MADE BY THE

ISSUER’S CAPITAL GROUP DURING THE FINANCIAL YEAR

Beside capital investments described in point 1.2, the Group does not have any other capital investments.

6. DESCRIPTION OF THE ANTICIPATED DEVELOPMENT OF

THE ISSUER’S CAPITAL GROUP

Policy related to the Capital Group’s development directions was disclosed in point 9.

7. MAJOR R&D ACHIEVEMENT

The Group offers a wide portfolio of products and considers development and further improvement of its products as

one of the key elements in building its competitive advantage on the market. Development activities are mainly focused

on the analysis of the design trends on the market, analysis of potential of the brand’s design as well as conceptual and

design works for selected product groups and have been carried out for several years by the Product Development

Centre – organisational unit of the Parent Company, in cooperation with subsidiaries. R&D activities are financed from

the Parent Company’s own funds.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

8. OVERVIEW OF THE KEY ECONOMIC AND FINANCIAL

FIGURES AND DESCRIPTION OF FACTORS AND EVENTS,

ESPECIALLY UNTYPICAL, AFFECTING THE GROUP’S

OPERATIONS IN 2023

Revenue and profitability of TOYA S.A. GROUP (PLN ‘000).

For 12 months ended 31 December

2023

2022

Sales revenue

732,396

762,590

Gross sales profit

244,051

242,665

Operating profit

88,765

97,644

Profit before tax

85,012

88,349

Net profit

68,318

70,220

In 2023, sales revenues amounted to PLN 732,396 thousand and were lower than the revenues achieved in 2022 by PLN

30,194 thousand, i.e. by 4%. The largest decrease in sales, by PLN 20,992 thousand (i.e. by 8%) was recorded in the

export channel, which was mainly due to the weakening of the economic situation and decline in sales in South America

(mainly Chile) and Africa, which was partially compensated by an increase in sales revenues in Ukraine. Lower revenues

were also recorded in the wholesale channel (a decrease by PLN 10,082 thousand, i.e. by 3%), mainly as a result of lower

sales in Poland. Higher revenues by PLN 1,504 thousand (3%) were realized in the retail sales channel, which was mainly

due to sales made via the online store and the Allegro platform in Poland.

Gross profit from sales increased in 2023 by PLN 1,386 thousand, i.e. by 0.6% as compared to 2022. Achieving a higher

gross profit, despite lower sales revenues, was possible thanks to lower costs of purchasing goods resulting from the

USD/PLN exchange rate and prices of transport services, and on the other hand, a pricing policy aimed at maintaining

competitiveness.

732 396

244 051

88 765

85 012

68 318

762 590

242 665

97 644

88 349

70 220

0 100 000 200 000 300 000 400 000 500 000 600 000 700 000 800 000 900 000

SALES REVENUE

GROSS SALES PROFIT

OPERATING PROFIT

PROFIT BEFORE TAX

NET PROFIT

Revenue and profitability (PLN '000)

2023 2022

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Operating profit in 2023 in the amount of PLN 88,765 thousand was lower than that achieved in 2022 by PLN 8,879

thousand, i.e. by 9.1%. This was primarily due to higher costs of employee benefits (an increase of 6.8% compared to

2022), increased costs of depreciation, in connection with the launch of a new warehouse in China, as well as higher

costs of organized promotions and business trips.

In order to raise the necessary working capital, the Group uses mainly short-term bank loans. Given the significant

impact of financial costs associated with these loans on the financial result, the Group negotiates the terms of loan

agreements on a yearly basis, so as to maximally reduce the corresponding costs. In 2023, the Parent Entity used bank

loans to a lesser extent than in the previous year. At the same time, the base interest rates decreased slightly as

compared to 2022. As a result, the interest costs incurred on bank loans amounted to PLN 2,805 thousand and were

lower by PLN 5,349 thousand, as compared to the previous year.

Profitability ratios.

For 12 months ended 31 December

2023

2022

Sales profit margin

33.3%

31.8%

Operating profit margin

12.1%

12.8%

Pre-tax profit margin

11.6%

Net profit margin

9.3%

9.2%

Key:

Sales profit margin – the ratio of gross profit to sales revenue

Operating profit margin – the ratio of operating profit to sales revenue

Pre-tax profit margin — the ratio of pre-tax profit to sales revenue

Net profit margin — the ratio of net profit to sales revenue

For the TOYA S.A. Group, sales profit margin is the basic indicator of the Group's market competitiveness and has a

decisive impact on its financial situation. The analysis of this ratio for 2023 shows that the sales profit in this period

increased by 1.5 percentage points as compared to 2022, which was caused by lower costs of purchasing goods due to

the decrease in the USD/PLN exchange rate and lower transportation costs.

The profitability ratio at the operating level decreased slightly compared to 2022, which was mainly due to higher

depreciation costs, employee benefits costs and business trips.

33,3%

12,1%

11,6%

9,3%

31,8%

12,8%

11,6%

9,2%

0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0%

SALES PROFIT MARGIN

OPERATING PROFIT MARGIN

PRE-TAX PROFIT MARGIN

NET PROFIT MARGIN

Profitability

2023 2022

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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The profitability ratios of profit before tax and net profit remained at a level comparable to the previous year.

Cash flows of the Group (PLN ‘000)

For 12 months ended 31 December

2023

2022

Cash flows from operating activities

140,345

55,508

Cash flows from investment activities

(10,520)

(20,722)

Cash flows from financial activities

(95,081)

(33,744)

Net change in cash before foreign exchange differences

34,744

1,042

Cash and cash equivalents at the beginning of the period

38,836

38,855

Effect of translation of cash and cash equivalents

(3,653)

(1,061)

Cash and cash equivalents at the end of the period

69,927

38,836

In 2023, the Group showed positive cash flows from operating activities, which amounted to PLN 140,345 thousand. In

response to the uncertain market situation resulting from external factors such as inflation or the ongoing conflict

abroad, the Group decided to optimize the level of inventories, however maintaining high ratios of customer order

fulfilment. Inventories decreased by PLN 53,886 thousand and short-term trade receivables and other receivables

decreased by PLN 17,298 thousand.

In 2023, the Group competed its investment in the construction of a new warehouse in China. The investment was led

by Yato (Jiaxing) Co. Ltd. Capital expenditures incurred by this entity in 2023 amounted to PLN 4,323 thousand. Other

expenses for the purchase of tangible fixed assets include mainly the purchase of IT equipment, devices and display

racks.

In 2023, the Group generated negative cash flows from financing activities in the amount of PLN 95,081 thousand. The

main reason was the full repayment of debt due to bank loans (a decrease by PLN 81,722 thousand), repayment of lease

capital instalments in the amount of PLN 8,619 thousand, as well as interest paid on bank loans and leasing in the

amount of PLN 4,740 thousand.

The liquidity of TOYA S.A. Capital Group during the analysed period remained at the right level. The Group’s net working

capital was positive, covering the demand arising from the volume of sales revenue. The ability to cover short-term

liabilities was correct.

Liquidity ratios

31.12.2023

31.12.2022

Current ratio

4,17

2,63

Quick ratio

1,48

0,79

Key:

Current ratio – the ratio of current assets to short-term liabilities

Quick ratio – the ratio of current assets less inventories to short-term liabilities

The value of the current ratio increased to 4.17 as at 31 December 2023 in relation to 2.63 as at 31 December 2022.

Therefore, a higher level of the current liquidity ratio indicates a lower dynamics of growth of liabilities compared to

the dynamics of growth of current assets.

The value of the quick ratio increased to 1.48 as at 31 December 2023 in relation to 0.79 as at 31 December 2022. It is

notable that both these ratios have still reached a very good level.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The structure of assets of TOYA S.A. Capital Group (PLN ‘000)

31.12.2023

31.12.2022

Non-current assets, including:

107,946

104,590

Property, plant and equipment

63,750

64,672

Intangible assets

4,348

4,610

Right-of-use assets

34,524

29,725

Current assets, including:

445,482

486,208

Inventory

287,280

341,166

Trade and other receivables

88,061

105,359

Cash and cash equivalents

69,927

38,836

% asset structure of TOYA S.A. Capital Group

31.12.2023

31.12.2022

Non-current assets / Assets

19%

18%

Property, plant and equipment / Assets

12%

11%

Intangible assets / Assets

Right-of-use assets / Assets

Current assets / Assets

81%

82%

Inventory / Assets

52%

57%

Trade and other receivables / Assets

16%

18%

Cash and cash equivalents / Assets

13%

The structure of equity and liabilities of TOYA S.A. Capital Group (PLN ‘000)

31.12.2023

31.12.2022

Equity

419,951

370,694

Long-term liabilities

26,594

35,530

Short-term liabilities, including:

106,883

184,574

Short-term trade and other liabilities

83,422

95,619

% equity and liability structure of TOYA S.A. Capital Group

31.12.2023

31.12.2022

Equity / Equity and liabilities

76%

63%

Short-term liabilities / Equity and liabilities

19%

31%

Long-term liabilities / Equity and liabilities

Short-term liabilities / Liabilities

80%

84%

Long-term liabilities / Liabilities

20%

16%

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Ratios of return on equity, assets and current assets

For 12 months ended 31 December

2023

2022

Return on assets (ROA)

12%

Return on equity (ROE)

16%

19%

Return on current assets

15%

14%

Key:

Return on assets (ROA) – the ratio of net profit to total assets as at the end of the period

Equity ratio (ROE) – the ratio of net profit to equity as at the end of the period

Return on current assets – the ratio of net profit to current assets as at the end of the period

As at 31 December 2023, the Group’s property, plant and equipment constitute 12% of total assets used in the Group’s

operations. Property, plant and equipment comprise primarily a newly constructed warehouse in China and land,

buildings and structures necessary for the Parent Company’s commercial activity.

As at 31 December 2023, right-of-use assets constituted 6% of the total balance sheet amount (5% in 2022). This item

consists mainly of the right of perpetual usufruct of land in Poland and China, rented office and warehouse space in

Poland and Romania, as well as cars, forklifts and servers under lease.

The structure of current assets used in the operations of TOYA S.A. Capital Group, which as at 31 December 2023

constitute 81% of total assets, includes primarily inventories and trade and other receivables, which is typical to the

business activity conducted by TOYA S.A. and its Capital Group. Both these items constitute in total 84% of current assets

as at 31 December 2023.

Equity structure and debt ratios

31.12.2023

31.12.2022

Total debt ratio

24%

37%

Equity debt ratio

32%

60%

Long-term debt ratio

Short-term debt ratio

19%

31%

The ratio of coverage of non-current assets with equity

and long-term liabilities

390%

379%

Key:

Total debt ratio – the ratio of long- and short-term liabilities to total equity and liabilities

Equity debt ratio – the ratio of long- and short-term liabilities to equity

Long-term debt ratio – the ratio of long-term liabilities to total equity and liabilities

Short-term debt ratio – the ratio of short-term liabilities to total equity and liabilities

The ratio of coverage of non-current assets with equity and long-term liabilities – the ratio of total equity and long-term liabilities to non-current

assets

As at 31 December 2023, the main item in the Group’s equity was retained earnings totalling PLN 385,032 thousand.

The Group’s share capital as at 31 December 2023 amounted to PLN 7,504 thousand.

The main sources of financing operating activities, in particular current assets, include equity and short-term financing

– primarily from bank loans. As at 31 December 2023, the Group financed 75.9% of its operations from equity. As at

that date, the Group had no debt due to bank loans (as at 31 December 2022, short-term and long-term liabilities in this

respect amounted to PLN 82,167 thousand). The long-term debt ratio as of 31 December 2023 amounted to 4.8%.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Group management effectiveness ratios

For 12 months ended 31 December

2023

2022

Inventories turnover period (days)

141

161

Receivables inflow period (days)

Liabilities repayment period (days)

Key:

Inventories turnover period (days) – the ratio of inventories as at the end of the period, multiplied by 360 days, to revenue from sales

Receivables inflow period (days) – the ratio of short-term trade and other receivables as at the end of the period, multiplied by 360 days, to

revenue from sales

Liabilities repayment period (days) – the ratio of trade and other liabilities as at the end of the period, multiplied by 360 days, to revenue from

sales

In 2023, the liabilities repayment period was shorter than the receivables inflow period. This means that the Group

granted longer trade credit to recipients than it received from suppliers itself. It implies higher demand for financing of

working capital. The inventory turnover period in 2023 decreased to 141 days, mainly as a result of the lower volume

of purchases of goods made in 2023 as compared to 2022.

SEASONALITY

The Group's offer includes seasonal products. However, due to their limited value, a wide range of other products that

are in demand throughout the year, and due to the geographic diversity of the subsidiaries, there is no seasonality.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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9. INFORMATION ABOUT THE DEVELOPMENT STRATEGY

ADOPTED BY THE ISSUER AND ITS GROUP AND ACTIONS

TAKEN TO IMPLEMENT THIS STRATEGY, AND A

DESCRIPTION OF THE ISSUER’S DEVELOPMENT

PROSPECTS AT LEAST IN THE NEXT FINANCIAL YEAR

The Group attaches great importance to the quality of customer service. It is a crucial factor for maintaining a

competitive advantage on the market, and one of its most important elements is ensuring full availability of the product

offer for each customer in any region of the world. By supporting these goals, the Group constantly improves logistics

processes, maintains good relations with suppliers, taking into account the need to minimize delivery costs. The Group

intends to strengthen its market position and look for new, attractive expansion opportunities.

The most important activities that the Group will undertake in order to implement this program are:

• Developing the capital group

Subsidiaries achieved good financial results in 2023, showing that, having good organizational and financial

support, they are ready for further intensive development.

The subsidiary Yato Tools (Jiaxing) with headquarters in the economic zone in Baibu Town, a town in the

Zhejiang Province of the People's Republic of China, launched a high-bay warehouse, which is the central

warehouse of the Group. This warehouse is equipped with modern warehouse automation, enabling the

optimization of logistics processes and at the same time not requiring the involvement of significant human

resources. The very good location of the warehouse, which is located close to two sea ports, which are one of

the largest transshipment centres in the world and relatively close to the largest suppliers, favours the

optimization of logistics processes and will enable maintaining a high level of availability of the product offer

for the Group's customers. This is an important element of building competitive advantage in the long term.

• Developing the export channel

The war conflict between Russia, Belarus and Ukraine has an impact on sales in the export channel. Sales to

customers based in these countries accounted for approximately 7% of the Group's total sales in 2022. In 2023,

sales to customers in this region were rebuilt and accounted for almost 9% of the share, and the largest increase

in sales, over 40%, was to Ukrainian customers. We can expect closer cooperation with Ukrainian clients in the

future, but a necessary condition is the stabilization of the political and macroeconomic situation on this

market.

Regardless of the situation referred to above, the Group will strengthen its position on the other markets where

it is present. This applies to markets where the Group has traditionally been present for many years, e.g. the

Hungarian market, but also in southern European countries, where the Group has been less visible so far.

The group will also strengthen outside Europe. In these markets, the Chinese subsidiary Yato Tools (Jiaxing) will

develop sales and acquire new customers. The foreign expansion of this company will be supported by the

development of logistics processes in the capital group, based on a newly built warehouse in China, equipped

with modern infrastructure.

• Effective products management

The Group's good financial results and its constant development would not be possible without the constant

development of the product offer so that it is very well suited to customers’ expectations. This process is carried

out, among others, by Product Managers from the Product Development Department, who have very extensive

knowledge about the product, techniques of shaping its image, who know customer habits and emerging

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

trends both locally and on the global markets. The team is supported by modern IT technology and systems

and devices supporting product management.

This process will continue in the coming quarters.

• Development of logistics processes

The Group conducts analytical work aimed at optimizing logistics processes. On the one hand, it involves

equipping currently used warehouses with modern warehouse automation supporting warehousing processes,

and on the other hand, it involves finding solutions that provide a competitive advantage in the long term.

• Capital investments

The Parent Company systematically supports the development of its subsidiaries. In December 2022, Toya S.A.

paid the last capital tranche for Yato Tools (Jiaxing), completing the process of capital payment for this company

in the amount of USD 12.5 million.

The Group continues to monitor the market in search of an attractive acquisition target that will add value to

the Company.

10. EXPLANATION OF DIFFERENCES BETWEEN THE

FINANCIAL RESULTS INDICATED IN THE ANNUAL REPORT

AND EARLIER FORECASTS

The Parent Company’s Management Board did not publish forecasts of the Group’s performance for 2023.

11. DESCRIPTION OF MAJOR RISK FACTORS AND

THREATS, SPECIFYING THE EXTENT TO WHICH THE

ISSUER IS EXPOSED TO THEM

11.1. FINANCIAL RISKS

The main financial risks include:

• foreign exchange risk,

• interest rate risk,

• liquidity risk.

The aforementioned financial risks and risk management are discussed in item 12.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

11.2. NON-FINANCIAL RISKS

The main non-financial risks include:

• the risk of changes in the macroeconomic situation, especially changes in the GDP growth rate, inflation level,

the situation in industrial, automotive, household and gardening, infrastructural and housing construction,

construction and assembly segments, the level of investments in enterprises, interest rate policy, budget

standing or the society’s income situation,

• competition risk,

• risk associated with changes in legislation and taxation;

• risk of disruption of the supply chain.

The above risks have been described in item 11.3.

11.3. CHARACTERISTICS OF EXTERNAL AND INTERNAL RISK FACTORS AND

THREATS SIGNIFICANT FOR THE GROUP'S DEVELOPMENT

Macroeconomic situation

The Group is present in the markets in different parts of the world, although most of its customers operate in Poland.

Because of the link between the Polish economy with the global economy system and because of the extensive activities

carried out outside the local market, the global economic situation has an impact on the volume of sales to the Group’s

customers. The destabilisation of the political situation in some of the local regions may temporarily reduce the Group’s

expansion in foreign markets and force it to look for new customers.

European markets constitute one of the largest areas of the TOYA Group operations, therefore internal problems of the

European Union could have a significant adverse effect on economy. This could further result in a reduced purchasing

power of the European societies and creation of trade barriers, which could be additionally deepened by the devaluation

of local currencies in relation to the most important global currencies. However, the impact of these factors is difficult

to estimate, as future economic and regulatory situation may differ from the Management Board’s expectations. The

Group’s management is carefully monitoring the developments and adjusts its strategic assumptions to minimise the

threats.

The situation on the Asian market, associated with the current GDP growth of local countries, also affects the financial

standing of the entire Group due to the fact that the Group buys goods mainly from manufacturers operating in this

region. This is related to the prices of purchased goods, terms of trade, the terms of order, as well as the logistics system

between Asia and Europe.

The Group’s Parent Company is a Polish entity, and most of its business activities are conducted in Poland. Therefore,

the government's economic policies, the Polish tax system, unemployment rate and the decisions taken by the National

Bank of Poland and the Monetary Policy Council are additional factors affecting the development of the entire Capital

Group.

Competition

The Polish market for distribution of industrial goods, which is the Group’s main field of operation, is relatively highly

dispersed in spite of the presence of several market leaders. Entities currently competing with the Group continue to

take actions to intensify their development through aggressive pricing policy aimed at current, target or potential

customers. Such actions may have a negative impact on the Group’s financial standing, because further expansion of

the market may be slowed down, become difficult or even impossible. The Group shall be monitoring the market and

its environment, taking various measures in order to maintain and develop competitive advantage.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Changes in currency markets

The Group’s strict link with foreign suppliers and settlements made primarily in USD and CNY make the Group’s financial

results sensitive to changes in FX rates. The Group carefully monitors the currency situation in global markets and the

trends occurring therein and updates the prices of its goods on a periodical basis. Therefore, the margins can be subject

to periodical fluctuations.

It should, however, be stressed that due to the fact that a substantial part of the Group’s sales revenue is earned through

the export channel based on prices set in foreign currencies, the Group is, to a certain extent, secured against sudden

movements in exchange rates. However, this security is not complete and not sufficient, as a result of which FX

fluctuations may have negative impact on the Company’s financial performance.

The chart below shows fluctuations in the average NBP exchange rate for the basic currency rates used in the Company's

operations in 2023.

Source: own study based on https://nbp.pl/statystyka-i-sprawozdawczosc/kursy/archiwum-tabela-a-csv-xls

The Group makes use of external capital funding. An increase in interest rates on the financial market could have

negative influence on the servicing costs of funding and could decrease the Group’s profitability since the Parent

Company enters into loan agreements with floating interest rates in PLN.

To minimise this risk, the Parent Company runs simulations of various scenarios in order to choose the optimal funding

sources, taking into consideration refinancing, roll-over of the existing positions, alternative financing and mid-term

tendencies on the debt market.

The chart below shows the changes in the NPB benchmark interest rate in the period 2022-2023.

0,48

0,5

0,52

0,54

0,56

0,58

0,6

0,62

0,64

0,66

0,68

3,5

3,7

3,9

4,1

4,3

4,5

4,7

4,9

CNY

USD AND EUR

Currency rates in 2023 in relation to PLN

USD EUR CNY

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Source: own study based on https://nbp.pl/polityka-pieniezna/decyzje-rpp/podstawowe-stopy-procentowe-nbp

Interpretation and application of legal regulations

Changes in legislation and diverse interpretations of the law impede the Group’s operations. Changes in legislation, in

particular in tax, customs, labour and social insurance law and introduction of new burdens, may have negative

consequences for the Company’s activity. Frequent changes in the interpretation of the tax law and lack of uniform

practices of fiscal authorities and courts in the application of tax legislation, are particularly burdensome. This may

involve the risk of third-party claims and proceedings of various state authorities. Moreover, because of their complexity

and inconsistent taxation practices, interpretations are often the subject of disputes with tax authorities. The Parent

Company exercises due care to ensure that these transactions are compliant with legislation – in particular with the tax

law. In spite of that, the risk of third-party claims, possible disputes with tax authorities or proceedings of various state

authorities cannot be ruled out. Such claims, disputes or proceedings, as well as cases when fiscal authorities or courts

and the Parent Company adopt different interpretations of tax regulations and different tax qualification of events and

transactions in which the Parent Company participated, may have adverse impact on the Group’s financial performance.

However, it should be noted that the Group takes measures to mitigate the effects of changes in law. The Parent

Company uses external services of renowned law and tax firms, which facilitate its current operations.

Supply chain

The Group purchases goods from suppliers located in various parts of the world, mainly in Asia. Purchased goods are

transported by sea. Such a supply chain exposes the Group to the risk that any adverse events concerning i.e. means of

production and transport, labour, infrastructure, natural events and phenomena, can disrupt the supply chain. The

Group reduces this risk by cooperating with many contractors who are additionally based in various regions in many

countries. However, in case of event with extensive geographical outreach, the above strategy may not be sufficient.

2,3%

2,8%

3,5%

4,5%

5,3%

6,0%

6,5%

6,8%

6,0%

5,8% 5,8%

01.01.2022

01.02.2022

01.03.2022

01.04.2022

01.05.2022

01.06.2022

01.07.2022

01.08.2022

01.09.2022

01.10.2022

01.11.2022

01.12.2022

01.01.2023

01.02.2023

01.03.2023

01.04.2023

01.05.2023

01.06.2023

01.07.2023

01.08.2023

01.09.2023

01.10.2023

01.11.2023

01.12.2023

Reference NBP interest rate in 2022-2023

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

12.1. FINANCIAL INSTRUMENTS IN THE SCOPE OF THE RISK OF PRICE CHANGE,

CREDIT AND LIQUIDITY RISK

The purchase prices of goods sold by the Group fluctuate, in particular due to changing manufacturing costs of

purchased goods (incl. prices of raw materials) borne by their manufacturers (the Group’s suppliers). Moreover, the

purchase price of goods depends on the exchange rate of USD to PLN and CNY to PLN. The above factors affect the level

of applied margins. To minimise the negative impact that fluctuations in goods purchase prices have on the financial

result, the Group negotiates contracts with relatively high values and chooses manufacturers offering competitive prices

and trade conditions. The Group does not use financial instruments to hedge against the risk of changes in goods

purchase prices as a result of FX rate fluctuations.

The customer credit risk is not material due to high dispersion of customers. To reduce the risk of overdue receivables

from customers, the Group periodically examines their creditworthiness and systematically monitors (internally and

externally) due balances. Credit limits for individual counterparties are set by the Management Board. Customers

systematically exceeding payment dates are subject to an appropriate debt collection procedure and have a limited

possibility of purchasing goods from the Group. To minimise the risk, the Parent Company also concludes agreements

to insure its receivables with one of the leading financial institutions.

Due to the specific nature of its operations, the Group requires working capital to secure settlements with suppliers

before receiving payments from customers of goods in exchange for advantageous purchase conditions. The necessary

capital is provided, among others, by concluding short-term loan agreements for the financing of current assets. In order

to diversify its lenders, the Parent Company uses services of several banks which have high credibility ratings. Interest

rate on loans is based on WIBOR rate. The Group does not employ instruments to hedge against the risk of movements

in interest rates.

The Parent Company has good relationships with banks and has had no problems renewing its loans thus far. Therefore,

the Parent Company’s Management Board believes that the risk resulting from short term debt is not significant.

In the view of the Parent Company’s Management Board, the Group's liquidity is secured for the foreseeable future.

The Group follows a rigorous liquidity risk management policy, which focuses on maintaining an adequate level of cash

and securing the ability to use the credit facilities. The Parent Company monitors the level of short-term liabilities and

current assets, as well as current cash flows of the Company and the Group.

12.2. OBJECTIVES AND METHODS OF FINANCIAL RISK MANAGEMENT

Due to the strong link with the foreign suppliers, the Group is sensitive to changes in FX rates and hence requires

increased expenditure on purchase of goods abroad. On the other hand, a part of the Group’s sales revenue comes from

export activity based on prices set in foreign currencies, as a result of which the Group is partly subject to natural

hedging. There is a risk, however, that future FX fluctuations may have a temporary negative effect on the Group’s

financial performance.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

13. ASSESSMENT OF FINANCIAL RESOURCES

MANAGEMENT AND THE ABILITY TO COVER LIABILITIES

50% of the Group’s activity is financed from external capital. Loan agreements provide that throughout the entire loan

period, the borrower undertakes to maintain the capitalization ratio and debt ratio at the agreed level and maintains

inflows to bank accounts in the agreed amount, in accordance with the terms of the loan agreements.

The Parent Company enjoys good relationships with banks and financial institutions and so far it has had no problems

renewing its loans on advantageous terms. The Group continues dynamic development of its activity, maintains a high

level of liquidity and pursues a conservative debt policy. That is why the Management Board considers the Company’s

ability to cover liabilities to be high.

At the moment, there are no events which may, according to the Management Board, have a negative effect on the

Group’s ability to cover its liabilities.

14. ASSESSMENT OF THE ABILITY TO CARRY OUT

INVESTMENT OBJECTIVES

In the opinion of the Parent Company’s Management Board, there are no threats to implementation of investment

objectives. The activities planned for the nearest period have been described in item 9. In addition to funds generated

from operating activities, the Group has secured external financing in the form of credit limits in accordance with the

agreements described in point 21.

15. MAIN COMMODITY GROUPS

15.1. COMMODITY GROUPS

The Company offers a wide range of goods sold under its own brands:

• YATO (battery, electric, diesel, pneumatic and hand tools, safety products),

• VOREL (hand workshop and construction tools),

• LUND (power tools),

• STHOR (power tools),

• FALA (bathroom furnishings),

• FLO (hand and fuel-powered gardening tools, gardening power tools),

The most recognizable and leading brand of the Company, also generating the highest sales growth, is YATO.

Since 2012, the YATO brand has had the largest share in the Company's sales. It consists of a wide range of high-quality

hand, pneumatic and power tools intended for car workshops, construction, finishing and gardening works. The YATO

range includes general-purpose tools and devices for specialized work, which have gained recognition of both

professionals and DIY users.

The following products are sold under the YATO brand: socket spanners, torque and impact wrenches, screwdrivers,

pliers, combination wrenches, hammers, drills, cutting discs, lighting and health and safety products. Automotive

workshop equipment, such as cabinets and tool sets, pneumatics and specialized car repair tools, has a strong position

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

in the brand's assortment. The wide range of YATO products also includes devices intended for installers in the electrical,

plumbing and HVAC industries.

In 2015, the YATO brand offer was expanded to include a line of power tools that combine excellent technical

parameters with high quality of workmanship. Available include drill/drivers, hammer drills, angle grinders, circular

saws, jigsaws, milling machines, etc. YATO power tools also include wireless devices powered by the same type of

battery, creating a universal and user-friendly platform for tools used in construction, workshops and gardens. Since

2017, YATO's offer also includes professional catering equipment for the HoReCa industry: refrigeration equipment,

worktables, transport thermoses, fryers, grills, meat grinders, pots, pans and many others.

YATO tools are made of high-quality alloy steel, using modern technologies: heat and chemical treatment. The Company

is constantly expanding its product range, introducing several hundred new products every year. When selecting the

offer, the use of products in the modern construction and automotive industries as well as market trends in the

supported sales channels are taken into account. Thanks to this, the YATO brand is well perceived on the market in

terms of both the quality and price of the products offered.

Revenue from sales of YATO branded products accounted for 76% of the Group’s revenue in 2023 (75% in 2022).

VOREL is a brand that has had the largest share in sales of the Company's products for approximately 10 years. The

brand's assortment includes hand and pneumatic tools necessary for workshop, construction and home use. VOREL's

offer includes devices for a wide range of professionals (electricians, locksmiths, service technicians, welders, plumbers,

pavers, plasterers, tilers) as well as hobbyists. These include, for example, screwdrivers and screwdriver bits, pliers, pipe

spanners, hammers, chisels, axes, clamps, vices, gas burners, planes, tile cutting devices, ladders, measuring tapes, spirit

levels, tool bags, etc. Among the pneumatic tools you can find, among others: grinders, impact spanners, angle shears,

blowing guns and ratchets. The VOREL tool range also includes products for keeping order at home and in the workshop.

Revenue from sales of VOREL branded products accounted for 13% of the Group's revenue in 2023 (13% in 2022).

The LUND brand was established in mid-2010 and offers household appliances, including mixers, blenders, fryers,

toaster ovens, as well as vacuum cleaners, irons, mops and air purifiers. Multifunctional and easy-to-use LUND

appliances facilitate everyday activities, such as cooking and keeping your home tidy, and their modern design makes

them a decoration for any interior. Garden charcoal and gas grills are very popular among users.

Revenue from sales of LUND branded products accounted for 4% of the Group’s revenue in 2023 (4% in 2022).

The STHOR brand is aimed at demanding DIY enthusiasts. Includes power tools intended for construction, renovation

and finishing works. The STHOR assortment also includes tool sets, accessories and equipment for working in the garage

and home workshop, e.g. vacuum cleaners, rectifiers, extension cords, sets of screwdriver bits, drills. STHOR products

are distinguished by ergonomics of work combined with affordable prices.

Revenue from sales of STHOR branded products accounted for 2% of the Group’s revenue in 2023 (3% in 2022).

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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The Company sells bathroom and kitchen equipment elements under the FALA brand. The product offer includes

washbasin and sink taps, shower panels and a wide selection of linear drains. Products gathered in unique collections

are accompanied by accessories that complement the brand's assortment, such as connection hoses, towel holders,

plugs, shower heads, pumps, heaters, and bathroom scales. Modern design and well-thought-out solutions make FALA

products create a functional space tailored to the needs of users.

Revenue from sales of FALA branded products accounted for 2% of the Group’s revenue in 2023 and 2022.

FLO is a brand that includes a wide range of hand tools, electric and battery devices intended for gardening and the

care of terrace and balcony plants. Products offered under this brand include secateurs, branch saws, shovels, rakes,

hoses, garden baskets, gloves. FLO power tools include hedge trimmers, chain saws, scarifiers, pumps, sprayers, etc.

Revenue from sales of FLO branded products accounted for 2% of the Group’s revenue in 2023 (2% in 2022).

15.2. SALES ACCORDING TO PRODUCT GROUPS

The most profitable brand is YATO. Every year, the Group records an increase in the sales volume of this brand in the

domestic and foreign market.

Revenues from sales in the Capital Group's core business, broken down by brand and its profitability for each financial

year, are shown in the table below:

The structure and volume of sales revenue from core (trading) operations of the Capital Group, by brand:

za for 12 months ended 31 December

2023

2022

PLN ‘000

YATO

559,991

76%

573,320

75%

VOREL

94,611

13%

102,778

13%

LUND

26,745

27,183

FALA

16,166

17,749

FLO

15,419

15,625

STHOR

15,065

19,065

Other

4,399

6,870

TOTAL

732,396

100%

762,590

100%

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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16. MAIN SELLING MARKETS

16.1. SALES STRUCTURE

The main distribution channels of TOYA S.A. Capital Group include:

a) local markets (Poland, Romania and China):

• wholesale market, i.e. distributors, wholesalers and stores;

• retail networks; and

• retail sales - mainly online sales, including through your own online store,

b) export.

The largest portion of sales is generated by TOYA S.A. Capital Group through the wholesale distribution channel in

Poland, Romania and China (49% share of the segment “Wholesale market” in sales revenue for 2023, profitability in

2023 amounted to 35%). The Group’s distribution channel with the second highest share in sales is the segment

“Export”. In 2023, its share in sales amounted to 33% with 29% profitability. Share of distribution through retail chains

on local markets (Poland and Romania) in sales revenue in 2023 reached the level of 11% with 28% profitability. Share

of sales of on-line stores in 2023 amounted to 7%, with 50% profitability.

Outside Poland, the goods are launched through the subsidiaries Toya Romania S.A., YATO Tools (Shanghai) and YATO

Tools (Jiaxing), as well as authorised distributors and sales representatives. Such diversified sales network provides

access to a broad market, professional service as well as optimised availability of the entire range of products sold by

the Group.

Revenues of the Capital Group, broken down by distribution channels and their profitability, are shown in the tables

below.

The structure and volume of sales revenue of the Capital Group, broken down by segments which are distribution

channels

for 12 months ended 31 December

2023

2022

PLN ‘000

Wholesale market (*)

358,906

49%

368,988

48%

Export

245,375

33%

266,367

35%

Retail networks (*)

75,729

11%

76,353

10%

Retail sales (*)

52,386

50,882

Total

732,396

100%

762,590

100%

(*) sales on local markets in Poland, Romania and China

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Sales profitability of segments which are the Capital Group’s distribution channels

for 12 months ended 31 December [%]

2023

2022

Wholesale market

35%

31%

Export

29%

31%

Retail networks

28%

30%

Retail sales

47%

46%

Average

33%

32%

Key:

Segment’s sales profitability ratio – the ratio of segment’s profit before tax to revenue from sales of good for certain segment (based on segment’s financial

information as disclosed in the financial statements)

Average – average weighted by sales for all the segments

16.1.1. Wholesale market – sales in Poland

TOYA S.A. has been present in Poland for more than 30 years. During this time, it has been systematically strengthening

its market position. The highest sales in Poland take place through traditional distribution channels, i.e. through

distributors, wholesalers and stores. In 2023, TOYA S.A. cooperated with multiple authorised distributors, and this

network will be constantly developed. The Group also cooperates with a few dozen wholesale customers in all regions,

meeting the rising demand for its products, in order to increase its margins and to promote its own brands. The Group

employs several dozen sales representatives – assistants of partners on the wholesale market – and is planning further

development of this distribution channel.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The structure and volume of the Company’s sales revenue on wholesale market in Poland (PLN ‘000)

for 12 months ended 31 December

2023

% share

2022

% share

Authorised distributors

187,652

74%

201,347

78%

Wholesalers and stores

65,544

26%

58,310

22%

Total

253,196

100%

259,657

100%

16.1.2. Retail networks – sales in Poland

Domestic sale to retail networks constitutes approx. 8% of the Group’s sales revenue. TOYA S.A. cooperates with several

large networks in Poland. The Parent Company sells industrial goods on the basis of its customers’ orders for specific

quantities of products to be delivered on specific dates. Upon acceptance, these orders give rise to typical contractual

obligations. In this channel, the Company cooperates with customers with established market positions that are reliable

and financially transparent and have a sound payment history.

16.1.3. The Group’s export sales and foreign activity

TOYA S.A.

For many years, the Parent Company has operated in international markets, focusing primarily on Central, Southern and

Eastern Europe

The structure and volume of revenue from the Parent Company’s export sales, broken down by countries in PLN ‘000

(*).

for 12 months ended 31 December

2023

% share

2022

% share

Ukraine

37,393

22%

26,128

16%

Hungary

23,905

14%

21,096

13%

Belarus

21,324

13%

18,419

11%

Baltic countries

20,090

12%

22,399

14%

Czech Republic

11,786

11,193

Bulgaria

10,057

9,348

Moldova

8,708

11,825

Greece

6,969

7,016

Russia

6,075

7,335

Germany

4,792

6,641

Other

19,380

11%

23,114

14%

TOTAL

170,479

100%

164,514

100%

(*) does not include sales to subsidiary TOYA Romania, which amounted to PLN 34 407 thousand (PLN 54 092 thousand in 2022)

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Toya Romania S.A.

Apart from the export sales described above, direct sales in Romania are carried out by the subsidiary established in

2003 – Toya Romania S.A. – whose business includes sales of hand and power tools in Romania. The product range

offered brands and distribution channels (other than export) are identical to those of the Polish company. Sales of Toya

Romania are presented in the wholesalers and stores segment.

The development concept of Toya Romania S.A. assumes, among other things, further use of the synergy effect within

the Group, in particular optimisation of goods purchase costs, based on common supply sources and logistics centres.

Moreover, the Romanian company plans to strengthen its position on the local market through further expansion of the

network of on-site sales representatives, whose main task is to win customers on the traditional market from among

specialist retail stores and institutional customers. Marketing activities focus on increasing the share of the high-margin

YATO brand in the revenue structure, which will considerably increase the company’s profitability when using the

shortened distribution channel.

The structure and volume of sales revenue of Toya Romania S.A., broken down by distribution channels (PLN ‘000)

for 12 months ended 31 December

2023

% share

2022

% share

Wholesalers and stores

75,296

83%

79,825

91%

Retail networks

10,521

16%

7,255

Retail sales

915

832

Total

86,732

100%

87,912

100%

Yato Tools (Shanghai) Co., Ltd.

Yato Tools, with its registered office in Shanghai, has been operating from the second half of 2008 as a jointly controlled

entity, and since 2 January 2013 as a subsidiary under full consolidation method. During this time, the company’s

operations focused on development of the distribution network in individual provinces of the PRC, finding and training

sales staff as well as preparing for expansion onto global markets. Recent years allowed for completion of the initial

stage and development of a distribution network in the main provinces of the PRC as well as creation of a structure

which enables consolidation and export of YATO products directly to customers/distributors in Southern and Eastern

Asia, Africa, Australia and the Middle East. Yato Tools is also one of the main suppliers of goods for TOYA S.A. and TOYA

Romania S.A.

So far, the distribution network in the Chinese market covers 31 out of 34 autonomic administrative units (23 provinces,

5 autonomic regions, 4 separated cities and 2 special regions), handled by one or more distributors depending on the

local conditions, the population density and traditional forms of trade.

At present, the retail network of Yato Tools covers an area with total population of 1,350 million out of the total of 1.4

billion of the country’s population. This means a considerable development potential for the retail network on the local

market – not only through the already existent representatives, but also through the development of a network of

distributors specialised in distribution of other products offered by the Company, including special automotive tools

and gardening power tools and tools. In addition, Yato Tools is developing sales in the internet sales channel, not only

through its own on-line store, but also through existing large specialised on-line stores.

Export activity of Yato Tools commenced in the second quarter of 2010 as the next step in the company's development.

In 2023, the company traded with over a dozen of customers from Africa, Asia, Australia and South and Central America.

The highest turnover this year was recorded by customers from Russia, Belarus and the United Arab Emirates and

Guatemala.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The structure and volume of sales revenue of Yato Tools (Shanghai), broken down by distribution channels in PLN

‘000 (*)

for 12 months ended 31 December

2023

% share

2022

% share

Distributors/ Wholesalers

5,097

30%

5,787

28%

Export

9,572

55%

12,216

59%

Other

2,669

15%

2,782

13%

Total

17,338

100%

20,785

100%

(*) the table does not include intra-group sales (from Yato Shanghai to the Parent Company and Yato Tools (Jiaxing)) which amounted to PLN 120,233

thousand in 2023 (in 2022: PLN 119,363 thousand) translated from CNY to PLN at the average exchange rate of the National Bank of Poland.

The structure and volume of revenue from the Yato Tools (Shanghai) export sales (PLN ‘000)

for 12 months ended 31 December

2023

% share

2022

% share

Russia

3,349

35%

3,709

30%

United Arab Emirates

2,935

31%

4,577

37%

Belarus

1,900

20%

2,030

17%

Uzbekistan

900

704

Fiji and Caribbean

137

517

Guatemala

483

Other

350

196

TOTAL

9,572

100%

12,216

100%

Yato Tools (Jiaxing) Co., Ltd.

Yato Tools (Jiaxing) Co. Ltd. was established in 2019 and is located in Baibu Town, a town in the Zhejiang Province of the

People's Republic of China. In 2020, the company started operating activities. In 2023, the new warehouse was fully

launched and the company has already traded with several dozen countries from Africa, Asia, Australia and South and

Central America. The highest turnover this year was recorded by customers from Chile, Ukraine and Armenia.

The structure and volume of sales revenue of YATO Tools (Jiaxing), broken down by distribution channels in PLN ‘000

(*)

for 12 months ended 31 December

2023

% share

2022

% share

Distributors/ Wholesalers

25,317

28%

23,719

21%

Export

65,324

72%

89,643

79%

Other

264

319

Total

90,905

100%

113,681

100%

(*) the table does not include intra-group sales (from Yato Jiaxing to the Parent Company, Toya Romania S.A. and Yato Shanghai) which amounted to

PLN 245,894 thousand in 2023 (2022: PLN 226,825 thousand) translated from CNY to PLN at the average exchange rate of the National Bank of Poland.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The structure and volume of revenue from the YATO Tools (Jiaxing) export sales in PLN ‘000

for 12 months ended 31 December

2023

% share

2022

% share

Chile

6,239

14,498

16%

Ukraine

5,688

10,371

12%

Armenia

5,047

2,430

Russia

4,544

2,117

Democratic Republic of Kongo

4,254

7,467

Guatemala

3,068

4,938

Turkmenistan

2,149

6,815

Georgia

1,989

1,866

Cameroon

1,769

2,116

Libia

1,687

2,583

Zimbabwe

1,627

1,012

Panama

1,581

2,757

Kenia

1,536

770

South Korea

1,526

Malysia

1,489

2,054

Indie

1,469

1,859

Izrael

1,079

1,041

Vietnam

1,040

1,412

Iraq

1,035

2,538

Bangladesh

1,023

1,385

Other

15,485

23%

19,614

21%

TOTAL

65,324

100%

89,643

100%

16.1.4. Retail sale - sale in all companies of the Group

The year 2023 marked a further dynamic growth of the on-line stores www.toya24.pl and yatogastro.pl. In addition,

sales in Poland are conducted through popular online platforms. The subsidiaries in Romania and China also sell online.

In total in the Group this sales channel accounts for 7% of total sales revenues.

The increase compared to the previous year was 3%, which indicates stabilization after the period of dynamic growth

recorded in 2020-2022 during the pandemic. The Group sees great potential and plans further dynamic development

of this distribution channel in the coming periods.

17. SUPPLIERS

The network of suppliers the Group cooperates with is highly diversified. For many years, the Group has cooperated

with more than several hundred foreign and several dozen domestic suppliers, which allowed it to establish durable

business contacts. Such a wide range of suppliers ensures a high degree of independence and helps strengthen the

Group's negotiating position. This position is additionally improved by the presence of the subsidiary Yato Tools

(Shanghai) and Yato Tools (Jiaxing), both thanks to higher confidence of Asian manufacturers in a local partner as well

as larger volumes of orders. The Parent Company usually signs short-term agreements on delivery of specific products

or places one-off orders for products, which ensures flexibility in negotiations and allows the Company to match the

product offer to the changing customer expectations better.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

18. CONCLUDED AGREEMENTS IMPORTANT TO THE

GROUP’S OPERATIONS

The criterion for recognising agreements as important adopted by the Parent Company is agreement value exceeding

10% of the Parent Company’s equity. According to this criterion, in 2023 the Parent Company concluded annexes to

agreements with banks which were presented in item 21.

The table below includes insurance policies of the Parent Company.

Insurance period

Object of insurance

1 July 2023 - 30 June 2024

Insurance against all risks of physical loss or damage of tangible fixed assets and

properties

1 July 2023 - 30 June 2024

Insurance against all risks of physical loss or damage of tangible current assets

1 July 2023 - 30 June 2024

Insurance against all risks of physical loss or damage of electronic equipment

1 July 2023 - 30 June 2024

Civil liability insurance due to owned property and conducted activity

29 November 2023 – 28 November 2024

Motor insurance of the vehicle fleet

20 September 2023 - 19 September 2024

Civil liability insurance of members of companies’ bodies

13 October 2023 – 12 October 2024

Professional liability insurance of accountants and payroll service providers

1 March 2023 - 30 June 2025

Insurance of the trade credit risk on certain agreements

1 March 2023 – 29 February 2024

Insurance of property in CARGO transport

01 January 2023 - 31 December 2023

Guarantee for the payment of customs fees

20 June 2023 - 20 June 2024

Travel insurance for employees

19. THE ENTITY AUDITING THE FINANCIAL STATEMENTS

The entity authorised to audit and review individual and consolidated statements is Grant Thornton Polska Prosta Spółka

Akcyjna with its registered office in Poznań.

The auditor was appointed by the Supervisory Board on 19 December 2022.

The agreement on audit and review was concluded on 5 July 2023 and covers semi-annual review and annual audit of

the individual and consolidated financial statements for years 2023-2025.

Financial statements for the year ended 31 December 2022 was audited by KPMG Audyt Spółka z ograniczoną

odpowiedzialnością sp.k. with its registered office in Warsaw.

The remuneration of the entity authorized to audit in accordance with the concluded contracts is presented below

(amounts in PLN thousand):

2023

2022

Audit of annual financial statements (individual and consolidated)

125

230

Review of mid-year financial statements (individual and consolidated)

Other attestation services

TOTAL

188

300

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

In 2023, Grant Thornton Polska Prosta Spółka Akcyjna provided an attestation service regarding the report on the

remuneration of the Management Board and the Supervisory Board for 2022. Moreover, in 2022 Grant Thornton Polska

Spółka z o.o. limited partnership (currently: Grant Thornton Polska Prosta Spółka Akcyjna) also provided an attestation

service regarding the report on the remuneration of the Management Board and the Supervisory Board for 2021,

without being the Company's auditor during that period. The remuneration for this service amounted to PLN 8.7

thousand. The Company did not use any other services of the selected audit company.

20. RELATED PARTY TRANSACTIONS

Related party transactions are entered into on the arm’s length basis in the course of the Group’s day-to-day operations.

These transactions have been presented in note 32 to the consolidated financial statements and note 31 of the stand-

alone financial statements. In 2023 TOYA S.A. did not conclude any transactions with related entities which were atypical

or divergent from the arm’s length basis.

21. LOANS AND BORROWINGS

The list of bank loans has been presented in a table on the subsequent page.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

____________________________________________________________________________________________________________________________________

Object and value of agreement

Name of the Bank / covering bonds

/ granting loans

Loan amount as

per agreement as

at 31 December

2023

PLN ‘000

Amount

outstanding as at

31 December

2023

PLN ‘000

Amount

outstanding as at

31 December

2022 (*)

PLN ‘000

Current interest rate

Date of expiry

1. Overdraft facility agreement No BDK/KR-

RB/000054601/0641/10 of 22 December 2010

Bank Handlowy w Warszawie S.A.

70,000

21,159

WIBOR 1 M + bank’s margin

13 December 2024.

2. Overdraft credit facility agreement No 09/030/19/Z/VV

mBank S.A. with its registered office

in Warsaw

60,000

18,991

WIBOR ON + bank’s margin

29 March 2024.

3. Overdraft credit facility agreement No

WAR/8833/20/326/CB

BNP Paribas Bank Polska S.A. with

its registered office in Warsaw

25,000

1,779

WIBOR 1 M + bank’s margin

15 November 2024

4. Non-revolving loan agreement no WAR/8833/20/327/CB

BNP Paribas Bank Polska S.A. with

its registered office in Warsaw

40,238 (**)

WIBOR 1 M + bank’s margin

19 September 2023

Total liabilities, of which:

155,000

82,167

– short-term portion

155,000

65,024

– long-term portion

17,143

(*) the amount used is presented together with interest due and not repaid as at 31 December 2022

(**) including PLN 40,000 thousand of the loan used and PLN 238 thousand of accrued and unpaid interest as at 31 December 2022

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

22. EXTENDED LOANS AND BORROWINGS

In 2023, the Group did not extend any borrowings or loans.

23. THE NATURE, PURPOSE AND VALUE OF SIGNIFICANT

OFF-BALANCE SHEET ITEMS

As at 31 December 2023, the companies belonging to the Group were parties to the following guarantee agreements in

connection with their operations, granted by the following entities:

On 12 June 2019, TOYA S.A. granted a guarantee of payment of liabilities arising from warehouse and office rental

agreement by Toya Romania S.A. to the landlord up to the amount of EUR 115 thousand. The lease agreement was

concluded on 8 February 2019 and covers a period of 10 years, with the option of changing this period. The warranty

expires 3 months after the date of termination of the lease.

24. NON-FINANCIAL INFORMATION DISCLAIMER

Separate report on non-financial information of the TOYA S.A. Capital Group for 2023, prepared in accordance with Art.

49b section 9 of the Accounting Act, constitutes a separate document, published together with the Management Board's

Report on the activities of the TOYA Capital Group.

Counterparty

Type of guarantee

Subject matter and value

Date of expiry

Bank Handlowy w

Warszawie S.A.

Guarantee of payment for the lease of

warehouses in Nadarzyn

Bank guarantee in the amount of EUR

514,369.49

30 June 2024

Sopockie

Towarzystwo

Ubezpieczeń ERGO

Hestia S.A.

Contract on granting a customs debt

guarantee

The security for repayment of custom debts,

taxes and other fees associated with goods

released into free circulation based on customs

declaration, in the amount of PLN 270,000

31 December

2023

BRD Groupe Societe

Generale

Guarantee of payment for warehouse

rental in Bucharest

Bank guarantee in the amount of EUR 247,300

3 August 2024

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

25. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET

DATE

25.1. Expression of consent by the Supervisory Board to conclude a surety

agreement

On 6 March 2024, the Company received information about the consent of its Supervisory Board to the conclusion of

the Surety Agreement No. BDK/UP/000054601/0040/23, between the Company and the Citibank (China) Company

Limited-Shanghai Branch, based in the People's Republic of China. The Surety Agreement will be concluded to secure

the repayment of receivables due to the Bank, in relation to the planned conclusion of the Short-Term Working Capital

Credit Agreement, in the amount of CNY 60,000 thousand, between YATO TOOLS (Shanghai) Co., Ltd., and the Bank.

The Surety Agreement assumes:

a) surety of the Issuer for the liabilities of the Subsidiary up to CNY 72,000 thousand;

b) granting a surety until 31 August 2025;

c) authorizing the Bank to debit the Issuer's current account with the amount of liabilities arising from the

Surety Agreement;

d) the Issuer's obligation to provide, at Bank's request, within the time limit and in accordance with the

conditions indicated by the Bank and in the content approved by the Bank, a declaration of submission to

enforcement in the form of a notarial deed in accordance with Art. 777 § 1 point 5) of Code of Civil

Procedure.

The remaining terms and conditions of the Surety Agreement do not differ from those commonly used for this type of

agreements.

25.2. Conclusion of a short-term loan agreement by a subsidiary

On 26 March 2024, the Company received information about the conclusion of the Short-term Working Capital Credit

Agreement between YATO TOOLS (Shanghai) Co., Ltd. and CITIBANK (CHINA) CO., LTD. SHANGHAI BRANCH based in the

People's Republic of China.

The loan amounted to CNY 60,000 thousand. The amount will be used for the current operations of the Subsidiary. The

contract was concluded for 12 months.

The loan will be secured by the Company's surety for the liabilities of the Subsidiary under the surety agreement.

The remaining terms and conditions of the Agreement do not differ from those commonly used for this type of

agreements.

25.3. Annex to the overdraft agreement

On 26 March 2024, TOYA S.A. concluded an Annex No. 6 to the Current Account Credit Agreement No. 09/030/19/Z/VV

with mBank S.A. based in Warsaw. Pursuant to the annex, the final repayment date of the loan was set at 27 March

2024. The remaining terms and conditions of the Agreement do not differ from the terms and conditions commonly

used for this type of agreements.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

26. STATEMENT ON THE APPLICATION OF CORPORATE

GOVERNANCE PRINCIPLES

In accordance with § 70 section 6 point 5) Regulation of the Minister of Finance dated 29 March 2018 on current and

periodic information published by issuers of securities and conditions for recognizing as equivalent information required

by laws of non-member state, the Management Board hereby presents its corporate governance statement for 2023.

26.1. Indication of the set of corporate governance rules governing the Parent

Company and the place where the set is publicly available and any

information about the Company's corporate governance practices that go

beyond the requirements provided for by national law, together with the

presentation of information on its corporate governance practices

From 1 July 2021, the Company applies the corporate governance principles set out in the "Best Practices of WSE Listed

Companies 2021", attached to the Resolution of the Stock Exchange Supervisory Board No. 13/1834/2021 of 29 March

2021, the content of which is publicly available on the website of the Warsaw Stock Exchange S.A. at the address:

https://www.gpw.pl/dobre-praktyki2021.

The text of the statements regarding each year with an indication of the extent to which the Company declared

compliance with the rules mentioned above, is available on the Company's website at: https://toya.pl/lad-korporacyjny

in the "Best practices" tab.

The Company does not apply any corporate governance practices that go beyond the requirements of local law.

26.2. An indication to the extent that the Parent Company departed from the

provisions of the set of principles of corporate governance, with an indication

of those provisions and the reasons for the withdrawal

Pursuant to Article 29.3 of the Regulations of the Warsaw Stock Exchange S.A., the Management Board of the Company

presented "Information on the status of the Company's application of the recommendations and principles contained

in the Best Practices of WSE Listed Companies 2021" in the EBI report No. 1/2021 of 2 August 2021. In reference to the

content of this document, in 2023 the Company complied with the detailed rules contained in the "Best Practices of

WSE Listed Companies 2021", with the exception of the following:

1.3.1. Companies integrate ESG factors in their business strategy, including in particular environmental factors, including

measures and risks relating to climate change and sustainable development;

Explanation of the Company’s departure from the application of the principle: In its business strategy, the Issuer does

not include ESG factors, which include environmental factors, including measures and risks relating to climate change

and sustainable development. The Issuer is aware of the growing importance of non-financial reporting as well as ESG

issues, therefore, meeting the expectations of various stakeholder groups, it will consider taking steps to implement and

apply this principle.

1.3.2. Companies integrate ESG factors in their business strategy, including in particular social and employee factors,

including among other actions taken and planned to ensure equal treatment of women and men, decent working

conditions, respect for employees’ rights, dialogue with local communities, customer relations.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Explanation of the Company’s departure from the application of the principle: In its business strategy, the Issuer does

not include ESG factors, including social and employee factors, including among others actions taken and planned to

ensure equal treatment of women and men, decent working conditions, respect for employees’ rights, dialogue with

local communities, customer relations. The Issuer is aware of the growing importance of non-financial reporting as well

as ESG issues, therefore, meeting the expectations of various stakeholder groups, it will consider taking steps to

implement and apply this principle. The Issuer and the entire TOYA S.A. Capital Group pays particular attention to the

issues related to the core values to which this principle applies.

1.4. To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their

website information concerning the framework of the strategy, measurable goals, including in particular long-term

goals, planned activities and their status, defined by measures, both financial and non-financial. ESG information

concerning the strategy should among others:

Explanation of the Company’s departure from the application of the principle: The Issuer presents its Strategy within

periodic reports. This information does not contain all the elements set out in this rule. If the Strategy document is

formally adopted and disclosed in accordance with applicable regulations, it will be made available to stakeholders on

the website. The Issuer is aware of the growing importance of non-financial reporting as well as ESG issues, therefore,

meeting the expectations of various stakeholder groups, it will consider taking steps to implement and apply this

principle.

1.4.1. explain how the decision-making processes of the company and its group members integrate climate change,

including the resulting risks;

Explanation of the Company’s departure from the application of the principle: The Issuer's current Strategy does not

take into account the ESG issues. The Issuer is aware of the growing importance of non-financial reporting as well as ESG

issues, therefore, meeting the expectations of various stakeholder groups, it will consider taking steps to implement and

apply this principle.

1.4.2. present the equal pay index for employees, defined as the percentage difference between the average monthly

pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about

actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of the equality

target.

Explanation of the Company’s departure from the application of the principle: The Strategy presented by the Issuer in

its periodic reports does not address the issues raised in this principle. The Issuer pursues an active policy in the field of

working conditions and employee pay, providing the Company with staff that contributes to the organic growth of the

organization.

1.5. Companies disclose at least on an annual basis the amounts expensed by the company and its group in support of

culture, sports, charities, the media, social organisations, trade unions, etc. If the company or its group pay such

expenses in the reporting year, the disclosure presents a list of such expenses.

Explanation of the Company’s departure from the application of the principle: The Issuer does not disclose the expenses

incurred by the Issuer and its group for supporting culture, sports, charities, media, social organizations, trade unions,

etc. The reason for this is the marginal scale of this type of expenses from the point of view of the Company's financial

situation.

1.6. Companies participating in the WIG20, mWIG40 or sWIG80 index hold on a quarterly basis and other companies

hold at least on an annual basis a meeting with investors to which they invite in particular shareholders, analysts,

industry experts and the media. At such meetings, the management board of the company presents and comments on

the strategy and its implementation, the financial results of the company and its group, and the key events impacting

the business of the company and its group, their results and outlook. At such meetings, the management board of the

company publicly provides answers and explanations to questions raised.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Explanation of the Company’s departure from the application of the principle: The Issuer enables investors, analysts,

shareholders and representatives of the media to ask questions and obtain explanations on topics of interest to these

persons, provided that the applicable law provides for such a possibility. The implementation of this principle takes place

in the form of direct meetings with the above-mentioned stakeholders or answers to questions in electronic form.

2.1. Companies should have in place a diversity policy applicable to the management board and the supervisory board,

approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals

and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target

dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation

of the minority group in each body should be at least 30%.

Explanation of the Company’s departure from the application of the principle: The Issuer does not have a diversity policy

towards the Management Board and the Supervisory Board adopted by the Supervisory Board or the General Meeting,

respectively. Nevertheless, the principle of diversity among its bodies is close to the Issuer and constitutes an added value

for the organization. The Issuer ensures that the bodies are composed of persons with the broadest possible scope of

competences and qualifications. The members of the Supervisory Board are elected by the General Meeting, while the

Management Board is appointed by the Supervisory Board. Despite the lack of a diversity policy, the Issuer is deeply

convinced that the General Meeting and the Supervisory Board, when selecting the Supervisory Board and the

Management Board, are guided primarily by the interests and needs of the Issuer to ensure a diverse pool of talents

necessary to meet the challenges faced by the Issuer. The above can be confirmed by the current composition of the

Supervisory Board and the Management Board, which ensures diversity in terms of education, specialist knowledge and

age.

2.2. Decisions to elect members of the management board or the supervisory board of companies should ensure that

the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve

the target minimum participation of the minority group of at least 30% according to the goals of the established diversity

policy referred to in principle 2.1.

Explanation of the Company’s departure from the application of the principle: The members of the Supervisory Board

are elected by the General Meeting, while the Management Board is appointed by the Supervisory Board. Despite the

lack of a diversity policy, the Issuer is deeply convinced that the General Meeting and the Supervisory Board, when

selecting the Supervisory Board and the Management Board, are guided primarily by the interests and needs of the Issuer

to ensure a diverse pool of talents necessary to meet the challenges faced by the Issuer. The above can be confirmed by

the current composition of the Supervisory Board and the Management Board, which ensures diversity in terms of

education, specialist knowledge and age.

2.7. A company’s management board members may sit on corporate bodies of companies other than members of its

group subject to the approval of the supervisory board.

Explanation of the Company’s departure from the application of the principle: A member of the Management Board

may not, without the consent of the General Meeting, deal with competitive interests or participate in a competitive

company as a partner in a civil partnership, partnership or as a member of a ruling body of a company, or participate in

another competitive legal person as a member of a ruling body. This prohibition also covers participation in a competitive

company, if a Management Board Member holds at least 10% of shares or stocks or the right to appoint at least one

Management Board Member. The prohibition does not apply to performing functions in entities belonging to the capital

group of the Company.

2.11.5. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an

annual report to the annual general meeting once per year. Such report includes at least the following:

assessment of the rationality of expenses referred to in principle 1.5;

Explanation of the Company’s departure from the application of the principle: The Issuer does not disclose the expenses

incurred by the Issuer and its group for supporting culture, sports, charities, media, social organizations, trade unions,

etc. The reason for this is the marginal scale of this type of expenses from the point of view of the Company's financial

situation.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

2.11.6. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an

annual report to the annual general meeting once per year. Such report includes at least the following:

information regarding the degree of implementation of the diversity policy applicable to the management board and

the supervisory board, including the achievement of goals referred to in principle 2.1.

Explanation of the Company’s departure from the application of the principle: Due to the fact that the Issuer does not

have a diversity policy towards the Management Board and the Supervisory Board adopted by the Supervisory Board or

the General Meeting, respectively (for the entirety of the justification, see rule 2.1.), the annual report of the Supervisory

Board referred to in rule 2.11 does not contain the information referred to in rule 2.11.6.

3.3. Companies participating in the WIG20, mWIG40 or sWIG80 index appoint an internal auditor to head the internal

audit function in compliance with generally accepted international standards for the professional practice of internal

auditing. In other companies which do not appoint an internal auditor who meets such requirements, the audit

committee (or the supervisory board if it performs the functions of the audit committee) assesses on an annual basis

whether such person should be appointed.

Explanation of the Company’s departure from the application of the principle: As at the date of publication of this

statement, the Issuer has not appointed an internal auditor to manage the internal audit function. The Issuer and the

Audit Committee assess on an ongoing basis the legitimacy of the organizational separation of internal audit and, if

there is a need for such separation, the Issuer will consider appointing such an auditor.

3.6. The head of internal audit reports organisationally to the president of the management board and functionally to

the chair of the audit committee or the chair of the supervisory board if the supervisory board performs the functions

of the audit committee.

Explanation of the Company’s departure from the application of the principle: The principle is not applied due to the

fact that the Company has not appointed a person to manage internal audit. The Issuer monitors the needs of conducting

an audit of individual areas of the Company's operations on an ongoing basis.

3.10. Companies participating in the WIG20, mWIG40 or sWIG80 index have the internal audit function reviewed at

least once every five years by an independent auditor appointed with the participation of the audit committee.

Explanation of the Company’s departure from the application of the principle: The principle is not applied as the Issuer

has not yet distinguished an internal audit unit and has not separated the position of the person managing the internal

audit function.

4.3. Companies provide a public real-life broadcast of the general meeting

Explanation of the Company’s departure from the application of the principle: The Issuer does not provide publicly

available real-time broadcasts of general meetings. The Issuer will monitor the demand of potential stakeholders for

access to real-time broadcasts of the general meeting

4.8. Draft resolutions of the general meeting on matters put on the agenda of the general meeting should be tabled by

shareholders no later than three days before the general meeting.

Explanation of the Company’s departure from the application of the principle: The issuer encourages shareholders to

submit draft resolutions of the general meeting on matters introduced to the agenda of the general meeting within a

time allowing them to be read, but the Company's internal regulations do not provide for the deadline referred to in this

rule.

4.9.1. If the general meeting is to appoint members of the supervisory board or members of the supervisory board for

a new term of office:

candidates for members of the supervisory board should be nominated with a notice necessary for shareholders present

at the general meeting to make an informed decision and in any case no later than three days before the general

meeting; the names of candidates and all related documents should be immediately published on the company’s

website.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Explanation of the Company’s departure from the application of the principle: The Issuer encourages shareholders to

propose candidates for the Supervisory Board in time allowing them to become acquainted with their professional

experience and competences, but the Company's internal regulations do not provide for a deadline for submitting

candidates. On the other hand, the rule is applied in the scope of immediate publication by the Issuer of the candidates

together with a complete set of materials concerning them on the Company's website, provided that the candidates are

submitted within the time limit specified in the rule in question.

4.14. Companies should strive to distribute their profits by paying out dividends. Companies may retain all their earnings

subject to any of the following criteria: a) the earnings are minimal and consequently the dividend would be immaterial

in relation to the value of the shares; b) the company reports uncovered losses from previous years and the earnings

are used to reduce such losses; c) the company can demonstrate that investment of the earnings will generate tangible

benefits for the shareholders; d) the company generates insufficient cash flows to pay out dividends; e) a dividend

payment would substantially increase the risk to covenants under the company’s binding credit facilities or terms of

bond issue; f) retention of the company’s earnings follows recommendations of the authority which supervises the

company by virtue of its business activity.

Explanation of the Company’s departure from the application of the principle: The intention of the rule is close to the

Issuer. The Issuer's Management Board, in each application to the General Meeting as to the method of profit

distribution for a given financial year, presents, together with the justification, its recommendations, which may include,

inter alia, the current and projected financial situation of the Company and its capital group, further development

strategy, including investment plans. The issuer shall immediately disclose the information in question to the public, and

the above-mentioned application is assessed by the Supervisory Board. The final decision, taking into account the

essential needs of the Issuer, the catalogue of which may exceed the premises indicated in the principle, is made by the

Issuer's General Meeting.

26.3. Description of basic features of internal control and risk management

systems applied in the Company with respect to the process of preparing the

financial statements - in relation to the Group

The Management Board of the Company is responsible for the internal control system in the Parent Company and its

effectiveness in the process of preparing financial statements and periodical reports developed and published in

accordance with the Regulation of the Minister of Finance of 29 March 2018 on current and periodical information

submitted by issuers of securities and on conditions for deeming as equivalent the information required under the

provisions of the law of a Non-Member State. The Company applies internal control systems with regard to accounting

and financial reporting to ensure reliable and transparent presentation of its financial and assets standing. The Parent

Company has in place documentation describing the adopted accounting principles, specifying the methods of assets

and liabilities valuation and determination of the financial result, as well as the manner of keeping the books of account

and the system for protection of data and data collections. The adopted accounting principles are applied on a

continuous basis by ensuring comparability of financial statements while using the rule of going concern and prudent

valuation. The Company’s financial statements are audited by authorised entities selected by way of resolution of the

Supervisory Board. The statements are published in accordance with the applicable provisions of the law.

The books of account are kept by the Company and its subsidiaries in the SAP R3 IT system. Access to information

resources of the IT system is restricted by appropriate rights of authorised employees solely in the scope of their duties.

The Financial Director supervises the process of preparing the Company’s financial statements and periodical reports

from the subject-matter point of view.

Organising work related to preparing annual and semi-annual financial statements is the competence of the accounting

and control department.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

After its approval by the Financial Director and before its publication, the financial statements are verified by the

Company’s Management Board and Supervisory Board.

26.4. Shareholders who hold, directly or indirectly, major blocks of shares, the

number of shares held by such entities, their percentage share in the share

capital, the number of votes resulting from them and their percentage share

in the total number of votes at the general meeting

The table below presents the ownership structure of shareholders who hold, directly or indirectly, major blocks of shares

of TOYA S.A., the number of shares held by such entities, their percentage share in the share capital, the number of

votes resulting from them and their percentage share in the total number of votes at the general meeting as of

31 December 2023 (status according to the best of the Company's knowledge and to information provided to Company

by its shareholders):

¹ Prepared based on:

• Current Report No. 27/2022 of 21 November 2022 containing a Notification of a transaction on shares of TOYA

S.A. performed by a key management personnel.

• Current Report No. 28/2022 of 21 November 2022 containing a Notification of a transaction on shares of TOYA

S.A. performed by a key management personnel.

26.5. Indication of the owners of any securities, which provide special

control rights, together with the description of the rights

All shares in the Company are ordinary bearer shares which provide no special control rights. Apart from shares, the

Parent Company issued no other securities.

26.6. Restrictions on voting rights, such as limitation of the voting rights of holders

of a given percentage or number of votes, time limits on the exercising of

voting rights, or provisions under which, with the company’s cooperation,

equity rights attaching to securities are separated from the holding of the

securities

Shares in the Company do not involve any restrictions with respect to exercising voting rights. Pursuant to the Articles

of Association of TOYA S.A., each share carries one vote at the General Shareholders’ Meeting.

Name

Number of

shares/Number of votes

Percentage share in the share

capital/Percentage share in the total number of

votes at the general meeting

Jan Szmidt

28,284,304¹

37.69

Romuald Szałagan

9,652,290

12.86

Generali OFE

5,001,147

6.66

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

26.7. Limitations in transferring the ownership right to the issuer’s securities

In 2023, there were no such limitations.

26.8. Description of principles concerning appointment and dismissal of managers

and their entitlements, in particular the right to decide on issuance or

redemption of shares

Pursuant to the Articles of Association pf TOYA S.A., the Management Board comprises one to seven members, including

the President of the Management Board and, in the case of a Management Board comprising several members, the

Vice-President of the Management Board. The number of Management Board members for a given term is specified by

the Supervisory Board. Members of the Management Board are appointed for a joint, three-year term of office, while

mandates of the Management Board members expire no later than on the day of the General Shareholders’ Meeting

which approves the financial statements for the last full financial year of the term of office.

Members of the Management Board of TOYA S.A. are appointed and dismissed by the Supervisory Board.

Members of the Management Board can be dismissed at any time, without detriment to their claims from the work

relationship or a different legal relationship which is the basis for holding the office of a Management Board Member.

The Management Board’s competencies relate to all matters of the Company not restricted to the competencies of the

General Shareholders’ Meeting or the Supervisory Board.

The Management Board operates on the basis of the Regulations approved by the Supervisory Board, as specified in the

Articles of Association of TOYA S.A. The Regulations also specify detailed competencies of the Management Board. The

Management Board handles the affairs of the Company, manages its assets and represents the Company before third

parties

The following corporate documents, including a description of principles concerning appointment and dismissal of

managers and their entitlements, in particular the right to decide on issuance or redemption of shares, are available on

the website https://toya.pl/ in the tab: For investors - Materials for investors - Articles of Association, regulations:

• Articles of Association of TOYA S.A.;

• Regulations of the Management Board;

• Regulations of the Supervisory Board;

• Regulations of the General Shareholders’ Meeting.

26.9. Principles of introducing amendments to the articles of association

Amendments to the Articles of Association of the Company are introduced in accordance with the provisions of the

Commercial Companies Code. The resolutions amending the Articles of Association on the increase of the shareholders’

benefits or limiting the rights granted to individual shareholders require the consent of all affected shareholders.

26.10. The functioning of the General Shareholders’ Meeting, its basic entitlements,

the rights of shareholders and the manner of exercising these rights and

entitlements, and in particular the rules set forth by the Bylaws of the

General Meeting of Shareholders provided such bylaws have been adopted,

unless such information is determined directly by the provisions of law

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The General Shareholders’ Meetings of TOYA S.A. (the Parent Company) take place in accordance with the provisions of

the Commercial Companies Code, the Articles of Association of the Company as well as provisions of the Regulations, while

taking into account other generally applicable provisions of law. The General Shareholders’ Meetings may be ordinary or

extraordinary. Ordinary General Shareholders’ Meeting is convened by the Company’s Management Board and should

take place within 6 months of the end of each financial year. Extraordinary General Shareholders’ Meeting is convened by

the Management Board on its own initiative or at a written request of the Supervisory Board or at the request of

shareholders representing at least 1/20 of the share capital submitted to the Management Board in writing or in electronic

form. The request for convening the Meeting should determine issues to be discussed or it should include a draft of

resolution concerning proposed agenda. Convening the Extraordinary General Shareholders’ Meeting at the request of the

Supervisory Board should take place within two weeks from the date of submission of the request.

The Supervisory Board convenes the General Shareholders’ Meeting:

a) if the Company’s Management Board failed to convene the Ordinary General Shareholders’ Meeting within the

prescribed period,

b) if, despite the submission of a request by the Supervisory Board, the Company’s Management Board failed to

convene the General Shareholders’ Meeting in time, or

c) whenever it deems such meeting necessary.

An Extraordinary General Shareholders’ Meeting may be convened by shareholders representing at least half of the

Parent Company’s share capital or at least half of the total number of votes in the Company. The Management Board is

required to immediately announce the convening of the General Meeting in the manner provided for by the provisions

of law. Shareholders can participate in the General Shareholders’ Meeting and exercise the voting right in person or

through a proxy. Shareholders may participate in the General Shareholders’ Meeting using electronic means of

communication, on conditions specified in detail by the Management Board.

The General Meeting may adopt resolutions regardless of the number of shareholders present at the meeting or the

represented shares, unless otherwise provided in the provisions of law.

Resolutions of the General Shareholders’ Meeting are adopted by an absolute majority of votes, unless the provisions

of law or these Articles of Association provide otherwise. Resolutions of the General Shareholders’ Meeting are adopted

by the majority of ¾ votes cast with respect to the following issues:

a. amendments to the Articles of Association, including issue of new shares,

b. issue of convertible bonds or bonds with pre-emptive rights to acquire shares,

c. merger of the Company with another company,

d. decrease of the share capital,

e. redemption of shares,

f. disposal of the Company’s enterprise or its organised part,

g. dissolution of the Company.

The resolutions amending the Articles of Association on the increase of the shareholders’ benefits or limiting the rights

granted to individual shareholders require the consent of all affected shareholders.

Resolutions of the General Shareholders’ Meeting are binding upon all bodies of the Company, as well as all

shareholders, including shareholders who are not present on the General Shareholders’ Meeting.

The competences of the General Meeting of Shareholders include adopting resolutions concerning the following issues:

a) considering and approving the Management Board and Supervisory Board’s report and the financial statements,

b) adopting a resolution on the division of profits or covering of losses,

c) discharging members of the Company’s governing bodies from liability in the performance of their duties,

d) taking all decisions concerning claims for the remedy of damage caused in incorporating the Company or in

carrying out management or supervision,

e) disposing of or leasing the Company’s business or an organised part thereof and establishing a limited right in rem

thereon,

f) acquisition of own shares,

g) issue of convertible bonds or bonds with pre-emptive rights to acquire shares,

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

h) amendment to the Company’s Articles of Association, including concerning a share capital increase or decrease,

i) merger of the Company or transformation of the Company,

j) dissolution and liquidation of the Company,

k) determination of remuneration of the Supervisory Board members,

l) appointment and dismissal of the Supervisory Board members,

m) creation and liquidation of special funds,

n) approval of the regulations of the Supervisory Board,

o) redemption of shares.

Acquisition and disposal of real property, right of perpetual usufruct or share in a real property by the Company does

not require a consent of the General Shareholders’ Meeting.

Subject to cases specified in the Commercial Companies Code, if the General Shareholders’ Meeting was convened

correctly, it is valid and capable of adopting resolutions regardless of the number of shareholders or number of shares

represented at the meeting, unless otherwise provided in the provisions of law. The General Shareholders’ Meeting of

the Company is convened by an announcement published on the Company’s website and in a manner specified for

transmitting current information, according to generally applicable regulations. The announcement should be made at

least twenty-six days before the date of the General Shareholders’ Meeting. The announcement about the General

Shareholders’ Meeting of the Company should include at least:

1) the date, time and place of the General Shareholders’ Meeting as well as a detailed agenda,

2) a precise description of procedures regarding participation in the General Meeting and executing the voting

right, in particular information about:

a) the shareholder’s right to demand specific issues to be included in the agenda,

b) the shareholder’s right to submit draft resolutions regarding issues on the General Shareholders’ Meeting’s

agenda or issues which are to be included in the agenda before the date of the General Shareholders’

Meeting,

c) the shareholder’s right to submit draft resolutions regarding issues on the General Shareholders’ Meeting’s

agenda during the General Shareholders’ Meeting,

d) the manner of exercising the voting right via proxy, including, in particular, information about forms used

in voting through a proxy and the manner of notifying the Company about appointment of a proxy using

electronic means of communication,

e) the possibility and the manner of participating in the General Shareholders’ Meeting using electronic means

of communication,

f) the manner of voicing opinions during the General Shareholders’ Meeting, using electronic means of

communication,

g) the manner of exercising the voting right by correspondence or using electronic means of communication,

h) the shareholder's right to ask questions regarding matters on the agenda of the general meeting.

3) the date of registration of participation in the General Shareholders’ Meeting,

4) information on the right to participate in the General Shareholders’ Meeting only applying to persons who are

shareholders of the Company on the date of registering their participation in the General Shareholders’

Meeting,

5) information on where and how the person entitled to participate in the General Shareholders’ Meeting can

obtain the full text of documentation to be presented to the General Shareholders’ Meeting

6) draft resolutions,

7) address of the website on which information concerning the General Shareholders’ Meeting will be made

available.

The right to participate in the General Shareholders’ Meeting of the Company applies exclusively to persons who are

shareholders of the Company sixteen days before the date of the General Shareholders’ Meeting (the date of registering

participation in the General Shareholders’ Meeting). The General Meeting can be attended by shareholders who

submitted, to the entity keeping the securities account, a request for issue of a registered certificate of the right to

participate in the General Meeting not earlier than after the announcement on the General Meeting being convened

and not later than on the first business day following the date of registration for the General Meeting. The Parent

Company determines the list of shareholders entitled to participate in the General Meeting on the basis of the list

prepared by the entity maintaining the depository of securities, according to the provisions on trade in financial

instruments, submitted to the Parent Company not later than a week before the date of the General Meeting.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Shareholders can participate in the General Shareholders’ Meeting and exercise the voting right in person or through a

proxy. The power of attorney should be made in writing or in electronic form.

Upon arrival at the General Shareholders’ Meeting, each shareholder on the list of shareholders entitled to participate

in the General Shareholders’ Meeting reports their attendance (at the shareholder registration point) to the shareholder

service team and is entered onto the attendance list. Preparing the attendance list of the General Meeting Participants

involves the following tasks:

1) verification of identity of the shareholder or their proxy (if the shareholder is represented by a proxy, this fact

must be indicated on the attendance list),

2) providing the number of shares held by the reporting Participant,

3) specifying the number of votes to which the reporting Participant is entitled,

4) the Participant placing a signature on the attendance list,

5) issuing a voting card, voting instructions and other materials for the meeting to the Participant.

The attendance list is signed by the Chairperson of the General Shareholders’ Meeting (the Chairperson) immediately

after their election. The Chairperson is competent for resolving complaints regarding this list. The attendance list is

made available to the Participants of the General Shareholders’ Meeting throughout the time of the meeting and is

updated on a current basis.

Upon the request of shareholders holding a tenth of the share capital represented at the General Shareholders’

Meeting, the attendance list will be verified by a commission appointed for this purpose, comprising at least three

persons, including one chosen by the applicants. If the commission issues a decision that is disadvantageous to a certain

person, such a person can appeal to the General Shareholders’ Meeting, which resolves the issue by voting. If a

Participant leaves the room during the General Meeting, the Chairperson will correct the attendance list, making note

of the time when the Participant left the room and recalculates the number of votes and the percentage of represented

share capital. After doing calculations, the Chairperson declares whether the General Meeting has the quorum required

and the majority of votes required to adopt resolutions, in particular if votes are planned on resolutions which require

the qualified majority of votes.

If a Participant entitled to participate in the General Shareholders’ Meeting is late, he/she should be allowed to attend

the meeting. In such a case, the Chairperson orders a correction of the attendance list, marking the arrival time of the

delayed Participant and the item of the agenda starting from which this person participates in the General Shareholders’

Meeting, and once again calculates the number of votes and quorum represented since the arrival of the latecomer.

Members of the Management Board and the Supervisory Board participate in the General Shareholders’ Meeting in

composition which allows them to provide factual answers to questions asked during the General Shareholders’

Meeting. If attendance of any of the participants of these bodies is impossible for important reasons, the participants

of the General Meeting are informed about these reasons.

Members of the Management Board and the Supervisory Board of the Company taking part in the General Meeting

should, within their competences and to the extent necessary to resolve issues on the agenda, provide the Participants

with explanations and information concerning the Company, subject to restrictions following from the applicable

regulations. In cases which require detailed, specialist knowledge of a given discipline, a Member of the Management

Board or the Supervisory Board can appoint a person from among the employees of the Company who will provide such

information or explanations. The registered auditor conducting the audit of the Company’s financial statements is

invited to the General Shareholders’ Meeting, in particular if the agenda includes an item of the Company’s financial

matters. The General Shareholders’ Meeting can be transmitted via the Internet. Information about public transmission

of the meeting will be published on the Company’s website right before the General Shareholders’ Meeting.

The General Shareholders’ Meeting is opened by the President of the Supervisory Board or, if they are absent, the Vice-

President of the Supervisory Board or a person appointed by the President or the Vice-President of the Supervisory

Board, respectively. The person opening the meeting orders and conducts the election of the Chairperson from among

the persons entitled to vote. Until the abovementioned elections, the person opening the General Shareholders’

Meeting has the Chairperson’s rights.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Every Participant of the General Shareholders’ Meeting is entitled to run for the Chairperson as well as to present one

candidature for this post. The candidate is entered on the list of candidates after stating that they accept

the candidature. The Chairperson of the General Meeting is elected in a secret ballot. The person opening the General

Meeting supervises the correct course of the ballot and announces its results.

The Chairperson ensures smooth course of the meeting and observance of the rights and interests of all shareholders.

The Chairperson should counter, in particular, abuse of Participants’ rights and ensure that the rights of minority

shareholders are respected. The Chairperson should not resign from their function without material reasons and neither

can they, without justified causes, delay the signature of the minutes of the General Shareholders’ Meeting.

Duties and rights of the Chairperson of the General Meeting, apart from those listed in the Regulations

of the General Meeting, include in particular:

1) declaring correctness of the manner in which the General Meeting was convened and the ability to adopt

resolutions,

2) presenting the announced agenda of the General Meeting,

3) giving floor and removing it from a Participant who voices their opinion clearly off-topic or violates

the principles of decent behaviour with their speech,

4) ordering ballots, supervising their correct course and announcing their results,

5) removing persons who are not entitled to participate in the General Shareholders’ Meeting or who interrupt

the meeting from the room,

6) ordering breaks in meetings, subject to the provisions of Regulations of the General Shareholders’ Meeting,

7) resolving doubts concerning regulations, if needed after obtaining the opinions of persons listed in

the Regulations of the General Shareholders’ Meeting,

8) concluding the General Shareholders’ Meeting after the meeting agenda has been exhausted.

The Chairperson is entitled to appoint a Secretariat of the General Meeting comprising 1-3 persons for cooperation with

the Chairperson during the General Meeting. The Chairperson of the General Meeting is entitled to consult the notary

public, lawyers and other independent consultants appointed by the Management Board of the Company to service the

General Meeting. The Chairperson informs the attendants about the presence of the abovementioned persons at the

General Shareholders’ Meeting.

Every Participant of the General Shareholders’ Meeting is entitled to submit a motion regarding formal issues.

Motions regarding formal issues are motions regarding the manner of holding the meeting and voting, in particular

motions for:

1) postponement or closure of discussion,

2) breaks in the meeting,

3) the voting order of motions submitted under a given item of the agenda,

4) closure of the list of candidates upon elections.

Subject to paragraph 5 of the Regulations of the General Shareholders’ Meeting, motions regarding formal issues are

resolved by the Chairperson, and if any Participant objects to their decision – by voting.

The Chairperson may order a short break in the meeting, in particular in order to allow:

1) formulation of conclusions,

2) agreement upon the Participants’ positions,

3) obtaining opinions of persons referred to in § 6 paragraph 5 of the Regulations of the General Shareholders’

Meeting,

4) the Management Board and the Supervisory Board to assume their positions,

5) handling other cases which require such breaks, in particular if the General Shareholders’ Meeting lasts longer

than 2 hours.

The ordered breaks cannot be aimed at impeding users in exercising their rights. Should a break in the meeting cause

postponement of the General Shareholders’ Meeting at least until the following day, the General Shareholders’ Meeting

must adopt the relevant resolution with at least 2/3 of votes. In total, such breaks cannot be longer than 30 days.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Subject to the provisions of § 8 of the Regulations of the General Shareholders’ Meeting, every Participant should voice

their opinion only on matters covered by the adopted agenda which are currently being considered, in particular by asking

questions to the representatives of the Company. Motions concerning draft resolutions or amendments thereof should be

submitted, along with their justification, in writing to the Secretariat, or in the case of lack thereof, to the Chairperson.

When taking the floor or submitting a motion, the Participant should provide their full name and, if they are not applying

on their own behalf, also details of the shareholder they are representing.

The Chairperson gives the floor to Participants according to the order of applications and for the purpose of retorts – after

the list of persons speaking on a given issue on the agenda is exhausted. The Chairperson can give the floor to the members

of the Company’s Supervisory Board and Management Board out of turn. The Chairperson can limit the speaking time of a

Participant of the General Shareholders’ Meeting if the number of Participants who intend to take part in the discussion is

so large that the lack of time limits for their speeches could, taking into account the agenda, make it impossible to conduct

the General Shareholders’ Meeting efficiently. Restriction of the speaking time cannot cause a restriction in the

shareholders’ rights. The Participant can also voice their opinion by submitting a written statement, question or motion.

After the list of speakers has been exhausted, the Chairperson informs the General Shareholders’ Meeting about the

content of such statements and organises explanations and, if needed, puts the submitted motions to vote. If there are

doubts regarding the motion under vote, before voting, the Participant can ask the Chairperson to read the motion out.

The Participant of the General Meeting who demanded an objection to be recorded in the minutes after the General

Meeting adopted a resolution against which they had voted can briefly motivate the objection.

The Parent Company publishes questions asked in relation with the General Meeting as well as provided answers on its

website, immediately after the end of the General Meeting.

Resolutions cannot be adopted with respect to issues not covered by the agenda unless the entire share capital is

represented at the General Meeting and none of the attendants objects to adoption of the resolution. The General

Shareholders’ Meeting can adopt, at any time, a resolution on convening an Extraordinary General Shareholders’ Meeting,

resolutions regarding the announced agenda and resolutions of organisational nature, which include:

1) a resolution on changing the order of individual discussed items on the agenda,

2) a resolution on removing individual issues from the agenda,

3) a resolution on the method of voting,

4) a resolution on breaks in the meeting.

A motion for a resolution on removing a specific issue from the agenda should be motivated. A matter whose

consideration is obligatory pursuant to applicable regulations cannot be removed from the agenda.

A resolution is deemed adopted if its adoption was voted for by shareholders representing the majority of votes required

according to the provisions of the Commercial Companies Code or the Articles of Association. If amendments were

suggested for a draft resolution, these suggestions, subject to § 8 paragraph 2 of the Regulations of the General

Shareholders’ Meeting, are put to vote in the order determined by the Chairperson and, subsequently, a vote is held on

the entire draft resolution, together with adopted improvements.

The Chairperson orders a secret ballot for elections and in the case of motions for dismissal of members of the Company’s

bodies, for holding them liable, as well as in the case of personnel issues. The Chairperson also orders a secret ballot on

other issues upon request of at least one Participant, except for votes on motions relating to formal issues. Voting and

counting votes are assisted by a company which counts votes using a computer technique or in a different manner,

specified in the voting instruction submitted by the Chairperson.

The Supervisory Board comprises between five and seven members, appointed for a joint term of office in a manner

specified in the Company’s Articles of Association. The number of members of the Supervisory Board for a given term is

determined by the General Shareholders’ Meeting.

The principles below apply to appointment of members of the Supervisory Board by the General Shareholders’ Meeting.

A candidate for an independent member of the Supervisory Board submits their agreement to be appointed member of

the supervisory board and a curriculum vitae, as well as a written declaration of meeting the independence criteria referred

to in the Company’s Articles of Association. Every Participant of the General Meeting is entitled to put forward candidatures

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

for a member of the Supervisory Board. The candidature put forward is accompanied by a justification and a short

curriculum vitae of the candidate, which covers in particular their education and hitherto work experience.

The candidate put forward is added to the list of candidates after declaring acceptance of the candidature and compliance

with the criteria, adopted by the Company, necessary to be recognised as an independent member of the Supervisory

Board, as well as submitting other declarations, if any, required by generally applicable provisions. A candidate who is

absent at the General Shareholders’ Meeting is entered onto the list of candidates after the person who proposes them

presents:

1) the candidate’s written agreement along with a declaration of compliance with the independence

requirements, or

2) a written declaration concerning the candidate being put forth with respect to consent to candidature and

compliance with the independence criteria and

3) the candidate’s other declarations required by the provisions of the law, submitted in the appropriate form.

Upon the request of the Chairperson or another Participant, the list of candidates for the Supervisory Board can be closed

by the Chairperson if the number of elected candidates is at least equal to the number of posts to be appointed in the

Supervisory Board. The list of proposed candidates for members of the Supervisory Board is prepared in alphabetic order

by the Secretariat of the General Shareholders’ Meeting.

Voting for the members of the Supervisory Board takes place separately for each candidate, in a secret ballot, according to

absolute majority of votes. A vote cast for a number of candidates exceeding the number of mandate posts is invalid. The

Supervisory Board comprises candidates who obtained the largest number and the absolute majority of votes; if there is

an equal number of votes for the last mandate post, another vote is held for these candidates, with the above principles

applying respectively. The provisions of this section also apply if the agenda of the General Shareholders’ Meeting covers

changes in the composition of the Supervisory Board.

A special voting procedure is ordered by the Chairperson of the General Shareholders’ Meeting in the case of group

elections to the Supervisory Board. Upon the motion of shareholders representing at least one fifth of the share capital,

the Supervisory Board should be elected by way of voting in separate groups even if the Articles of Association provide for

a different manner of appointment of the Supervisory Board. During a group ballot, one share corresponds to one vote.

Groups of shareholders are created at the General Shareholders’ Meeting in order to elect members of the Supervisory

Board, provided that the number of created groups corresponds to the number of posts to be appointed in the Supervisory

Board. A shareholder can only be a member of one voting group. The minimum number of shares needed for creating a

group is established by dividing the number of shares represented at the General Shareholders’ Meeting by the number of

mandates to be appointed in the Supervisory Board. The group of shareholders is entitled to elect the number of members

of the Supervisory Board equal to the number of times the shares represented by it exceed the calculated minimum.

Groups of shareholders can merge in order to make optimal use of jointly held shares to elect members of the Supervisory

Board. For each group, the Chairperson orders a separate attendance list to be prepared. Each group holds a vote for the

chairperson of the meeting of a given group, who will ensure organisation of the ballot within the group, i.e. proposing

candidates, holding ballots and minutes from the group’s meeting being drawn up by the notary public. Each of the

established groups is provided with a separate room to hold the elections unless this is impossible for organisational

reasons. In such a case, groups take turns and use a single room. Each group holds the ballot before the notary public who

draws up the minutes; the order is determined by the Chairperson of the General Shareholders’ Meeting.

After holding a group ballot, the chairperson of the group delivers written results of secret ballots held in groups to the

Chairperson of the General Shareholders’ Meeting. The Chairperson of the General Shareholders’ Meeting announces

the composition of the Supervisory Board after collecting all results of group ballots.

Resolutions of the General Shareholders’ Meeting are recorded in the minutes by the notary public, otherwise being

null and void. The minutes are signed by the notary public and the Chairperson of the General Shareholders’ Meeting.

The minutes declare that the General Shareholders’ Meeting has been convened correctly and can adopt resolutions;

they also list the adopted resolutions and, next to each of them, the number of shares from which valid votes were cast,

the percentage of these shares in the share capital, the total number of valid votes, the number of votes for, against

and withheld as well as voiced objections. The minutes are supplemented by the attendance list with signatures of the

Participants. The Management Board of the Company enters the extract from the minutes to the minutes book. The

minutes book is also supplemented with evidence for convening the General Shareholders’ Meeting.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

On its website, the Parent Company publishes the ballot results within a week of the conclusion of the General Meeting.

The ballot results will be available until the deadline for appealing against the resolution of the General Shareholders’

Meeting.

General Shareholders’ Meetings can be recorded; in such cases, the recording of the meeting will be published on the

Company’s website immediately after conclusion of the General Shareholders’ Meeting.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

26.11. Composition and the changes that occurred in the course of the last

accounting year and the description of managing, supervisory and

administrative bodies` as well as committees’ operation, and with respect to

the Audit Committee or Supervisory Board or other supervisory or

controlling body performing the function of the Audit Committee, providing

also information on:

26.11.1. on individuals who meet the statutory independence criteria and who have knowledge

and skills in accounting or auditing of financial statements, including the manner of

acquiring the same,

26.11.2. on individuals who have knowledge and skills in the industry in which the Company

operates, including the manner of acquiring the same,

26.11.3. whether the Company has been provided with any permitted non-audit services by the

auditing firm examining its financial statements, and whether the independence of this

auditing firm has been assessed and the consent for the provision of such services has

been given,

26.11.4. main assumptions of the policy developed for the selection of an audit firm to carry out

the audit and the policy of providing any permitted non-audit services by the audit firm,

any entities related thereto and by the member of the auditing firm's chain,

26.11.5. whether the recommendation regarding the selection of an audit firm to carry out the

audit met the applicable conditions, and where the selection of the audit firm was not

related to the extension of the agreement for the auditing of financial statements –

whether such recommendation was prepared following the selection procedure

organised by the Issuer and whether it complied with the applicable criteria,

26.11.6. number of meetings of the Audit Committee or Supervisory Board or other supervisory

or controlling body held,

26.11.7. in case the functions of the Audit Committee are performed by the Supervisory Board or

other supervisory or controlling body - information on which statutory conditions

allowing such situation were met, along with necessary supporting data.

MANAGEMENT BOARD

The composition of the Company's Management Board as at 31 December 2023 was as follows:

• Grzegorz Pinkosz - President of the Management Board,

• Maciej Lubnauer - Vice-President of the Management Board,

• Robert Borys – Vice-President of the Management Board.

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

The Management Board operates on the basis of the Articles of Association of the Company, Regulations of the

Management Board and in accordance with adopted principles of corporate governance.

The Management Board handles the affairs of the Company. Led by the President of the Management Board, it manages

the Company and represents it before third parties. The manner of representation of the Company is specified in the

Articles of Association, according to which the persons authorised to make declarations of will and to place signatures

on behalf of the Company are the President of the Management Board individually or the Vice-President of the

Management Board jointly with a member of the Management Board.

Detailed principles of operation of the Management Board are specified in the Regulations of the Management Board,

published on the website www.toya.pl, in the tab: For investors - Materials for investors - Articles of Association,

regulations.

SUPERVISORY BOARD

The composition of the Company's Supervisory Board as at 31 December 2023 was as follows:

• Piotr Mondalski - President of the Supervisory Board,

• Jan Szmidt - Vice-President of the Supervisory Board,

• Dariusz Górka - Member of the Supervisory Board

• Grzegorz Maciąg - Member of the Supervisory Board,

• Wojciech Papierak - Independent Member of the Supervisory Board,

• Michał Kobus - Independent Member of the Supervisory Board,

Beata Szmidt - Member of the Supervisory Board.

Mr. Piotr Mondalski, Dariusz Górka and Grzegorz Maciąg served as Independent Members of the Supervisory Board

until February 2023. From February 2023, due to serving as Members of the Supervisory Board for more than 12 years,

Mr. Piotr Mondalski, Dariusz Górka and Grzegorz Maciąg lost the status of Independent Members of the Supervisory

Board.

AUDIT COMMITTEE

On 2 January 2023, the Supervisory Board made the following changes to the composition of the Audit Committee:

1. Supervisory Board dismissed from the Audit Committee of TOYA S.A. the following members:

a. Mr. Piotr Mondalski

b. Mr. Jan Szmidt

c. Mr. Grzegorz Maciąg

2. Supervisory Board appointed to the Audit Committee of TOYA S.A. the following member:

a. Mr. Wojciech Papierak

b. Mr. Michał Kobus

At the same time, the Supervisory Board entrusted the function of the Chairman of the Audit Committee to Mr. Wojciech

Papierak.

After the above-mentioned changes, the Audit Committee of TOYA S.A. consists of the following persons:

• Mr. Wojciech Papierak - Chairman of the Audit Committee

• Mr. Michał Kobus – Member of the Audit Committee

• Mr. Dariusz Górka – Member of the Audit Committee

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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The composition of the Audit Committee as at 31 December 2023 was as follows:

• Wojciech Papierak – Chairman of the Audit Committee, Independent Member of the Audit Committee

• Michał Kobus – Independent Member of the Audit Committee

• Dariusz Górka.

Dariusz Górka is the member of the Audit Committee with knowledge and skills in the field of accounting or auditing of

financial statements and in the industry in which "TOYA" S.A. specializes. Dariusz Górka is, inter alia, graduate of Stern

School of Business (New York, USA), where he had obtained an MBA degree in finance and acquired knowledge and

competencies in the area mentioned above. He remains the member of Institute of Management Accountants (IMA) in

Newark (New York, USA).

During the financial year 2023, a permissible non-audit service was provided to "TOYA" S.A. by the audit firm auditing

its financial statements, related to assessing the report on the remuneration of the Management Board and the

Supervisory Board for the period from 1 January 2022 to 31 December 2022, in terms of including information required

on the basis of relevant regulations, ending with the issuance of a report on the assessment. The Audit Committee

assessed the independence of the audit firm and agreed to provide the above-mentioned services.

The main role of the Audit Committee is to advise and support the Supervisory Board in carrying out its control and

supervisory duties concerning the widely understood financial reporting, including:

1) monitoring:

a) the Company’s financial reporting process,

b) the effectiveness of internal control, risk management, compliance and internal audit systems, including

with respect to the financial reporting,

c) monitoring of performing of financial revisions, in particular performing of an audit by an audit company,

taking into account any conclusions (motions) and arrangements of the Audit Supervision Committee

stemming from an audit (inspection) performed at an audit company;

2) controlling and monitoring of independence and impartiality of the chartered accountant (certified auditor)

and the entity entitled to examine financial statements, in particular in case other services than an audit are

provided for the benefit of the Company;

3) informing the Supervisory Board of audit results and explaining as to who did the audit contribute to

trustworthiness of financial reporting in the Company, and also what was the role of the Audit Committee in

course of the audit;

4) performing the evaluation of independence of the certified auditor and expressing consent for performing by

him of permitted services not constituting the audit within the Company;

5) developing the policy for selecting the auditing company to perform the audit;

6) developing a policy of performing by the auditing company performing the audit, entities related with the

auditing company and members of the auditing company’s corporate network of permitted services no

constituting the audit;

7) defining the procedure for selecting the auditing company by the Company;

8) presenting to the Supervisory Board of recommendation, as required under Art. 16.2 Regulation (EU) No

537/2014 of the European Parliament and of the Council of 16 April 2016 on specific requirements regarding

statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (i.e. Official Journal

of European Union L 158 of 2014, page 77), in line with policies referred to above in items 5 and 6;

9) presenting recommendations aimed at ensuring reliability of the financial reporting process within the

Company,

10) performing other activities vested with audit committees pursuant to Act of 11 May 2017 on certified auditors,

auditing companies and public oversight.

Main assumption of the Policy on appointing the Audit Firm to audit financial statements adopted by the Company are

as follows:

• selection of the audit firm conducting the statutory audit should be held in accordance with the Policy on

appointing the Audit Firm to audit financial statements adopted by the Company;

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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• the selection decisions are taken in the form of a resolution of the Supervisory Board, no later than by the end

of December of the year proceeding the year which will be subject to an audit, provided that selection of the

audit firm for 2018 was made by 30 March 2018;

• Audit Committee is entrusted with conducting the selection procedures, in accordance with applicable

regulations and Policy on appointing the Audit Firm to audit financial statements;

• selection of the audit firm conducting the statutory audit is performed upon providing the recommendation

for selection by the Audit Committee to the Company’s Supervisory Board. When selection does not relate to

extension of an existing audit contract, the recommendation submitted by the Audit Committee should contain

at least two candidates, along with reasoning and indication of justified preferred option;

• in case of statutory audit, the first audit contract should be executed for a period not shorter than 2 years, with

an option to be extended by subsequent, at least 2-year period, considering obligations to rotate audit firm

and key certified auditor resulting from generally applicable legislations;

• while selecting the audit firm, principle regarding change of audit firm should be taken into consideration,

according to which the maximum duration of continuous engagements of statutory audits, carried out by the

same audit firm or an audit firm associated with that audit firm or any member of the network operating in the

Member State of the European Union of which the audit firms belong, may not exceed 5 years. In case of key

certified auditor, the maximum period during which the key certified auditor can provide statutory audit

services shall not be longer than 5 consecutive years. Key certified auditor may again perform the statutory

audit of the Company’s financial statement at least 3 years after the end of the last statutory audit;

• the following criteria are applied while selecting the audit firm to perform audit of the financial statements:

a) proposal submitted by audit firm does not qualify for rejection under Article 9 point 4 of the Policy on

appointing the Audit Firm;

b) audit firm has the ability to provide required audit procedures in foreign subsidiaries of TOYA S.A. Capital

Group;

c) audit firm has:

− knowledge and international connections which can be utilized in proper execution of the audit;

− experience in auditing financial statements of companies listed on the stock exchange, within the

meaning of Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to

Organized Trading and Public Companies of 29 July 2005, preparing their financial statements in

accordance with International Financial Reporting Standards;

− personnel resources consisting of, among others, individuals being members of international

association of finance, accounting and management professionals – ACCA;

− adequate expert knowledge and knowledge of the industry in which the Company operates;

d) audit firm provides the Company, the Supervisory Board and the Audit Committee current and direct access

to the key certified auditor;

e) audit firm uses common IT tools and has experience in auditing accounting records maintained in SAP

system;

f) audit firm has its head office, branch or offices in Wrocław;

g) during the duration of the audit contract, audit firm enables the Company to perform assessment of

significant matters subject to the audit;

h) audit firm submits a proposal containing elements referred to in Article 12 point 4 of the Policy on

appointing the Audit Firm;

i) price, however price offered by audit firm is not a decisive factor;

j) impartiality, objectivity, integrity and independence of the audit firm;

• in case any circumstances indicating possible influence of third parties on the auditor’s selection procedure are

detected or disclosed, an individual who is associated with these circumstances shall immediately refrain from

performing any activities related to the auditor selection procedure and inform the Audit Committee;

• the Management Board signs the agreement with audit firm appointed by the Supervisory Board

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

Main assumption of the Policy on providing non-audit allowed services by audit firm performing the audit or an audit

firm associated with that audit firm or any member of the network operating in the Member State of the European

Union of which the audit firms belong are as follows:

• the policy is developed by the Audit Committee and is addressed to all entities of TOYA S.A. Capital Group;

• a statutory auditor or an audit firm carrying out the statutory audit of TOYA S.A. entity or Group, or any member

of the network to which the statutory auditor or the audit firm belongs, shall not directly or indirectly provide

to the audited entity, to its controlled undertakings within the Group any prohibited non-audit services

including:

a) tax services relating to:

− preparation of tax forms;

− payroll tax;

− customs duties;

− identification of public subsidies and tax incentives unless support from the statutory auditor or the

audit firm in respect of such services is required by law;

− support regarding tax inspections by tax authorities unless support from the statutory auditor or the

audit firm in respect of such inspections is required by law;

− calculation of direct and indirect tax and deferred tax;

− provision of tax advice;

b) services that involve playing any part in the management or decision-making of the audited entity;

c) bookkeeping and preparing accounting records and financial statements;

d) payroll services;

e) designing and implementing internal control or risk management procedures related to the preparation

and/or control of financial information or designing and implementing financial information technology

systems;

f) valuation services, including valuations performed in connection with actuarial services or litigation support

services;

g) legal services, with respect to:

− the provision of general counsel;

− negotiating on behalf of the audited entity; and

− acting in an advocacy role in the resolution of litigation;

− services related to the audited entity's internal audit function;

h) services linked to the financing, capital structure and allocation, and investment strategy of the audited

entity, except providing assurance services in relation to the financial statements, such as the issuing of

comfort letters in connection with prospectuses issued by the audited entity;

i) human resources services, with respect to:

− management in a position to exert significant influence over the preparation of the accounting records

or financial statements which are the subject of the statutory audit, where such services involve:

o searching for or seeking out candidates for such position; or

o undertaking reference checks of candidates for such positions;

− structuring the organisation design; and

− cost control.

• statutory auditors and the audit firms shall be allowed to provide certain tax and valuation services when such

services are immaterial or have no direct effect, separately or in the aggregate, on the audited financial

statements. Where such services involve aggressive tax planning, they should not be considered as immaterial.

A statutory auditor or an audit firm should be able to provide non-audit services, in the scope not related to

the tax policies of the Company and/or the TOYA S.A. Group, which are not prohibited under the existing laws

and regulations and which include:

a) services performed in connection with the prospectuses issued by the audited entity, conducted in

accordance with the national standard of related services and consisting in conducting the agreed

procedures:

− of conducting due diligence procedures with regard to economic-financial condition;

− issuing letters certifying;

b) assurance services with regard to pro forma financial information, forecasts of results or estimated results,

published in the prospectus issued by the audited entity;

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

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c) examination of historical financial information to of the Prospectus mentioned in the Regulation of the

Commission (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European

Parliament and of the Council as regards information contained in prospectuses as well as the format,

incorporation by reference and publication of such prospectuses and dissemination of advertisements (EU

Journals of Laws L of 2004, no. 149, page 1 – repealed) – currently Regulation (EU) 2017/1129 of the

European Parliament and of the Council of 14 June 2017 on the prospectus to be published in connection

with the public offering of securities or admission to trading on a regulated market and repealing Directive

2003/71/EC ( i.e., EU Journal of Laws L of 2017, No. 168, p. 12) and Commission Delegated Regulation (EU)

2019/980 of 14 March 2019, supplementing Regulation (EU) 2017/1129 of the European Parliament and of

the Council, regarding the format, content, verification and approval of the prospectus to be published in

connection with the public offering of securities or their admission to trading on a regulated market, and

repealing Commission Regulation (EC) No 809/2004 (i.e. EU Journals of Laws L of 2019, No. 166, p. 26);

d) verification of consolidation packages;

e) confirmation of fulfilment of conditions of the concluded loan contracts on the basis of the analysis of

financial information coming from financial statements audited by a given audit firm;

f) assurance services in reporting concerning corporate governance, risk management and corporate social

responsibility;

g) services consisting in assessment of compliance of information revealed by financial institutions and

investment companies with the requirements with regard to disclosing information concerning capital

adequacy and variable remuneration;

h) certification concerning reports or other financial information for supervision bodies, the supervisory board

or other supervisory authority of the company, or owners, exceeding the scope of the statutory audit, to

help these authorities to perform their statutory duties;

• services other than audit services are provided in accordance with the independence requirements specified

for those services in professional ethics principles and standards of providing such services;

• entities providing non-audit services shall have a critical attitude and alertness towards conditions that may

indicate a possible distortion or behaviours contrary to binding regulations in the area of provided services;

• when the statutory auditor or the audit firm provides to the audited entity, its parent undertaking or its

controlled undertakings, for a period of three or more consecutive financial years, non-audit services other

than those referred to in point 3 of this Policy, the total fees for such services shall be limited to no more than

70 % of the average of the fees paid in the last three consecutive financial years for the statutory audit(s) of

the audited entity and, where applicable, of its parent undertaking, of its controlled undertakings and of the

consolidated financial statements of TOYA S.A. Capital Group of undertakings;

• providing permitted non-audit services is allowed only subject to the approval of the Audit Committee by the

mean of appropriate resolution. The Audit Committee may approve providing permitted non-audit services if

there is a justified need to use such services by one of the Company’s bodies, after it has properly assessed

threats to independence and the safeguards applied in accordance with Articles 69-73 of the Act of 11 May

2017 on Statutory Auditors, Audit Firms and Public Oversight

Due to the fact that selection of audit firm in 2023 did not concern the extension of the contract for the audit of the

financial statements, but the recommendation of the "TOYA" S.A. Audit Committee regarding the establishment of an

audit company auditing the financial statements of "TOYA" S.A. in the years 2023, 2024 and 2025, it met the applicable

conditions and was prepared following the selection procedure organized by the Company that met the applicable

criteria, consisting of:

• inviting any audit firms to submit proposals for the provision of the statutory audit service on the condition

that Article 17(3) of the Regulation (EU) no 537/2014 of the European Parliament and of the Council of 16 April

2016 on specific requirements regarding statutory audit of public-interest entities and repealing Commission

Decision 2005/909/EC;

• organization of the tender process does not in any way preclude the participation in the selection procedure

of firms which received less than 15 % of the total audit fees from public-interest entities in the Member State

concerned in the previous calendar year, included in the list of the audit firms, referred to in Article 91 of the

Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight;

• the audited entity shall prepare tender documents for the attention of the invited audit firms. Those tender

documents shall allow them to understand the business of the audited entity and the type of statutory audit

that is to be carried out. The tender documents shall contain transparent and non-discriminatory selection

TOYA S.A. CAPITAL GROUP

Report on operations for the period of 12 months ended 31 December 2023

_______________________________________________________________________________________

criteria that shall be used by the audited entity to evaluate the proposals made by statutory auditors or audit

firms;

• the audited entity shall be free to determine the selection procedure and may conduct direct negotiations with

interested tenderers in the course of the procedure;

• the audited entity shall evaluate the proposals made by the audit firms in accordance with the selection criteria

predefined in the tender documents

• the Company shall prepare a report on the conclusions of the selection procedure, which shall be approved by

the resolution of the Audit Committee;

• the Company and the Audit Committee shall take into consideration any findings or conclusions of annual

report, referred to in article 90 point 5 of the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public

Oversight;

• At the request of the Financial Supervision Authority (KNF), the Company shall prove that the selection

procedure was conducted in accordance with the requirements referred to in Article 130 points 2 and 3 of the

Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight.

During 2023, the Audit Committee held two meetings.

26.12. Description of diversity policy applied for administrative bodies, managing

and supervising the Issuer as regards the aspects such as, for example, age,

gender or education and experience, aims of this policy, ways of its

realization and results in the particular reporting period (and in case the

Company does not apply such policy, explanation of the reasons for such

decision)

The Company did not prepare and does not pursue a diversity policy. The position of the Company’s Management Board

is that the sole criterion for appointing persons to perform functions in the Company’s authorities and its key

management is the experience and competence of the candidates for performing the given functions. The Company

declares that it will consider developing a diversity policy in the future.

Management Board of Toya S.A.

Date

Name and surname

Position

Signature

28.03.2024

Grzegorz Pinkosz

President of the

Management Board

28.03.2024

Maciej Lubnauer

Vice-President of the

Management Board

28.03.2024

Robert Borys

Vice-President of the

Management Board