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Letter of the President of the Management Board to the Shareholders

Dear Shareholders,

On behalf of the Management Board of Toya S.A., I am providing you with the annual report of the Company summarising its activities in 2020. The past period will be remembered by all of us as the year of the global COVID-19 pandemic and disturbances to the global economy associated with it. Despite such unfavourable circumstances, I am pleased to provide you with the annual report of the Company for the year in which the Company not only maintained its strong business position but also strengthened its market presence in several areas. The Company achieved record results in its history with sales of over PLN 442 million and a net profit of almost PLN 55 million.

The greatest influence on the achievement of good financial results had the increase in sales in each distribution channel. The wholesale channel and the export channel increased sales by approximately PLN 30 million in comparison to the previous year. The retail channel (mainly e-commerce) recorded the sales dynamics of over 72%, increasing sales by PLN 14 million. The development of this channel was supported by a noticeable trend in the development of digital services caused by the introduced restrictions in the functioning of the economy related to the COVID-19 pandemic. The Company achieved such good results by expanding its product offer, acquiring new customers and maintaining high quality customer service.

Products offered by the Company are sold under 6 private label brands, of which the most recognisable and valued among customers is Yato. The value of products sold under this brand amounted to over PLN 282 million in 2020 which accounted for 64% of total revenue and shows a steady upward trend. This trend is likely to continue in future years.

Toya S.A. is the parent company of a rapidly growing capital group. The newly established Chinese company Yato Tools (Jiaxing) won the tender for the rights to the land property, purchased it and commenced the process of building the warehouse, while starting normal operations. The erection of the warehouse will redefine the logistics chain in the Group.

We achieved operational success in the past year and built a solid foundation for the Company's growth in the coming years. The COVID-19 pandemic in Poland, Europe and other regions of the world had little negative impact on Toya S.A.'s development, although it required redefinition of many operational processes both within the Company and with regard to external partners located in different parts of the world. The effort of the state authorities to combat the pandemic observed in the past weeks gives hope for its relatively quick end, however it cannot be ruled out that its prolongation can affect the Company's operations which can limit or even prevent its intensive development. Due to the very dynamic nature of this phenomenon, however, the impact on financial performance is impossible to assess at present.

We achieved a joint success for which, on behalf of the Management Board, I would like to thank all shareholders, customers, suppliers and Company’s employees without whom it would not have been possible to achieve such good results. I am convinced that your continued support, as well as the development strategy successfully implemented for several years now, will contribute to the achievement of good results in 2021 as well. I invite you to read the Annual Report.

President of the Management Board

Garzegorz Pinkosz