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 Toya Capital Group 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 Toya Capital Group. It was a year in which the Group not only maintained its strong business position but also strengthened its market presence in several areas. The Group achieved record results in its history with sales of over PLN 542 million and a net profit of almost PLN 65 million.

The greatest influence on the achievement of good financial results had the increase in sales in each distribution channel. However, the wholesale channel and retail sales (mainly e-commerce) deserve special attention. In case of the first channel, we sold PLN 47 million more in comparison to the previous year and in case of the second channel we achieved a sales increase of PLN 14 million which is an increase of as much as 66% in comparison to the previous period. The development of e-commerce was supported by a noticeable trend in the development of digital services around the world caused by restrictions in the functioning of many economies which was related to the COVID-19 pandemic.

Subsidiaries also made a large contribution to the Group's strong financial performance. The Chinese subsidiary, Yato Tools (Shanghai), increased sales in both the wholesale and export channels in comparison to the previous year, thereby strengthening its position in the supply chain, strengthening its relationships with local suppliers and optimising its operational processes. The second Chinese company Yato Tools (Jiaxing) won the tender for the rights to a land property, purchased it and started the process of building a warehouse, while starting normal operations. The European subsidiary, Toya Romania, also achieved very good financial results. Sales of this company increased by more than 28% and net profit increased by almost 50%. This company took full advantage of new competences related to the use of a modern, larger warehouse enabling it to present a broader offer to customers and ensure the availability of all products offered.

However, the development of the COVID-19 pandemic in Poland, Europe and other regions of the world, despite the efforts of many countries, can have an impact on the Group's activities and can limit or even prevent its intensive development. However, due to the very dynamic spread of the pandemic, its nature and geographical diversity, the impact on financial performance cannot be estimated at present.

Last year, we achieved operational success and built a solid foundation for the development of the Capital Group in the coming years despite the COVID-19 pandemic in Poland, Europe and other regions of the world. The Group made good use of the development expenditure incurred and gained new competencies. This process will continue in the coming years.

We achieved a joint success for which, on behalf of the Management Board, I would like to thank all shareholders, business partners and Group 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 next year. I invite you to read the Annual Report.

President of the Management Board

Grzegorz Pinkosz