Dear Sirs,

The Śnieżka Group has been consistently implementing the development strategy, which is based on long-term building of the leader position in the sector of decorative paints on the Central and Eastern European markets. Both the year 2018 and the beginning of this year were sometimes very intense for our Group and in many aspects, landmark.

In February 2019, we finalized negotiations with the owners of Poli-Farbe Vegyipari Kft. - a company with an established position in the sector of decorative paints for internal purposes in Hungary, which has one of the most recognizable paint brands on the market in its portfolio. Together with Antala Szabó - the founder and managing director of Poli-Farbe - we devoted a lot of time to work out a cooperation model guaranteeing further dynamic development of both our companies based on mutual understanding and respect. I can say with satisfaction that we have achieved this goal.

The purchase of a majority interest in Poli-Farbe, for approx. PLN 108 million, is the largest capital transaction in the history of our Group and is a "new opening" for it. Not only will the finalization of this transaction change the gradation of markets in the sales structure (as yet the second Ukrainian market will give way to the Hungarian one), but may ultimately be the key to Śnieżka's expansion on the markets of Southern Europe. Importantly, the acquisition of shares in Poli-Farbe diversifies the Group's sales markets, reducing the potential risks associated with the situation in Ukraine and Belarus, which will become our markets number three and four.

Less than a year earlier, we made a smaller transaction on the Polish market, taking over the majority interest in Radomska Fabryka Farb i Lakierów SA - specializing in the manufacture of anticorrosive primers and topcoats.

The year 2018 was record-breaking in terms of investment. The Group's expenditures for this purpose amounted to PLN 69.7 million and were 122.6% higher than a year earlier. In addition to the implementation of strategic transactions, we have consistently invested in the Group's organic development - infrastructure and new management solutions. We’ve already completed the modernization of colour paint lines and other important automation activities in production facilities. We can also boast about the effects of actions taken in collaboration with SAP in the area of digital transformation. The first implementations - including tools supporting management of cooperation with customers or supporting marketing activities - confirm the legitimacy of the investment made. Further projects scheduled under the Change IT project are a space for designing subsequent competitive advantages of Śnieżka as regards modern methods of management of sales tools and customer relations - both business and final. The accumulation of investments is also connected with the construction of our new Logistics Center, which in 2021 will allow us to more efficiently and more effectively supply the market with our products.

Despite the record high development expenses, we are well prepared to carry out investment tasks scheduled for 2019 and subsequent years. This is reflected by the figures presented in this Statement - the Group's revenues and profits are growing, and debt ratios remain at a safe level. Moreover,Śnieżka intends to proceed with paying dividends to share its success with the shareholders. In 2018, the Company paid almost PLN 27.8 million, and over 15 years of its operation at the WSE, a total of over PLN 336 million in dividends.

In 2018, we celebrated our 15th anniversary at the Stock Exchange, where we remain the only company in our business field. In 2019, Śnieżka is to celebrate the 35th anniversary of its formation. For us, it was a period of intense growth, as well as a long road abundant in bold decisions. It is even more satisfying for us that 2018 is already the second reporting period in the history of our parent company, which we finish as the market leader of paints and varnishes in Poland - both in value and quantity terms, in the segment of decorative products.

Today, having over 1,100 employees aboard and being a leader, not only on the Polish market of paints and varnishes, we can proudly summarize the road we have already made over the last 35 years.

Despite our past achievements, we still have ambitious goals ahead of us. First, after closing the transaction, we plan to commence the integration process of Poli-Farbe with our Group. In the course of the above mentioned work, we aim at achieving synergies in the area of purchases (including raw materials and packaging), research and development, as well as in the area of marketing and sales. After completing the integration and achieving the anticipated synergy effects, most likely in the next few years, we will analyse together with the management of Poli-Farbe markets geographically similar to the Hungarian one, to recognize the possibilities of increasing export sales on the Southern European markets.

Thank you very much to everyone who contributed to the development of the Śnieżka Group in the next year of essential challenges. The challenges, we have met together.

Piotr Mikrut
President of the Management Board