MANAGEMENT BOARD’S REPORT ON THE ACTIVITIES · Zakłady Tłuszczowe „Kruszwica” S.A. Management Board’s Report on the activities of the Company for 12 months ended 31 December

MANAGEMENT BOARD’S REPORT ON THE ACTIVITIES

of Zakłady Tłuszczowe

“Kruszwica” Spółka Akcyjna

for the 12 months ended 31 December 2016

Kruszwica, 14 March 2017

Zakłady Tłuszczowe „Kruszwica” S.A.

Management Board’s Report on the activities of the Company for 12 months ended 31 December 2016

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CONTENTS:

1. GOODS AND PRODUCTS SOLD BY THE COMPANY ..................................................................................... 3

2. SALES MARKETS AND SUPPLY SOURCES .................................................................................................... 7

3. MAJOR R&D ACHIEVEMENTS .......................................................................................................................... 8

4. CURRENT AND FORECAST FINANCIAL POSITION OF THE COMPANY .................................................... 10

5. ORGANIZATIONAL OR CAPITAL RELATIONS OF THE COMPANY .............................................................. 12

6. TRANSACTIONS WITH RELATED PARTIES NOT CARRIED OUT ON AN ARM'S LENGTH BASIS............. 12

7. CONTRACTS MATERIAL FOR THE COMPANY'S BUSINESS OPERATIONS .............................................. 13

8. LOAN AND CREDIT FACILITY AGREEMENTS CONCLUDED AND TERMINATED ...................................... 13

9. ORIGINATED LOANS ...................................................................................................................................... 14

10. GUARANTEES AND SURETIES GRANTED AND RECEIVED........................................................................ 14

11. PROCEEDS FROM ISSUES OF SHARES....................................................................................................... 14

12. EXPLANATION OF DIFFERENCES BETWEEN ACTUAL FINANCIAL PERFORMANCE AND

PREVIOUSLY PUBLISHED PROJECTIONS FOR THE GIVEN FINANCIAL YEAR ........................................ 14

13. RISKS AND THREATS ..................................................................................................................................... 14

14. MANAGEMENT OF FINANCIAL ASSETS AND DEFINING OF POSSIBLE THREATS ................................... 15

15. EVALUATION OF THE FEASIBILITY OF INVESTMENT PROJECTS, INCLUDING CAPITAL

INVESTMENTS ................................................................................................................................................ 15

16. NON-TYPICAL EVENTS THAT AFFECTED 2015 PERFORMANCE AND THE RANGE OF THEIR

IMPACT ............................................................................................................................................................ 16

17. FACTORS MATERIAL FOR THE COMPANY'S GROWTH AND BUSINESS DEVELOPMENT

PERSPECTIVES .............................................................................................................................................. 16

18. CHANGES IN KEY BUSINESS MANAGEMENT PRINCIPLES........................................................................ 17

19. AGREEMENTS CONCLUDED BY THE COMPANY WITH MEMBERS OF ITS MANAGEMENT,

PROJECTING COMPENSATION IN CASES THEY RESIGN OR ARE DISMISSED WITHOUT A VALID

REASON OR WHEN DISMISSED OR LAID OFF DUE TO COMBINATION THROUGH ACQUISITION ........ 17

20. REMUNERATION, BONUSES AND OTHER BENEFITS RECEIVED BY PERSONS RESPONSIBLE FOR

MANAGEMENT AND SUPERVISION OF THE COMPANY ............................................................................. 17

21. TOTAL NUMBER AND FACE VALUE OF ALL SHARES IN THE COMPANY AND ITS RELATED PARTIES

HELD BY THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES ..................................... 17

22. CONTRACTS KNOWN TO THE COMPANY THAT MAY RESULT IN FUTURE CHANGES IN ITS SHARE

CAPITAL/BONDS STRUCTURE ...................................................................................................................... 17

23. EMPLOYEE STOCK OWNERSHIP PLAN CONTROL SYSTEM ..................................................................... 18

24. PROCEEDINGS PENDING BEFORE COURT, ARBITRATION AUTHORITY OR PUBLIC

ADMINISTRATION AUTHORITY ...................................................................................................................... 18

25. ACQUISITION OF TREASURY SHARES ........................................................................................................ 18

26. INFORMATION ON COMPANY’S PLANTS ..................................................................................................... 18

27. RISK HEDGING INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND METHODS

ADOPTED BY THE COMPANY ........................................................................................................................ 18

28. CONTRACTS CONCUDED BY THE COMPANY WITH AN ENTITY AUTHORIZED TO AUDIT FINANCIAL

STATEMENTS .................................................................................................................................................. 18



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1. GOODS AND PRODUCTS SOLD BY THE COMPANY

(By volume and by value with share of each product, good or service [if material l] or their groups in total sales and the related

changes)

Information on products, services and goods offered by the Company

Zakłady Tłuszczowe “Kruszwica” Spółka Akcyjna (hereinafter referred to as the “Company” or “ZT Kruszwica S.A.”) is a vertically integrated manufacturer of vegetable oil-based products. Its core business includes extraction of rapeseed oil, refining (purification) of vegetable oil produced and purchased by the plant, processing of vegetable oils and fats aimed at modification of their physical and chemical characteristics (hydrogenation, esterification) and manufacturing of margarine, vegetable fats and oils. The Company sells products manufactured in all processing stages, as well as by-products and goods purchased from other manufacturers.

Key products manufactured by the Company

Bottled oils Bottled vegetable oils sold in unit packaging up to 10 l for individual users (consumers)

Consumer margarines Edible fat and water emulsions with 20-82% fat contents to be used in households, wrapped in plastic film or cups up to 1 kg of weight

Industrial margarines Products used in manufacturing of food, mainly in bakery, packed in boxes up to 10 kg of weight

Industrial fats Supplies used in food production (bakery, dairy and other industries) sold in 10 kg blocks or bulk-packaged

Raw and refined oils Vegetable oils (mainly rapeseed oil) of various refinement, sold as bulk for manufacturers of food and bio-components

Rapeseed meal By-product of oil seed processing, a component of animal feed. The main recipients of rapeseed meal on the domestic market are animal feed producers and breeding farms; the main customers on foreign markets are predominantly trade companies.



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Sales performance analysis 2016

2016

Change

compared to the previous year

PLN ‘000 Tonnes

[k] Share (*) PLN ‘000 Tonnes [k]

Raw and refined oils 815 122 246 25.26% 73 668 -5

Rapeseed meal 393 452 459 47.13% -50 393 -44

Bottled oils 508 584 106 10.90% 12 915 -5

Consumer margarines 384 647 79 8.14% -13 050 -8

Industrial margarines 105 413 28 2.87% 1 131 0

Industrial fats 162 927 38 3.90% 17 031 1

Other 16 365 18 1.80% -3 714 6

Total sales 2 386 509 975 100% 37 587 -54

Including domestic sales

Raw and refined oils 723 153 218 22.40% 37 796 -13

Rapeseed meal 327 907 386 39.63% 1 966 10

Bottled oils 432 408 90 9.27% 8 178 -5

Consumer margarines 277 465 61 6.29% -12 033 -5

Industrial margarines 90 784 24 2.45% -1 103 0

Industrial fats 137 893 33 3.34% 14 465 1

Other 10 118 16 1.60% -959 5

Total domestic sales 1 999 728 828 84.97% 48 310 -7

Including export

Raw and refined oils 33 400 9 0.94% -22 242 -10

Rapeseed meal 64 296 72 7.35% -53 608 -55

Bottled oils 54 020 11 1.11% 3 793 1

Consumer margarines 32 763 10 1.00% -573 -1

Industrial margarines 14 628 4 0.42% 2 234 0

Industrial fats 25 034 5 0.56% 2 566 0

Other 1 750 1 0.05% 771 0

Total export sales 225 890 112 11.44% -67 059 -64

Including sales of goods

Raw and refined oils 58 569 19 1.92% 58 114 19

Rapeseed meal 1 249 1 0.15% 1 249 1

Rapeseed 1 670 1 0.10% 991 1

Bottled oils 22 156 5 0.53% 944 0

Consumer margarines 74 419 8 0.85% -444 -2

Industrial margarines 0 0 0.00% 0 0

Industrial fats 0 0 0.00% 0 0

Międzychód 0 0 0.00% -2 857 0

Other 2 827 0 0.04% -1 660 0

Total sale of goods 160 891 35 3.59% 56 336 17

* share in total sales



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Bottled oils

In 2016 the Company sold 106,000 tonnes of packed oils, i.e. about 5 per cent less compared with the previous year. The Company’s products represented 95 per cent of the total sales of bottled oils. Although the sales volumes dropped (-5 per cent), the values in 2016, as compared to 2015, went up by nearly 3 per cent as the average prices rose. The rise was the effect of lower supplies of raw materials in the Polish and European markets which pushed the prices of rapeseed oil up.

The Company continued activities aimed at the strengthening of the market standing of two packed oil brands:

a. Kujawski – brand value enhancement through:

Developing the Kujawski oil varieties (marketing a new series of cold pressed oils comprising 4 varieties of products)

marketing a new series of marinades comprising 4 varieties of products

Advertising campaign on TV

Continuation of CSR campaign "Z Kujawskim Pomagamy Pszczołom" aimed at educating

consumers with regard to protection of bees

Enhancing brand identification on Internet, in particular:

i. Development of the cuisine portal for Kujawski, www.zpierwszegotloczenia.pl including

over 20,000 opinions and advice regarding preparation of tasty and healthy meals based on Olej Kujawski oil

ii. Implementing and promoting FOODER application (at www.fooder.pl and through a mobile application) allowing the building of customized cooking books through adding of recipes from various sources

All the brand-development activities undertaken over the years gave the Kujawski oil brand the 1st place among the most valuable Polish food brands in the annual Rzeczpospolita daily ranking.

b. Oliwier - building the market position through:

Marketing a new series of 3 varieties of Oliwier oil: sesame seed, pistachio and peanut with rapeseed oil

Building consumer awareness and culinary context through TV presence and sponsoring

Initiatives targeting trade clients, aiming to increase the presence of Oliwier oil in shops

The Company increased the sales of bottled oils on the Polish market and other European markets.

The Company continued participation in the “Fall in Love with Rapeseed Oil” programme carried out by the

Polish Association of Oil Producers of which the Company is a member. The second edition of the programme

was launched in mid-2015. The Programme has been run for 3 years in the Polish and Slovakian markets. The

objective of the Programme is to develop consumer awareness of nutritional value and health benefits of

rapeseed oil.

According to ACNielsen (ACN), in the period from November 2015 to November 2016, the packed oil market in

Poland (including olive oil) did not change significantly in terms of volume, while its value increased by about 4

per cent year on year. The market value increase was related to a rise in retail prices, caused by a global

appreciation of prices of supplies. In 2016, the Company’s share on bolted oil market was 34 per cent (according

to ACN, volume data), i.e. dropped by one percentage point compared to 2015.

Consumer margarines

In 2016 the Company sold 79,000 tonnes of consumer margarines, about 9 per cent less compared with

the previous year. About 72 per cent of the margarines was sold on the domestic market. In 2016 the consumer

margarines market in Poland decreased by 8 per cent compared with 2015. Exports amounted to 10,000 tonnes,

i.e. decreased by 7 per cent compared with 2015. The key sales markets were Georgia, Hungary, Romania,

Slovakia, Macedonia and the Baltic States.

The main reason for the drop in the sales of margarines was a slump in the margarine and vegetable mix market (on average by 10% in volumes) and a considerable drop in the importance of private brands. .

The Company's strategy in the table margarine segment was based on development of three strategic brands:

Smakowita, Słynne MR and Optima. As the value of the products continued to grow, the Company revived the

entire Smakowita brand: recipes were improved, the product’s benefits were emphasized and packages were

redesigned. We kept developing our cholesterol-lowering spreads by marketing a new variety of Optima Cardio

Potas+ which not only lowers the cholesterol levels, but also helps maintain normal blood pressure. Continuing

http://www.zpierwszegotloczenia.pl/



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the building of product value, we have launched two new Premium segment brands: Finuu and Naturima,

responding to the growing needs of consumers related to the purchase of natural, unprocessed food products.

In 2016 the Company continued a rapid increase in production of private label products for key discount

networks in Poland, including Biedronka and Lidl, and maintained the key player position on the market.

Based on price as the key criterion, the domestic market of margarines and vegetable mixes may be divided into

three segments:

- Premium segment to include Optima, Finuu and Naturima

Optima – margarine with health-promoting properties, offering cholesterol-reducing products, such as Optima

Cardio and Optima Cardio Potas + and preventive products Optima Omega 3, Optima DHA. The brand

was accompanied with another edition of the promotion campaign carried out in Internet, TV, POS materials

and actively supported by trade-marketing actions.

Finuu is a mix of butter and natural oils (rapeseed and camelina), combining the quality of butter with Omega-3

fatty acids, the first of the type in the margarine portfolio. The Finuu brand was strongly supported by

Internet and TV spots, POS materials and trading promotions.

Naturima is another innovative product in the premium product offer. This is high-quality 82% margarine with

first-press rapeseed oil as the key ingredient, without preservatives or additives. The Naturima was

supported with a number of promotion actions.

- Mainstream segment, where the Company offers Smakowita, Słynne Masło Roślinne MR, Pyszny Duet,

and “Z Kruszwicy” margarine blocks. In this segment, marketing activities focused on development of

Smakowita, which repeated the record sales level in 2016. The performance resulted from a long-term

strategy and implementation of appropriate advertisement activities, to include a campaign on TV, in Internet

and POS, as well as the use of relevant pro-selling tactics supported by a number of promotions.

The year 2016 was important for the Słynne MR brand, which became available in Biedronka outlets and

thus reached the group of discount store customers. .

- Economy segment, offering products for which the price is the key selection criterion. This segment included

among others Ola, Ewa, Marcysia and Dobry z masłem margarines.

In terms of consumer use, the domestic table margarine and mix market is divided into two categories:

- Bread spreads in cups, including products such as Smakowita, Optima, Masmix, Słynne MR, Pyszny

Duet, Finuu, Naturima, Ekstra Pomorski, Benevita, Ola, Marcysia, Ewa.

- Cooking margarines (in blocks) used for baking, cooking and frying, including Palma z Kruszwicy, Mleczna

z Kruszwicy and Zwykła z Kruszwicy.

According to ACN, during the 12 months from November 2015 and November 2016 (MAT), the table margarine

and mix market in Poland decreased by nine percent in terms of volume and seven in terms of value year on

year. The total share of brands offered by ZT Kruszwica S.A. and Bunge Poland in the margarine and mix market

approximated 27,5 percent in period from November 2015 to November 2016 (ACN, volume data).

Industrial fats and margarines

In 2016 the Company supplied the market with 56 thousand tonnes of margarines and fats for industrial clients,

which was 1 percent more than in the preceding year. Export exceeded 9 thousand tonnes and was similar to

the previous year's performance.

The performance results from high marketing and trading activity, maintaining of high quality of products and

developing of new ones in line with global nutrition trends and customers' expectations.

The Company continues to strengthen its position of the top provider of industrial margarines to the baking industry, by developing the programme dedicated to the bakery and confectionery circles – Akademia Mistrza. The Company actively builds its position and develops sales in the HoReCa channel (hotels, restaurants, catering) and in 2016 expanded the range of industrial frying fats offered to restaurants by 4 new products.

Raw and refined oils

In 2016 the Company sold a total of 246,000 tonnes of raw and refined oil which is a 5,000 tonnes decrease compared with 2015, with a drop in export of 10,000 tonnes and domestic sales growth of 5,000 tonnes. This



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slight drop in sales was mainly the effect of a considerably lower level of seeds processed in 2016 following a negative balance of seeds harvested in 2015 and lower production of oil from the seeds harvested in 2016. Lower production of own oils was partially compensated by purchased oil and therefore the drop in the sales of oil is not as considerable as the drop in seed processing might suggest.

Still, a vast majority of raw and refined oil is sold to domestic clients.

The increase in sales of raw and refined oil resulted mostly from a growth in the domestic demand for vegetable oils and the Company’s activity.

Rapeseed meal

Sales of rapeseed meal in 2016 amounted to 459,000 tonnes and were 43,000 tonnes lower than in 2015. This drop was mainly the effect of considerably lower levels of processed seeds in 2016.

2. SALES MARKETS AND SUPPLY SOURCES

Sales markets

(Divided into domestic and foreign markets, defining dependence on one or more clients, names (companies), shares in sales, formal relations between clients with at least 10 percent share in the total sales revenue and the Company)

Consumer products

In 2016 the Company sold its oils and margarines on the domestic market through all key distribution channels, both indirect (distributors) and direct (sales networks).

Sales of packed oils (including own products supplied to trade networks) were mostly performed in the modern channel. The market share of bottled oils sold on the Polish market remains stable at approximately 35%. In 2016 the oils manufactured by the Company were available in 95% of shops in Poland. According to AC Nielsen, the most available brand was Olej Kujawski.

The Company also sold bottled oils in Latvia, Lithuania and Estonia, as well as Israel, both as own brands and other brands of the Bunge companies in Europe.

Industrial products

The sales of industrial margarines and industrial fats in Poland were performed by a network of approx. 65 specialized distributors delivering products to bakeries, small and medium-sized food manufacturing plants (38 distributors). The sales to the HoReCa market were carried out via 25 distributors. Large food manufacturers bought these products directly from the Company.

Export of industrial margarines and other fats was performed through a shared distribution channel with deliveries to approx. 40 clients in Europe. In 2016, the Company became more active on the markets in the Czech Republic, Slovakia and Hungary.

Raw and refined oils

In 2016 the Company supplied raw oils to domestic and foreign manufacturers of bio-components. Germany was the key export market.

In 2016, the Company remained the leading supplier of oil for the domestic bio-fuel industry.

Most bulk refined oils were sold on the domestic market, mainly to the food industry. Refined oils were exported to the Ukraine, Lithuania and Latvia.

Rapeseed meal

The domestic sales of rapeseed meal constituted 84 per cent of the total sales in Poland in this category in 2016. Total sales dropped, but the position in the domestic market remained strong and the Company improved its domestic and export sales ratios. The Company exported the rapeseed meal mostly to Germany, Spain and France.

The animal feed industry remained the key domestic customer for rapeseed meal in 2016.



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Supply sources

(Information regarding sources of supply in production materials, dependence on one or more clients, names (companies), shares in supply, formal relations between clients with at least 10 percent share in the total sales revenue and the Company)

Rapeseed

The Company bought rapeseed, which is the basic supply in the manufacturing of oils, margarines and vegetable fats, under sales agreements concluded both with rapeseed producers and trade companies. In 2016, the Company bought rapeseed especially in the Dolnośląskie, Kujawsko-Pomorskie, Łódzkie, Mazowieckie, Opolskie, Podlaskie, Pomorskie, Lubelskie, Lubuskie, Małopolskie, Śląskie, Świętokrzyskie, Wielkopolskie, Warmińsko-Mazurskie and Zachodniopomorskie provinces. In 2016, the Company additionally purchased rapeseed from the Czech Republic, Lithuania, Slovakia, Austria, Hungary and Romania.

Other Vegetable oils

Tropical oils are the second most important supply used by the Company in production of margarines and fats offered by the Company.

In 2016, the Company purchased refined tropical oils, such as refined palm oil, stearin and palm olein, coconut oil and palm seed oil from European refineries located in the Netherlands and Germany. It also imported sunflower seed oil from Ukraine, Hungary and Austria.

3. MAJOR R&D ACHIEVEMENTS

As in previous years, in 2016 the Company relied on the experience of the Bunge Group R&D Centre in Budapest. Project works performed included both table and industrial product development. Measures taken in all of the above areas were supervised by the following units:

Application and Technical Support Department – Consumer Products and R&D Consumer Oils which carried out research and development projects on: new products, modifications of existing products, services, technical and technological support offered to the Company and other Bunge Group entities, etc.

R&D projects included:

:

- SAFA and TRANS Reduction

- Smakowita 3 Benefits

- Finuu Production Karczew

- Vegetable Spreads

- Optima Dual Action

- Maggie - Naturima – New Varieties

- Kostki – New Varieties

- Clarified Butter

- Half Pallets 1L, 3 L

Cooperation with Bunge Poland on broadly defined engineering and process issues, to include:

- relocation of products from Brzeg to Karczew

- modification of recipes for the new technical solutions

- verification of technical and technological solutions employed in the production process - production monitoring

Continuation of the Palma Slovakia projects and cooperation as regards:

- product modification

- recipe and packaging related works

- documentation supervision

Harmonising consumer product manufacturing, modification of and optimisation of recipes and packaging to

improve the economic effect in the capital group

Cooperation with discount networks with regard to the existing and new products and packaging

Designing a new stand for vegetable spreads

Completing works on a new type of packaging (glass jar + lid) for the vegetable spreads



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Cooperation on the research carried out by a sensory expert panel for new projects.

In addition, as was the case in the previous years, in 2016 the Company also continued daily cooperation with

renowned external R&D intuitions, such as the Institute of Biotechnology of the Agricultural and Food Industry,

the Fat Processing Branch in Warsaw; University of Technology in Gdansk; Nicolaus Copernicus University in

Toruń, the Institute of Plant Breeding and Acclimatization, Institute of Animal Reproduction and Food Research

of Polish Academy of Sciences in Olsztyn.

In 2016, the Company continued recipe optimization projects focusing on low-trans, non-hydrogenated, non-palm

oil and the so-called "Clean label" products, as well as launched new products and packaging, offered technical

and technological support to chosen key customers of the Company. In 2016 the Company also intensified works

on the development of export markets.

Projects in 2016:

- Launch of products made of certified materials;

- Development of the group of professional margarines dedicated to large domestic clients;

- Development of products for export (Czech Republic: Bunge Pro line of margarines, Hungary: Bolero

Puff Pastry NH, Israel: extended shelf life);

- Continuation and development of cooperation with recipients of non-trans products that do not contain

Hydrogenated ingredients;

- Preparation of "clean label" margarine;

- Development of Horece dedicated portfolio (Maestro Sol for deep frying);

- Work on implementation of new, more functional packaging.



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4. CURRENT AND FORECAST FINANCIAL POSITION OF THE COMPANY

Key business items

2016 2015 Change

PLN'000 %

Sales volume (tonnes [k]) 975 1 028 (53) (5%)

Revenue from sales of products and goods 2 386 509 2 348 922 37 587 2%

Manufacturing cost of products and costs of goods sold 2 120 925 2 027 921 93 004 5%

Costs to sell 143 196 167 436 (24 240) (14%)

General and administrative expenses 39 659 40 796 (1 137) (3%) (Gains)/losses on derivatives and exchange differences 4 069 5 994 (1 925) (32%)

Gross profit on sales 265 584 321 001 (55 417) (17%)

Gross sales margin 11.1% 13.7% (2.5%)

Profit from continuing operations 81 252 116 486 (35 234) (30%)

% of sales 3.4% 5.0% (1.5%)

EBITDA (1)

110 291 151 613 (41 322) (27%)

% of sales 4.6% 6.4% (1.8%)

Profit before tax 82 400 117 760 (35 360) (30%)

Gross profit margin 3.5% 5.0% (1.6%)

Net profit 65 336 95 215 (29 879) (31%)

Net profit margin 2.7% 4.1% (1.3%)

Net cash flows from operating activities 179 194 199 012 (19 818) (10%)

Closing balance of non-current assets 344 424 336 164 8 260 2%

Closing balance of current assets 653 342 660 977 (7 635) (1%)

Closing balance of equity 653 000 835 290 (182 290) (22%)

Average working capital(2)

469 107 479 203 (10 096) (2%)

Days of sales (3)

72 74 (3)

Closing balance of credit facilities and loans (4)

8 022 0 8 022 0%

ROA (5)

6.7% 9.8% (3.1%) (32%)

ROE (6)

9.0% 11.7% (2.7%) (23%)

Legend:

(1) Profit from continuing operations + Depreciation

(2) = Average balance based on quarterly data: Current assets – Current liabilities + Current liabilities due to credit facilities and loans

(3) = Average working capital / Revenue from sales of products and goods*365 days

(4) = Current liabilities due to credit facilities and loans + Long-term credit facilities and loans

(5) = Net profit/ average balance of assets (opening balance, closing balance)

(6) = Net profit/average balance of equity (opening balance, closing balance)



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In 2016 the value of consolidated revenue from sales of goods and products increased by PLN 37.6 million

(+2%) year on year. The increase was a result of an increase in the sales price of consumer margarines, bulk oil

and industrial margarines, which combined resulted in a rise in sales of PLN 103.6 million.

However, the sales of rape meal and consumer margarines dropped by 9% each. In 2016 the Company

managed to sell 975,000 tonnes of its products, i.e. 5 per cent less than in the previous year.

The rise in the value of sales was accompanied by an increase in the total manufacturing costs of products sold

and cost of goods sold (+5%), which enabled the Company to earn a gross profit on sales of PLN 265.6 million

and a gross margin of 11.1% (2015: PLN 321.0 million and 13.7%, respectively). This disproportionate rise in the

manufacturing costs of products and costs of goods sold with respect to the increase in sales revenue results

from the fact that the rise in the prices of raw materials was not proportionally covered by a rise in the prices of

products sold.

In 2016 the costs of sales amounted to PLN 143.2 million and were PLN 24.2 million lower (-14%) as compared

to 2015. The decrease in this cost category was due to a change in the structure of sales of rape meal (domestic

vs. export) and lower marketing expenses.

General and administrative expenses also went down from PLN 40.8 to PLN 39.7 million (-3%).

In 2016, the Company disclosed a loss on unrealized currency and commodity derivatives and unrealized FX

differences of PLN 4.1 million (in 2015: a loss of PLN 6.0 million). The said gain includes a gain on unrealized

exchange differences of PLN 3.3 million (2015: gain of PLN 4.2 million), a loss of PLN 11.7 million on commodity

hedging instruments (2015: PLN 7.5 million) and a gain of PLN 4.3 million on currency hedging instruments

(2015: a loss of PLN 2.7 million).

A description of the purpose of hedging instruments and their recording is presented in Note 34 and Note 35.

In 2016, the operating profit amounted to PLN 81.3 million and was PLN 35.2 million (-30%) lower than

the operating profit for 2015. EBITDA saw a similar decrease from PLN 151.6 million to PLN 110.3 million.

Consequently, the EBITDA/sales revenue dropped by 1.8 p.p. year-on-year (from 6.4% in 2015 to 4.6% in 2016).

In 2016, financial expenses remained on the similar level (increase by PLN 0.3 million). In 2016 and 2015,

average debt equalled PLN 8.0 million and PLN 1.6 million, respectively. The change results from changes in the

working capital, i.e. a decrease in free cash, as well as a decrease in the average equity (-8%).

In 2016, the Company incurred restructuring costs totalling PLN 368 thousand. These costs mainly included

employee benefits as a consequence of implementation of the group redundancy programme in the production

plan in Brzeg.

In 2016, operating cash flows were positive and amounted to PLN 179.2 million (2015: PLN 199.0 million).

In 2016, cash flows from operating activities were affected especially by the following events:

increase in short-term liabilities (except for credit facilities and loans) by PLN 164 million, mainly as a result of changes in the structure of the working capital;

Generating a net profit of PLN 65.3 million;

Depreciation of non-current assets as cost without any cash outflow – i.e. a cash inflow of PLN 29.0 million.

The cash flows from other, i.e. investing and financing activities were negative and amounted to PLN 30.5 million

and PLN 243.2 million, respectively. They resulted mainly from investments (PLN 31.7 million) and a dividend

payment (PLN 247.8 million), respectively.

Positive cash flows from operating activities did not offset the negative balances from other activities and in

effect, as at the end of the reporting period, the Company presented negative net cash flow of PLN 94.5 million,

i.e. PLN 211.2 million lower year-on-year.



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As at the end 2016, the Company’s non-current assets had increased by PLN 8.3 million compared with the end of 2015. This was mainly the effect of investments in property, plant and equipment which exceeded the value of depreciation.

At the end of 2016, current assets amounted to PLN 653.3 million and were PLN 7.6 million lower as compared

to 2015. The key changes in the structure of current assets related to cash (down PLN 94.4 million) and

inventory (up PLN 88.6 million). The changes in the balance of inventory were mainly due to an increase in the

inventory of rapeseed.

In 2016, the Company’s ROA decreased by 3.1 p.p. year-on-year and amounted to 6.7%, while ROE went down

by 2.7 p.p. amounting to 9.0%.

In the financial statements of the Company for 2016 no significant changes in each class of assets and liabilities

occurred as a result of events other than described above.

In the nearest future, the Company does not anticipate any significant changes to its assets and liabilities other

than those resulting from the current operations.

In 2016 the Company paid its liabilities within the determined deadlines and carried out investments as planned.

5. ORGANIZATIONAL OR CAPITAL RELATIONS OF THE COMPANY

(Information regarding organizational or capital relations of the Company with other entities; defining key domestic and foreign investments (securities, financial instruments, intangible assets and real property) including capital investments beyond the capital group with description of funding methods)

As at 31 December 2016, Koninklijke Bunge Besloten Vennootschap (henceforth "KBBV") with the registered office in Rotterdam, the Netherlands, was the major shareholder of the Company. KBBV is a direct holder of 14,763,313 shares in the Company, accounting for 64.22% of its share capital. The shares give the shareholder the title to 64.22% of votes at the General Shareholders Meeting. KBBV is a wholly-owned subsidiary of Bunge Europe SA with its registered office in Luxembourg (holding 100% of shares and having the right to 100% of votes at the General Shareholders’ Meeting). Bunge Limited with the registered office in the U.S. (White Plains, N.Y.) is the parent of Bunge Europe S.A. Bunge Limited has been listed on the New York Stock Exchange since 2001.

The Bunge Group operates in over 40 countries around the world and has 35,000 employees. The scope of its business operations includes:

- purchase of oil seeds and grain;

- processing oilseeds for the production of oils for food and bio-fuel industries as well as meal for animal feed industry;

- production of bottled oils, mayonnaise, margarines and other consumer goods;

- production of animal feed;

- trading in grain and oilseeds;

- processing wheat and corn for the food and brewing industry;

- processing of sugar cane and biomass for the purpose of power generation;

- sales of fertilizers for agricultural producers.

Detailed information regarding related party transactions is presented in Note 33 to the Financial Statements of ZT "Kruszwica" S.A. for 2016.

6. TRANSACTIONS WITH RELATED PARTIES NOT CARRIED OUT ON AN ARM'S LENGTH BASIS

(Information regarding transactions with related parties on non-arm's length basis with amounts and information on their nature)

In 2016, the Company did not conclude non-arm's length transactions with related parties.



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7. CONTRACTS MATERIAL FOR THE COMPANY'S BUSINESS OPERATIONS

(Information regarding contracts that are material for the Company's business operations, concluded between shareholders, as well as insurance and cooperation agreements)

For the purpose of this chapter, the following contract materiality criteria have been adopted:

- Value in excess of ten percent of net revenue on sales of goods and products in 2016 financial year, i.e. PLN 238.7 million for trade contracts (purchase of supplies, consumables, sales of goods and products) concluded in the course of regular business operations;

- Value in excess of ten percent of equity as at 31 December 2016 for other types of contracts. As at 31 December 2016 the Company’s equity amounted to PLN 653.0 million.

In light of the above criteria, the Company did not conclude any material contracts in 2016.

8. LOAN AND CREDIT FACILITY AGREEMENTS CONCLUDED AND TERMINATED

As at reporting period end 31 December 2016, the Company had no outstanding balance of credit facilities.

On 8 August 2016 the line of credit agreement with ING Bank Śląski S.A. expired. The agreement set the credit limit at PLN 10 million, interest was based on the WIBOR rate plus margin. The average interest expense in 2016 was 3.29%.

Agreement with Koninklijke Bunge B.V.

On 7 July 2014, a loan agreement (“Revolving credit facility agreement”) was concluded by and between the Company (the debtor) and Bunge Finance B.V. with the registered office in Rotterdam, the Netherlands (the creditor). The agreement anticipates the maximum debt level of USD 350 million, whereas the loan can be withdrawn in the following currencies: PLN, USD and EUR. The interest is equal to a relevant interbank interest rate plus margin. The term of the loan agreement is until the end of 2014, and it will be automatically extended for 3 months, unless the parties terminate the agreement in writing 30 days before its expiry date. The Company has been using the automated extension clause. The loan is to fund current operations of the Company, mainly the purchase of rapeseed being the key edible oil production supply.

In 2016, the interest on the loan was based mainly on WIBOR increased by a margin. The average effective interest rate is approx. 3.70% per annum.

The loan has been settled on a daily basis. The closing balances of the key bank accounts of the Company are automatically transferred to the bank account of Bunge Finance B.V. to reduce the debt as of the end of the same day. The objective is to reduce the financial expenses and use the cash resources more effectively. In the case of a surplus of payments over proceeds, the debit balance of the Company’s key accounts automatically becomes the amount of the drawdown which increases the Company’s outstanding loan.

Since on 1 January 2016 Bunge Finance B.V. was acquired by Koninklijke Bunge B.V. the party to this agreement is Koninklijke Bunge B.V. with its registered office in Rotterdam, the Netherlands.

As at 31 December 2016, the Parent did not have any had no outstanding debt with Koninklijke Bunge B.V.

Agreement with ZTK Property Management sp. z o. o.

On 29 March 2016 the Company (debtor) and ZTK Property Management sp. z o. o., a subsidiary, (creditor) concluded a short-term loan agreement with a credit limit set at PLN 8 million.

The interest on the loan is based on variable WIBOR for 3M deposits, increased by margin. The average annual interest on the loan was 3.22%. The loan repayment date has been set at 31 March 2017.

As at 31 December 2016 the Company’s debt due to the above loan and interest due was PLN 8,022 thousand.



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Liabilities due to loans

Creditor Registered office

Contractual amount Debt

of the loan As at 31 December

2015

In thousand Currency Maturity

date PLN ‘000

Koninklijke Bunge B.V. Rotterdam,

The Netherlands 350 000

USD or equivalent

01.03.2017 0

ZTK Property Management Sp. z

o.o. Warszawa 8 000 PLN 31.03.2017 8 022

9. ORIGINATED LOANS

(Information on loans originated by the Company with special focus on those granted to its related parties, including the amount, nature and amount of interest, currency and maturity date)

The entire loan of PLN 10 thousand extended to Mauresa sp. z o. o. on 23 January 2014 with interest due was presented under other operating expenses as Mauresa sp. z o. o. was liquidated.

10. GUARANTEES AND SURETIES GRANTED AND RECEIVED

In 2016, per Company's order, its cooperating banks issued the following guarantees:

Name of bank

Registered

office

Guarantee number

Guarantee amount Expiry date Amount Currency

Bank Handlowy w Warszawie S.A. Warsaw GK15-1050009 782.250,00 PLN 20.05.2018

Bank Handlowy w Warszawie S.A. Warsaw GK15-1810003 73.743,43 EUR 30.04.2017

Bank Handlowy w Warszawie S.A. Warsaw GK15-1820020 264.207,00 PLN 20.05.2018

Guarantees GK15-1050009 and GK15-1820020 were issued for Agencja Rezerw Materiałowych.

Guarantee GK15-1810003 was issued instead of a traditional deposit to GTC Aeropark, with its registered office in Warsaw, which rents office space to the Parent.

Guarantees DDF/12464/2015 and GK13-1980009/1 were issued for Agencja Rezerw Materiałowych to secure strategic supply of rapeseed oil.

On 17 November 2016 the Company guaranteed potential reprivatisation liabilities of ZTK Property Management sp. z o.o. (Company’s subsidiary), resulting from the agreement to sell real property located in Warsaw at ul. Radzymińska concluded by ZTK Property Management, up to the total cap amount of PLN 5.5 million. The guarantee remains valid until 31 December 2022..

11. PROCEEDS FROM ISSUES OF SHARES

(Description how the Company used proceeds from issues of shares until the date of the report on activities)

In 2016, ZT Kruszwica S.A. did not issue any shares.

12. EXPLANATION OF DIFFERENCES BETWEEN ACTUAL FINANCIAL PERFORMANCE AND PREVIOUSLY PUBLISHED PROJECTIONS FOR THE GIVEN FINANCIAL YEAR

In 2016, the Company did not publish any financial projections.

13. RISKS AND THREATS

Risks and threats have been described in the Company's financial statements for 2016, in Note 36.



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14. MANAGEMENT OF FINANCIAL ASSETS AND DEFINING OF POSSIBLE THREATS

(Evaluation of financial asset management with special focus on solvency and definition of possible threats and measures initiated or planned by the Company in order to counteract the threats)

Sources of funding of the Company's business operations

Source 2016-12-31 2015-12-31 Change

PLN ‘000 % PLN ‘000 % PLN ‘000 p.p.

Equity 653 000 65,45% 835 290 83,77% -182 290 -18.32

Non-current liabilities 6 933 0,69% 6 774 0,68% 159 0.02

Short-term loans and credit facilities

8 022 0,80% 0 0,00% 8 022 0.80

Current liabilities 329 811 33,05% 155 077 15,55% 174 734 17.50

TOTAL 997 766 100% 997 141 100% 625

Equity accounted for 65% of the sources of funding of the Company’s business operations in 2016 (in 2015: 84%). Non-current liabilities did not change materially. In 2016 the Company disclosed a short-term loan given by ZTK Property Management sp. z o. o. (subsidiary) totalling PLN 8 million. Current liabilities accounted for 33% of the sources of funding of the Company’s business operations as compared to 16% in 2015. This shift was mainly the effect of a dividend totalling PLN 248 million paid out in December 2016.

In 2016 the Company funded its working capital mainly with own cash and liabilities.

As in previous years, the receivables recognized in the Company's balance sheet did not include those covered with full factoring (without the risk recourse). At the end of 2016, these receivables amounted to PLN 159 million and were PLN 21 million higher as compared to 2015. Factoring as the operations funding source allows the improvement of the Company’s liquidity and merchant risk reduction.

The Company is fully capable of satisfying its obligations. The Company paid its liabilities to related parties, banks and suppliers, as well as those under public law, within specified deadlines. There is no indication of potential threats in this respect.

15. EVALUATION OF THE FEASIBILITY OF INVESTMENT PROJECTS, INCLUDING CAPITAL INVESTMENTS

(Evaluation of feasibility of investments, including capital ones, in lights of funds held, including possible changes in the funding structure)

In 2016, improvement of production infrastructure in the consumer product and oilseed processing segments was the key element of the Company's investment strategy. Investment projects performed were focused on the maintaining and improving of technical reliability and manufacturing costs reduction. Fulfilling of new legislation requirements, as well as improving of OSH and environmental protection were among key objectives of these investments. Investments in non-current assets except from capital investments amounted to PLN 37.5 million.

Investments carried out in the financial year included among others:

- modernization of the pressing system, including disassembly of the old and assembly of new screw presses with required infrastructure in the Plant in Kobylniki,

- assembly and start-up of a Gas Boiler House in the Plant in Brzeg,

- purchase of installation of the system for transporting and palletizing bottles from A and B lines to half pallets and pallets in the Oil Bottling Plant in Kobylniki,

- installation of a cavitation mixer on the oil refining line in the Plant in Kobylniki,

- expansion of the DeltaV process control system in the Plants in Brzeg and Kobylniki,

- delivery and start-up of a chiller in the Refinery Division in Kobylniki,

- expansion of the margarine blend composition installation in the Plant in Kobylniki,

- replacement of mechanical draft cooling towers in the Refinery in Kobylniki,

- modernization of the gallery above the rapeseed silos in the Oil Mill in Kobylniki.

In the coming years the Company will invest mainly in improvement and replacement of its property, plant and equipment; its plans do not include direct capital investments in other entities.



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The investment plans will be funded mostly with profit from previous years and depreciation charges. Regardless of using own funds, the Company may obtain borrowings in the form of unused loan and credit facility limits, although these sources may only be treated as ad-hoc funding measures. The Company's strategy involves a financial balance obtained through absorbing of long-term assets with adequate equity and/or long-term liabilities. At present, the balance is maintained and there are no indications that it may be lost.

16. NON-TYPICAL EVENTS THAT AFFECTED 2016 PERFORMANCE AND THE RANGE OF THEIR IMPACT

No material changes in the structure of the Company’s revenue from sales of goods and products occurred in 2016. A decrease in the sales volume of bottled oil, raw and refined oils was offset by an increase in their prices. As a result, the sales value was PLN 37.6 million higher than in the previous year.

Rapeseed harvest in Poland and the adjacent countries is a material factor affecting the Company’s operating performance. The volume harvested determines the raw material price, thus materially impacting the realized margin on sales, mostly of consumer products.

No material changes in the structure of the Company’s revenue from sales of goods and products occurred in

2016. An increase in the sales volume of bottled oil, rapeseed meal and industrial fats was offset by a decrease

in their prices. As a result, the sales value was PLN 138 million lower than in the previous year.

In 2016, rapeseed yield in Poland was lower in comparison to the previous year. The volume harvested

(estimated) was approximately 2.2 million tonnes (2015: 2.8 million tonnes).

The Company has been performing the provisions of contracts with Bunge Polska Sp. z o.o. concluded in

September 2010; under the said contracts, distribution and marketing (sales consolidation contracts) of both

companies were integrated. In 2012, the Company took over all the agreements for sale of products of Bunge

Polska, thus becoming its sole distributor.

The Company uses derivatives to hedge against two key types of risk occurring in the course of business – FX

risk and the commodity risk on international markets. The Company uses FX forwards to hedge against the FX

risk related to future cash flows due to purchases and sales presented or denominated in foreign currencies as

well as the balances of receivables and liabilities. In order to limit the commodity risk, and therefore ensure the

planned margin is realized, the Company concludes commodity forwards to hedge against the exposure.

In 2016 the Company concluded commodity derivative contracts with rape seed suppliers. The underlying instruments were MATIF prices. Over the period determined in the contract Suppliers may choose the MATIF trading day and this way set the final price of the seeds.

The above instruments allow mitigating the effects of volatility of prices of products and supplies as well as forex rates. No other factors or untypical events occurred that would significantly impact the financial performance of the Company in 2016 reporting period.

17. FACTORS MATERIAL FOR THE COMPANY'S GROWTH AND BUSINESS DEVELOPMENT PERSPECTIVES

(Internal and external factors of material importance for development and description of business development perspectives at least until the end of the financial year following the year covered by the financial statements, including market strategy elements)

The key factors that determine the financial performance of the Company include:

- Cost of supplies – rapeseed and tropical oils

- Availability of rapeseed

- Selling prices of bulk rapeseed oil

- Growing prices of supplies being offset with prices of the final products

- Selling prices of rapeseed meal;

- Core production sales volume;

- Foreign exchange rates.

Purchase prices of key supplies used by the Company are determined on world's commodity exchanges. Prices of mass products (bulk oil and rapeseed meal) are closely correlated to the prices of supplies, which allows offsetting their increase. Prices of table and industrial products are much less sensitive to changes in the prices of supplies on commodity exchanges. This results in a delay in compensation of growing prices of supplies with an increase in the prices of the final products, since consumer markets have a limited ability to accept end user price increases. If prices of supplies decrease, the Company may discount the effect of reduced sensitivity of product sales prices on changes in prices of supplies.



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Price and availability of rapeseed and changes in the prices of tropical oils will be the key factors determining the Company's financial performance in the years to come.

Currency exchange rates are another material factor that impacts the future financial performance of the Company. Growing or decreasing exchange rate of PLN improves or deteriorates competitiveness of the Company's products on foreign markets. Since prices of key supplies are determined by world's commodity markets, any changes in prices are enhanced with possible forex fluctuations. Assuming that changes in prices of the packed products offered by the Company on the domestic market are not rapid or material, failure to promptly respond to current forex fluctuations and the related final product price adjustments poses a material risk for the Company.

Since the need for borrowings has decreased over last years, the effects of monetary policy on the Company’s performance has been weakening.

The Company has been attempting to minimize its working capital, mainly in order to reduce demand for borrowings, improve effectiveness and profitability ratios, and reduce its exposure to interest rate fluctuations on the interbank market.

18. CHANGES IN KEY BUSINESS MANAGEMENT PRINCIPLES

In 2016, there were no changes in this respect.

19. AGREEMENTS CONCLUDED BY THE COMPANY WITH MEMBERS OF ITS MANAGEMENT, PROJECTING COMPENSATION IN CASES THEY RESIGN OR ARE DISMISSED WITHOUT A VALID REASON OR WHEN DISMISSED OR LAID OFF DUE TO COMBINATION THROUGH ACQUISITION

The Company did not conclude any agreements projecting compensation in the case its management members resign or are dismissed without a valid reason or if the dismissal/layoff is caused by business combination through acquisition.

20. REMUNERATION, BONUSES AND OTHER BENEFITS RECEIVED BY PERSONS RESPONSIBLE FOR MANAGEMENT AND SUPERVISION OF THE COMPANY

(Amount of remuneration, bonuses or benefits, including those arising from incentive or bonus schemes based on the Company's equity, such as bonds with pre-emptive right, convertible bonds, subscription warrants (in cash, in kind or any other form) paid, due or potentially due, individually for each individual managing and supervising the Company in its enterprise, regardless whether they are included in expenses or arise from profit distribution; if the Company is a parent of a major investor, information regarding amount of remuneration and awards obtained for management of controlled entities should be provided; if relevant information has been included in the financial statements, the obligation is fulfilled if the report indicates the chapter/heading under which it is presented in the financial statements)

Remuneration, awards and other benefits received by members of the Company's management and supervisory bodies are presented in Note 38 to the financial statements of ZT "Kruszwica" S.A. for 2016.

21. TOTAL NUMBER AND FACE VALUE OF ALL SHARES IN THE COMPANY AND ITS RELATED PARTIES HELD BY THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BODIES

To the best of the Company's knowledge, as at the date of publication of this report, none of the Members of the Management Board or Supervisory Board held any shares in ZT “Kruszwica” S.A. or in its related parties.

22. CONTRACTS KNOWN TO THE COMPANY THAT MAY RESULT IN FUTURE CHANGES IN ITS SHARE CAPITAL/BONDS STRUCTURE

(Information regarding contracts known to the Company (including those concluded after the balance sheet date) that may in future result in changes in its shareholding/bonds structure)

According to information obtained by the Company, as at the date of the report, the no contracts existed that could in future result in changes in the shareholding structure.



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23. EMPLOYEE STOCK OWNERSHIP PLAN CONTROL SYSTEM

The Company has no employee stock ownership plan.

24. PROCEEDINGS PENDING BEFORE COURT, ARBITRATION AUTHORITY OR PUBLIC ADMINISTRATION AUTHORITY

(Including information on: (i) proceedings regarding receivables or liabilities of the Company or its subsidiary, totalling to at least ten percent of its equity; (ii) two or more proceedings regarding liabilities and receivables totalling to at least ten percent of the Company's equity, respectively)

In 2016 no such proceedings occurred.

25. ACQUISITION OF TREASURY SHARES

(Information regarding purchase of treasury shares, in particular the purpose of the acquisition, the number and face value of shares and indication, which part of the share capital they represent, the purchase and selling price of these shares if disposed of)

In 2016, the Company purchased no treasury shares.

26. INFORMATION ON COMPANY’S PLANTS

In 2016, the Company performed its operations in two production plants located in Poland:

- Kobylniki plant near Kruszwica;

- Brzeg plant.

Business operations of Kobylniki plant included rapeseed proceeding, refining and packing of vegetable oils, manufacturing of industrial margarines and fats as well as margarine components.

Business operations of Brzeg plant included rapeseed proceeding, refining and packing of vegetable oils and manufacturing of table margarines.

27. RISK HEDGING INSTRUMENTS, FINANCIAL RISK MANAGEMENT OBJECTIVES AND METHODS ADOPTED BY THE COMPANY

(Information on financial instruments regarding:

a) pricing and credit risk, the risk of substantial disruptions of cash flows, liquidity risk of the entity;

b) financial risk management objectives and methods adopted by the Company, including hedging of significant planned transaction types included in hedge accounting).

Information regarding risk hedging instruments, financial risk management methods and objectives adopted by the Company has been presented in Notes 34 and 35 to the financial statements for 2016.

28. CONTRACTS CONCLUDED BY THE COMPANY WITH AN ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENTS

a) Date of concluding an agreement with an entity authorized to audit financial statements with regard to audit or review of separate or consolidated financial statements and the term of the agreement

An agreement regarding review of the mid-year consolidated financial statements for the six months ended 30 June 2016 with Deloitte Polska Sp. z o. o. Sp. k. with the registered office in Warsaw was concluded on 8 May 2016. The scope of the review includes the consolidated financial statements prepared in line with IFRS.

The agreement regarding an audit of the annual separate and consolidated financial statements for the 12 months ended 31 December 2016 with Deloitte Polska Sp. z o. o. Sp. k. was concluded on 8 May 2016. The scope of the audit includes the full separate and consolidated financial statements prepared in line with IFRS.

The agreement regarding an audit of the consolidated package prepared in line with US GAAP and Bunge Group principles for the 12 months ended 31 December 2016 with Deloitte Polska Sp. z o. o. Sp. k. with the registered office in Warsaw was concluded on 8 May 2016.



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b) The total contractual fee payable or paid to the entity authorized to audit financial statements for a review and audit of the financial statements, and, if the company prepares consolidated financial statements, for a review and audit of the consolidated financial statements for the given financial year.

The total fee payable for the review of the consolidated financial statements for the first half of 2016 has been determined as an equivalent of EUR 20,000.

The total fee payable for the audit of separate and consolidated financial statements and the consolidated package for 2016 has been determined as an equivalent of EUR 165,000.

Pursuant to the above agreements, the Company shall reimburse all costs incurred by the Auditor in the course of performing the agreement (i.e. travels, accommodation, phone calls, translation of the financial statements into English, etc.).

c) The remaining total contractual fee payable or paid to the entity authorized to audit financial statements for other services than listed in point b in relation to the given financial year

The total fee payable for other services than listed in point b in relation to 2016 has been determined as PLN 7,000.

d) Information included in points b and c regarding the previous financial year

The total fee payable for the review of the consolidated financial statements for the first half of 2015 has been determined as an equivalent of EUR 20,000.

The total fee payable for the audit of separate and consolidated financial statements of the parent, separate financial statements of a subsidiary and the consolidated package for 2015 had been determined as an equivalent of EUR 158,387.

Pursuant to the concluded agreements, the Company was obliged to reimburse all costs incurred by the Auditor in the course of performing the agreement (i.e. travels, accommodation, phone calls, translation of the financial statements into English, etc.). The total fee payable for other services than listed in point b in relation to 2015 had been determined as PLN 7,000.

The Management Board’s Report was prepared on 14 March 2017.

Signatures of all members of the Management Board:

Wojciech Jachimczyk – President of the Management Board ..................................

Wojciech Bauman – Member of the Management Board ..................................

Marcin Brodowski – Member of the Management Board ..................................

Jacek Michalak – Member of the Management Board ..................................

Piotr Piotrowski – Member of the Management Board ..................................

Dariusz Szymański – Member of the Management Board ..................................

Tomasz Wika – Member of the Management Board ..................................

Documents

MANAGEMENT BOARD’S REPORT ON THE ACTIVITIES · Zakłady Tłuszczowe „Kruszwica” S.A. Management Board’s Report on the activities of the Company for 12 months ended 31 December