Letter of the President of the Management Board

The two recent years of operation in the time of COVID-19 pandemic were highly requiring, lacking stability and foreseeability. As soon as we thought we were at the end of the road, the conflict in Ukraine unexpectedly erupted. Owing to the security of our staff, immediately after the aggression had commenced we made a decision on temporary suspension of the operating activities at our two companies: Alupol LLC in Borodianka near Kiev (within the Extruded Products Segment), and Aluprof Systema Ukraina TOV in Kiev (within the Aluminium Systems Segment). The suspension of production at the Ukrainian plants shall not affect customer service in other countries. Sympathising with the Ukrainian Nation, we made a decision on abandoning cooperation with contractors in Russia and Belarus. Simultaneously, we have been engaging in helping our Ukrainian employees by ensuring safety to them and their families, as well as actions to support humanitarian aid to the Ukrainian citizens.

Sales revenue amounted to PLN 4,598 million (+30% y/y), EBITDA equalled PLN 900 million (+34% y/y), and net profit reached PLN 595 million (+38% y/y).

Behind those achievements stand over 5,000 people employed at 24 companies of the Capital Group in Poland and abroad. I wish to thank each and every of them for the work done and the engagement in daily duties and activities.

Very good operating results of the Segments have prompted us to update the investment plan presented in the Strategy of the Grupa KĘTY S.A. Capital Group for the years 2021–2025. In 2021, the Supervisory Board issued a positive opinion on increasing expenditures in that period for PLN 256 million, to the total amount of PLN 1.3 billion, out of which roughly 50% will be allocated to development projects.

As a result of the update, the capital expenditures of the Extruded Products Segment will grow by PLN 188 million, to PLN 692 million. Additional funds will be allocated to the extension of the production capacity at Grupa KĘTY S.A. through construction of a production and warehouse hall complete with infrastructure, as well as purchase of a 40 MN press line, plus extension of the production capacity of Aluminium Kety Emmi by way of construction of a production line to manufacture components of aluminium profiles, mainly for the automotive market.

Capital expenditures at the Aluminium Systems Segment will be increased by PLN 68 million, to PLN 492 million. The funds will be allocated to the construction of a production and warehouse hall complete with infrastructure, comprising the complete production process of coating, crimping and storing aluminium profiles, as well as other elements of the offered systems.

We have estimated that the changes in the investment plan will enable increase in the sales revenue projected for the year 2025 in the 2021–2025 Strategy by PLN 506 million, to PLN 5,143 million, and EBITDA profit by PLN 77 million, to PLN 864 million.

In 2021 we checked the interest of investors in the Flexible Packaging Segment. The offers we received have confirmed the valuation of the Segment but have not guaranteed our shareholders a premium over the value generated by the Segment within the Capital Group, specifically considering the costs related to the transaction conclusion.

Year 2021 was generous as regards prizes and awards, which is a token of esteem for the financial achievements of the Company and the Capital Group of Grupa Kęty S.A, the competencies of the managers, and the methods of communication with the capital market.

Grupa Kęty took the third position (higher by 7 positions compared to the preceding year) in the prestigious ranking of the Stock Exchange Company of the Year. Also in the sub-ranking of Investor Relations the Company took the third position, as well as the fourth position in the sub-ranking of the Management Board Competence.

The latter have been additionally confirmed by the prestigious TOP 30 Stock Exchange Managers ranking. The experts cooperating with Martis CONSULTING have analysed the CEOs of the largest companies listed on the Warsaw Stock Exchange, and the model estimating the value of the managers comprised: the growth rate of share prices, the growth rate of EBITDA, and the expert assessment of the managerial competencies. I found myself among the TOP 10 highest valued CEOs of the Polish companies – I am honoured by that and I wish to thank for the distinction. The award is due to a large group of my colleagues together with whom I have been building and managing Grupa Kęty.

Grupa Kęty has also become a laureate of the ‘Poland’s Best Employers 2021’ ranking, which is a list of 300 companies operating in Poland with outstanding achievements in HR, honoured with the title of the Best Employer. Grupa Kęty took the fifth position in the sector category and joined the top five in the general ranking of the Climate Strategies Benchmark, initiated and carried out by GO Responsible together with the UNEP/GRID Warsaw Centre. It is an honour for us, because the ranking covered the companies of WIG20 and mWIG40, and the reporting data were analysed with regard to 14 different areas.

In 2021 we consequently followed the path set out by our Corporate Social Responsibility Policy as well as respected and developed within our processes 10 Global Compact principles to which we are a signatory. We carefully observed the market and reacted to the changing formal and legal environment, adjusting our organisation to the new reality. Being aware of the challenges in front of us, I wish to inform that our organisation joined the partnership for the performance of the goals of the 2030 Agenda for Sustainable Development.

We are at the beginning of a new, probably difficult road, but we feel prepared for it. We have been expecting normalisation, end of war and pandemic, and everything that disturbs the functioning of families, companies or the whole countries – then we will all be able to fully enjoy the results of our Company.