Recommendation of the Company's Management Board regarding the distribution of profit for 2019

STALPROFIL SA (Company, Issuer) informs that on 8 April 2020, the Management Board adopted a resolution on the adoption of a proposal to divide the Company's net profit for the financial year 2019, according to which the Management Board proposes to the Ordinary General Meeting of STALPROFIL SA for the allocation of the Issuer's net profit for the period from 01.01.2019 to 31.12.2019 in the amount of PLN 11 120 698.25, in full to the Company's capital reserve.

In the opinion of the Management Board, allocating 100% of the total balance sheet profit for 2019 to capital reserve will increase the value of the Company's equity, and thus increase the financial security of the Company in the face of the forecasted permanent slowdown of the Polish and global economy caused by the protracted epidemic of COVID-19 (coronavirus).

Despite the fact that both markets on which the Company operates, i.e. the steel distribution market and the market of gas transmission network infrastructure, operate so far without any serious disturbances, there is a significant risk that the prolonged duration of the epidemic will destabilize both these markets. The COVID-19 epidemic may cause, among other things: a decrease in sales, a deterioration in the flow of receivables, shortages in supply, high absence of employees, a significant weakening of the Polish currency exchange rate, fluctuation in the prices of metallurgical products, which in turn may have a negative impact on the results of STALPROFIL SA in 2020.

The capital needs of the Company also result from the fact that STALPROFIL SA is in the process of implementing significant contracts acquired by the Company and the Group in the gas transmission network infrastructure segment, as well as the finalization of the investment: "Construction of a high storage warehouse at the premises of the Commercial Warehouse in Katowice". The investment process started in 2018 will last until about mid-2020, and the estimated total value of expenditure will be PLN 22,000 thousand.