Auditing firm selection

The Management Board of FFiL Śnieżka SA - based on the statement of the Supervisory Board - presents below information on current and periodic information required by § 70 item 1(7) of the Regulation.

On May 9, 2023, the Supervisory Board selected – in accordance with applicable regulations – the entity PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. to audit and review the statutory separate financial statements of Fabryka Farb i Lakierów Śnieżka SA and the consolidated financial statements of the Śnieżka Group for the years 2023-2025. On July 19, 2023, the Company concluded an agreement with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. in the above-mentioned scope.

On February 27, 2024, in connection with the Corporate Sustainable Reporting Directive (CSRD), which enters into force on January 1, 2024, a decision was made to subject selected non-financial disclosures for 2023 to independent certification. On February 27, 2024 the Company concluded an agreement with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. The selection of the service provider was dictated by:

  • the emerging market practice aimed at attesting both reports (financial and non-financial data) by one entity;
  • experience of PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. in the certification of non-financial data of companies listed on the WSE;
  • ensuring consistency in the attestation of both reports and the competitiveness of the price offer.
  • the need to confirm 2 indicators required as part of SSL financing provided by Bank BNP Paribas Polska in 2022.

The subject of the above-mentioned agreements with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. is the following:

  • audit of the financial statements of the Company and the Group for the period from January 1, 2023 to December 31, 2023 and from January 1, 2024 to December 31, 2024 and from January 1, 2025 to December 31, 2025, carried out in accordance with the requirements of the Accounting Act of September 29, 1994 and the National Auditing Standards. conducting a review of the interim financial statements of the Company and the Group – for the period from January 1, 2023 to June 30, 2023 and for the period from January 1, 2024 to June 30, 2024 and for the period from January 1, 2025 to June 30, 2025 year – in accordance with the requirements of the Accounting Act and the National Auditing Standards.
  • certification of disclosures for the period from January 1, 2023 to December 31, 2023 in the field of carbon footprint, sales of ecologically and allergy-certified products and selected non-financial disclosures included in the Statement on non-financial information resulting from the provisions of the CSRD Directive.

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. was entered by the National Council of Statutory Auditors on the list of auditing firms under no. 144.

The aforementioned auditing firm and members of the audit team of the Company and the Group fulfilled the conditions for preparing an impartial and independent audit report on the annual financial statements in accordance with applicable regulations, professional standards and ethics.

FFiL Śnieżka SA adheres to the applicable regulations related to the rotation of the auditing firms and the key statutory auditor and mandatory grace periods.

The Company has already taken advantage of the PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k.’s services regarding audit and review of financial statements from 2016 to 2022.

The auditing firm’s remuneration, PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k., due for the annual audit and review of the interim financial statements of the Group and the Company for the financial year ended December 31, 2023 amounts in total PLN 570 thousand with reference to the parent company:

  • PLN 330 thousand for statutory audit within the meaning of Art. 2 item 1 of the Act on statutory auditors,
  • PLN 86 thousand for the review of the interim financial statements, PLN 22 thousand for other certification services (report on the compliance of the format of the consolidated financial statements with the requirements of the European Single Electronic Format “ESEF”).
  • PLN 105 thousand for certification services regarding carbon footprint disclosures, sales of ecologically and allergy-certified products and selected non-financial disclosures included in the Statement on non-financial information and PLN 27 thousand for certification services Assessment of the remuneration report for 2023.

Within the scope of services described above:

  • Remuneration of the audit company PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. for the financial years from January 1, 2024 to December 31, 2024 and from January 1, 2025 to December 31, 2025, will be in the same amount as the remuneration for services relating to the financial year from January 1, 2023 to December 31, 2023 and will be increased accordingly by the percentage of the increase in the average salary in the national economy in the previous year determined on the basis of the Announcement of the President of the Central Statistical Office issued on the basis of Art. 20 (1) (a) the Act of 17 December 1998 on pensions and annuities from the Social Insurance Fund, relating to the year preceding the given year of the audit.
  • In addition, PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. will be reimbursed direct costs such as travel, accommodation, etc. up to a maximum of 5% of the net remuneration. In connection with the requirements referred to in art. 55 of the Act on Statutory Auditors, the remuneration will also be increased by costs in the amount of 2.18% of the supervision fee.
  • The Company also concluded an agreement with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. regarding the assessment of the Remuneration Report prepared by the Supervisory Board for 2023, for 2024 and 2025. The remuneration in this respect will amount to PLN 27 thousand for each year.
  • If the growth rate of the average salary in the national economy in the previous year determined on the basis of the Announcement of the President of the Central Statistical Office issued pursuant to Art. 20 (1) (a) of the Act of December 17, 1998 on pensions and annuities from the Social Insurance Fund, relating to the preceding year exceeds 5% (five percent), then the remuneration for services in the scope of assessing the Remuneration Report prepared by the Supervisory Board for 2024 and 2025 will be increased by the percentage of the increase in the average salary in the national economy in the previous year, determined on the basis of the Announcement of the President of the Central Statistical Office issued on the basis of Art. 20 (1) (a) of the Act of 17 August 1998 on pensions and annuities from the Social Insurance Fund.

 

In connection with the requirements referred to in Art. 55 of the Act on Statutory Auditors, the remuneration for the assessment of the Report on remuneration prepared by the Supervisory Board will also include the assessment remuneration in the amount of 2.18% for supervision fee.

The auditing firm’s remuneration, PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k., for auditing the annual and reviewing the interim financial statements of subsidiaries amounts in total PLN 416 thousand for the period between January 1 and December 31, 2023.

Remuneration of the audit company PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. for the financial years from January 1, 2024 to December 31, 2024 and from January 1, 2025 to December 31, 2025, will be in the same amount as the remuneration for services relating to the financial year from January 1, 2023 to December 31, 2023 and will be increased accordingly by the percentage of the increase in the average salary in the national economy in the previous year determined on the basis of the Announcement of the President of the Central Statistical Office issued on the basis of Art. 10 (1) (a) the Act of 17 December 1998 on pensions and annuities from the Social Insurance Fund, relating to the year preceding the given year of the audit.

In addition, PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. was reimbursed direct costs such as travel, accommodation, etc. up to a maximum of 5% of the net remuneration. In connection with the requirements referred to in art. 55 of the Act on Statutory Auditors, the remuneration also included costs in the amount of 2.18% of the supervision fee.

VAT tax was added to the above amounts at the applicable rate.

VAT will be added to the above amounts at the applicable rate.

Neither did the Company conclude with PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. other agreements, nor did it pay remuneration for auditors other than mentioned above.

FFiL Śnieżka SA has a policy on selecting an auditing firm and a policy on providing additional non-audit services by an auditing firm.

Selection of an auditing firm is carried out in accordance with the Policy on selecting an auditing firm to conduct the audit and review of financial statements (available at the Company’s website) adopted by a resolution of the Audit Committee on January 27, 2023.

The policy corresponds to the Procedure on selecting an auditing firm prepared by the Audit Committee and adopted by a resolution of January 27, 2023. The policy on selecting an auditing firm to conduct the audit and review of financial statements determines the guidelines and principles that the audit committee should be driven by at the stage of preparing recommendations and the supervisory board by selecting an entity empowered to audit the financial statements of the Company and the Śnieżka Group. They take into account the requirements resulting from the Act of 11 May 2017 on statutory auditors, audit firms and public supervision, and in particular:

  • the need to maintain the impartiality and independence of the auditing firm and the statutory auditor;
  • previous experience of the auditing firm in the audit and review of public interest entities and capital groups;
  • potential to perform the scope of services whose performance is to be entrusted to the auditing firm (i.e. statutory audit and review of separate and consolidated financial statements);
  • holding (in the appropriate value) an insurance policy against the civil liability by an auditing firm;
  • professional qualifications and experience of persons directly involved in audit activities;
  • the price proposed by an auditing firm;
  • time of conducting the audit and review of the financial statements;
  • the maximum period of uninterrupted duration of audit orders and statutory reviews carried out by the same audit firm or an audit firm related to that audit firm or any member of the network operating in the European Union to which these audit firms belong, not exceeding 10 years;
  • the interval between the audits and statutory inspections carried out in the same public interest entity for a period of 10 years, amounting to at least the next 4 years, counting from the end of the last audit and statutory inspection;
  • the key statutory auditor may not conduct audit and statutory review in the same public interest entity for a period longer than 5 years. The key statutory auditor may conduct the statutory audit and review in the entity referred to in the preceding sentence again after at least 3 years have elapsed from the end of the last statutory audit and review.

The policy corresponds to the Procedure on selecting an auditing firm, which takes into account cooperation of a member of the management board – the CFO, the audit committee and the supervisory board. The aim of the procedure is to efficiently and effectively collect bids from auditing firms, which are subsequently analysed by the audit committee, in order to submit to the supervisory board an appropriate recommendation on selecting entities authorized to perform the audit. The recommendation covers at least two auditing firms together with the justified preference of the audit committee for one of the presented entities. The final decision regarding the selection of an auditing firm is made by the supervisory board. However, if the supervisory board decides to select another entity than recommended by the audit committee, it should provide reasons for departing from the audit committee’s recommendation and provide such justification to the shareholder meeting of the Company.

Additional services provided by an auditing firm are set out in the „Policy of providing by an audit firm conducting audits and reviews of financial statements by entities related to this auditing firm and by a member of the auditing firm network of permitted non-audit services” adopted by the resolution of the Audit Committee of January 27, 2023.

The indicated policy has been in force at FFiL Śnieżka SA since 2023. The core assumption of this document is to minimize the risk that a statutory auditor or an auditing firm conducting audits of the Company’s financial statements (or other entities mentioned in the title of this policy) provides directly or indirectly to the audited entity, its parent company or its subsidiaries within the European Union, any prohibited services other than auditing or auditing activities. The exceptions are services set out in art. 136 sec. 2 of the act on statutory auditors, auditing firms and public supervision (The act on Statutory Auditors), the provision of which is possible only to the extent not related to the tax policy of FFiL Śnieżka SA, after carrying out by the audit committee an assessment of threats and safeguards of independence and expressing a relevant consent. In addition, if the statutory auditor or auditing firm provides the services referred to above, these entities are obliged to comply with the regulations contained in art. 69-73 of the act on Statutory Auditors determining solutions aimed at ensuring the independence and objectivity of the statutory auditor and the auditing firm.