Seco/Warwick : Adoption of decision concerning intention to merge SECO/WARWICK SPÓŁKA AKCYJNA with subsidiary and execution of Merger Plan as part of modified growth strategy

Subject: Adoption of decision concerning intention to merge SECO/WARWICK SPÓŁKA AKCYJNA with subsidiary and execution of Merger Plan as part of modified growth strategy

Current Report No. 26/2016 of October 31st 2016

Legal basis: Art. 17(1) of MAR - Inside information

Text of the report:

Upon approval by the Supervisory Board, the Management Board of SECO/WARWICK S.A. ("SW S.A." or the "Company") announces that a decision concerning the intention to merge the Company with its subsidiary SECO/WARWICK EUROPE sp. z o.o. ("SW EUROPE") of Świebodzin has been made and that both companies agreed upon and executed a Merger Plan on October 31st 2016.

Pursuant to the Merger Plan approved by the companies, the merger will be effected through an acquisition under Art. 492.1.1 of the Commercial Companies Code, i.e. through transfer of all assets of SW EUROPE (the Target Company) to SW S.A. (the Acquiring Company) by way of universal succession. Upon the merger, SW S.A. will assume all the rights and obligations of the Target Company, which will be dissolved without liquidation proceedings on the date of its deletion from the register.

Given the fact that SW S.A. is the sole shareholder of SW EUROPE, the merger will be effected without a share capital increase at SW S.A. and without amendment of its Articles of Association, in accordance with Art. 515.1 of the Commercial Companies Code. Further, as stipulated in Art. 516.6 in conjunction with Art. 516.5 of the Commercial Companies Code, the planned merger is not subject to the obligation requiring that the Management Boards of the merging companies prepare reports specifying the grounds for the merger, as set forth in Art. 501 of the Commercial Companies Code, or the obligation to have the Merger Plan audited by a qualified auditor, as set forth in Art. 502 and Art. 503 of the Commercial Companies Code.

The Merger Plan, together with the appendices thereto, is attached to this report. The Merger Plan, together with the appendices, will be made available on SW S.A.'s website www.secowarwick.com.

The merger will be effected as part of the SECO/WARWICK Group's modified growth strategy for 2017−2021, approved today.

The previous growth strategy required modification due to internal and external circumstances whose nature and scale were not in line with expectations. The differences between actual and expected developments primarily related to some of the assumptions concerning macroeconomic conditions: the actual GDP growth rates on some of the Group's markets were lower than assumed, which brought about an above-average growth of competition on other key markets. Another obstacle to the implementation of the original strategy was the scale of organisational challenges at the Group's foreign subsidiaries (necessary changes and the required financial expenditure and time, etc.), which was larger than assumed.

In view of the above circumstances, the Management Board announces the decision not to pursue the financial objectives presented in 2012 (Current Report No. 28/2012 of October 23rd 2012) and updated in 2014 (Current Report No. 15/2014 of April 29th 2014). The period covered by the strategy has been changed to 2017−2021 and the strategy has been modified mainly where it refers to the Group's structure and organisation. The plan to pay 50% or more of the profits as dividend was maintained.

The following measures are envisaged to implement the modified strategy for 2017−2021:

• Merger of SW S.A. and SW EUROPE covering their production and distribution activities, organisation, management and legal status;

• Adapting the subsidiaries' structure and costs to the current sales capabilities;

• Implementation of a new approach to regional management at the Group, with three areas (Europe, Asia & Pacific and the Americas) distinguished for the purposes of business supervision:

• Continued development of structures, sale and servicing competencies and after-sales services at the subsidiaries;

• Implementing an integrated management support system (ERP);

• Standardising a part of the offering in terms of products, technologies and processes. These measures are expected to facilitate the achievement of the following principal objectives:

1. Implementation of a sustainable growth concept, providing for the merger of SW S.A. and SW EUROPE to create a competence, production and sales centre integrating the teams of managers and engineers. In line with this concept, the subsidiaries will implement their individual strategies on their local markets with strict supervision and selective support from SW S.A.

   The Management Board believes that the merger of SW S.A. and SW EUROPE will help to streamline management functions, optimise the asset base, and deliver tangible savings in general and administrative expenses.

2. Reaching the break-even point by all the subsidiaries as soon as possible.

All the subsidiaries are expected to modify their product and organisational structure to achieve this objective. In addition, the terms of technology transfer to the subsidiaries will be amended.

Successful implementation of the modified business strategy for 2017−2021 will enable the Group to be more effective in pursuing its business objectives thanks to cost savings and laying foundations for further economic growth.

The Management Board will submit the modified strategy to the Supervisory Board for approval. Appendix: The Merger Plan

Legal basis:

Art. 56.1.1 of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies of July 29th 2005

Appendices:

File:

Plan połączenia.pdf

Description:

Merger Plan

PLAN POt,lCZENIA

uzgodniony pomidzy

SECO/WARWI CK SPOtKA AKCYJNA

oraz

SECO/WARWICK EUROPE SPOtKA Z OGRANICZONJ ODPOWIEDZIALNOSCIJ

Swiebodzin, dnia 31.10.2016 r.

Plan Pofc1czenia Sp6fek: SECO/WARWICK SPOtKA AKCYJNA z siedzibq w Swiebodzinie (zwana dalej ,,SECO/WARWICK S.A."

lub ,,Sp6fka Przejmujc1ca")

oraz

SECO/WARWICK EUROPE SPOtKA Z OGRANICZONJ ODPOWIEDZIALNOSCIJ (zwana dalej ,,SECO/WARWICK EUROPE SP. Z 0.0." lub ,,Sp6fka Przejmowana")

Uzgodniony isporzqdzony w Swiebodzinie, w dniu 31.10.2016 r.

1. WPROWADZENIE

   W zwiqzku z zamiarem potqczenia Sp6tek, zarzqdy Sp6tek: SECO/WARWICK S.A. z siedzibq w Swiebodzinie oraz SECO/WARWICK EUROPE SP. Z 0.0. z siedzibq w Swiebodzinie wsp61nie sporzqdzity i zaakceptowaty niniejszy plan potqczenia (dalej: ,,Plan Potqczenia").

   Plan potqczenia zostat sporzqdzony na podstawie art. 498 i 499 kodeksu sp6tek handlowych (dalej:

   ,,k.s.h."). Potqczenie bdqce przedmiotem niniejszego Planu Potqczenia odbywa si w trybie tqczenia si przez przejcie na podstawie art. 492 § 1pkt 1k.s.h.

2. TYP, FIRMA I SIEDZIBA SPOtEK UCZESTNICZJCYCH W POtJCZENIU (art. 499 § 1pkt. 1k.s.h.)
3. SPOtKA PRZEJMUJJCA Firma: SECO/WARWICK SPOtKA AKCYJNA Typ: sp6tka akcyjna

   Siedziba: Swiebodzin, adres: ul. Sobieskiego 8, 66-200 Swiebodzin

   Sp6tka wpisana jest do rejestru przedsi biorc6w Krajowego Rejestru Sqdowego prowadzonego przez Sqd Rejonowy w Zielonej G6rze,VIII Wydziat Gospodarczy Krajowego Rejestru Sqdowego pod nr KRS: 0000271014.

   Nr NIP: 9270100756 Nr REGON: 970011679
4. SPOtKA PRZEJMOWANA
5. Firma: SECO/WARWICK EUROPE SPOtKA Z OGRANICZONJ ODPOWIEDZIALNOSCIJ Typ: sp6tka z ograniczonq odpowiedzialnosciq

   Siedziba: Swiebodzin, adres: ul. Swierczewskiego 76, 66-200 Swiebodzin

   Sp6tka wpisana jest do rejestru przedsibiorc6w Krajowego Rejestru Sqdowego prowadzonego przez Sqd Rejonowy w Zielonej G6rze, VIII Wydziat Gospodarczy Krajowego Rejestru Sqdowego, pod nr KRS: 0000482661.