Letter from the President of the Management Board

Dear stakeholders,

another successful business year is behind us, as confirmed by the business results achieved, as well as awards and recognitions we have been receiving. In this Integrated Report, we want to bring you closer to our business, to familiarize you with the most important activities during the year, the results and way of managing economic, social and environmental impacts.
Despite the challenges in the global automotive market, we have been successfully achieving the set development guidelines within the industry to which we belong, thus ensuring the smooth growth and achievement of the desired results. Thanks to our business strategy and the activities we have been carrying out, our growth trend is still above market trends, which confirms the correctness of the decisions we make.
The results we achieve are a great motivation, but at the same time the obligation and responsibility towards all the stakeholders we influence with our business. We have set ambitious plans and goals, and increasingly complex business operations and business opportunities require a high level of focus from us. Through our development and investments, we contribute to the achievement of the sustainable development goals that are an integral part of our business strategy.
Unstoppable changes in the market, investments in research and development of new, more environmentally friendly materials and new technologies, encourage us to constantly improve business and management. By using new materials, we contribute to reducing vehicle emissions globally, and in-house R&D is focused on making further progress in these areas. In addition to the successful economic topics management, our success is reflected in the quality management of social and environmental topics.
The automotive industry has been rapidly changing and advancing, and as one of the most important backbones of the economy, it has a significant role to play in scientific and technological achievements. The increasing impact of high technologies integrated into serial production of vehicles is aimed primarily
at improving end-user safety, environmental protection and sustainable development. As members of an industry with such high standards, we are aware of the need for constant changes, trend monitoring and competency upgrading. Exactly this is an opportunity for strong development in all business segments.
Aware of our impact and the importance of corporate social responsibility, sustainability principles have been included in every segment of our work, about which you can read in more detail in this report. By cooperating with all our stakeholders, we have been creating a solid foundation for the future and further development. We pay special attention to our employees because they are the most valuable resource of the Company. With quality management and continuous improvement of human resources development at all production sites, we have been creating a motivating business environment. With high standards of quality of products and services, we have ensured our customers reliable cooperation and contribute to the safety of end users of vehicles. We have been introducing continuous
improvements in corporate governance and business transparency to the satisfaction of all stakeholders. We contribute to the development and well-being of the communities in which we operate, while taking care of the local population. We operate in harmony with our environment, so we pay special attention to the environment and its protection.

Marinko Došen
President of the Management Board

We promote fair business, safe working conditions, employee education, equality and equal pay and respect for human rights. We choose our business partners according to the values of the company and require them to adhere to the AD Plastik Group Code of Business Conduct and Policies. We want to be a positive example
Standarts of ethical conduct are defined in the Code of Business Conduct and Policies of the AD Plastik Group. The brochure is distributed to employees at all production sites, and each new employee receives a copy when they are hired. It has been translated into four languages, Croatian, Russian, Serbian and Hungarian,
the official languages of the countries where the Group’s production sites are located. In this way, all employees are made aware of the ethical behavior that the Company promotes, its values, vision and mission. The Code of Business Conduct is binding on all employees, and it also prescribes how to report conduct that is
not in line with the Company’s values. The code and policies are digitally available on the intranet, and they have also been published on the Company’s website in order for other stakeholders to be familiar with them.
It is important to point out that our suppliers are also required to comply with the AD Plastik Group Code of Business Conduct, and the Sustainable Supplier Management Policy is also among the policies. We aim to cooperate with business partners who share our vision and business values, so we encourage our suppliers
to follow corporate social responsibility guidelines. Regular questionnaires and periodic audits we conduct help us monitor and evaluate their full respect for human rights and the principles of sustainable development.

All employees of the AD Plastik Group are aware of their rights to the equal right to respect and dignity, regardless of their race, religion, gender, age, national origin, political beliefs, sexual orientation, marital status, disability or any other personal attribute.
Employees should treat each other with respect and dignity, and no form of discrimination or harassment in the workplace is tolerated, and every report is considered with the utmost seriousness and care.
In case of receipt of a report on violation of rights prescribed by the code, a procedure shall be initiated in which the circumstances of the reported event shall be investigated, the justification of the report shall be determined and appropriate measures shall be taken in regard to the reported employee.
We also oblige our suppliers to respect human rights and a standard purchase agreement form has been created containing the abovementioned human rights clauses including provisions on prohibition of child and forced labor, referring explicitly to the implementation of conventions (ILO 138, 29 and 105). In this sense,
a general tool agreement was made with the same provisions as We continually promote diversity and non-discrimination policies and raise awareness of the importance of these policies and their implementation in workshops. In 2019, one workshop on diversity was held in Zagreb, attended by 24 emloyees.

During the reporting period, two new disputes regarding labor relations were initiated and resolved. In 2019, one dispute, initiated before the beginning of the reporting period, was resolved. Three cases of discrimination were reported, and after the procedure, it was found that there was no discrimination in two cases, while
one was found to be discriminatory and appropriate warning measures were taken against the employee.
In the previous reporting period, as in previous periods, no employment contract was signed with persons under the age of 15 or under 18 years of age in the Group.

All employees of the AD Plastik Group are aware of their rights to the equal right to respect and dignity, regardless of their race, religion, gender, age, national origin, political beliefs, sexual orientation, marital status, disability or any other personal attribute. Employees should treat each other with respect and dignity, and
no form of discrimination or harassment in the workplace is tolerated, and every report is considered with the utmost seriousness and care.
In case of receipt of a report on violation of rights prescribed by the code, a procedure shall be initiated in which the circumstances of the reported event shall be investigated, the justification of the report shall be determined and appropriate measures shall be taken in regard to the reported employee.
In the previous reporting period, as in previous periods, no employment contract was signed with persons under the age of 15 or under 18 years of age in the Group. In this way, we transparently support the ban on child labor and monitor the application of principles in all countries where we conduct business. Control
mechanisms for verification of the age of candidates for employment are prescribed, thus reducing the risk of hiring persons under the age of 15 and 18.
All agreements with customers contain human rights clauses. We also oblige our suppliers to respect human rights and a standard purchase agreement form has been created containing the abovementioned human rights clauses including provisions on prohibition of child and forced labor, referring explicitly to the implementation of conventions (ILO 138, 29 and 105).
Code of Business Conduct is binding on all employees, and it also prescribes how to report conduct that is not in line with the Company’s values.
The code and policies are digitally available on the intranet, and they have also been published on the Company’s website in order for other stakeholders to be familiar with them.

An important channel of communication of the Management Board towards employees are the trade unions and the Workers’ Council, which are regularly informed of all important information on business, changes, plans and new deals. Maintenance of good relations and transparent communication have been continued in the previous reporting period. They are also involved in making decisions that are important for the position of employees and they represent their interests, and a member of the Workers’ Council is a member of the Supervisory Board and thus the employees are involved in the supervision of the work of the Company. Good social dialogue is focused on achieving common goals - through continuous improvement of working conditions and employee satisfaction.

In the reporting period, communication within the Company took place through multiple channels at the individual, operational and corporate levels. A research of motivation and satisfaction was conducted. Six times a year we publish internal newsletter ADP News through which we regulary inform our employees about the current topics in all Group members. If necessary, individual consultations of employees with their supervisors and HR department are made, and information oncerning all employees is presented on bulletin boards, intranet and via email. With the aim of raising the level of cohesion in our teams, we have been constantly working on designing activities to develop employee connectivity. In this way, we want to create a more comfortable working atmosphere, increase employee awareness and involvement. Thus, in 2019, employees in Croatia participated in humanitarian activities and represented the Company at B2B races
held in Zagreb and Split. We also continued good practices of employee rewarding, trainings, chat rooms, team building, as well as various informal gatherings such as matches, holiday receptions and the like. On the occasion of ADP Day, we have organized a number of activities at all Group production sites, such as
Open Doors Day for the families of employees, with an interactive play about nature and environment conservation for the youngest ones.

Environmental responsibility is an integral part of the develop- Materials ment policy of the AD Plastik Group and of the automotive industry as a whole. Without a clear and unconditional focus on improving the environmental protection, it is not possible to be part of the supply chain within this industry. Due to the impact of vehicles on the atmosphere, special attention is paid to reducing emissions, namely the develop pment of lighter products. The environmental orientation of our Company is also reflected in the long-standing implementation of the ISO 14001 environmental management system. We continually manage and control our environmental impact
and with good planning, make sure that we burdain it as little as possible, while taking care of the rational use of natural resources and energy. We pay close attention to environmental protection in accordance with the Sustainable Development Guidelines and use the best available tools as preventative protection measures
to avoid possible risks and damage to the environment.
We apply the Group-wide precautionary principle, through which we avoid any possible risk of using new technology until there is complete knowledge and understanding of its impact on the environment and human health.

Being aware of the environmental impact of materials, together with our customers we have been constantly exploring the possibility of using bio plastics and other alternative materials that are recyclable. We have been also exploring the possibility of using water-based paints, varnishes and solvents with significantly less
negative environmental impact.
Energy is an important material topic of the AD Plastik Group, not only in terms of consumption and cost, but primarily because of its direct environmental impact.
As this is the main energy source used in the business for the operation of production machines and heating and cooling devices, we keep systematic records
and monitor its consumption. The monitoring is carried out at the Group level in accordance with the prescribed internal documents and ISO 14001 environmental
management and ISO 50001 energy management standards. These standards were the backbone and basis for the development of an energy efficiency program
that has clearly set goals by 2021.
Due to its potential environmental and economic impacts, the management of gas emissions into the atmosphere is an important segment of business within the Group. The supervision and certification of the ISO 14001 environmental management system and ISO 50001 energy management system, allow us to evaluate
our performance. Internal documents prescribe the supervision and management of activities related to gas emissions.
Waste and waste water management is an indispensable part of the daily operations of the Group. Aware of their environmental impact, and in accordance with positive legal regulations, professional environmental protection services are organized at all production sites. All sites have implemented the ISO 14001 environmental
management system, and during regular successful certification audits we successfully confirm our commitment regarding this topic.

In 2019, 3.215 tonnes more of thermoplastic organic polymers were consumed due to the increase in production compared to
the previous year, and 113,9 tonnes more of paints, varnishes and solvents. It is important to emphasize that in the period observed, we continued to apply a chemical
leasing model that takes care of the entire life cycle of organic solvents used in painting technology in Zagreb. Namely, we hand over the waste solvents to an authorized repository that regenerates the waste solvent and returns it purified to the painting process. The amount of this recovered solvent used in 2019 was 191 t.
The share of electricity in total energy consumption within the Group in 2019 was the same as in the previous year and amounted to 79.26 percent.
We regularly monitor emissions into the atmosphere from fixed sources, which we report to in accordance with legal regulations in the field of air protection. The weights of the emissions into the air are determined directly from the measurement or indirectly from calculations based on the fuel consumption or the substance
emitted. Regular maintenance of energy distribution and production systems, as well as systems for the regenerative incineration of volatile organic compounds, is the basis for reducing emissions to the environment. Their automatic control monitors consumption parameters and contributes to a more efficient use of low emission resources. In the reporting period there was no uncontrolled releasing of active substances in the environment, and there were no fires, i.e. releasing of 227ea active substance due to fire suppressing activities.
The analyses have shown that in the past year the quality of wastewater was in accordance with legally prescribed parameters at all production sites. The reports on the quality of waste water are submitted to national competent authorities responsible for environmental protection. In 2019, there were no significant outpours of hazardous substances that could have significant negative impacts on the environment with potential adverse effects on the soil, water, air, biodiversity and human health.

Standarts of ethical conduct are defined in the Code of Business Conduct and Policies of the AD Plastik Group. The brochure is distributed to employees at all production sites, and each new employee receives a copy when they are hired. It has been translated into four languages, Croatian, Russian, Serbian and Hungarian,
the official languages of the countries where the Group’s production sites are located. In this way, all employees are made aware of the ethical behavior that the Company promotes, its values, vision and mission. The Code of Business Conduct is binding on all employees, and it also prescribes how to report conduct that is
not in line with the Company’s values. The code and policies are digitally available on the intranet, and they have also been published on the Company’s website in order for other stakeholders to be familiar with them. Among others, we have a prescribed Group-wide Anti-Corruption Policy that clearly defines zero tolerance for all forms of bribery and corruption. The Anti-Monopoly Policy respects the basic principles of free market competition and, accordingly, forbids coordinated actions, agreements and decisions of associations of entrepreneurs that Ethics and integrity aim to or result in a disruption of market competition and which place the company in an advantageous position in relation to the competition and customers. It is important to point out that our suppliers are also required to comply with the AD Plastik Group Code of Business Conduct, and the Sustainable Supplier Management Policy is also among the policies. We aim to cooperate with business partners who share our vision and business values, so we encourage our suppliers to follow corporate social responsibility guidelines. Regular questionnaires and periodic audits we conduct help us monitor and evaluate their full respect for human rights and the principles of sustainable development.
The Company does not participate in lobbying activities or providing financial or non-cash political contributions to political parties or goals. In this way the Company excludes itself from improper influence on the political system. We advocate the public advocacy of various policies through business and interest organizations,
public appearances, expert discussions or direct suggestions and comments to the competent authorities.
Corporate Social Responsibility is indisputably an integral part of the development strategy of AD Plastik Group, through which we ensure a clear business objective to the satisfaction of all stakeholders

Employees are required to report any form or suspicion of corruption to their direct superiors, Human Resources or Legal Affairs Department.

In 2019, as before, there were no statements about any events on suspicion of corruption, business cooperations with partners weren’t terminated for this reason, and no anti-corruption disputes were initiated. In the reporting period no disputes regarding the violation of the free market competition principles were initiated nor finished.