MANAGEMENT BOARD REPORT
ON THE OPERATIONS OF THE
GROUP AND COMPANY
TABLE OF CONTENTS
1. Basic information.......................................................................................................................................................................................... 3
1.1 General information ................................................................................................................................................................................................... 3
1.2 Synthetic summary of data concerning the Company and the Capital Group for the year 2015-2020 ................................................... 3
1.3 Significant events in 2020 and until the date of the report ................................................................................................................................ 5
1.4 Composition of the Group ........................................................................................................................................................................................ 6
1.5 Changes in the Group’s structure ........................................................................................................................................................................... 8
1.6 Branches of the Parent Company ........................................................................................................................................................................... 8
1.7 Organizational and capital ties ................................................................................................................................................................................ 8
1.8 Changes to the management principles of the Company and its Capital Group .......................................................................................... 9
2. The activities and development of the Parent Company and its Capital Group ........................................................................................ 9
2.1 Products and services ............................................................................................................................................................................................... 9
2.2 Main operating markets and their segments ..................................................................................................................................................... 11
2.3 Events significantly influencing activities in 2020 ............................................................................................................................................ 12
2.4 Material contracts ................................................................................................................................................................................................... 12
2.5 Related party transactions .................................................................................................................................................................................... 12
2.6 Credits and loans..................................................................................................................................................................................................... 12
2.7 Sureties and guarantees ........................................................................................................................................................................................ 12
2.8 Post balance sheet events..................................................................................................................................................................................... 13
2.9 External and internal factors important for the development of the Company and the Group ............................................................... 13
2.10 The Group’s activities in 2020 and development outlook ............................................................................................................................... 15
3. Operating and financial situation ............................................................................................................................................................... 16
3.1 Principles of preparation of annual financial statements................................................................................................................................ 16
3.2 Basic economic and financial information ......................................................................................................................................................... 16
3.3 Current and projected financial situation ........................................................................................................................................................... 29
3.4 Structure of assets and liabilities ......................................................................................................................................................................... 30
3.5 Factors which in the Management’s Board belief may impact the Group’s operations and perspectives ........................................... 32
3.6 Risk factors ............................................................................................................................................................................................................... 34
3.7 Assessment of financial funds management .................................................................................................................................................... 38
3.8 Material off-balance sheet items ......................................................................................................................................................................... 38
3.9 Financial forecasts .................................................................................................................................................................................................. 39
3.10 Dividend policy ......................................................................................................................................................................................................... 39
4. Corporate Governance ................................................................................................................................................................................ 40
4.1 Set of rules of corporate governance applied by X-Trade Brokers Dom Maklerski S.A ............................................................................ 40
4.2 Equity ......................................................................................................................................................................................................................... 42
4.3 Shares on the stock exchange.............................................................................................................................................................................. 42
4.4 Shareholding structure ........................................................................................................................................................................................... 43
4.5 Acquisition of own shares ..................................................................................................................................................................................... 43
4.6 Holders of securities with special control rights ............................................................................................................................................... 44
4.7 Restrictions on exercising the voting right ......................................................................................................................................................... 44
4.8 Restrictions on the transfer of ownership of shares ........................................................................................................................................ 44
4.9 Agreements as a result of which changes may occur in the future in the proportions of shares held by the current shareholders 44
4.10 Management Board ................................................................................................................................................................................................ 44
4.11 Supervisory Board ................................................................................................................................................................................................... 48
4.12 General Meeting of Shareholders......................................................................................................................................................................... 56
4.13 Change of the Articles of Association of the Company ................................................................................................................................... 63
4.14 The main features of internal control and risk management in relations to the process of preparing separate and consolidated
financial statements ................................................................................................................................................................................................ 63
4.15 Remuneration Policy............................................................................................................................................................................................... 63
5. Other information........................................................................................................................................................................................ 66
5.1 Audit company authorised to audit the financial statements ........................................................................................................................ 66
5.2 The information on the significant court proceedings, arbitration authority or public administration authority ................................. 67
5.3 Employment information ....................................................................................................................................................................................... 72
5.4 Major research and development achievements .............................................................................................................................................. 73
6. Statement and information of the Management Board ............................................................................................................................ 73
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
1. Basic information
1.1 General information
The Parent Company in the Capital Group X-Trade Brokers Dom Maklerski S.A. (the „Group”, „Capital Group”) is X Trade Brokers
Dom Maklerski S.A. (hereinafter: the „Company” „Parent Entity”, „Parent Company”, „Brokerage”, „XTB”) with its headquarters
located in Warsaw, at Ogrodowa street 58, 00-876 Warsaw.
X–Trade Brokers Dom Maklerski S.A. is entered in the Commercial Register of the National Court Register by the District Court
for the Capital City of Warsaw, XII Commercial Division of the National Court Register, under No. KRS 0000217580. The Parent
Company was granted a statistical REGON number 015803782 and a tax identification number 5272443955.
The Parent Company’s operations consist of conducting brokerage activities on the stock exchange and OTC markets (currency
derivatives, commodities, indices, stocks and bonds). The Parent Company is supervised by the Polish Financial Supervision
Authority and conducts regulated activities pursuant to a permit dated 8 November 2005, No. DDM–M–4021-57-1/2005.
Company's shares have been listed on the main market of the Warsaw Stock Exchange.
The foregoing Management Board report on the operations of X-Trade Brokers Dom Maklerski S.A. Capital Group for 2020
includes disclosure requirements for the report on the operations of the Company X-Trade Brokers Dom Maklerski S.A.
pursuant to §71 item 8 of the ordinance of Minister of Finance dated 29 March, 2018 on current and periodic information
published by issuers of securities and the conditions for recognition as equivalent the information required by the laws of
a non-member state.
1.2 Synthetic summary of data concerning the Company and the Capital Group for the year
2015-2020
2020
2019
2018
2017
2016
2015
Selected consolidated financial data
Total operating income
mm PLN
798
239
288
274
251
283
Net profit
mm PLN
402
58
101
93
78
119
Balance sheet total
mm PLN
2 284
1 139
970
898
797
727
Own cash
mm PLN
542
484
468
367
291
325
Equity
mm PLN
888
491
455
400
356
374
Earnings per share (EPS)
1
PLN
3,43
0,49
0,86
0,79
0,66
1,01
The market value of the Company
shares
2
PLN
17,90
3,95
4,40
4,47
6,97
nd
Aggregate capital adequacy ratio,
including buffers
%
16,0
13,3
19,1
10,7
16,3
14,5
Selected separate financial data
Total operating income
mm PLN
748
211
267
252
211
246
Net profit
mm PLN
418
54
91
87
73
115
Balance sheet total
mm PLN
2 156
1 084
928
853
775
722
Own cash
mm PLN
495
435
413
323
234
276
Equity
mm PLN
889
497
463
413
364
382
Earnings per share (EPS)
1
PLN
3,56
0,46
0,77
0,74
0,62
0,98
Standalone capital adequacy ratio,
including buffers
%
17,1
14,6
20,0
10,9
15,7
13,3
Economic data (average)
Exchange rate
EUR/PLN
4,61
4,30
4,26
4,26
4,36
4,18
Exchange rate
USD/PLN
3,76
3,84
3,61
3,78
3,94
3,77
1
) Attributable to shareholders of the Parent Company.
2
) At the end of the period.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
1.3 Significant events in 2020 and until the date of the report
Calendar
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
1.4 Composition of the Group
As at 31 December 2020 the Group comprised Parent Company and 9 subsidiaries. The Company has 7 foreign branches.
The chart below presents the corporate structure of the Group as at 31 December 2020, including Company’s subsidiaries and
foreign branches, together with the share in the share capital/in the number of votes at the general meeting or the meeting of
shareholders to which the shareholders is entitled.
All subsidiaries results are fully consolidated since the date of foundation/ acquisition. In the reporting periods all subsidiaries
have been subject to consolidation.
Neither the Parent Company nor any Group company holds shares in other companies that may have a material impact on its
assets and liabilities, financial position and profit or loss.
Subsidiaries
Basic information about the Group companies, which are directly or indirectly dependent on the Company, is provided below.
XTB Limited, Great Britain
The company provides brokerage services based on the obtained permission issued by the FCA (Financial Conduct Authority),
license no FRN 522157.
X Open Hub Sp. z o.o., Poland
Main scope of business of the company is offering electronic applications and trading technology.
XTB Limited (formerly: DUB Investments Ltd.), Cyprus
The company provides brokerage services based on the obtained permission issued by the CySEC (Cyprus Securities and
Exchange Commission), license no 169/12. On May 3 2018, DUB Investments Limited changed its name to XTB Limited. On
June 6 2018, the parent company acquired 1 165 shares in the increased share capital of the subsidiary, maintaining a 100%
share in its capital.
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş. (formerly: X Trade Brokers Menkul Değerler A.Ş.), Turkey
In 2020 XTB Yönetim Danışmanlığı Anonim Şirketi did not conduct any operating activities. In the past the company business
encompassed among other.:
• investment consulting,
• trading derivatives,
• leverage trading on the forex market,
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• trading intermediation.
On 10 February 2017, the Turkish regulator, the Capital Market Board of Turkey (CMB), amended the regulations governing the
activities of investment services, investment activities and additional services. On 19 April 2018 The Management Board
decided to resume an action to terminate the activities on Turkish market and liquidation of the subsidiary. The decision of the
Company was made after analysing the situation of the subsidiary and in the absence of the expected relaxation of the
restrictions introduced by the Capital Markets Board of Turkey (CMB). As at the date of this report the subsidiary did not have
active licence to operate.
On 3 March 2020 the General Meeting of company XTB XTB Yönetim Danışmanlığı Anonim Şirketi with its office in Turkey
decided to reduce the company’s share capital from TRY 22 500 thousands to TRY 100 thousands. Therefore, X- Trade Brokers
Dom Maklerski S.A. Group, on the basis of Management Board decision of 15 April 2020, made a decision on recognition in
accounting records reclassification of the part of negative foreign exchange differences in the amount of 21,9 million PLN
arising from the translation of the XTB Yönetim Danışmanlığı Anonim Şirketi subsidiary’s equity from the position “Foreign
exchange differences on translation” in equity to income statement.
The recognition of reclassification in the above amount as financial cost in accounting records is an accounting operation and
was recognized in consolidated financial results for the 1st Half 2020. However, it did not affect the liquidity position of XTB nor
the total amount of Group’s equity as at the date of its booking.
The remaining part of foreign exchange differences arising from the translation of the Turkish company’s equity, which as at
the end 2020 amounted to PLN 3,0 million and is derived among other the exchange rate of Turkish lira, will be recognized in
consolidated result at the date of liquidation of this company.
On 12 March 2020 the subsidiary changed its name to XTB Yönetim Danışmanlığı Anonim Şirketi.
On 15 September 2020 the liquidation process of the company in Turkey began. The name of the company has changed to
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
Lirsar S.A in liquidacion, Uruguay
On 21 May 2014 the Parent Company acquired 100% of shares in Lirsar S.A. with its seat in Uruguay. The capital from the
subsidiary with accumulated profits was returned to the Parent Company on 14 December 2017. Until the date of report
submission the company was not formally liquidated.
XTB Chile SpA, Chile
On 17 February 2017 the Parent Company established XTB Chile SpA. The Company owns 100% of shares in subsidiary. XTB
Chile SpA will provide services involving the acquisition of clients from the territory of Chile.
XTB International Limited, Belize
On 23 February 2017 the Parent Company acquired 100% of shares in CFDs Prime with its seat in Belize. On 20 March 2017
the company changed its name from CFDs Prime Limited to XTB International Limited. On 26 September 2019 the Parent
Company acquired 500 000 shares in the increased share capital of the subsidiary while maintaining a 100% share in its capital.
The company provides brokerage services based on the obtained permission issued by the International Financial Service
Commission.
XTB Services Limited, Cyprus
On 27 July 2017 the Parent Company acquired 100% shares in Jupette Limited with its registered office in Cyprus. On 5 August
2017 the subsidiary changed its name to XTB Services Limited. The company provides marketing and marketing-sales services
(sales support).
XTB Africa (PTY) Ltd., South Africa
On 10 July of 2018 the Parent Company established a subsidiary of XTB Africa (PTY) Ltd with its seat in RPA. The company
hold 100% shares in a subsidiary. On 14 October 2019 the Parent Company acquired 100 shares in the increased capital of the
subsidiary, maintaining 100% share in its capital. As at the date of report publication, the company did not conduct any operating
activities and was in the process of obtaining a license to conduct brokerage activities.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
XTB Foundation, Poland
On 23 December 2020 XTB Foundation was registered in KRS (National Court Register).
The subject of foundation activity is:
• increase in entrepreneurship and innovation, in particular in the area of new technologies and the financial market,
• raising awareness and knowledge of economic, finance and new technologies
• scientific and research activity and promotion of solutions developed as part of the activities of the XTB Capital Group.
XTB MENA Limited, United Arab Emirates
At the end of November 2020 XTB received the preliminary approval of the DFSA regulator to conduct brokerage activities in
United Arab Emirates. It is an approval of the „in principal” type, that requires the fulfilment of conditions (mainly operational
type) before the actual start of operations.
One of the condition was the establishment of the company XTB MENA Limited in DIFC (Dubai International Financial Centre)
after the balance sheet data, i.e. on 9 January 2021. As at the date of this report the process is currently underway over the
fulfilment of other conditions.
1.5 Changes in the Group’s structure
In the reporting period, i.e. from 1 January to 31 December of 2020 and until the date of report submission there were no
changes in the X-Trade Brokers Dom Maklerski S.A. Group’s structure, than described in point
1.4 Composition of the Group
.
1.6 Branches of the Parent Company
The Company has 7 foreign branches, listed below:
• X-Trade Brokers Dom Maklerski Spółka Akcyjna, organizačni složka – a branch established on 7 March 2007 in the
Czech Republic. The branch was registered in the commercial register maintained by the City Court in Prague under
No. 56720 and was granted the following tax identification number: CZK 27867102,
• X-Trade Brokers Dom Maklerski Spółka Akcyjna, Sucursal en Espana – a branch established on 19 December 2007
in Spain. On 16 January 2008, the branch was registered by the Spanish authorities and was granted the tax
identification number ES W0601162A,
• X-Trade Brokers Dom Maklerski Spółka Akcyjna, organizačná zložka – a branch established on 1 July 2008 in the
Slovak Republic. On 6 August 2008, the branch was registered in the commercial register maintained by the City Court
in Bratislava under No. 36859699 and was granted the following tax identification number: SK4020230324,
• X-Trade Brokers Dom Maklerski S.A. Sucursala Bucuresti Romania (branch in Romania) – a branch established on
31 July 2008 in Romania. On 4 August 2008, the branch was registered in the Commercial Register under No. 402030
and was granted the following tax identification number: RO27187343,
• X-Trade Brokers Dom Maklerski S.A., German Branch (branch in Germany) – a branch established on 5 September
2008 in the Federal Republic of Germany. On 24 October 2008, the branch was registered in the Commercial Register
under No. HRB 84148 and was granted the following tax identification number: DE266307947,
• X-Trade Brokers Dom Maklerski Spółka Akcyjna (branch in France) – a branch established on 21 April 2010 in the
Republic of France. On 31 May 2010, the branch was registered in the Commercial Register under No. 522758689,
and was granted the following tax identification number: FR61522758689,
• X-Trade Brokers Dom Maklerski S.A., Sucursal Portugesa – a branch established on 7 July 2010 in Portugal. On
7 July 2010, the branch was registered in the Commercial Register under and was granted the following tax
identification number PT980436613.
1.7 Organizational and capital ties
XXZW Investment Group S.A. with its registered office in Luxembourg is the key shareholder of the Company. It holds, as at
31 December 2020, 66,99% of shares and votes in the General Meeting. XXZW Investment Group S.A. prepares consolidated
financial statements.
Mr. Jakub Zabłocki is the ultimate parent company for the Company and XXZW Investment Group S.A.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Apart from the organization of the Group and the Parent Company described above, neither the Parent company nor any of the
Group companies holds any shares in other undertakings which could materially impact the assessment of its assets and
liabilities, financial condition and profits and losses.
1.8 Changes to the management principles of the Company and its Capital Group
In the reporting period there were no changes in the management principles of the Company and its Capital Group
2. The activities and development of the Parent Company and its Capital Group
2.1 Products and services
The Group is an international provider of trading and investment products, services and solutions, specialising in OTC markets
with a particular focus on CFDs, which are investment products with returns linked to the changes in the prices and values of
underlying instruments and assets. The Group also offers investments in shares and ETF instruments on the same trading
platform. The Group operates in two segments: retail and institutional segment. The Group's retail operations mainly include
online trading of derivatives based on assets and underlying instruments that are traded on the financial and commodity
markets. Institutional customers of the Group offers technologies thanks to which they can offer their clients the possibility of
trading in financial instruments under their own brand. The Group also acts as a liquidity provider for institutional clients.
The Group offers two trading platforms to both retail clients and institutional clients:
• xStation and
• MetaTrader 4 (MT4) – the platform offered to new clients until 18 January 2021.
which are supported by the Group’s advanced, proprietary technology infrastructure. The Group’s retail clients are given access
to one of the above-mentioned front-end trading platforms and to the range of its components, along with access to back-
office systems. Institutional clients are granted full access to the set-up and management facilities, the branding system and
the risk management tools.
The Group also offers its clients various trading alternatives based on the level of client sophistication (from beginner to expert)
and on the mode of access (from smartphones to web-based interfaces to desktop applications). These applications provide
retail clients investing in CFDs based on various financial instruments with tools, including charts, analytics, research and online
trading.
The functionality of the Group’s offer enables clients to open and deposit funds in accounts, place and move orders and request
statements via the Internet. The Group’s core technology uses software products designed for their functionality and scalability.
In the period of 12 months of 2020, the Group continued the process of expanding its product offer. The aim of these activities
was to meet clients expectations regarding the availability of individual financial instruments. In 2020, the offer of shares and
ETFs was constantly expanded with new instruments desired by clients. In October 2020, the Company offered trading on
shares from all around the world for free for monthly volumes up to EUR 100 000 as a first broker in Poland. XTB is constantly
developing its own xStation trading platform by adding new functionalities. The Company’s aim is to make the xStation platform
a central and necessary place for every trader, where besides trading one could have access to education and fundamental
data.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
XTB product offer
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
XTB is constantly actively expanding the functionalities of the xStation platform to meet requirements of both CFD clients and
the new group of shares clients. The Management Board believes that the platform is currently one of the most developed
trading platform on the CFD and stock market. The company is constantly trying to develop the platform with elements
supporting transactions on OTC markets.
As at the end of 2020, the Group offered in total more than 4 800 financial instruments from all over the world. This number
consisted of over 2 100 leveraged CFDs, including approximately 50 based on currency pairs, approximately 20 based on
commodities, approximately 40 based on indices, 25 based on cryptocurrency, approximately 1 850 based on shares of
companies listed on stock exchanges in 16 countries and over 100 based on American and European ETFs. Second part of
XTB’s offer contains over 2 400 cash instruments, including over 2 500 equity instruments and over 200 ETF instruments from
European markets. Cash instruments were introduced to the offering in March 2018 and replaced the synthetic shares offered
so far, i.e. equity CFDs without leverage. The group is constantly working on the development of its own xStation platform. In
2020, the Company focused mainly on improving the existing processes of acquiring new clients, processes leading to the start
of trading by clients and the clients experience resulting from concluding transactions in XTB. The Group is actively introducing
new improvements to the transaction platform that make it more intuitive and easy to use.
2.2 Main operating markets and their segments
The Group conducts its operations through two business segments:
• retail segment and
• institutional segment.
The Group’s retail business is focused on providing online trading in various instruments based on assets and underlying
instruments from the financial and commodities markets to individual clients. For its institutional clients, the Group offers
technologies that allow clients to set up their own trading environment under their own brands and acts as a liquidity provider
to its institutional clients.
The Group operates on the basis
of licences granted by regulators
in Poland, the UK, Cyprus and
Belize. The Group’s business is
regulated and supervised by
competent authorities on the
markets on which the Group
operates, including EU countries,
where it operates on the basis of
a single European passport.
Currently, the Group is focusing
on growing its business in 12 key
countries, including Poland,
Spain, the Czech Republic,
Portugal, France and Germany
and has prioritised Latin
America, Africa and Asia as
a region for future development.
Currently, the Management Board efforts are focused on the start of operational activities in a chosen Asian country, i.e. United
Arab Emirates and Republic of South Africa. At the end of November 2020 XTB received the preliminary approval of the DFSA
regulator to conduct brokerage activities in United Arab Emirates. It is an approval of the „in principal” type, that requires the
fulfilment of conditions (mainly operational type) before the actual start of operations. One of the condition was the
establishment of the company XTB MENA Limited in DIFC (Dubai International Financial Centre) which took place on 9 January
2021. The process is currently underway over the fulfilment of other conditions. The intention of the Management Board is to
start operating activities in United Arab Emirates in the first half of 2021. In terms of Republic of South Africa, due to the complex
local formal and legal conditions, the Management Board is currently not able to indicate the expected date of the start of
operations on this market. Subsidiary XTB Africa (PTY) has been in the licensing process since February 2019.
On 10 February 2017, the Turkish regulatory body, the Capital Markets Board of Turkey (CMB), introduced changes to the
regulations regarding the operation of investment services, investment activities and additional services. This contributed to a
significant decrease in the number of clients and, consequently, to a significant reduction in the Group's operations in Turkey.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
On 19 April 2018 The Management Board decided to resume an action to terminate the activities on Turkish market and
liquidation of the subsidiary X Trade Brokers Menkul Değerler A.S. The decision of the Company was made after analysing the
situation of the subsidiary and in the absence of the expected relaxation of the restrictions introduced by the Capital Markets
Board of Turkey (CMB). As at the date of this report the Company did not have any active licence to operate. On 15 April 2020
the Management Board made a decision on recognition in accounting records reclassification of the part of negative foreign
exchange differences in the amount of 21,9 million PLN arising from the translation of the Tasfiye Halinde XTB Yönetim
Danışmanlığı A.Ş. (former: X Trade Brokers Menkul Değerler A.S.) subsidiary’s equity from the position “Foreign exchange
differences on translation” in equity to income statement. The recognition of reclassification in the above amount as financial
cost in accounting records is an accounting operation and was recognized in consolidated financial results for the 1st Half
2020. However, it did not affect the liquidity position of XTB nor the total amount of Group’s equity as at the date of its booking.
The remaining part of foreign exchange differences arising from the translation of the Turkish company’s equity, which as at
the end of 2020 amounted to PLN 3,0 million and is derived among other the exchange rate of Turkish lira, will be recognized
in consolidated result at the date of liquidation of this company. On 15 September 2020, the liquidation process of the company
in Turkey has begun. The name of the company was changed to Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
2.3 Events significantly influencing activities in 2020
Information about events and circumstances that had impact on the Company’s and Group's operations in 2020 are presented
in other parts of this report, in particular in note
3.2 Basic economic and financial information
. Apart from the events described
in this report there were no other events which had significant impact on the Company’s and the Group’s activities in 2020.
2.4 Material contracts
In 2020, the Company and the Group companies did not enter into agreements material for XTB operations, different than
described in this report, also the Company has no knowledge about contracts concluded between shareholders material for
XTB operations.
2.5 Related party transactions
In the 12 months period ended 31 December 2020 and 31 December 2019 there were no related parties transactions concluded
on other than arm’s length basis.
Transactions and the balances of settlements with related parties were presented in detail in
note 30
to the Separate Financial
Statements.
2.6 Credits and loans
In the reporting period the Company and the Group companies did not execute or terminate any loan agreements.
In 2020 the Company and Group companies did not grant any loans.
2.7 Sureties and guarantees
On 9 May 2014 the Company issued a guarantee in the amount of PLN 56 thousand to secure an agreement concluded by
a subsidiary XTB Limited, based in the UK and PayPal (Europe) Sarl & Cie, SCA based in Luxembourg. The guarantee was
granted for the duration of the main contract, which was concluded for an indefinite period.
On 7 July 2017, the Parent Company granted a surety of PLN 5 646 thousand to secure the agreement concluded by the
subsidiary XTB Limited with its registered office in the United Kingdom and Worldpay (UK) Limited, Worldpay Limited and
Worldpay AP LTD based in the United Kingdom. The guarantee was granted for the duration of the main contract, which was
concluded for a period of 3 years with the possibility of further extension.
Apart from described above, in 2020 XTB did not grant and did not receive other sureties and guarantees.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
2.8 Post balance sheet events
On 9 January 2021 XTB MENA Limited with its seats in United Arab Emirates was registered in the local register of
entrepreneurs. The shares in this company have not yet been paid.
2.9 External and internal factors important for the development of the Company and the
Group
2.9.1 The number of active clients, transaction volumes and deposit amounts
The Group’s revenue and its results of operations are directly mostly depended on the volume of transactions concluded by the
Group’s clients and the amount of deposits placed by them. The transaction volumes and deposit amounts depend, in turn, on
the number of new active clients.
Net deposits placed by retail clients comprise deposits less the amounts withdrawn by the Group’s clients in a given period.
The level of net deposits defines the ability of the Group’s clients to execute transactions in derivatives offered by the Group,
which affects the level of the Group’s transaction volumes.
2.9.2 Revenues of the Company and the situation on the financial and commodity markets
The Group’s revenue depends directly on the volume of transactions concluded by the Group’s clients and profitability per lot
which in turn is correlated with the general level of transaction activity on the FX/CFD market.
As a rule, the Group's revenues are positively affected by higher activity of financial markets due to the fact that in such periods,
a higher level of turnover is realized by the Group's clients and higher profitability per lot. The periods of clear and long market
trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of
financial markets and commodities generally leads to an increased volume of trading on the Group's trading platforms. On the
other hand, the decrease in this activity and the related decrease in the transaction activity of the Group's clients leads, as a
rule, to a decrease in the Group's operating income. Due to the above, operating income and the Group's profitability may
decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in
which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability
than in the case of larger directional movements on the markets, which creates favourable conditions for transactions
concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed,
which leads to a decrease in the Group's result on market making.
The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market,
and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group
in the subsequent quarters. This is characteristic of the Group's business model.
2.9.3 General market, geopolitical and economic conditions
Changes in the general market and economic situation in the regions, in which the Group operates, to some extent affect the
general buying power of the Group’s clients, as well as their readiness to spend or save, which in turn to some extent affects
the demand for the Group’s products and services.
Unfavourable trends in the global economy may limit the level of disposable income of the Group’s clients and induce them to
limit their activity on the FX/CFD market, which may, in turn, reduce the volume of transactions in financial instruments offered
by the Group and result in a drop in the Group’s operating income.
2.9.4 Competition on the FX/CFD market
The FX/CFD market, both globally and in Poland, is characterised by high competitiveness. The Group competes with local
entities (mainly brokerage houses being a part of or owned by commercial banks), local or Western European licenced
institutions (such as Saxo Bank and IG Group) and other entities, both licenced and non-licenced which gain clients through
the Internet (such as Plus500).
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
These entities compete with one another in terms of product and service prices, advanced technological solutions and brand
strength. Activities undertaken by the Group and its competition affect the Group’s competitive position and its share in the
FX/CFD market. To maintain and expand its position in the markets in which it operates, the Group is investing in marketing
activities.
In addition, the Group's ability to strengthen the current competitive position in the markets in which it operates, depends on
many factors beyond the control of the Group, including in particular the recognition of the brand and the Group's reputation,
attractiveness and quality of products and services offered by the Group as well as the functionality and quality of its
technological infrastructure.
Moreover, results of operations depend to some extent on the level of spreads in the derivatives CFD. Increased competition in
the market FX / CFD leads to a reduction in spreads in derivative transactions CFD. Smaller spreads and increased competition
may reduce the revenues and profitability of the
market making
business model.
2.9.5 Regulatory environment
The Group operates in a strictly regulated environment that places specific significant obligations on the Group within the scope
of a number of international and local regulations and provisions of applicable law. Among others, the Group is subject to
regulations relating to.:
• sales practices, including gaining of clients and marketing activities;
• maintaining capital at a specified level;
• anti-money laundering and preventing the financing of terrorism practices and “know your client” procedures (KYC);
• reporting obligations towards regulators;
• personal data protection and professional confidentiality obligations;
• obligations concerning investor protection and providing them with the relevant data on risks related to the brokerage
services provided;
• supervision over the Group’s operations.
• confidential data and its use, prevention of illegal disclosure of confidential data and prevention of market
manipulation
• providing information to the public as an issuer.
The Group is subject to supervision by specific regulatory authorities and public administration authorities in jurisdictions in
which the Group operates. In Poland, the conduct of brokerage activities requires a licence from the PFSA and is subject to
a number of regulatory requirements. The Company is a brokerage house operating based on a licence for the conduct of
brokerage activities and is subject to regulatory supervision by the PFSA.
Thanks to the “single passport” rule arising from the MiFID II Directive, the Company operates as a branch based on and as
part of the licence granted by the PFSA in the following member states of the EU: the Czech Republic, Spain, Slovakia, Romania,
Germany, France and Portugal.
Moreover, the Company and XTB Limited, subject to the supervision by the FCA, conduct cross-border operations without
establishing a branch (the MiFID Outward Service) in a number of jurisdictions, focusing mainly on the Italian and Hungarian
markets. In addition, the Company and its subsidiaries are entitled to conduct cross-border operations in Austria, Bulgaria,
Croatia, Denmark, Estonia, Finland, Greece, the Netherland, Iceland, Ireland, Lichtenstein, Lithuania, Luxembourg Latvia, Malta,
Germany, Norway, Slovenia and Sweden.
Additionally, the Company has a 100% interest in the following entities operating based on separate licences for the conduct of
brokerage activities issued by the supervision authorities in foreign jurisdictions:
• XTB Limited – a brokerage house registered in the United Kingdom subject to supervision by the FCA,
• XTB Limited (formerly: DUB Investments Ltd.) – an investment firm conducting brokerage activities registered in
Cyprus and subject to supervision by the CySEC,
• XTB International Limited – the company with its seats in Belize provides brokerage services based on the obtained
permission issued by the International Financial Service Commission.
The Group has created a compliance (compliance in law) function for each Group Company to ensure compliance with the
regulatory and regulatory requirements to which the Group is subject.
The regulatory environment in which the Group operates is constantly evolving. In recent years, the financial services industry
has been subject to increasingly comprehensive regulatory oversight. The supervisory and public administration authorities
regulating and supervising the Group's activities introduced a number of changes in the regulatory requirements to which the
Group is subject and may undertake additional initiatives in this area in the future.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
2.10 The Group’s activities in 2020 and development outlook
The Group's strategy is to actively strengthen its position as an international supplier of technologically advanced products,
services and solutions in the field of trading in financial instruments mainly in the EU and Latin America by increasing brand
recognition, acquiring new clients for its transaction platforms and building a long-term investment profile and customer
loyalty. The Group's strategic plan includes supporting growth through expansion into new markets, further penetration of
existing markets, expansion of the Group's product and service offer as well as the development of the institutional segment of
operations (X Open Hub).
The Management Board is of the opinion that the Group has built solid foundations that ensure its good position to generate
stable growth in the future.
XTB with its strong market position and dynamically growing client base builds its presence in the non-European markets,
consequently implementing a strategy on building a global brand. The XTB Management Board puts the main emphasis on
organic development, on the one hand increasing the penetration of European markets, on the other hand successively building
its presence in Latin America, Asia and Africa. Following these activities, the composition of the capital group will be expanded
by new subsidiaries. It is worth mentioning that geographic expansion is a process carried out by XTB on a continuous basis,
the effects of which are spread over time. Therefore, one should not expect sudden, abrupt changes in the results on this action.
Currently, the Management Board efforts are focused on the start of operational activities in a chosen Asian country, i.e. United
Arab Emirates and Republic of South Africa. At the end of November 2020 XTB received the preliminary approval of the DFSA
regulator to conduct brokerage activities in United Arab Emirates. It is an approval of the „in principal” type, that requires the
fulfilment of conditions (mainly operational type) before the actual start of operations. One of the condition was the
establishment of the company XTB MENA Limited in DIFC (Dubai International Financial Centre) which took place on 9 January
2021. The process is currently underway over the fulfilment of other conditions. The intention of the Management Board is to
start operating activities in United Arab Emirates in the first half of 2021. In terms of Republic of South Africa, due to the complex
local formal and legal conditions, the Management Board is currently not able to indicate the expected date of the start of
operations on this market. Subsidiary XTB Africa (PTY) has been in the licensing process since February 2019.
The development of XTB is also possible through mergers and acquisitions, especially with entities that would allow the Group
to achieve geographic synergy (complementary markets). Such transactions will be carried out, only when they will bring
measurable benefits for the Company and its shareholders. XTB is currently not involved in any acquisition process.
The entry into force of product intervention by ESMA creates both opportunities and threats for XTB. The Management Board
of XTB is convinced of the business's vitality over a longer time horizon. A wave of consolidation is going through the market,
which should allow XTB to establish its strong position. Small, local brokers, unable to withstand regulatory pressure and strong
competition from larger, international brokers such as XTB, are gradually disappearing from the market. As a consequence,
large brokers have noticed an increase in their client base.
In 2020, the Company focused mainly on improving the existing processes of acquiring new clients, processes leading to the
start of trading by clients and the clients experience resulting from concluding transactions in XTB. The Group is actively
introducing new improvements to the transaction platform that make it more intuitive and easy to use.
The Group consistently implemented in its branches modern tools for comprehensive management of client relations from the
moment of obtaining contact through the stages of further service, to signing the contract and maintaining the after-sales
relationship. The tools allow for reporting and analysis, giving a better understanding of users and clients, which allows to
optimize the cost of client acquisition and retention, which translates into a better-matched offer and faster implementation of
client instructions.
The Group continued the process of investor education by organizing free workshops and conferences as well as providing
access to educational materials for both beginners and more experienced investors.
In 2021, the Group will undertake further actions aimed at implementing the strategy presented above.
The impact of COVID-19 on the Company’s result
In March 2020 the World Health Organization determined that COVID disease can be treated as a pandemic. Due to significant
increase of this disease all over the world, countries take numerous action to limit or delay it’s spread. Undertaken measures
have increasing impact on global economy. This situation has influence on the above average volatility in the financial and
commodity markets which resulted in high transaction activity of customers and converted to growth of Group’s revenues and
customer base.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
3. Operating and financial situation
3.1 Principles of preparation of annual financial statements
Consolidated and separate financial statements were prepared based on International Financial Reporting Standards (IFRS),
which were endorsed by the European Union.
The consolidated financial statements of the X–Trade Brokers Dom Maklerski S.A. Group prepared for the period from
1 January 2020 to 31 December 2020 with comparative data for the year ended 31 December 2019 cover the Parent Company’s
financial data and financial data of the subsidiaries comprising “The Group”.
The separate financial statements of the X–Trade Brokers Dom Maklerski S.A. prepared for the period from 1 January 2010 to
31 December 2020 with comparative data for the year ended 31 December 2019 cover the Company’s financial data and
financial data of the foreign branch offices.
The consolidated and separate financial statements have been prepared on the historical cost basis, with the exception of
financial assets at fair value through P&L and financial liabilities held for trading which are measured at fair value. The Group’s
assets are presented in the statement of financial position according to their liquidity, and its liabilities according to their
maturities.
The Group companies maintain their accounting records in accordance with the accounting principles generally accepted in
the countries in which these companies are established. The consolidated financial statements include adjustments not
recognised in the Group companies’ accounting records, made in order to reconcile their financial statements with the IFRS.
Drafting this consolidated financial statements, the Parent Company decided that none of the Standards would be applied
retrospectively.
The IFRS comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”) and the
International Financial Reporting Interpretations Committee (“IFRIC”).
3.2 Basic economic and financial information
3.2.1 Basic consolidated economic and financial information
The Group’s operating and financial results are mainly affected by:
• the number of active accounts, transaction volumes and deposit amounts,
• volatility on financial and commodity markets,
• general market, geopolitical and economic conditions,
• competition on the FX/CFD market,
• regulatory environment.
The key factors affecting the Group’s financial and operating results in the 12 months period ended 31.12.2020 are discussed
below. The Management Board believes that these factors had and may continue to have an effect on the business activities,
operating and financial results, financial condition and development perspectives of the Group.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Description of the Group’s results in 2020
The table below shows selected items of the consolidated statement of comprehensive income for the periods indicated
(IN PLN’000)
12 MONTHS PERIOD ENDED
CHANGE %
31.12.2020
31.12.2019
Result of operations on financial instruments
792 788
233 106
240,1
Income from fees and charges
4 839
5 629
(14,0)
Other income
123
569
(78,4)
Total operating income
797 750
239 304
233,4
Salaries and employee benefits
(119 141)
(86 024)
38,5
Marketing
(87 731)
(37 716)
132,6
Other external services
(29 443)
(24 638)
19,5
Costs of maintenance and lease of buildings
(3 788)
(3 158)
19,9
Amortisation and depreciation
(7 753)
(6 753)
14,8
Taxes and fees
(3 723)
(2 950)
26,2
Commission expenses
(22 539)
(8 329)
170,6
Other expenses
(7 886)
(4 324)
82,4
Total operating expenses
(282 004)
(173 892)
62,2
Operating profit (EBIT)
515 746
65 412
688,5
Finance income
5 857
5 901
(0,7)
Finance costs, including:
(22 906)
(1 877)
1 120,4
-
negative foreign exchange differences relating
to a company in Turkey
(21 880)
-
-
Profit before tax
498 697
69 436
618,2
Income tax
(96 610)
(11 735)
723,3
Net profit
402 087
57 701
596,8
In 2020, XTB reported PLN 402 087 thousand of consolidated net profit compared to PLN 57 701 thousand profit a year earlier.
Operating profit (EBIT) amounted to PLN 515 746 thousand to PLN 65 412 thousand a year earlier. Consolidated revenues
amounted to PLN 797 750 thousand to PLN 239 304 thousand a year earlier. Total operating expenses amounted to PLN
282 004 thousand (in 2019: PLN 173 892 thousand).
Operating income
The Group’s income is primarily derived from its retail activities and consists of:
• spreads (the difference between the offer price and the bid price),
• fees and commissions charged by the Group to its clients,
• swap points charged by the Group (being the difference between the notional forward rate and the spot rate of a given
financial instrument),
• net result (profits offset by losses) from the Group’s market making activities.
The table below presents the percentage share of each revenue category in the gross result of operations of financial
instruments.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Spread
54%
62%
Market Making
30%
23%
Swap, commission and fees
16%
15%
Gross result of operations on financial instruments
100%
100%
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
In 2020 the retail business segment generated approximately 87% of the total volume of the Group's turnover and the
institutional business segment – approximately 13%.
In 2020 XTB noted a record increase of revenues by 233,4% y/y i.e. PLN 558 446 thousand from PLN 239 304 thousand to PLN
797 750 thousand. The significant factors determining the level of revenues were high volatility on financial and commodity
markets caused by among others coronavirus COVID-19 global pandemic and a constantly growing client base combined with
their high transaction activity noted in the number of concluded transactions in lots. As a consequence the transaction volume
in CFD instruments amounted to 3 175,2 thousand lots (2019: 1 597,2 thousand lots) and a profitability per lot increased by
67,7% y/y i.e. from PLN 149,8 in 2019 to PLN 251,2 in 2020.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
31.12.2018
31.12.2017
31.12.2016
31.12.2015
Total operating income
(in PLN’000)
797 750
239 304
288 301
273 767
250 576
282 542
Transaction volume in CFD
instruments in lots
1
3 175 166
1 597 218
2 095 412
2 196 558
2 015 655
2 443 302
Profitability per lot (in PLN)
2
251
150
138
125
124
116
1
) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
2
) Total operating income divided by the transaction volume in CFDs in lots.
THREE-MONTH PERIOD ENDED
31.12.2020
30.09.2020
30.06.2020
31.03.2020
31.12.2019
30.09.2019
30.06.2019
31.03.2019
Total operating income
(in PLN’000)
139 962
139 630
211 494
306 664
89 571
60 952
47 891
40 890
Transaction volume in CFD
instruments in lots
1
800 935
760 373
829 017
784 840
394 146
423 333
385 318
394 421
Profitability per lot (in PLN)
2
175
184
255
391
227
144
124
104
1
) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
2
) Total operating income divided by the transaction volume in CFDs in lots.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In 2020 the Group
reported another record in this area by acquiring 112 025 new clients compared to 36 555 a year earlier. This is the effect of
continuing the optimized sales and marketing strategy, bigger penetration of already existed markets, successive introduction
of new products to the offer and expansion into a new geographic markets. Similarly to the number of new clients, the number
of active client was also record high. The number of active client increased from 45 837 to 107 287, i.e. by 134,1% y/y.
PERIOD ENDED
31.12.2020
30.09.2020
30.06.2020
31.03.2020
31.12.2019
30.09.2019
30.06.2019
31.03.2019
New clients
1
38 413
21 178
30 523
21 911
10 424
10 042
9 246
6 843
Average number of active
clients
2
58 069
53 309
52 084
45 660
26 582
25 171
23 688
22 245
1
) The number of new Group’s clients in the individual periods..
2
) The average quarterly number of clients respectively for 12, 9, 6, 3 months of 2020 and 12, 9, 6, 3 months of 2019.
The priority of the Management Board is to further increase the client base, leading to strengthen the market position of XTB in
the world. These activities will be supported by a number of initiatives, including introduced on 5th October 2020 a new offer
for shares and ETFs (Exchange-Traded Funds) “0% commission” for monthly volumes up to EUR 100 000. This offer was
received with great enthusiasm by current and new XTB clients. The company aims to be the first choice and comprehensive
solution for every investor. Over the past few years, XTB has done a great deal of work – from expanding the offer by around
3 000 financial instruments (from 1 500 to 4 500 currently), to the continuous improvement of the web and mobile version of
the award-winning xStation platform. Now with a free offer, XTB has opened the door wide to anyone interested in investing in
both real stocks and ETFs. XTB currently allows client to invest in over 2 000 real stocks from 16 of the world’s largest stock
exchanges, including New York Stock Exchange, London Stock Exchange, Spanish Bolsa de Madrid, German Börse Frankfurt
and of course Warsaw Stock Exchange. Besides stocks, XTB offers over 200 ETFs, including commodities, real estate and
bonds.
The „0% commission” offer is supported by a marketing and
advertising campaign with the participation of the new XTB
brand ambassador – one of the best football manager on the
world, José Mourinho. The new XTB ambassador is the coach
who not only won championships in a record number of
countries (Portugal, England, Italy and Spain), but is also one
of only three coaches who have won the UEFA Champions
League twice with two clubs. The Portuguese will be the XTB’s
global ambassador for the next two years.
The announcement of José Mourinho collaboration with XTB
also marked the launch of the new global marketing campaign
“Be like José”. Its creative concept is based on the similarities
between the challenges faced by investors and trainers on
a daily basis. A well-considered strategy, the will to win and
the ability to learn from mistakes are the main factors of
success in both football and finance.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The company expects on the effectiveness of the new offer for shares and ETFs as well as the campaign with José Mourinho.
In particular, the ambition of the Management Board is to acquire in 2021 at least 120 thousand new clients, that is an average
30 thousand new clients quarterly. As a result of the implemented actions, in January 2021 the Group acquired 21,8 thousand
new clients in total, while in February 23,6 thousand new clients.
Looking at revenues in terms of the classes of instruments responsible for their creation, it can be seen that CFDs based on
index dominated in 2020. Their share in the structure of revenues on financial instruments in 2020 reached 53,2% against 74,8%
a year earlier. This is a consequence of the high interest of XTB clients in CFD instruments based on the German DAX stock
index (DE30) and US indices US100 and US500 and contract based on volatility index listed on the U.S. organized market. The
second most profitable class of assets were CFD based on commodities. Their share in the structure of revenues on financial
instruments in 2020 reached 33,0% (2019: 5,2%). The most profitable instruments among this asset class were CFD
instruments based on oil prices, gold and natural gas contracts. Revenues of CFD based on currency reached 11,5% of all
revenues, compared to 18,2% a year earlier.
The result of operations on financial instruments
(IN PLN’000)
12 MONTHS PERIOD ENDED
CHANGE %
31.12.2020
31.12.2019
Index CFDs
425 917
175 116
143,2
Commodity CFDs
263 949
12 021
2 095,7
Currency CFDs
91 951
42 624
115,7
Stock CFDs and ETFs
13 082
2 313
457,1
Bond CFDs
198
771
(74,3)
Total CFDs
795 097
232 845
241,4
Shares and ETFs
4 988
1 199
316,0
Gross gain on transactions in financial instruments
800 085
234 044
241,8
Bonuses and discounts paid to customers
(1 580)
(300)
426,7
Commission paid to cooperating brokers
(5 520)
(638)
765,2
Net gain on transactions in financial instruments
792 985
233 106
240,1
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The share of instruments in the result of operations on financial instruments
XTB places great importance on the geographical diversification of revenues. The countries from which the Group derives more
than 15% of revenues are Poland and Spain with the share of 37,0% (2019 r.: 39,9%) and 16,0% (2019 r.: 19,9%) respectively.
The share of other countries in the geographical structure of revenues does not exceed in any case 15%.
(IN PLN’000)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Central and Eastern Europe
404 414
121 334
- including Poland
295 148
95 390
Western Europe
303 177
90 934
- including Spain
127 755
47 642
Latin America
90 159
27 036
Total operating income
797 750
239 304
XTB also puts strong emphasis on diversification of segment revenues. Therefore the Group develops, besides retail segment,
institutional activities (X Open Hub), under which it provides liquidity and technology to other financial institutions, including
brokerage houses. Revenues from this segment are subject to significant fluctuations from quarter to quarter, analogically to
the retail segment, which is typical for the business model adopted by the Group.
(IN PLN’000)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Retail segment
692 819
218 457
Institutional segment (X Open Hub)
104 931
20 847
Total operating income
797 750
239 304
XTB’s business model includes high volatility of revenues depending on the period. Operating results are mainly affected by:
(i) volatility on financial and commodity markets; (ii) the number of active clients; (iii) volume of concluded transactions on
financial instruments; (iv) general market, geopolitical and economic conditions; (v) competition on the FX/CFD market and
(vi) regulatory environment.
As a rule, the Group's revenues are positively affected by higher activity of financial markets due to the fact that in such periods,
a higher level of turnover is realized by the Group's clients and higher profitability per lot. The periods of clear and long market
trends are favourable for the Company and it is at such times that it achieves the highest revenues. Therefore, high activity of
financial markets and commodities generally leads to an increased volume of trading on the Group's trading platforms. On the
other hand, the decrease in this activity and the related decrease in the transaction activity of the Group's clients leads, as
a rule, to a decrease in the Group's operating income. Due to the above, operating income and the Group's profitability may
decrease in periods of low activity of financial and commodity markets. In addition, there may be a more predictable trend in
which the market moves within a limited price range. This leads to market trends that can be predicted with a higher probability
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
than in the case of larger directional movements on the markets, which creates favourable conditions for transactions
concluded in a narrow range trading. In this case, a greater number of transactions that bring profits to clients is observed,
which leads to a decrease in the Group's result on market making.
The volatility and activity of markets results from a number of external factors, some of which are characteristic for the market,
and some may be related to general macroeconomic conditions. It can significantly affect the revenues generated by the Group
in the subsequent quarters. This is characteristic of the Group's business model.
Operating expenses
In 2020 operating expenses amounted to PLN 282,0 million and were higher by PLN 108,1 million in relation to the same period
a year earlier (2019: PLN 173,9 million). The most significant changes occurred in
• marketing costs, an increase of PLN 50,0 million mainly due to higher expenditures on marketing online campaigns;
• costs of salaries and employee benefits, an increase of PLN 33,1 million mainly due to provisions for variable
remuneration components (bonuses) and an increase in employment;
• commission expenses, an increase of PLN 14,2 million as a result of larger amounts paid to payment service providers
through which clients deposit their funds on transaction accounts;
• other external costs, an increase of PLN 4,8 million as a result of higher expenditures on: (i) IT systems and licenses
(an increase of PLN 2,6 million y/y); (ii) IT support services (an increase of PLN 1,0 million y/y).
3.2.2 Public support
In 2020 the Company received financial support in the form of the
de minimis
help in the total amount of PLN 28 thousand from
KFS training fund.
In 2019 the Company received financial support in the form of the
de minimis
help in the total amount of PLN 20 thousand from
KFS training fund.
3.2.3 Rate of return on assets
The rate of return on assets, calculated as the quotient of net profit and total assets, as of 31 December 2020 amounted to
17,6% and as of 31 December 2019 amounted to 5,1%.
3.2.4 Activities of the brokerage house outside the territory of the Republic of Poland
Information about the activities of the brokerage house outside the territory of the Republic of Poland, broken down into member
states and third countries in which the brokerage house has its subsidiaries, on a consolidated basis within the meaning of
Article 4(1)(48) of the Regulation of the European Parliament and of the Council (EU) No 575/2013 on prudential requirements
for credit institutions and investment firms are presented below.
AREAS OF ACTIVITIES
REVENUE
FOR 2020
NUMBER OF EMPLOYEES IN
TERMS OF FTSs
PROFIT BEFORE
TAX FOR 2020
INCOME TAX
FOR 2020
Poland
803 506
419
513 814
(96 061)
Great Britain
732
29
1 000
16
Cyprus
71
9
138
−
Belize
248
−
3 451
(60)
Turkey
57
1
(21 804)
(62)
3.2.5 Selected financial and operating ratios of the Group
The financial ratios presented in the following table are not a measure of the financial results in accordance with the IFRS nor
should they be treated as a measure of the financial results or cash flows from operating activities, or considered an alternative
to a profit. These indicators are not uniformly defined and may not be comparable to ratios presented by other companies,
including companies operating in the same sector as the Group.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
EBITDA (in PLN’000)
1
523 499
72 165
EBITDA margin (%)
2
65,6
30,2
Net profit margin (%)
3
50,4
24,1
Return on equity –ROE (%)
4
58,3
12,2
Return on assets – ROA (%)
5
23,5
5,5
Aggregate capital adequacy ratio, including buffers (%)
6
16,0
13,3
1
) EBITDA calculated as operating profit, including amortisation and depreciation.
2
) Calculated as the quotient of operating profit, including amortisation and depreciation, and operating income.
3
) Calculated as the quotient of net profit and operating income.
4
) Calculated as the quotient of net profit and average balance of equity (calculated as the arithmetic mean of the total equity as at the end of the prior period and as at the
end of the current reporting period).
5
) Calculated as the quotient of net profit and average balance of total assets (calculated as the arithmetic mean of the total assets as at the end of the prior period and as
at the end of the current reporting period).
6
) Calculated as the quotient of equity less buffers requirements and total risk exposure.
The table below presents:
• the number of new clients in individual periods;
• the number of clients who at least one transaction has been concluded over the individual periods;
• the average quarterly number of clients who at least one transaction has been concluded over the last three months;
• the aggregate number of clients;
• the amount of net deposits in the individual periods;
• average operating income per one active client;
• the transaction volume in lots;
• profitability per lot;
• transaction volume of CFD derivatives at nominal value (in USD million);
• profitability per 1 million turnover (in PLN) and;
• the volume of share transactions at nominal value (in USD million).
The information presented in the table below is related to the aggregate operations in the retail and institutional operations
segments.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
New clients
1
112 025
36 555
Clients in total
255 791
149 304
Number of active clients
2
107 287
45 837
Average number of active clients
3
58 069
26 582
Net deposits (in PLN’000)
4
1 961 242
409 420
Average operating income per active client (in PLN’000)
5
13,7
9,0
Transaction volume in CFD instruments in lots
6
3 175 166
1 597 218
Profitability per lot (in PLN)
7
251
150
Transaction volume in CFD instruments in nominal value (in USD million)
1 021 835,3
541 509,5
Profitability per 1 million USD transaction volume in CFD instruments (in PLN)
8
207,8
116,4
Turnover of shares in nominal value (in USD million)
1 643,3
178,8
1
) The number of new Group’s clients in the individual periods.
2
) The number of clients who at least one transaction has been concluded over the individual periods.
3
) The average quarterly number of clients who at least one transaction has been concluded over the last three months.
4
) Net deposits comprise deposits placed by clients less amounts withdrawn by the clients in a given period.
5
) The Group’s operating income in a given period divided by the average quarterly number of clients who at least one transaction has been concluded over the last three
months.
6
) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
7
) Total operating income divided by the transaction volume in CFDs in lots.
8
) Total operating income divided by the transaction volume in CFDs in nominal value in PLN
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The table below shows data on the Group’s transaction volumes (in lots) by geographical area for the periods indicated.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Retail operations segment
2 864 584
1 406 414
Central and Eastern Europe
1 484 941
725 220
Western Europe
961 500
541 497
Latin America
418 143
139 697
Institutional operations segment
310 582
190 804
Total
3 175 166
1 597 218
Group turnover in lots by segments
The table below shows data on the Group’s revenue by geographical area for the periods indicated.
(IN PLN’000)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Result from operations on financial instrument:
792 788
233 106
Central and Eastern Europe
400 589
116 206
Western Europe
302 346
89 921
Latin America
89 853
26 979
Income from fees and charges:
4 839
5 629
Central and Eastern Europe
3 703
4 554
Western Europe
831
1 018
Latin America
305
57
Other income:
123
569
Central and Eastern Europe
123
569
Total operating income
1
797 750
239 304
Central and Eastern Europe
404 414
121 334
- including Poland
2
295 148
95 390
Western Europe
303 177
90 934
- including Spain
2
127 755
47 642
Latin America
90 159
27 036
1
)
The countries where the Group always generates 15% or more of its revenues is Poland 37,0% (2019 r.: 39,9%). The second largest market for XTB is Spain, with shares
amounting to 16,0% (2019 r.: 19,9%). The share of any of the other countries in the Group’s revenue structure by geographical area does not exceed 15%.
2
)
The country which generates the highest revenue in the region.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Group revenues by geographical area
Retail operations segment
The table below presents key operational data in the retail operations segment of the Group for the respective periods indicated.
OKRES 12 MIESIĘCY ZAKOŃCZONY
31.12.2020
31.12.2019
New clients
1
112 015
36 548
Clients in total
255 752
149 265
Number of active clients
2
107 259
45 807
Average number of active clients
3
58 045
26 555
Number of transactions
4
61 317 970
24 444 600
Transaction volume in CFD instruments in lots
5
2 864 583
1 406 413
Net deposits (in PLN’000)
6
1 843 086
398 395
Average operating income per active client (in PLN’000)
7
11,9
8,2
Average cost of obtaining an client (in PLN’000)
8
0,8
1,0
Profitability per lot (in PLN)
9
242
155
Transaction volume in CFD instruments in nominal value (in USD million)
933 177,1
486 813,1
Profitability per 1 million USD transaction volume in CFD instruments (in PLN)
10
197,5
118,2
Turnover of shares in nominal value (in USD million)
1 643,3
178,8
1
) The number of new clients in the individual periods.
2)
The number of clients who at least one transaction has been concluded over the individual periods.
3)
The average quarterly number of clients via which at least one transaction has been concluded over the last three months.
4)
Total number of open and closed transactions in a given period.
5)
A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
6)
Net deposits comprise deposits placed by clients less amounts withdrawn by the clients in a given period.
7)
The Group’s operating income in a given period divided by the average quarterly number of clients via which at least one transaction has been concluded over the last
three months.
8)
Average cost of obtaining a client comprise total marketing costs of the Group divided by the number of new clients in given period.
9)
Total operating income in retail segment divided by the transaction volume in CFDs in lots.
10
) Total operating income in retail segment divided by the transaction volume in CFDs in nominal value in PLN.
The table below presents the average quarterly number of retail clients maintained by the Group on which at least one trade
was executed in the last three months, by geographical location. The locations of active clients have been determined based
on the location of the Group’s office (that maintains the client) except for clients maintained by XTB Limited and
XTB International Limited. The clients maintained by XTB Limited and XTB International Limited have been classified based on
the client’s country of residence rather than the location of the Group’s office.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Central and Eastern Europe
31 180
54%
13 073
49%
Western Europe
18 825
32%
10 512
40%
Latin America
8 040
14%
2 970
11%
Total
58 045
100%
26 555
100%
Institutional operations segment
The Group provides its services to institutional clients, including brokerage houses and other financial institutions.
The table below presents information regarding the number of clients in the Group’s institutional operations segment in the
periods indicated.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Average number of active clients
24
27
Clients in total
39
39
The table below presents the Group’s turnover (in lots) in the institutional operations segment in the periods indicated.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Transaction volume in CFD instruments in lots
310 582
190 805
3.2.6 Basic separate economic financial information
Discussion of the Company’s results in 2020
The table below shows selected items of the separate statement of comprehensive income for the periods indicated.
(IN PLN’000)
12 MONTHS ENDED
CHANGE %
31.12.2020
31.12.2019
Result of operations on financial instruments
744 344
204 479
264,0
Income from fees and charges
3 827
5 529
(30,8)
Other income
123
569
(78,4)
Total operating income
748 294
210 577
255,4
Salaries and employee benefits
(95 126)
(68 692)
38,5
Marketing
(51 213)
(20 225)
153,2
Other external services
(57 601)
(35 926)
60,3
Costs of maintenance and lease of buildings
(2 447)
(2 205)
11,0
Amortisation and depreciation
(6 881)
(5 643)
21,9
Taxes and fees
(3 170)
(2 416)
31,2
Commission expenses
(14 636)
(6 349)
130,5
Other costs
(5 301)
(3 249)
63,2
Total operating expenses
(236 375)
(144 705)
63,3
Profit on operating activities
511 919
65 872
677,1
Impairment of investments in subsidiaries
(2 244)
(2 390)
(6,1)
Finance income
4 927
1 828
169,5
Finance costs
(365)
(501)
(27,1)
Profit before tax
514 237
64 809
693,5
Income tax
(96 061)
(10 664)
800,8
Net profit
418 176
54 145
672,3
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Operating income
The Company’s income is primarily derived from its retail activities and consists of:
• spreads (the difference between the offer price and the bid price);
• fees and commissions charged by the Company to its clients;
• swap points charged by the Company (being the difference between the notional forward rate and the spot rate of
a given financial instrument);
• net result (profits offset by losses) from the Company’s market making activities.
The table below presents the percentage share of each revenue category in the gross result of operations of financial
instruments (except dividends from subsidiaries).
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Spread
54%
62%
Market Making
30%
23%
Swap, commission and fees
16%
15%
Gross result of operations on financial instruments
(except dividends from subsidiaries)
100%
100%
The table below shows information on the Company’s operating income for the periods indicated.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
(in PLN’000)
(%)
(in PLN’000)
(%)
Result of operations on financial instruments
744 349
99,5
204 479
97,1
Income from fees and charges
3 827
0,5
5 529
2,6
Other income
123
0,0
569
0,3
Total operating income
748 294
100,0
210 577
100,0
The largest source of the Company's operating income is the result from operations on financial instruments, which accounted
for 99,5% and 97,1% of total operating revenues, in 2020 and 2019, respectively. The largest share in the result on transactions
in gross financial instruments have three product classes: CFD derivatives on indices, commodities and currencies that
generated in 2020, respectively 53,1%, 32,9% and 11,5% (in 2019, respectively: 73,7%, 5,1% and 17,9%). Other products, such as
CFD derivatives based on shares and ETFs, bond, shares and ETFs in the analysed periods accounted for a total of 2,3% and
1,8% of the result on operations in gross financial instruments in 2020 and in 2019 respectively.
The result of operations on financial instruments
(IN PLN’000)
12 MONTHS PERIOD ENDED
CHANGE %
31.12.2020
31.12.2019
Index CFDs
425 917
175 116
143,2
Commodity CFDs
263 949
12 021
2 095,7
Currency CFDs
91 951
42 624
115,7
Stock and ETF CFDs
12 885
2 313
457,1
Bond CFDs
198
771
(74,3)
Total CFDs
794 900
232 845
241,4
Stocks and ETFs
4 988
1 199
316,0
Dividends from subsidiaries
2 666
3 477
(23,3)
Gross gain on transactions in financial instruments
802 554
237 521
237,9
Bonuses and discounts paid to customers
(57 501)
(32 604)
76,4
Intermediary services
(708)
(438)
61,6
Commission paid to cooperating brokers
744 344
204 479
264,0
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The share of instruments in the result on operations financial instruments
Total operating expenses
In 2020 operating expenses amounted to PLN 236,4 million and were higher by PLN 91,7 million in relation to the same period
a year earlier (2019: PLN 144,7 million). The most significant changes occurred in
• marketing costs, an increase of PLN 31,0 million mainly due to higher expenditures on marketing online campaigns;
• costs of salaries and employee benefits, an increase of PLN 26,4 million mainly due to provisions for variable
remuneration components (bonuses) and an increase in employment;
• other external services, an increase of PLN 21,7 million as a result of higher expenditures on: (i) financial
intermediation services related to the intensive development of the subsidiaries activities on foreign markets
(an increase by PLN 17,2 million y/y); (ii) IT systems and licenses (an increase of PLN 2,6 million y/y);
• commission expenses, an increase of PLN 8,3 million as a result of larger amounts paid to payment service providers
through which clients deposit their funds on transaction accounts.
3.2.7 Selected financial and operation ratios of the Company
The financial ratios presented in the following table are not a measure of the financial results in accordance with the IFRS nor
should they be treated as a measure of the financial results or cash flows from operating activities, or considered an alternative
to a profit. These ratios are not defined in a harmonised manner and may not be comparable with the ratios presented by other
companies, including companies operating in the same sector as the Company.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
EBITDA (in PLN’000)
1
518 800
71 515
EBITDA margin (%)
2
69,3
34,0
Net profit margin (%)
3
55,9
25,7
Return on equity –ROE (%)
4
60,3
11,3
Return on assets – ROA (%)
5
25,8
5,4
Aggregate capital adequacy ratio, including buffers (%)
6
17,1
14,6
1
) EBITDA calculated as operating profit, including amortisation and depreciation.
2
) Calculated as the quotient of operating profit, including amortisation and depreciation, and operating income.
3
) Calculated as the quotient of net profit and operating income.
4
) Calculated as the quotient of net profit and average balance of equity (calculated as the arithmetic mean of the total equity as at the end of the prior period and as at the
end of the current reporting period).
5
) Calculated as the quotient of net profit and average balance of total assets (calculated as the arithmetic mean of the total assets as at the end of the prior period and as
at the end of the current reporting period).
6
) Calculated as the quotient of equity less buffers requirements and total risk exposure.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Due to the fact that operating KPIs data concerning number of clients, number of active clients, deposits, volume turnover in
lots and average operating income per active client are analysed by the Company’s Management Board on the Group level, and
not in the separate view, this data was presented only in the consolidated view. In the Company’s opinion this gives complete
view of the Group’s situation. Therefore, in the Company‘s opinion analysis of the above mentioned KPIs on the consolidated
level is reliable.
The table below shows data on the Company’s revenue by geographical area for the periods indicated.
(IN PLN’000)
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
Result of the operations on financial instrument:
744 344
204 479
Central and Eastern Europe
400 628
116 225
Western Europe
282 080
75 517
Latin America
61 636
12 737
Income from fees and charges:
3 827
5 529
Central and Eastern Europe
3 590
4 561
Western Europe
237
968
Other income:
123
569
Central and Eastern Europe
123
569
Total operating income
1
748 294
210 577
Central and Eastern Europe
404 341
121 360
- including Poland
2
295 075
95 416
Western Europe
282 316
76 480
- including Spain
2
127 755
47 642
Latin America
61 637
12 737
1
) The countries where the Company always generates 15% or more of its revenues include Poland: 39,4% (2019 r.: 45,3%) and Spain: 17,1% (2019 r.: 22,6%). The share of
any of the other countries in the Company’s revenue structure by geographical area does not exceed 15%.
2
) The country which generates the highest revenue in the region.
3.3 Current and projected financial situation
Current and projected financial situation of X-Trade Brokers Dom Maklerski S.A. and the Capital Group shows no significant
risks. The Company is the parent company of the Capital Group. The Company’s financial situation should be evaluated by the
results of the entire Capital Group. The company maintains and intends to maintain the financial liquidity at an adequate level
to the scale of its operations.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
3.4 Structure of assets and liabilities
3.4.1 Structure of assets and liabilities in the consolidated statement of financial position
(IN PLN’000)
31.12.2020
% balance
sheet total
31.12.2019
% balance
sheet total
ASSETS
Own cash
542 205
23,7
484 351
42,5
Clients’ cash
1 033 602
45,3
470 845
41,3
Financial assets at fair value through P&L
663 133
29,0
149 318
13,1
Income tax receivables
2 593
0,1
71
0,0
Financial assets at amortized cost
13 310
0,6
6 474
0,6
Prepayments and deferred costs
5 397
0,2
4 073
0,4
Intangible assets
639
0,0
572
0,1
Property, plant and equipment
13 260
0,6
14 193
1,2
Deferred income tax assets
9 387
0,4
9 003
0,8
Total assets
2 283 526
100,0
1 138 900
100,0
EQUITY AND LIABILITIES
Liabilities
Amounts due to clients
1 203 243
52,7
573 792
50,4
Financial liabilities held for trading
96 632
4,2
23 529
2,1
Income tax liabilities
1 329
0,1
1 697
0,1
Liabilities due to lease
8 654
0,4
10 772
0,9
Other liabilities
54 167
2,4
19 676
1,7
Provisions for liabilities
7 939
0,3
3 129
0,3
Deferred income tax provision
23 257
1,0
15 561
1,4
Total liabilities
1 395 221
61,1
648 156
56,9
Equity
Share capital
5 869
0,3
5 869
0,5
Supplementary capital
71 608
3,1
71 608
6,3
Other reserves
390 730
17,1
364 757
32,0
Foreign exchange differences on transaction
9
0,0
(23 637)
(2,1)
Retained earnings
420 089
18,4
72 147
6,3
Equity attributable to the owners of the Parent Company
888 305
38,9
490 744
43,1
Total equity
888 305
38,9
490 744
43,1
Total equity and liabilities
2 283 526
100,0
1 138 900
100,0
As at 31 December 2020 balance sheet total amounted to PLN 2 283 526 thousand. In comparison to 31 December 2019 there
was an increase by PLN 1 144 626 thousand i.e. 100,5%.
The most important asset item, both at the end of 2020 and 2019, are cash increased by treasury bonds (presented in financial
assets at fair value through P&L), which accounted for respectively in 2020 and 2019, 86,5% and 85,2% of assets. Cash
comprises the Group's own cash and clients’ cash. Clients' cash is deposited in bank accounts separately from the Group's
cash. In an environment of low interest rates, which discourages the maintenance of high deposits in banks, XTB started to
locate part of its cash in financial instruments with a risk weight of 0% (treasury bonds). As at 31.12.2020 the total amount of
treasury bonds in the Group amounted to PLN 398 616 thousand, (as at 31.12.2019 PLN 14 899 thousand). At the end of 2020
own cash increased by treasury bond increased by 88,4% y/y, with a simultaneous increase in clients cash by 119,5% y/y.
The most significant increase, i.e. 344,1 p.p. in assets occurred in financial assets at fair value through P&L. At the end of 2020
and 2019 treasury bonds accounted for 60,1% and 10,0% respectively of financial assets at fair value through P&L.
As regards the structure of liabilities, the most significant item as at 31 December 2020 were amounts due to clients (52,7% of
liabilities in 2020 and 50,4% in 2019, respectively). Amounts due to clients result from transactions made by clients (including
cash deposited on clients’ accounts).
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
3.4.2 Structure of assets and liabilities in the separate statement of financial position
(in PLN’000)
31.12.2020
% balance
sheet total
31.12.2019
% balance
sheet total
ASSETS
Own cash
494 766
23,0
435 039
40,1
Clients’ cash
941 466
43,7
420 772
38,8
Financial assets at fair value through P&L
632 760
29,4
136 549
12,6
Investments in subsidiaries
35 890
1,7
54 463
5,0
Income tax receivables
2 584
0,1
71
0,0
Financial assets at amortised cost
23 564
1,1
12 747
1,2
Prepayments and deferred costs
4 881
0,2
3 541
0,3
Intangible assets
477
0,0
380
0,0
Property, plant and equipment
11 725
0,5
13 138
1,2
Deferred income tax assets
7 518
0,3
7 189
0,7
Total assets
2 155 631
100,0
1 083 889
100,0
EQUITY AND LIABILITIES
Liabilities
Amounts due to clients
1 104 252
51,2
519 550
47,9
Financial liabilities held for trading
73 398
3,4
19 159
1,8
Income tax liabilities
494
0,0
1 335
0,1
Liabilities due to lease
7 544
0,3
10 119
0,9
Other liabilities
52 883
2,5
19 446
1,8
Provisions for liabilities
4 911
0,2
1 452
0,1
Deferred income tax provision
23 166
1,1
15 561
1,4
Total liabilities
1 266 648
58,8
586 622
54,1
Equity
Share capital
5 869
0,3
5 869
0,5
Supplementary capital
71 608
3,3
71 608
6,6
Other reserves
390 592
18,1
364 619
33,6
Foreign exchange differences on translation
2 738
0,1
1 026
0,1
Retained earnings
418 176
19,4
54 145
5,0
Total equity
888 983
41,2
497 267
45,9
Total equity and liabilities
2 155 631
100,0
1 083 889
100,0
As at 31 December 2020 balance sheet total amounted to PLN 2 155 631 thousand. In comparison to 31 December 2019 there
was an increase by PLN 1 071 742 thousand i.e. 98,9%.
The most important asset item, both at the end of 2020 and 2019, are cash increased by treasury bonds (presented in financial
assets at fair value through P&L), which accounted for respectively in 2020 and 2019, 85,1% and 80,3% of assets. Cash
comprises the Group's own cash and clients’ cash. Clients' cash is deposited in bank accounts separately from the Group's
cash.
In an environment of low interest rates, which discourages the maintenance of high deposits in banks, XTB started to locate
part of its cash in financial instruments with a risk weight of 0% (treasury bonds and bonds guaranteed by the State Treasury).
As at 31.12.2020 the total amount of treasury bonds in the Group amounted to PLN 398 616 thousand, (as at 31.12.2019 PLN
14 899 thousand). At the end of 2020 own cash increased by treasury bond increased by 110,7% y/y, with a simultaneous
increase in clients cash by 123,7% y/y.
The most significant increase, i.e. 363,4 p.p. in assets occurred in financial assets at fair value through P&L. At the end of 2020
and 2019 treasury bonds accounted for 63,0% and 10,9% respectively of financial assets at fair value through P&L.
The company has investments in subsidiaries. The total nominal value of shares in subsidiaries as at 31 December 2020
amounted to PLN 35 890 thousand, which accounted for 1,7% of the Company's assets. As at 31 December 2019, this value
amounted to PLN 54 463 thousand, i.e. 5,0% of the Company's assets, which means a decrease in this position by PLN 18 573
thousand y/y.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
As regards the structure of liabilities, the most significant item as at 31 December 2020 were amounts due to clients (51,2% of
liabilities in 2020 and 47,9% in 2019, respectively). Amounts due to clients result from transactions made by clients (including
cash deposited on clients’ accounts).
3.5 Factors which in the Management’s Board belief may impact the Group’s operations
and perspectives
The Management Board believes that the following trends have impact and will maintain and continue to impact the Group’s
operations in 2021 and in some cases also longer:
• As a rule, the Group's revenues are positively affected by higher activity of financial markets due to the fact that in
such periods, a higher level of turnover is realized by the Group's clients and higher profitability per lot. The periods of
clear and long market trends are favourable for the Company and it is at such times that it achieves the highest
revenues. Therefore, high activity of financial markets and commodities generally leads to an increased volume of
trading on the Group's trading platforms. On the other hand, the decrease in this activity and the related decrease in
the transaction activity of the Group's clients leads, as a rule, to a decrease in the Group's operating income. Due to
the above, operating income and the Group's profitability may decrease in periods of low activity of financial and
commodity markets. In addition, there may be a more predictable trend in which the market moves within a limited
price range. This leads to market trends that can be predicted with a higher probability than in the case of larger
directional movements on the markets, which creates favourable conditions for transactions concluded in a narrow
range of the market (range trading). In this case, a higher number of transactions that bring profits to clients is
observed, which leads to a decrease in the Group's result on market making.
The volatility and activity of markets results from a number of external factors, some of which are characteristic for
the market, and some may be related to general macroeconomic conditions. It can significantly affect the revenues
generated by the Group in the subsequent quarters. This is characteristic of the Group's business model. To illustrate
this impact, the table below presents the historical financial results of the Group on a quarterly basis
THREE-MONTH PERIOD ENDED
31.12.2020
30.09.2020
30.06.2020
31.03.2020
31.12.2019
30.09.2019
30.06.2019
31.03.2019
Total operating income
(in PLN’000)
139 962
139 630
211 494
306 664
89 571
60 952
47 891
40 890
Transaction volume in CFD
instruments in lots
1
800 935
760 373
829 017
784 840
394 146
423 333
385 318
394 421
Profitability per lot (in PLN)
2
175
184
255
391
227
144
124
104
1
) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
2
) Total operating income divided by the transaction volume in CFDs in lots.
Although in quarterly terms, the revenues of the XTB Group are subject to significant fluctuations, which is
a phenomenon typical of the XTB business model, then in a longer time horizon, which is a year, they take on more
stable and comparable values to those from historical years. However, in 2020, there was a record increase in
revenues caused, among others, by above-average volatility on financial and commodity markets and a constantly
growing client base combined with their high transaction activity expressed in the number of concluded contracts in
lots.
12 MONTHS PERIOD ENDED
31.12.2020
31.12.2019
31.12.2018
31.12.2017
31.12.2016
Total operating income (in PLN’000)
797 750
239 304
288 301
273 767
250 576
Transaction volume in CFD instruments
in lots
1
3 175 166
1 597 218
2 095 412
2 196 558
2 015 655
Profitability per lot (in PLN)
2
251
150
138
125
124
1)
A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of
instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.
2
) Total operating income divided by the transaction volume in CFDs in lots.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• The Group provides services for institutional clients, including brokerage houses, start-ups and other financial
institutions within the institutional activity segment (X Open Hub). The products and services offered by the Group as
part of the X Open Hub differ from those offered as part of the retail segment, which entails different risks and
challenges. As a result, the Group's revenues from this segment are exposed to large fluctuations from period to
period. The table below illustrates the percentage share of the institutional business segment in total operating
income.
2020
2019
2018
2017
2016
% share of operating income from institutional
operations in total operating income
13,2%
8,7%
6,5%
15,2%
7,8%
The level of volatility in financial and commodity markets in 2021, regulatory changes as well as other factors (if they
occur) may affect the condition of XTB's institutional partners, transaction volume in lots, as well as XTB revenues
from these clients.
• Due to the dynamic development of the Group the Management Board expects that in 2021 total operating costs may
be higher by approximately a dozen percent compared to 2020. The priority of the Management Board is to further
increase the client base and build a global brand. As a consequence of the implemented activities, marketing
expenditure may increase by over 20% compared to the previous year.
The final level of operating costs will depend on the level of variable remuneration components paid to employees,
the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of
potential product interventions and other external factors on the level of revenues generated by the Group.
The value of variable remuneration components will be influenced by the results of the Group. The level of marketing
expenditures depends on their impact on the Group’s results and profitability, the rate of foreign expansion and on
clients responsiveness to the actions taken. The impact of a new product intervention on the Group's revenues will
determine, if necessary, a revision of the cost assumptions.
• On 10 February 2017, the Turkish regulatory body, the Capital Markets Board of Turkey (CMB), introduced changes to
the regulations regarding the operation of investment services, investment activities and additional services. This
contributed to a significant decrease in the number of clients and, consequently, to a significant reduction in the
Group's operations in Turkey. On 19 April 2018 The Management Board decided to resume an action to terminate the
activities on Turkish market and liquidation of the subsidiary X Trade Brokers Menkul Değerler A.S. The decision of the
Company was made after analysing the situation of the subsidiary and in the absence of the expected relaxation of
the restrictions introduced by the Capital Markets Board of Turkey (CMB). As at the date of this report XTB Yönetim
Danışmanlığı Anonim Şirketi (former: X Trade Brokers Menkul Değerler A.S.) did not have any active licence to operate.
On 15 April 2020 the Management Board made a decision on recognition in accounting records reclassification of the
part of negative foreign exchange differences in the amount of 21,9 million PLN arising from the translation of the XTB
Yönetim Danışmanlığı Anonim Şirketi (former: X Trade Brokers Menkul Değerler A.S.) subsidiary’s equity from the
position “Foreign exchange differences on translation” in equity to income statement. The recognition of
reclassification in the above amount as financial cost in accounting records is an accounting operation and was
recognized in consolidated financial results for the 1st Half 2020. However, it did not affect the liquidity position of
XTB nor the total amount of Group’s equity as at the date of its booking. The remaining part of foreign exchange
differences arising from the translation of the Turkish company’s equity, which as at the end of 2020 amounted to
PLN 3,0 million and is derived among other the exchange rate of Turkish lira, will be recognized in consolidated result
at the date of liquidation of this company.
• The entry into force of product intervention by ESMA creates both opportunities and threats for XTB. The Management
Board of XTB is convinced of the business's vitality over a longer time horizon. The natural consequence of ESMA's
decision should be a wave of consolidation on the market that would allow XTB to consolidate its strong position on
the European market. Less influential brokers, unable to withstand regulatory pressure and strong competition from
a very significant brokers, will naturally disappear from the market. Consequently large brokers should expect the
client base to grow.
XTB with its strong market position and dynamically growing client base builds its presence in the non-European
markets, consequently implementing a strategy on building a global brand. The XTB Management Board puts the
main emphasis on organic development, on the one hand increasing the penetration of European markets, on the
other hand successively building its presence in Latin America, Asia and Africa. Following these activities, the
composition of the capital group will be expanded by new subsidiaries. It is worth mentioning that geographic
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
expansion is a process carried out by XTB on a continuous basis, the effects of which are spread over time. Therefore,
one should not expect sudden, abrupt changes in the results on this action.
Currently, the Management Board efforts are focused on the start of operational activities in a chosen Asian country,
i.e. United Arab Emirates and Republic of South Africa. At the end of November 2020 XTB received the preliminary
approval of the DFSA regulator to conduct brokerage activities in United Arab Emirates. It is an approval of the „in
principal” type, that requires the fulfilment of conditions (mainly operational type) before the actual start of operations.
One of the condition was the establishment of the company XTB MENA Limited in DIFC (Dubai International Financial
Centre) which took place on 9 January 2021. The process is currently underway over the fulfilment of other conditions.
The intention of the Management Board is to start operating activities in United Arab Emirates in the first half of 2021.
In terms of Republic of South Africa, due to the complex local formal and legal conditions, the Management Board is
currently not able to indicate the expected date of the start of operations on this market. Subsidiary XTB Africa (PTY)
has been in the licensing process since February 2019.
The development of XTB is also possible through mergers and acquisitions, especially with entities that would allow
the Group to achieve geographic synergy (complementary markets). Such transactions will be carried out, only when
they will bring measurable benefits for the Company and its shareholders. XTB is currently not involved in any
acquisition process.
Due to the uncertainty regarding future economic conditions, the expectations and forecasts of the Management Board are
subject to a particularly high level of uncertainty.
3.6 Risk factors
3.6.1 Risk management
The Group is exposed to a variety of risks connected with its current operations. The purpose of risk management is to make
sure that the Group takes risk in a conscious and controlled manner. Risk management policies are formulated in order to
identify and measure the risks taken and for regularly setting appropriate limits to limit the scale of exposure to these risks.
At the strategy level, the Management Board is responsible for establishing and monitoring the risk management policy. All
risks are monitored and controlled with regard to profitability of the operations as well as the level of capital necessary to ensure
safety of operations from the capital requirement perspective.
The Risk Management Committee, composed of members of the Supervisory Board, was appointed in the Parent Company.
The Committee's tasks include: preparation of a draft document regarding risk appetite of the brokerage house, issuing opinions
on management strategy developed by the Management Board, supporting the Supervisory Board in supervising the strategy
of the brokerage house in risk management by the Management Board, verification of remuneration policy and principles of its
implementation in terms of adjusting the remuneration system to the risk the brokerage house is exposed to, its capital, liquidity
and probabilities and dates of obtaining income.
The Risk Control Department supports the Management Board in formulating, reviewing and updating ICAAP rules in the event
of the occurrence of new types of risk, significant changes in strategy and operating plans. The Department also monitors the
appropriateness and efficiency of the implemented risk management system, identifies, monitors and controls the market risk
of the Group’s own investments, defines the overall capital requirement and estimates internal capital. The Risk Control
Department reports directly to the Member of the Management Board responsible for the operation of the Company’s internal
control system.
The Parent Company’s Supervisory Board approves procedures for internal capital estimation, capital management and
planning.
In the reporting period there were no significant changes in the risk management system.
3.6.2 Risk factors and threats
The Group within its operations monitors and assesses risks and undertakes activities in order to minimize their impact on the
financial situation.
As at 31 December 2020 and as at the date of this report, the Group identifies the following risks associated with the Group’s
operations and with the regulatory environment.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Risks associated with the Group’s operations:
• Group’s revenue and profitability are influenced by trading volume and volatility in financial and commodity markets
that are impacted by factors that are beyond the Group’s control;
• economic, political and market factors beyond the Group’s control may harm its business and profitability;
• the Group may incur material financial losses from its market making model;
• the Group’s risk management policies and procedures may prove ineffective;
• the Group may experience disruptions to or corruption of its infrastructure necessary for the conduct of the Group’s
business;
• the Group’s business relies, to a great extent, on the Group’s ability to maintain its good reputation and the general
perception of the financial instruments;
• the Company may not be able to pay dividends in the future or pay lower dividends than provided in the Group’s
dividend policy;
• the Group may fail to implement its strategy;
• as a result of implementing its strategy relating to developing its operations in various regions of the world may be
exposed to various risks specific to these regions;
• the Group may experience difficulties in attracting new retail clients and maintain its active retail client base;
• the Group may be unable to effectively manage its growth;
• the Group is subject to counterparty credit risk;
• the Group is exposed to client credit risk;
• the Group is exposed to the risk of losing its liquidity;
• the Group may lose access to market liquidity;
• the decline in interest rates may have an adverse impact on the Group’s revenue;
• the Group’s operations in certain regions are subject to increased risks associated with political instability and the
risks that are typical of the developing markets;
• the Group operates on a highly competitive market;
• the Group may not be able to maintain technological competitiveness and respond to dynamically changing client
demands;
• the Group may be unable to effectively protect or to ensure the continued use of its current intellectual property rights;
• the development of the Group’s product and services portfolio and expansion of the Group’s operations to include
new lines of business may involve increased risks;
• the Group may not be able to hire or retain qualified staff;
• risks related to the Group’s cost structure;
• the Group’s insurance coverage relating to its operations may be insufficient or not available;
• within its operations the Group is significantly dependent on third parties;
• the Group may not be able to prevent potential conflicts between its interest connected with its activities and the
interests of the clients;
• other factors beyond the Group’s control could have negative impact on its operating activities.
Risks associated with the regulatory environment:
• the Group operates in a heavily regulated environment and may fail to comply with the rapidly changing laws and
regulations. Additional information regarding the Group’s regulatory environment were presented in section 5.2.;
• the Group is required to adapt its business to the new PFSA Guidelines and other supervisory authorities (including
ESMA), which may force the Group to incur significant financial expenditures and to implement material
organisational changes, and may adversely affect the Group’s competitive position;
• the Company is required to maintain minimum levels of capital, which could restrict the Company’s and as
a consequence Group’s growth and subject it to regulatory sanctions;
• the Company may be required to maintain higher capital ratios or buffers;
• maximum leverage ratios may be further reduced by regulators;
• the interpretation of the applicable laws may be unclear, and the laws may be subject to change;
• the Group may be exposed to increased administrative burdens and compliance costs as a respect of entering new
markets;
• the procedures utilised by the Group, including in respect of anti-money laundering, preventing the financing of
terrorism and ‘know your client’, may not be sufficient to prevent money laundering, the financing of terrorism, market
manipulation or to identify other prohibited trades;
• the Group may be exposed to risks related to personal data and other sensitive data processed by the Group;
• a breach of consumer protection regulations may result in adverse consequences for the Group;
• advertising regulations and other regulations may impact the Group’s ability to advertise;
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• changes in tax law regulations specific for the Group’s business, their interpretation or changes to the individual
interpretations of tax law regulations could adversely affect the Group;
• the related-party transactions carried out by the Company and the Group Companies could be subject to inspection
by the tax or fiscal authorities;
• court, administrative or other proceedings may have an unfavourable impact on the Group’s operations, and the Group
is exposed, in particular, to the risk of proceedings relating to client complaints and litigation, and regulatory
investigation;
• as a brokerage house, XTB may be required to bear additional financial burdens under Polish law, including
contributions to the investment compensation scheme established by the NDS and contributions for the purpose of
financing the PFSA’s supervision of capital markets, as well as fees related to the costs of the Financial Ombudsman
and his office;
• risk related to increased reporting obligations due to the applicability of FATCA and the automatic exchange of
information on tax matters;
• the Group will be required to observe and to adjust its business to the MiFID II/MiFIR Package after it enters into force,
which may be expensive and time-consuming and may result in significant restrictions in terms of the manner and
scope in which the Group may offer its products and services;
• the risk related to the application of EU law on the implementation of remedial actions and the resolution of financial
institutions.
3.6.3 Market risk
In the period covered by these consolidated financial statements, the Group entered into OTC contracts for differences (CFDs).
The Group also acquire securities and may enter into forward contracts on its own account on regulated stock markets.
The following risks are specified, depending on the risk factor:
• Currency risk connected with fluctuations of exchange rates,
• Interest rate risk,
• Commodity price risk,
• Equity investment price risk.
The Group’s key market risk management objective is to mitigate the impact of such risk on the profitability of its operations.
The Group’s practice in this area is consistent with the following principles:
As part of the internal procedures, the Group applies limits to mitigate market risk connected with maintaining open positions
on financial instruments. These are, in particular: a maximum open position on a given financial instrument, currency exposure
limits, maximum value of a single instruction. The Trading Department monitors open positions subject to limits on a current
basis, and in case of excesses, enters into appropriate hedging transactions. The Risk Control Department reviews the limit
usage on a regular basis, and controls the hedges entered into.
3.6.4 Currency risk
The Group enters into transactions on the foreign exchange derivative contracts. In addition to transactions whose underlying
is the exchange rate, the Group has instruments which price or value is denominated in foreign currency.
Brokerage house also manages the market risk generated by the assets held in foreign currencies, the so-called currency
positions. Currency position consists of own resources of Brokerage house denominated in foreign currencies in order to settle
transactions on foreign markets and related to the conduct of foreign branches.
Accounting Department supervises the state of own funds on bank accounts. Risk Control Department is actively involved in
setting limits related to market risk, monitors the effectiveness of the control systems of market risk, monitors adherence to
internal limits.
3.6.5 Credit risk
Credit risk is mainly affected by the risks associated with maintaining cash both own and customers' on bank accounts, as well
as maintaining a portfolio of debt instruments. The credit risk related to cash is limited by the choice of banks with high credit
ratings awarded by international rating agencies and through diversification of banks in which accounts are opened. With regard
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
to the portfolio of debt instruments, credit risk is limited by the choice of instruments issued or guaranteed by the State
Treasury. Risk Control Department continuously monitors the probability of default and credit ratings of banks, undertaking
where appropriate the actions described in internal procedures. The concentration of exposures is monitored daily in order to
avoid excessive negative impact on the Company of single event in the field of credit risk.
Credit risk involving financial assets held for trading is connected with the risk of customer or counterparty insolvency. With
regard to OTC transactions with customers, the Group’s policy is to mitigate the counterparty credit risk through the so-called
“stop out” mechanism. Customer funds deposited in the brokerage house serve as a security. If a customer’s current balance
is equal or less than 50% of the security paid in and blocked by the transaction system, the position that generates the highest
losses is automatically closed at the current market price. The initial margin amount is established depending on the type of
financial instrument, customer account, account currency and the balance of the cash account in the transaction system, as
a percent of the transaction’s nominal value. A detailed mechanism is set forth in the rules binding on the customers. In addition,
in order to mitigate counterparty credit risk, the Group includes special clauses in agreements with selected customers, in
particular, requirements regarding minimum balances in cash accounts.
Transactions made by customers on the regulated market practically does not generate relevant credit risk, since the vast
majority of customers’ orders is fully covered by the cash account.
3.6.6 Interest rate risk
Interest rate risk is the risk of exposure of the Company’s current and future financial result and equity to the adverse impact
of interest rate fluctuations. Such risk may result from the contracts entered into by the Company, where receivables or liabilities
are dependent upon interest rates as well as from holding assets or liabilities dependent on interest rates.
As a rule, the change in bank interest rates does not significantly affect the Company’s financial position, since the Company
determines interest rates for funds deposited in customers’ cash accounts based on a variable formula, in an amount not higher
than the interest received by the Group from the bank maintaining the bank account in which customers’ funds are deposited.
Interest rates applicable to cash accounts are floating and related to interest rates on the interbank market. Therefore, the risk
of interest rate mismatch adverse to the brokerage is very low.
Since the Group maintains a low duration of assets and liabilities and minimises the duration gap, sensitivity of the market
value of assets and liabilities to fluctuations of market interest rates is very low. There is a slight sensitivity of financial result
on changes of interest rates due to the Company’s possession of Treasury Bond.
Additional costs may arise in the Group related to cash deposited in bank due to market negative interest rate.
3.6.7 Liquidity risk
For the Company, liquidity risk is the risk of losing its payment liquidity, i.e. the risk of losing capacity to finance its assets and
to perform its obligations in a timely manner in the course of normal operations or in other predictable circumstances with no
risk of loss. In its liquidity analysis, the Group takes into consideration current possibility of generation of liquid assets, future
needs, alternative scenarios and payment liquidity contingency plans.
Currently at the Brokerage house the value of the most liquid assets (own cash) far exceeds the value of liabilities, hence liquidity
risk is relatively low. These values are continuously monitored.
3.6.8 Operational risk
Due to the dynamic development of the Parent Company, the expansion of product offerings and IT infrastructure, the Company
to a large extent is exposed to operational risk, defined as the possibility of losses due to mismatch or failed internal processes,
human and systems errors or external events, while the legal risk is considered to part of the operational risk.
The Brokerage house applies a number of procedures for the operational risk management, including business continuity plans
of the Company, emergency plans and personnel policy. As in the case of other risks, the Company approaches to operational
risk in an active way - trying to identify risks and take action to prevent their occurrence, or limiting their effects and an important
element of this process is the analysis of the frequency of site and the type of events in the field of operational risk.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
3.6.9 Hedge accounting
XTB does not apply hedge accounting.
3.7 Assessment of financial funds management
The Group manages its financial funds through ongoing monitoring of possibility to finance its assets and to perform its
obligations in a timely manner in the course of normal operations or in other predictable circumstances with no risk of loss. In
its liquidity analysis, the Group takes into consideration current possibility of generation of liquid assets, future needs, alternative
scenarios and payment liquidity contingency plans.
The objective of liquidity management in XTB is to maintain the amount of cash on the appropriate bank accounts that will
cover all the operations necessary to be carried on such accounts.
In order to manage liquidity in relation to certain bank accounts associated with the operations of financial instruments, the
Parent Company uses the liquidity model. The essence of the model is to determine the safe area of the state of free cash flow
that does not require corrective action.
When the upper limit is achieved, the Parent Company makes a transfer to the appropriate current account corresponding to
the surplus above the optimum level. Similarly, if the cash in the account falls to the lower limit, the Parent Company makes
a transfer of funds from the current account to the appropriate account in order to bring cash to the optimum level.
Tasks relating to the maintenance and updating of the rules of the liquidity model are performed by the Parent Company’s Risk
Control Department. Department employees are required to analyse liquidity at least once a week, as well as to transfer the
relevant information to the Parent Company’s Accounting Department in order to make certain operations in the accounts.
The subsidiaries manage liquidity by analysing the anticipated cash flows and by matching the maturities of assets with the
maturities of liabilities. The subsidiaries do not use any models for managing liquidity. Liquidity management based on the
liquidity gap analysis is effective and sufficient – in subsidiaries, there were no incidents related to lack of liquidity or the lack
of possibility of meeting financial obligations. In extraordinary cases, the subsidiaries’ liquidity may be provided by the Parent
Company.
The procedure also provides for the possibility of deviating from its application, and such procedure requires the consent of at
least two members of the Parent Company’s Management Board. Information on deviations is transmitted to the Risk Control
Department of the Parent Company.
The Parent Company has also implemented liquidity contingency plans, which were not used in the period covered by the
financial statements and in the comparative period, due to the fact that the amount of the most liquid assets (own cash and
cash equivalents) greatly exceeds the amount of liabilities.
As part of ongoing business and the tasks related to liquidity risk management, the managers of appropriate organisational
units of the Parent Company monitor the balance of funds deposited in the account in the context of planned liquidity needs
related to the Parent Company’s operating activities. In its liquidity analysis, the existing possibility of generation of liquid assets,
future needs, alternative scenarios and payment liquidity contingency plans are taken into consideration.
Supervision and control operations concerning the balance of cash accounts are also performed by the Risk Control
Department of Parent Company on a daily basis.
The contractual payment periods of financial assets and liabilities are presented in notes 37.3 and 38.3 to the Consolidated and
Separate Financial Statements, respectively. The marginal and cumulative contractual liquidity gap, calculated as the difference
between total assets and total liabilities for each maturity bucket, is presented for specific payment periods.
In 2020, the Company did not issue any securities.
3.8 Material off-balance sheet items
Nominal value of financial instruments (off-balance sheet items) as at 31 December 2020 and 31 December 2019 was
presented in notes
34
and
35
, respectively to the consolidated and separate financial statements.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
3.9 Financial forecasts
X-Trade Brokers Dom Maklerski S.A. did not publish any financial forecasts for 2020 (respectively consolidated and separate).
3.10 Dividend policy
The dividend policy adopted by the Company implies recommending to the General Meeting a dividend payment at the level of
50 - 100% of the Company's separate net profit for a given financial year, taking into account factors such as financial results
and financial capabilities of the Company, as well as ensuring an adequate level of capital adequacy ratios of the Company, as
well as the capital necessary for the development of the Group.
The dividend payment by the Company is subject to various types of legal restrictions. In particular, the date and method of
payment of the dividend have been specified in the Polish commercial law. In addition, every year the PFSA issues positions
regarding the dividend policy of financial institutions.
The Management Board maintains that its intention is to recommend in the future the adoption of resolutions to the General
Meeting on dividend payment taking into account factors mentioned above, at the level of 50% to 100% of Company’s
standalone net profit of a given financial year. The standalone net profit for the 2020 amounted to PLN 418 176 thousand.
Taking into account the position of the KNF published on 16 December 2020, regarding the dividend policy of brokerage houses
in 2021, it is recommended to pay dividends only by brokerage houses that especially:
• at the end of each quarter, have a total capital ratio of at least 14% - then it is possible to pay a dividend in the amount
not higher than 100% of the net profit for a given year, or
• as at the last calendar day of a given year had a total capital ratio of at least 14% - then it is possible to pay a dividend
at the level not exceeding 75% of the net profit for a given year;
• obtain a BION supervisory assessment of 1 or 2.
The total capital ratio informs about the relation between own funds and risk-weighted assets. It shows whether the brokerage
house is able to cover the minimum capital requirement for market, credit, operational and other risks with its own funds. The
values of the capital ratio in the Company at the end of each quarter of 2020 are presented in the table below.
AS AT
31.03.2020
30.06.2020
30.09.2020
31.12.2020
18,0%
13,6%
15,1%
17,1%
The chart below presents levels of the total capital ratio in 2020.
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
22,0%
Total capital ratio of the Company in 2020
Total capital ratio Total capital ratio required (KNF position)
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
On December 28 2020, the Company received a supervisory assessment (BION) of 2 [2,46] from the Investment Firms
Department of the Polish Financial Supervision Authority. As a consequence, taking into account the total capital ratios achieved
by the Company at the end of each quarter of 2020, as well as the received supervisory assessment BION, it is possible in 2021
to pay dividend of up to 75% of the Company’s standalone net profit for 2020 in accordance with the recommendations of the
Polish Financial Supervision Authority. The Management Board plans to present its recommendations regarding profit
distribution (dividend level) in March this year after the publication of the annual report.
The table below presents information about the separate net profit of the Company and the total amount of the dividend paid
for the financial years indicated therein.
FOR THE YEAR ENDED (IN PLN’000)
31.12.2019
31.12.2018
Net profit of the Company
54 145
90 898
Dividend
28 172
19 955
The advance payment of dividend
-
41 084
Pursuant to the decision of the General Shareholders’ Meeting of the Parent Company, the net profit for 2019 in the amount of
PLN 54 145 thousand was partially earmarked for the payment of a dividend in the amount of PLN 28 172 thousand, the
remaining amount was transferred to reserve capital.
The amount of dividend per share paid for 2019 was equal to PLN 0,24. The dividend was paid on 15 May 2020.
4. Corporate Governance
4.1 Set of rules of corporate governance applied by X-Trade Brokers Dom Maklerski S.A
Acting pursuant to § 70 section 6 point 5 in connection with § 72 section 4 of the Regulation on current and periodic information
(…), the Management Board of X-Trade Brokers Dom Maklerski S.A. provides a declaration on the application of corporate
governance principles in 2020.
Best Practice of WSE Listed Companies
X-Trade Brokers Dom Maklerski S.A. applies the corporate governance principles expressed in the Code of Best Practice for
WSE Listed Companies, adopted by the Warsaw Stock Exchange Council on 13 October 2015 and which came into force on
1 January 2016. The current content is available on the website dedicated to the principles of corporate governance of
companies listed on the WSE under: www.gpw.pl/dobre-praktyki.
A statement on the company’s compliance with the corporate governance recommendations and principles contained in Best
Practices for WSE Listed Companied 2016 is posted on the website of X-Trade Brokers Dom Maklerski S.A., in the Investor
Relations’ section.
In 2020, X-Trade Brokers Dom Maklerski S.A. complied with the principles expressed in the Code of Best Practice for WSE Listed
Companies, excluding recommendation IV.R.2 and 2 detailed rules: I.Z.1.20, IV.Z.2.
In relation to the recommendation contained in Chapter IV, point 2, as follows:
„If justified by the structure of shareholders or expectations of shareholders notified to the company, and if the company is in
a position to provide the technical infrastructure necessary for a general meeting to proceed efficiently using electronic
communication means, the company should enable its shareholders to participate in a general meeting using such means, in
particular through:
1) real-life broadcast of the general meeting,
2) real-time bilateral communication where shareholders may take the floor during a general meeting from a location other
than the general meeting,
3) exercise of the right to vote during a general meeting either in person or through a plenipotentiary.”
The Company identifies threats to the proper conduct of the General Meeting, especially legal risks, which in the opinion of the
Company would exceed the potential benefits. Slight dissemination of practice of conducting the general meetings by means
of electronic communication and inadequate preparation of the market may lead to increased risk of organizational and
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
technical problems that might disrupt the proper running of the general meeting, as well as the risk of a possible undermining
of the adopted resolutions of the general meeting, in particular due to technical defects. Due to the above, the Company does
not apply on a permanent basis of this recommendation.
With regard to the rules contained in Chapter I, point 1.20, as follows:
“A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to
information required under the legislation: an audio or video recording of a general meeting.”
The Company has not adopted the use of this principle for the same reasons, which are described above.
With regard to the rules contained in Chapter IV, point 2, as follows:
”“If justified by the structure of shareholders, companies should ensure publicly available real-time broadcasts of general
meetings.”
The Company has not adopted the use of this principle for the same reasons as described in case of recommendation IV.R.2.
Principles of Corporate Governance of the PFSA
On 22 July 2014, the PFSA published the Principles of corporate governance for supervised institutions. The rules and
information on their application are available on XTB website under:
www.xtb.com/pl/oferta/informacje-o-rachunku/informacje-prawne
In accordance with the PFSA Corporate Governance Principles, a supervised institution should strive to apply the principles set
out in the Corporate Governance Rules of the Polish Financial Supervision Authority to the widest extent, taking into account
the principle of proportionality resulting from the scale, nature of the business and the specifics of the institution. However, the
withdrawal from the application of specific rules to the full extent can only occur if their comprehensive introduction would be
unduly burdensome for the supervised institution.
On 18 December 2014, the Management Board adopted a resolution regarding the application of the Corporate Governance
Rules of the Polish Financial Supervision Authority. The application of the Corporate Governance Rules of the Polish Financial
Supervision Authority was confirmed by a resolution of the Extraordinary General Meeting of Shareholders of 28 January 2015.
The Company applies the Corporate Governance Rules of the Polish Financial Supervision Authority to the extent to which they
define the rules of functioning of brokerage houses and are consistent with the generally applicable provisions.
The KNF Corporate Governance Principles, as expected by the PFSA, were implemented by the Company as of 1 January 2015.
In the reporting period, the Company applied the KNF Corporate Governance Rules, with the following reservations:
• The principle set out in § 8 section 4 of the Corporate Governance Code of PFSA to the extent that it imposes on the
supervised institution the obligation to facilitate the participation of all shareholders in the assembly of the supervisory
body, inter alia by ensuring the possibility of electronically active participation in the meetings of the decision-making
body.
Pursuant to the Articles of Association, participation in the General Meeting using electronic means of communication
will be provided by the Company, if the announcement on convening the General Meeting will contain information
about the possibility of shareholders participating in the General Meeting using electronic means of communication.
• The principle set out in § 21 section 2 of the Corporate Governance Code of PFSA to the extent it stipulates that the
election of the chairman of the supervisory body should be made on the basis of experience and the ability to manage
such body, taking into account the independence criterion.
Pursuant to the Articles of Association, Jakub Zabłocki has the right to appoint and dismiss one member of the
Supervisory Board acting as the Chairman of the Supervisory Board by way of a written statement on the appointment
or dismissal of the Chairman of the Supervisory Board delivered to the Company. Therefore, compliance with the
above rule will depend on Jakub Zabłocki.
• The principle set out in § 28 section 3 of the Corporate Governance Code of PFSA to the extent it stipulates that the
supervisory body prepares and presents to the decision-making body once a year a report on the assessment of the
remuneration policy in the supervised institution. In the Company, the documentation regarding the remuneration
policy is prepared by the Supervisory Board acting as the Remuneration Committee. Moreover, in accordance with the
Remuneration Policy for Members of the Management Board and Members of the Supervisory Board adopted by the
General Meeting on 20 April 2020, the General Meeting will adopt a resolution containing an opinion on the report on
remuneration granted and paid to Members of the Management Board and Supervisory Board prepared by the
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Supervisory Board. The first report will be prepared in 2021 and will include data for 2019 and 2020. Due to above, the
principle set out in § 28 section 3 of the Corporate Governance Code will be fully applied starting from 2021.
• The principle set out in § 28 section 4 of the Corporate Governance Code of PFSA to the extent it stipulates that the
decision-making body assess whether the established remuneration policy is favourable for the development and
security of the operations of supervised institution. On 20 April 2020 the General Meeting of the Company adopted the
remuneration Policy for Members of the Management Board and Members of the Supervisory Board. In accordance
with the adopted policy, the General Meeting adopts each year a resolution issuing opinion on the report on the
remuneration granted and paid to Members of the Management Board and Supervisory Board prepared by the
Supervisory Board. The first report will be prepared in 2021 and will include data for 2019 and 2020. In addition, each
significant change of the remuneration Policy requires a resolution of the General Meeting, while a resolution of the
General Meeting on the remuneration Policy must be adopted at least every four years. In addition, pursuant to § 27
of the Regulation of the Minister of Development and Finance on internal capital, risk management system,
supervisory assessment program, supervisory review and evaluation, as well as remuneration policy in a brokerage
house of 25 April 2017 ( Journal of Laws of 2017, item 856) the supervisory body, at least once a year, reviews the
remuneration policy and supervises its implementation. In case remuneration committee has been established in a
brokerage house, the remuneration policy is subject to an opinion by this committee before its approval by the
supervisory board in accordance with Art. 110v paragraph 2 of the Act on trading financial instruments of 29 July
2005. Additionally, pursuant to the regulation, no later than within 2 months from the approval of the financial
statements, the management board informs the supervisory board and the remuneration committee, if such a
committee has been established, on the amount of variable remuneration components paid in the last calendar year
to persons covered by the remuneration policy. Due to above, until the adoption of remuneration Policy for Members
of the Management Board and Supervisory Board, i.e. until 20 April 2020, the evaluation of the remuneration policy in
force in the Company was the responsibility of the Remuneration Committee.
4.2 Equity
As at 31 December 2020 and as at the submission date of this annual report, share capital of X-Trade Brokers Dom Maklerski
S.A. comprised of 117 383 635 A-series ordinary shares. The nominal value of the shares is PLN 0,05 per share.
4.3 Shares on the stock exchange
On 4 May 2016, the Warsaw Stock Exchange (WSE) Management Board adopted a resolution to admit the Company's shares
to trading on the regulated market with the same day. Subsequently, on 5 May 2016, the WSE Management Board adopted
a resolution to introduce, as of 6 May 2016, all Company shares for stock exchange trading.
XTB’s share price
X-Trade Brokers Dom Maklerski S.A. made its debut on the Warsaw Stock Exchange (WSE) on 6 May 2016. The Company’s
shares have been listed on the main market of the WSE.
34 000
39 000
44 000
49 000
54 000
59 000
64 000
69 000
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
2 PLN
6 PLN
10 PLN
14 PLN
18 PLN
22 PLN
26 PLN
30 PLN
XTB's stock performance compared to WIG
XTB WIG
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The maximum price per share of XTB stock in 2020 was PLN 28,40 on 28 July 2020 (at closing prices). The annual price trough
of PLN 3,47 was recorded on 12 March 2020.
4.4 Shareholding structure
4.4.1 Shareholding structure at the end of the reporting period
To the best knowledge of the Management Board of the Company as at 31 December 2020, the status of shareholders holding
directly or through subsidiaries, at least 5% of the total number of votes at the General Meeting of the Parent Entity, was as
follows:
NUMBER OF
SHARES/
VOTES
NOMINAL SHARE VALUE
(IN PLN’000)
SHARE IN CAPITAL/
IN TOTAL VOTES
XXZW Investment Group S.A.
1
78 629 794
3 932
66,99%
Other shareholders
38 753 841
1 937
33,01%
Total
117 383 635
5 869
100%
1
) XXZW Investment Group S.A. with its registered office in Luxembourg is directly controlled by Jakub Zabłocki, who holds shares representing 81,97% of the share capital
authorising the exercise of 81,97% of the votes at the general meeting of the shareholders of XXZW.
The percentage share in the share capital of the Parent Company of the abovementioned shareholders is in line with the
percentage shares in the number of votes at the General Meeting.
The shareholding structure as at 31 December 2020 is presented in the following chart:
4.4.2 Changes in the shareholding structure after the balance sheet date
To the best knowledge of the Management Board of the Company as at the date of publishing this periodic report, the status
of shareholders holding directly or through subsidiaries at least 5% of the total number of votes at the General Meeting of the
Parent Entity did not change compared to the status as at 31 December 2020.
4.5 Acquisition of own shares
In the financial year 2020, the Company and its subsidiaries did not acquire the shares of X-Trade Brokers Dom Maklerski S.A.
66,99%
33,01%
XXZW Investment Group S.A.
Other shareholders
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
4.6 Holders of securities with special control rights
In the 2020 financial year and as at the date of publication of this report, there were no securities that would give special control
rights to the Company.
4.7 Restrictions on exercising the voting right
In the 2020 financial year and as at the date of publication of this report, there were no limitations to the exercise of voting rights
attached to the Company's securities.
4.8 Restrictions on the transfer of ownership of shares
In accordance with the principles of the Incentive Scheme, Jakub Malý (on 10 January of 2017 Mr Jakub Malý was dismissed
from the position of the President of the Management Board), Paweł Frańczak (on 25 April 2018 Mr. Paweł Frańczak previously
holding the position of a Member of the Management Board of the Company resigned from his function) and Alberto Medrán
pledged to XXZW and SYSTEXAN that due to the fact that the options were exercised and shares were granted on the basis of
the Incentive Scheme, they will not sell them on the date on which The Company is subject to a contractual limitation of the
transferability of the Shares (specified in the Bid Guarantee Agreement, i.e. within 360 days from the date of the first listing of
the Company's shares on the WSE (i.e. until 01 May 2017).
At the same time, as at the balance sheet date and as at the date of publication of this report, there were no restrictions on the
transfer of ownership of securities.
4.9 Agreements as a result of which changes may occur in the future in the proportions of
shares held by the current shareholders
As at the date of publication of this annual report, the Company is not aware of any events that may result in future changes in
the proportions of shares held by existing shareholders.
4.10 Management Board
The governing body of the Company is the Management Board.
4.10.1 Composition, changes and election of the Management Board
The rules for appointing and dismissing Management Board members and their rights are specified in the Company's Articles
of Association. Pursuant to the Articles of Association of the XTB, the composition of the Management Board may include from
three to six members, including the President of the Management Board and two Vice Presidents of the Management Board.
In accordance with its Articles of Association, at least two members of the Management Board need to have:
• higher education,
• at least three years of experience of working for financial market institutions
• a good opinion in connection with the positions held thereby.
Articles of Association of the Company is available on the Company's website www.xtb.pl in the Investor Relations section.
Members of the Management Board are appointed and dismissed by the Supervisory Board. The number of members of the
Management Board is determined by the Supervisory Board in the resolution on appointing members of the Management
Board. A member of the Management Board may also be dismissed or suspended from office by resolution of the General
Meeting.
The Management Board is appointed for a joint three-year term.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The mandates of members of the Supervisory Board shall expire on the date of the General Meeting which approves the
financial statements of the Company for the last full year of their term of office and in other cases specified in the Code of
Commercial Companies.
As at 31 December 2020 and as at the date of publication of this interim report, the composition of the Management Board was
as follows:
NAME AND SURNAME
FUNCTION
DATE OF FIRST
APPOINTMENT
EXPIRATION DATE OF THE
CURRENT TERM
Omar Arnaout
*
Chairman of the Management Board
10.01.2017
30.06.2022
Paweł Szejko
Board Member
28.01.2015
30.06.2022
Filip Kaczmarzyk
Board Member
10.01.2017
30.06.2022
Jakub Kubacki
Board Member
10.07.2018
30.06.2022
Andrzej Przybylski
Board Member
01.05.2019
30.06.2022
* Omar Arnaout on 10.01.2017 was appointed as a member of the Management Board for Sales in the rank of Vice Chairman of the Board. On 23.03.2017 he was appointed
the Chairman of the Management Board.
The main information on the education, qualifications and previously held positions of the members of the Management Board
are presented below:
Omar Arnaout
CEO and President of the Management Board. Mr. Omar Arnaout graduated in 2005 with
a master’s degree from the Warsaw School of Economics – Banking and Finance. He is
associated with the Company since January 2007. In 2007-2009 he held the position of the Sales
Dealer. In 2009-2010 he worked as the deputy director of the Romanian branch of XTB and in
2010-2012 as deputy director of the Italian branch of XTB. In 2012-2014 Mr. Omar Arnaout worked
as the director of the foreign branches office at Noble Securities Dom Maklerski S.A. and in 2014,
he also worked as Sales Director and Chairman of the Management Board of xStore sp. z o.o.
In 2014-2016 he held the position of the Retail Sales Director in XTB Limited in the UK and in 2016
Mr. Omar Arnaout became the regional director of XTB for Poland, Hungary, Germany and
Romania.
Filip Kaczmarzyk
Member of the Management Board responsible for Trading. Mr. Filip Kaczmarzyk is a graduate of
the Warsaw School of Economics majoring in Quantitative Methods in Economics and Information
Systems. He started his professional career at X-Trade Brokers DM S.A. in 2007 in the Trading
Department on the position of Junior Trader. Since April 2009 he held the position of Deputy Chief
Trader. In November 2010 he began working in the CFH Markets in London in the Customer
Support Department. From May 2011 to May 2015 he worked at Noble Securities SA, initially as
the Director of the OTC Instruments Trading Office, and from November 2012 as the Director of
the Foreign Markets Department. Mr. Filip Kaczmarzyk returned to XTB in May 2015 for the
position of the Director of Trading Department.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Paweł Szejko
Chief Financial Officer and Member of the Management Board at XTB. Mr. Paweł Szejko graduated
from the Economy Academy and the Higher School of Banking in Poznań. Mrs. Paweł Szejko also
studied at the Aarhus University in Denmark. He has the qualifications of a Polish statutory auditor
and an ACCA certificate in international finance reporting. Mr. Paweł Szejko commenced his
professional career in 2003 in the audit companies (BDO and PwC), auditing among others,
financial institutions, including banks and investment funds. In 2008-2014 he held the position of
finance director and also a member of the Management Board of P.R.E.S.C.O. GROUP S.A.,
managing the area of finance in the capital group, both at the national and international level.
In October 2014 Mr. Paweł Szejko joined X-Trade Brokers and he took the position of CFO. Mrs.
Paweł Szejko is responsible for financial matters in XTB group.
Jakub Kubacki
Member of the Management Board responsible for Legal. Mr. Jakub Kubacki graduated in 2009
as a Master of Law from Koźmiński University, then he completed his training advocate and in
2013 passed the Bar exam at the District Warsaw Bar Association he was admitted to the Bar. In
2010 he started his professional career at XTB in the Legal and Compliance Department,
where since 2012 he has been the Compliance Officer. From 25 April 2018 he became the Director
of the Legal Department. He specializes in capital market law. Mr. Jakub Kubacki is responsible
for legal affairs and internal control in the XTB Group.
Andrzej Przybylski
Member of the Management Board responsible for Risk Management. Mr. Przybylski graduated in
1994 with a master’s degree on Wroclaw University of Technology and completed doctoral studies
in economics at the Warsaw School of Economics in 2011. Since 1995, Mr. Przybylski has
a stockbroker license. Professionally connected with brokerage houses and offices since 1995
until 1997 with DDM S.A. in Wrocław, then CBM WBK S.A., and until 1998 with Dom Maklerski BMT
S.A. From 1998 he worked as a stockbroker specialist at CDM Pekao S.A. and then since 2002 as
a risk management specialist. From 2007 to 2010 he worked at UniCredit CAIB Poland S.A. as
a risk and compliance manager. From 2010 to 2013 he worked at ING TFI S.S. and ING Investment
Management (Poland) S.A. as a senior specialist in risk management and performance
measurement. From 2013 to 2014 he was the Director of business project part of launching
a brokerage house and an expert on risk management at PGE Dom Maklerski S.A. From 2014
Mr. Przybylski became the Director of the Risk Management Department at XTB and from 1 May
2019 he became a Member of the Management Board at XTB.
In the reporting period and until the date of submission of this report, there were no changes in the composition of the
Management Board.
4.10.2 Powers of the Management Board
The Management Board is authorized to conduct the affairs of the Company, represent the Company and any meters not
reserved by law or the Articles of Association of the Company to the General Meeting or the Supervisory Board. The
Management Board conducting the Company's affairs, makes decisions in the interest of the Company, shall draft the
Company's development strategy and identifies the main goals of the Company.
All members of the Management Board are obliged and authorized to jointly conduct the Company’s affairs.
President of the Management Board shall convene meetings of the Management Board and chair. Chairman of the
Management Board may authorize other members of the Management Board to convene and preside over meetings of the
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Management Board. In the absence of the President Management, the meeting of the Management Board shall be convened
by the oldest member of the Management Board.
In particular, the Management Board shall have the power and shall be required to:
• act on behalf of the Company and represent the Company in dealings with third parties,
• prepare periodic reports and statements of the Company within timeframes allowing for their publication in
accordance with relevant laws,
• submit financial statements to a statutory auditor for the purpose of their audit or review,
• submit reports of the Management Board on the activities of the Company and the financial statements, including an
opinion and report of the statutory auditor (if required by law), to the Supervisory Board for the purpose of evaluation,
• convene General Meetings, submit proposals to be considered by the General Meeting and prepare draft resolutions
of the General Meeting in a timely manner,
• submit reports of the Management Board on the activities of the Company and the financial statements, including an
opinion and report of the statutory auditor, for the last financial year, to the General Meeting for the purpose of
consideration and approval,
• develop and adopt regulations related to the operations of the Company, unless such authority has been reserved for
any other body of the Company,
• prepare draft annual budgets, including the budget of the Company, budgets of Subsidiaries and the consolidated
budget of the capital group of the Company, to be presented for approval to the Supervisory Board,
• fulfil reporting obligations imposed on brokerage houses,
• any other matters not reserved for other bodies of the Company.
The Management Board does not have a special competence in the issue and redemption of XTB shares.
4.10.3 The operation of the Management Board
The Management Board operates on the basis of the Regulations of the Management Board.
Meetings of the Management Board shall be held not less than once a month at the headquarters of the Company or if all
members agree, elsewhere on Polish territory. The Management Board may hold a meeting without being formally convened if
all members are present at the meeting and no one objects to holding the meeting or any of the proposed items on the agenda.
Management Board resolutions are passed by an absolute majority of votes cast, and in the case of an equal number of votes
"for" and "against" the vote of the Chairman of the Board decides.
Board members may participate in adopting resolutions of the Board by casting their votes in writing through another member
of the Management Board. Casting a vote in writing may not concern matters introduced to the agenda during the meeting of
the Board. Resolutions may be passed in writing or using means of direct remote communication. The resolution is valid if all
the members of the Board have been notified of the draft resolution.
In accordance with the Articles of Association, the President of the Management Board supervises the activities of the
Management Board and determines the internal division of tasks and powers among particular members of the Management
Board, specifically, the President of the Management Board may entrust the management of specific departments to particular
members of the Management Board. Furthermore, the President of the Management Board calls and chairs meetings of the
Management Board. The President of the Management Board may authorise other members of the Management Board to
convene and chair meetings of the Management Board. In the absence of the President of the Management Board or if the
position of the President of the Management Board is vacant, the meetings of the Management Board are convened by the
oldest member of the Management Board. Additionally, special rights of the President of the Management Board in terms of
managing the work of the Management Board may be determined in the Regulations of the Management Board.
Two members of the Management Board acting jointly are authorised to make representations on behalf of the Company.
4.10.4 Shares of the Company and related entitles held by the Members of the Management
Board
Management Board Members did not have any shares of the Company at the end of the reporting period and as at the date of
this report.
As at the end of the reporting period and as at the date of this report, Management Board Members did not have any rights to
the Company's shares.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The Management Board Members did not own shares in related entities.
4.10.5 Positions held by the Management Board Members of the issuer in the Group
companies
The following table provides information on the functions carried out by members of the Management Board of the parent
company in the authorities of subsidiaries:
NAME AND SURNAME
COMPANY
FUNCTION
Paweł Szejko
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
(former: X Trade Brokers Menkul Değerler A.Ş.)
Board Member
Omar Arnaout*
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
(former: X Trade Brokers Menkul Değerler A.Ş.)
Board Member
* Omar Arnaout has been Chairman of the Management Board of Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş. (former: X-Trade Brokers Menkul Değerler from 17
February 2017.
Members of the Management Board of the parent company did not receive in 2020 and 2019 remuneration for performing
functions in the bodies of subsidiaries. On 15 September 2020, the liquidation process of the company in Turkey began.
4.11 Supervisory Board
Supervisory Board shall supervise the operations of the Company in all areas of its operations.
4.11.1 Composition, changes and election of the members of the Supervisory Board
Pursuant to § 15 of the Articles of Association of the Company, the Supervisory Board consists of five to nine members. The
Supervisory Board members are appointed for a joint three year term of office.
Composition and election of the Supervisory Board
The Supervisory Board members are appointed and dismissed as follows:
• Jakub Zabłocki has the right to appoint and dismiss one member of the Supervisory Board, who is the Chairman of
the Supervisory Board, by way of a written representation on the appointment or dismissal of the chairman of the
Supervisory Board submitted to the Company; the above right which, within the meaning of Article 385 §2 of the
Commercial Companies Code is classified as an “other method of appointment” of a member of the Supervisory
Board, will be enjoyed by Jakub Zabłocki until such time that, through entities personally controlled thereby, within
the meaning of the Accounting Act, or jointly with such entities or personally, he holds shares in the Company
representing at least 33% of the overall number of votes at the General Meeting;
• SYSTEXAN, as long as it holds shares in the Company representing at least 10% of the overall number of votes at the
General Meeting, will enjoy the personal right to appoint and dismiss one member of the Supervisory Board by way of
a written representation on the appointment or dismissal of the given member of the Supervisory Board delivered to
the Company;
• the other members of the Supervisory Board will be appointed and dismissed by the General Meeting
The number of members of the Supervisory Board in a given term is determined by the General Meeting, and if the General
Meeting does not reach other decision, the number of members of the Supervisory Board will be five. In the case of the election
of the Supervisory Board by way of separate group voting in compliance with Article 385 of the Commercial Companies Code,
the number of Supervisory Board members will be five.
The members of the Supervisory Board may elect from among themselves a Deputy Chairman of the Supervisory Board and
a secretary of the Supervisory Board. Once Jakub Zabłocki loses his personal right referred to above, the members of the
Supervisory Board will elect a Chairman of the Supervisory Board from amongst themselves.
The mandates of the Supervisory Board members shall expire on the date of the General Meeting approving financial
statements for the last full year as a member of the Supervisory Board and in other cases specified in the Code of Commercial
Companies.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
As at 31 December 2020 and as at the date of submission of this report, the composition of the Supervisory Board was as
follows:
NAME AND SURNAME
FUNCTION
STARTING DATE OF THE
CURRENT TERM OF
OFFICE
EXPIRATION DATE OF
THE CURRENT TERM
OF OFFICE
Jakub Leonkiewicz
Chairman of the Supervisory Board
10.11.2018
10.11.2021
Łukasz Baszczyński
Member of the Supervisory Board
10.11.2018
10.11.2021
Jarosław Jasik
Member of the Supervisory Board
10.11.2018
10.11.2021
Bartosz Zabłocki
Member of the Supervisory Board
10.11.2018
10.11.2021
Grzegorz Grabowicz
Member of the Supervisory Board
10.11.2018
10.11.2021
The main information on the education, qualifications and previously held positions of the members of the Supervisory Board
are presented below:
Jakub Leonkiewicz,
Chairman of the
Supervisory Board
Jakub Leonkiewicz started his professional career in 2001 in the business development department
at Interhyp.de in Germany. In 2001-2002 he worked at Roland Berger Strategy Consultants in
Germany. In the years 2002-2015 Jakub Leonkiewicz was associated with J.P. Morgan – first as an
analyst in the merger and acquisition team in London and since 2012 as a director of J.P. Morgan in
Warsaw, where he was responsible for J.P. Morgan’s practice in Poland and the Baltic countries. From
November 2015 to January 2017 and once again from May 2017 he is the Chairman of the XTB
Supervisory Board. Currently, Mr. Jakub Leonkiewicz acts as a partner in Avia Capital private equity
fund.
Jakub Leonkiewicz graduated in 2002 with a master’s degree from the Warsaw School of Economics
with a degree in finance and banking. Jakub Leonkiewicz participated in the CEMS Master Program
(Community of European Management Schools) at the London School of Economics and was
a scholarship holder at the Christian-Albrecht Universität zu Kiel.
Member of the Supervisory Board satisfies the independence criteria provided for in § 20, section
2 of the Articles of Association.
Łukasz
Baszczyński,
Member of the
Supervisory Board
Łukasz Baszczyński commenced his professional career in 1999 as a clerk in the District Court in
Zgierz. From 2002 to 2006 he cooperated as an attorney with the law office of Kancelaria Radców
Prawnych P. Stopczyk & R. Mikulski and as an assistant to the management board of Sarton
Management sp. z o.o. He is a partner at the law office of Kancelaria Prawna P. Grzelka & Wspólnicy
sp. k. and a partner in Baszczyński & Dąbrowska Intellectual Property Law and a member of the
supervisory board of Novama Cloud S.A.
Łukasz Baszczyński graduated from the Faculty of Law and Administration at the University of Lodz.
In 2008, he was registered in the register of legal advisors and in 2010 in the register of advocates at
the District Chamber of Advocates in Warsaw. Łukasz Baszczyński is entered in the list of candidates
for members of supervisory boards of companies with the shareholding of the State Treasury.
Member of the Supervisory Board satisfies the independence criteria provided for in § 20, section
2 of the Articles of Association.
Jarosław Jasik,
Member of the
Supervisory Board
Jarosław Jasik commenced his professional career in 1992 at the Polish Securities and Exchange
Commission as an advisor and then as a specialist, later becoming a chief specialist in the Finance
and Economic Analyses Office. From 1995 to 1996, he was an Investments Specialist at the Capital
Investments Bureau of Ciech S.A. From 1996 he was the director of Public Market, Head of Public
Markets and Investment Analyst at XI Narodowy Fundusz Inwestycyjny S.A. From 1999 to 2000,
Jarosław Jasik worked as an expert in the Capital Investments Department at BIG Bank Gdański S.A.
From 2000 to 2006, Jarosław Jasik worked for the PZU S.A. group as: Head of the Project of the
Consolidation of the PZU Group, deputy director of the Operating Control Bureau, member of the
management board of PZU Tower sp. z o.o. and vice president for finance at PZU Ukraina. From 2007
to 2008, Jarosław Jasik was a member of the management board of Perła Browary Lubelskie S.A.
From 2009 to 2017, Jarosław Jasik was the managing director at Saba Consulting sp. z o.o and from
2011 to 2015 he has been the president of the management board of Saba Nieruchomości sp. z o.o.
and from 2011 to 2017 he has been the president of the management board of Secus Property S.A.
Jarosław Jasik graduated from the Faculty of Finance and Statistics at the Warsaw School of
Economics, he completed post-graduate studies in management and finance at the Warsaw School
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
of Economics. From 2002 to 2003 he participated in a programme for the management of PZU S.A.
at the Herriot-Watt University in Edinburgh.
Member of the Supervisory Board does not satisfy the independence criteria provided for in § 20,
section 2 of the Articles of Association.
Bartosz Zabłocki,
Member of the
Supervisory Board
Bartosz Zabłocki commenced his professional career in 2002 in Contract Administration sp. z o.o.
where until 2007 he was the specialist for brand protection. From 2005 he is a partner in the law office
of Kancelaria Prawna P. Grzelka & Wspólnicy sp. k. Since 2006, Bartosz Zabłocki has been running
his own business: “Globetroter Bartosz Zabłocki”.
Bartosz Zabłocki graduated from the Department of Law and Administration at the University of Lodz.
Member of the Supervisory Board does not satisfy the independence criteria provided for in § 20,
section 2 of the Articles of Association.
Grzegorz
Grabowicz,
Member of the
Supervisory Board
Grzegorz Grabowicz has been a Member of the Management Board and Financial Director at Mabion
S.A. since January 2019. Grzegorz Grabowicz gained knowledge and experience in management
while working: over the period 1998 – 2003 in the Audit Department at Deloitte, in 2003 as Financial
Controller at BFF Polska S.A. (formerly: Magellan S.A.), over the period 2004 – 2017 as Financial
Director at BFF Polska S.A. and Vice President of the Management Board at BFF Polska S.A. Between
2010 and 2013 he worked as President of the Management Board of MEDFinance S.A. In the years
2007 – 2017 was a Member of the Supervisory Board of Magellan Czech Republic and Magellan
Slovakia. Over the period 2013 – 2017 he was a Chairman of the Supervisory Board of MEDFinance
S.A. From 2014 to October 2018 Mr Grzegorz Grabowicz was a Member of the Supervisory Board of
Skarbiec Holding S.A. From October 2017 to August 2020 he was a Member of the Supervisory Board
of Develia S.A. (formely: LC Corp S.A.) and from June 2018 to May 2019 he was a Member of the
Supervisory Board of Medicalgorithmics S.A.
Grzegorz Grabowicz holds a graduate degree. In 1998 he graduated from the University of Lodz,
Faculty of Management and Marketing, specialisation in Accounting, and received a Master’s degree
in Management and Marketing. In 2010 he completed a programme organised by the Nottingham
Trent University and the WSB at the University in Poznań and receive the EMBA (Executive Master of
Business Administration) degree. Grzegorz Grabowicz is also a Statutory Auditor.
Member of the Supervisory Board satisfies the independence criteria provided for in § 20, section
2 of the Articles of Association.
In 2020 the Supervisory Board held seven meetings. In 2020, 45 resolutions were adopted at the Supervisory Board meetings
and by circulation.
In the reporting period and until the date of submission of this report, there were no changes in the composition of the
Supervisory Board.
4.11.2 Powers of the Supervisory Board
The Supervisory Board shall exercise permanent supervision over the operations of the Company in all areas of such operations.
Apart from the matters reserved for the competence of the Supervisory Board by the Code of Commercial Companies, the
Supervisory Board shall be responsible, in particular, for:
• evaluation and review of the financial statements for the last financial year and evaluation of the report of the
Management Board on the activities of the Company for the last financial year, in terms of their compliance with
accounting books and documents, as well as the actual state of affairs, and review of the distribution of profits or
covering the losses proposed by the Management Board;
• submitting to the General Meeting of the annual written report on the results of the review and evaluation referred to
in point above;
• suspending members of the Management Board in their activities, for material reasons;
• determining conditions of remuneration and employment of members of the Management Board;
• appointing committees referred to in §18 of the Regulations of the Supervisory Board;
• granting consent to the payment of interim dividends;
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• approving annual budgets, including the budget of the Company, the budgets of the Subsidiaries, and the consolidated
budget of the capital group of the Company;
• appointing an independent external auditor for the Company and the Subsidiaries;
• granting consent to the provision of sureties, guarantees or other forms of collateral for third-party liabilities, excluding
any events which are directly and closely related to the operations of the Company, which shall be understood as any
activities directly related to the current brokerage activities performed by the Company and the Subsidiaries, and in
particular those related to trading in foreign exchange contracts, contracts for difference and any other instruments
in the OTC market, including any marketing activities (the “Operations of the Company”);
• granting consent to establishment of pledges, mortgages, assignments by way of security, and any other
encumbrances on the assets of the Company or the Subsidiaries, not provided for in the budget;
• granting consent to the acquisition, subscription or disposal by the Company or any of the Subsidiaries any shares or
stocks in other companies, or any assets or organised part of the enterprise of another company or other companies,
or to mergers with (or demergers from) other companies or enterprises by the Company or any of the Subsidiaries,
excluding any agreements concluded within the framework of Operations of the Company, if such acquisition,
subscription or disposal does not exceed 5% of the share capital of such other company;
• granting consent to the sale, encumbrance, leasing or any other disposal of the real estate of the Company or any of
its Subsidiaries, not provided for in the budget approved by the Supervisory Board;
• granting consent to the conclusion of agreements between the Company or any of its subsidiaries and the members
of the Managements Board, the Supervisory Board or shareholders of the Company, or any related party, with any
member of the Management Board, the Supervisory Board or any shareholder of the Company, excluding any
agreements concluded within the framework of Operations of the Company;
• expressing an opinion on changes to the investment policy of the Company, if any such change would result in the
increase, by more than 50%, of the maximum exposure of the Company to market risk, unless the revenues of the
Company, as planned in the budget approved by the Supervisory Board, were to increase by more than 50%, and in
this case, such an opinion of the Supervisory Board shall be required if the percentage of the increase in the exposure
exceeds the percentage of the increase in the revenues, as planned in the budget;
• granting members of the Management Board consent for competitive interests, within the meaning of article 380 of
the Code of Commercial Companies;
• granting consent to the disposal by the Company of any right or incurring a liability with a value exceeding EUR
1 000 000 (one million), if any such disposal or liability has not been provided for in the budget approved by the
Supervisory Board, including any disposal or liability related to repeated or continuous benefits/services, if the value
of benefits arising therefrom exceeds EUR 1 000 000 (one million) per annum. In the event that the total value of all
such disposals and liabilities made or incurred by the Company, and not provided for, or exceeding the value provided
for, in the budget of the Company, exceeds in the calendar year the amount of EUR 3 000 000 (three million), the
Management Board shall be required to request the Supervisory Board for its approval of any disposal of right or
liability to be incurred which has not been provided for in the budget of the Company, regardless of the value thereof,
• granting consent to members of the Management Board to take office in the management or supervisory boards of
companies from outside the capital group of the Company;
• granting consent to the appointment and dismissal of persons in charge of the internal audit and compliance
departments of the Company,
• review and expressing opinion on matters to be discussed and put to a vote at the General Meeting.
4.11.3 The operation of the Supervisory Board
The Chairman of the Supervisory Board manages the work of the Supervisory Board and represents the Supervisory Board
before other authorities of the Company. In the case of the absence of the chairman of the Supervisory Board or a vacancy in
such position, the above-mentioned rights of the chairman of the Supervisory Board should be exercised by a member of the
Supervisory Board authorised thereby to exercise such rights, and if no such authorisation has been granted, by the eldest
member of the Supervisory Board.
The Chairman of the Supervisory Board or a member of the Supervisory Board authorised thereby convenes the meetings of
the Supervisory Board and chairs such meetings, and if the chairman of the Supervisory Board has not granted the relevant
authorisation, the right to convene and chair the meetings is enjoyed by the eldest member of the Supervisory Board. A meeting
of the Supervisory Board may also be convened by two members of the Supervisory Board acting jointly.
The Management Board or a member of the Supervisory Board may demand that a meeting of the Supervisory Board be
convened by presenting the proposed agenda. Such meeting of the Supervisory Board should be convened for a date falling no
later than the 14th day from the date of submitting the request, provided that, if reasonable circumstances exist preventing the
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
presence of at least half of the members of the Supervisory Board at the meeting within the above mentioned deadline, the
meeting of the Supervisory Board may be convened not later than within 30 days from the date of filing the application.
Resolutions of the Supervisory Board may also be adopted in writing by circulating the resolution or by using means of direct
remote communication.
Members of the Supervisory Board may participate in the adoption of resolutions of the Supervisory Board by casting their vote
in writing and delivering it through another member of the Supervisory Board. Such method of voting may only be used when
voting on matters already on the agenda of a meeting of the Supervisory Board.
The detailed procedure for the operation of the Supervisory Board and the organisation thereof is set out in the Regulations of
the Supervisory Board.
Resolutions of the Supervisory Board will be valid if all of the members of the Supervisory Board have been invited to and at
least half are present at a Supervisory Board meeting, including the chairman or a deputy chairman of the Supervisory Board.
The Supervisory Board resolutions are passed by a simple majority. In case of equal number of votes, the vote of the Chairman
of the Supervisory Board decides.
4.11.4 Shares of the Company and related entities held by the Supervisory Board Members
Supervising persons did not hold shares of the Company.
The supervising persons did not own shares in related entities.
4.11.5 Positions held by the Supervisory Board Members of the Issuer in the Group
companies
Members of the Supervisory Board of the Parent Company did not hold in the reporting period at the same time functions in
the bodies of subsidiaries.
4.11.6 Committees of the Supervisory Board
The following committees operate within the Supervisory Board:
• Audit Committee;
• Remuneration Committee;
• Risk Management Committee;
• Nomination Committee.
The duties of the Remuneration Committee, Risk Committee and Nomination Committee are performed by all of the members
of the Supervisory Board collectively pursuant to a resolution adopted thereby. From the date of 13 October 2017 the Audit
Committee functions as a separate committee, before that date, the duties of the Audit Committee are performed by all of the
members of the Supervisory Board.
The Supervisory Board may also appoint other committees. The detailed duties and procedures for the appointment and
operation of the committees are provided for in the Regulations of the Supervisory Board.
Audit Committee
In 2020 the Audit Committee proceeds in the following composition:
− Grzegorz Grabowicz – Chairman of the Audit Committee;
− Jakub Leonkiewicz – Member of the Audit Committee;
− Łukasz Baszczyński – Member of the Audit Committee;
− Bartosz Zabłocki – Member of the Audit Committee;
− Jarosław Jasik – Member of the Audit Committee.
Basic assignments taken by the Audit Committee:
• monitoring the financial reporting process;
• monitoring Company’s SLC systems, SIC systems, SIA systems including SRM;
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• monitoring the performance of financial audit activities, particularly an audit performed by an audit firm, taking into
account any conclusions and findings of an inspection carried out at the audit firm;
• checking and monitoring the independence of the statutory auditor of permitted non-audit services;
• presenting to the Supervisory Board offers of audit firms and recommending the selection of a company to conduct
audits of financial statements;
• informing the Supervisory Board on the results of the audit and explaining in what way the audit contributed to the
honesty of the financial reporting process in the Company, as well as what was the role of the audit committee in the
audit process;
• monitoring the independence of the statutory auditor and granting consent for performance of services permitted by
him other than financial audits;
• establishing an audit firm selection policy and regularly reviewing this documents;
• establishing the policy for conducting permitted non-audit services by an audit firm carrying out the statutory audit,
entities related to this audit firm and any member of the network to which the audit firm and regularly reviewing this
documents;
• establishing the procedure of an audit firm selection and regularly reviewing this documents;
• presenting the recommendation regarding selection of the certified auditors or audit firms to the Supervisory Board;
• providing recommendations to ensure reliability of the public-interest entity’s financial reporting process;
• adoption of the report on the activities of the Audit Committee for the previous year.
Regarding XTB Audit Committee:
• members who meet the independence criteria:
In 2020 in the members of the Audit Committee fulfilled the criteria of independence specified in article 129 item
3 of the Act of 11 May 2017 in auditors, audit firms and public supervision:
− Grzegorz Grabowicz –Chairman of the Audit Committee;
− Jakub Leonkiewicz –Member of Audit Committee;
− Łukasz Baszczyński – Member of Audit Committee;
• members with knowledge and skills in the field of accounting or auditing of financial statements, with an indication
of how to acquire them
The persons listed below, who are members of the Audit Committee, acquired as a result of the described education
and professional experience knowledge and skills in the field of accounting or auditing of financial statements:
− Grzegorz Grabowicz graduated from the University of Lodz, Faculty of Management and Marketing, specialisation
in Accounting, and received a Master’s degree in Management and Marketing in 1998. In 2010 he completed
a programme organised by the Nottingham Trent University and the WSB at the University in Poznań and receive
the EMBA (Executive Master of Business Administration) degree. Grzegorz Grabowicz is also a Statutory Auditor.
Over the period has worked in the Audit Department at Deloitte, in 2003 as Financial Controller at Magellan S.A.,
over the period 2004-2017 as Financial Director at Magellan S.A.;
− Jarosław Jasik graduated from the Faculty of Finance and Statistics at the Warsaw School of Economics, he
completed post-graduate studies in management and finance at the Warsaw School of Economics. From 2002 to
2003 he participated in a programme for the management of PZU S.A. at the Herriot-Watt University in Edinburgh.
He has a broad experience in financial management;
− Jakub Leonkiewicz graduated in 2002 with a master’s degree from the Warsaw School of Economics with a degree
in finance and banking. Jakub Leonkiewicz participated in the CEMS Master Program (Community of European
Management Schools) at the London School of Economics and was a scholarship holder at the Christian-Albrecht
Universität zu Kiel. He gained his professional experience in Roland Berger Strategy Consultants in Germany and
also in J.P. Morgan;
• members with knowledge and skills in the industry in which the issuer operates, with an indication of how to acquire
them
− Jakub Leonkiewicz – for over 3 years he has been a member of the Supervisory Board of XTB, which allowed him
to thoroughly learn about the financial industry and the specification of brokerage activities on the stock market
and the OTC market (derivatives for currencies, commodities, indices, stocks and bonds) operated by XTB.
Additionally, in 2001-2002 he worked at Roland Berger Strategy Consultants in Germany. In the years 2002-2015
Jakub Leonkiewicz was associated with J.P. Morgan – first as an analyst in the merger and acquisition team in
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
London and since 2012 as a director of J.P. Morgan in Warsaw, where he was responsible for J.P. Morgan’s
practice in Poland and the Baltic countries. Currently, he acts as a partner in Avia Capital private equity fund;
− Łukasz Baszczyński – for over 9 years he has been a member of the Supervisory Board of XTB, which allowed him
to thoroughly learn about the financial industry and the specification of brokerage activities on the stock market
and the OTC market (derivatives for currencies, commodities, indices, stocks and bonds) operated by XTB.
additionally, he is a partner at the law office of Kancelaria Prawna P. Grzelka & Wspólnicy sp. k. and a partner in
Baszczyński & Dąbrowska Intellectual Property Law and a member of the supervisory board of Novama Cloud S.A.;
− Jarosław Jasik – for over 7 years he has been a member of the Supervisory Board of XTB, which allowed him to
thoroughly learn about the financial industry and the specification of brokerage activities on the stock market and
the OTC market (derivatives for currencies, commodities, indices, stocks and bonds) operated by XTB. Additionally,
from 1995 to 1996, he was an Investments Specialist at the Capital Investments Bureau of Ciech S.A. From 1996
he was the director of Public Market, Head of Public Markets and Investment Analyst at XI Narodowy Fundusz
Inwestycyjny S.A. From 1999 to 2000, he worked as an expert in the Capital Investments Department at BIG Bank
Gdański S.A. From 2000 to 2006, he worked for the PZU S.A. group as: Head of the Project of the Consolidation of
the PZU Group, deputy director of the Operating Control Bureau, member of the management board of PZU Tower
sp. z o.o. and vice president for finance at PZU Ukraina;
− Bartosz Zabłocki – for over 3 years he has been a member of the Supervisory Board of XTB, which allowed him
acquire relevant knowledge in the industry. From 2005 he is a partner in the law office of Kancelaria Prawna P.
Grzelka & Wspólnicy sp. k.
• information on providing services by audit firm examining financial statement permitted non-audit services and on
conducted assessment of independency of audit firm and expressed consent for providing these services
In 2020, the audit firm PricewaterhouseCoopers spółka z ograniczoną odpowiedzialnością Audyt sp.k. performed the
following permitted non-audit services:
− review of the condensed financial statements for the six months ended on 30 June 2020;
− review of the process of storing and protecting the assets of Company’s clients on 31 December 2020.
The above services were performed based on the consent of the Supervisory Board of 7 November 2018.
The Audit Committee approved the employment of the audit company (i.e. PricewaterhouseCoopers spółka
z ograniczoną odpowiedzialnością Audyt sp.k.) to perform the abovementioned allowed non-audit services. Before
submitting the relevant recommendations to the Audit Committee, the auditor services independence in the process
of financial statements auditing had been positively verified.
• the main assumptions of the developed policy of selecting an audit firm to conduct the audit and the policy for the
provision of permitted non-audit services by the audit firm conducting the audit, entities related to this audit firm and
by a member of this audit firm's network
On 13 October 2017 Supervisory Board approved:
− Procedure of selecting an audit firm;
− Policy of selecting an audit firm;
− Policy for the provision of permitted non-audit services by the audit firm.
Procedure for selection an audit firm:
The purpose of the Procedure is to describe the process of selecting an audit firm. This procedure contains the
following elements:
− offer inquiry;
− evaluation of offers;
− selection of the offer;
− conclusion of the agreement or repeated selecting.
Policy for selection of audit firm:
The purpose of the Policy is to define rules and criteria for selection of audit firm, which will conduct audit in the
Company. It describes:
− selection criteria for entities authorized to conduct the audit;
− evaluation criteria of offers received;
− criteria for the independence assessment carried out by the Audit Committee;
− rules for submitting and selecting offers.
Policy for the provision of permitted non-audit services by the audit firm:
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The purpose of the Policy is to define general principles on which the audit firm conducting audit may provide services
to the Company or entities affiliated with the Company. The policy includes a catalogue of the permitted services.
• recommendation regarding the selection of an audit firm to conduct the audit
In 2018, the Supervisory Board of the Company selected a new audit firm PricewaterhouseCoopers Sp. z o.o. for the
audit of the Company's financial statements for 2019 and 2020. The selection of a new entity authorized to audit
financial statements was carried out on the basis of the Policy for selection of audit firm in force in the Company and
the Procedure for selecting an audit firm to audit XTB's financial statements. The core of the procedure was the Audit
Committee’s execution of analysis of the submitted offers in terms of the requirements specified under the Act of
Auditors as well as the criteria and guidelines set out in the above mentioned Policy. As a result of analysing and
comparing offers, the Audit Committee recommended two audit firms to the Supervisory Board, at the same time
indicating PricewaterhouseCoopers Sp. o.o., as the preferred one.
The Supervisory Board, after having familiarized itself with the recommendation, chose the entity preferred by the
Audit Committee.
Summarizing, the recommendation of the Audit Committee regarding the selection of an audit firm to conduct the
audit for 2019-2020 was made as a result of a selection procedure, which meets all binding criteria.
• number of meetings of the Audit Committee or meetings of the Supervisory Board or other supervisory or controlling
body dedicated to performing the duties of the Audit Committee
In 2020 ten meetings of the Company's Audit Committee were held.
Remuneration Committee
The function of the Compensation Committee in the Company is performed by the entire Supervisory Board. The tasks of the
Compensation Committee include:
• expressing opinion on the variable remuneration components policy, including the amount of remuneration and the
components of remuneration;
• expressing opinion on performing the variable remuneration components policy;
• expressing opinion on and monitoring of payment of the remuneration variable components to the persons holding
managerial positions responsible for risk management, internal audit and compliance of the brokerage house’s activity
with law;
• determining list of the persons holding managerial positions in the Company, and;
• approving the planned amount of remuneration and the components of remunerations of the persons holding
managerial positions.
Risk Management Committee
The function of the Risk Management Committee is performed by the entire Supervisory Board in the Company. The main tasks
include:
• developing a draft document regarding the risk appetite of a brokerage house;
• expressing opinions on the strategy of a brokerage house developed by the Management Board in the scope of risk
management;
• supporting the Supervisory Board in monitoring the implementation of the brokerage house strategy in terms of risk
management by the Management Board;
• verification of the remuneration policy and the rules of its implementation in terms of adjusting the remuneration
system to the risk to which the brokerage house is exposed, its capital, liquidity and probabilities and dates of
obtaining income.
Nomination Committee
The function of the Nominating Committee is performed by the entire Supervisory Board. Its main tasks include:
• recommending candidates for the management board of the brokerage house, taking into account the necessary
knowledge and skills as well as the experience of the management board as a whole, necessary to manage the
brokerage house, and taking into account diversity in the composition of the management board of the brokerage
house;
• defining the scope of duties for the candidate to the management board of a brokerage house, knowledge and skills
requirements and anticipated commitment in terms of time spent, that is necessary to perform the function;
• conducting periodic reviews, at least once a year, of the knowledge, skills and experience of the board as a whole and
individual board members and informing the management board about the results of this assessment;
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• periodically reviewing management's policy regarding the selection and appointment of persons holding
management positions and presenting recommendations to the management board in this regard.
4.11.7 The control system for employee share schemes
With the exception of the Incentive Scheme introduced on the basis of the shareholders' agreement of 28 March 2011 adopting
the option plan of the Company concluded between XXZW and SYSTEXAN in the execution of the investment agreement (of
which the Company informed in detail in the Prospectus), XTB does not operate employee share program. On 23 December
2016, members of the Management Board entitled under the Incentive scheme exercised their entitlement to acquisition of XTB
shares.
4.12 General Meeting of Shareholders
The operation of the General Meeting of the Company and its powers are contained in the Articles of Association and the
Regulations of the General Meeting of X-Trade Brokers Dom Maklerski SA with its registered office in Warsaw, which is available
on the Company's website under www.xtb.pl in Investors Relations section.
4.12.1 Operation of the General Meeting
General Meetings is convened by the Management Board as ordinary or extraordinary.
Ordinary General Meetings are held annually, not later than within six months after the end of the financial year.
Extraordinary General Meetings are convened in the circumstances specified in the Commercial Companies Code or in the
Articles of Association and also if the authorities or persons authorised to convene General Meetings believe such to be
necessary.
Ordinary General Meeting may be convened by the Supervisory Board, if the Management Board fails to convene it on time. The
Supervisory Board may also convene the extraordinary General Meeting if it deems it necessary. The right to convene an
extraordinary General Meeting is also vested with the Company’s shareholders representing at least one-half of the Company’s
share capital or at least one-half of the total number of votes in the Company. In such case, the Company’s shareholders will
appoint the chairman of such General Meeting.
Furthermore, a shareholder or shareholders of the Company representing at least one-twentieth of the Company’s share capital
may request that an extraordinary General Meeting be convened and that certain matters be placed on the agenda of such
General Meeting. The request to convene the extraordinary General Meeting must be submitted to the Management Board in
writing or in electronic form. If within two weeks from the submission of such request to the Management Board the
extraordinary General Meeting is not convened, the registry court may authorise the Company’s shareholders submitting such
request to convene an extraordinary General Meeting. In such case, the chairman of the General Meeting is appointed by the
court.
4.12.2 Powers of General Meetings
According to the Commercial Code of Companies, tasks of the General Meeting include in particular:
• the consideration and approval of the Management Board’s report on the Company’s Operations and the financial
statements for the previous financial year,
• the granting of a vote of approval to the members of the Management Board and the Supervisory Board with respect
to the performance of their duties,
• decisions regarding claims for the redress of damage caused while establishing the Company or exercising
management or supervision over the Company,
• the sale or lease of the Company’s enterprise or an organised part thereof and the establishment of a limited property
right thereon,
• making a distribution of profit or covering of losses,
• issue of convertible bonds or bonds with priority rights and subscription warrants, referred to in art. 453 § 2 of the
CCC,
• liquidation of the Company,
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Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
• the acquisition of own shares for redemption, redemption and reduction of share capital of the Company,
• the merger, transformation or split of the Company,
• amending the Articles of Association of the Company.
According to the Articles of Association, the competences of the General Meetings include also:
• the approval of the Regulations of the Management Board,
• the adoption of the Regulations of the Supervisory Board,
• the determination of the rules and amount of the remuneration of the members of the Supervisory Board,
• the creation, drawing upon and liquidation of reserve capitals and other special-purpose funds and the drawing upon
the supplementary capital.
The resolutions of the General Meeting passed by an absolute majority of votes, unless the law or the Articles of Association
provide for stricter requirements for the adoption of the resolution.
As of the Dematerialisation Date, the General Meeting will be deemed to have been validly convened regardless of the number
of shares represented thereat, provided that the General Meeting will be able to adopt a resolution regarding the amendment
to §15, sections 3 and 4 of the Articles of Association only in the presence of shareholders representing at least 2/3 (two-thirds)
of the overall number of votes a the General Meeting.
4.12.3 Rights and obligations related to the Shares
Certain rights and obligations related to the Shares are presented below. The issues regarding the rights and obligations related
to the shares are specifically regulated under the Polish Commercial Companies Code, the Act on Public Offering, the Act on
Trading in Financial Instruments and the Articles of Association.
The Articles of Association do not contain provisions regarding the threshold amount of shares owned, beyond which it is
necessary to state the shareholding of the Company shareholder or contain provisions imposing stricter conditions governing
changes in capital than specified by the applicable law.
Right to dispose of the Shares
The shareholders of the Company have the right to dispose of shares. Disposal of shares consists of their disposal (transfer of
ownership) and other forms of the ordinance, including pledging, establishing rights of use and their lease.
Dividend
The shareholders of the Company have the right to participate in the profit, which will be shown in the annual financial statement
audited by the statutory auditor, designated by the resolution of the General Meeting for payment to the shareholders of the
Company (right to dividend).
The Ordinary General Meeting is the body authorized to make decisions on the distribution of the Company's profit and dividend
payment. The Ordinary General Meeting of Shareholders adopts a resolution on whether and what part of the Company's profit
shown in the financial statements, audited by the statutory auditor, should be used to pay dividends. The Ordinary General
Meeting should take place within six months after the end of each financial year (the financial year corresponds to the calendar
year), i.e. by the end of June.
The Ordinary General Meeting also sets the date of the dividend and the date of dividend payment. The dividend day may be
designated as at the date of adoption of the resolution on the distribution of profit or within the next three months, counting
from that day.
The amount to be distributed among the shareholders of the Company may not exceed the profit for the last financial year,
increased by undistributed profits from previous years, and amounts transferred from the supplementary and reserve capital
created from profit, which may be allocated for the payment of dividends. However, this amount should be reduced by
uncovered losses, own shares and amounts that, according to the Commercial Companies Code or the Articles of Association,
should be allocated from the profit for the last financial year to supplementary or reserve capital.
The Management Board may pay shareholders an advance on the anticipated dividend at the end of the financial year if the
Company has sufficient funds to pay. The advance payment requires the consent of the Supervisory Board. The company may
pay an advance if its approved financial statements for the previous financial year show profit. The advance may amount to at
most half of the profit earned from the end of the previous financial year, shown in the financial statements audited by the
statutory auditor, increased by reserve capital created from profit, which the Management Board may use to distribute advances
and reduced by uncovered losses and own shares.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The right to dividend is payable to persons on accounts of which dematerialized shares (bearer shares) are kept on the dividend
day and to entities authorized to sell dematerialized Shares on a collective account.
A shareholder's claim against the Company for payment of a dividend may be made within 10 years, starting from the date of
adoption by the ordinary General Meeting of a resolution to allocate all or part of the Company's profit to be paid to shareholders.
After this date, the Company may evade payment of the dividend, raising the plea of limitation.
Terms of payment of dividend
The conditions for the receipt of dividends by the shareholders of the Company correspond to the rules adopted for public
companies. The resolution on dividend payment should indicate the date of determining the right to dividend (dividend day) and
the dividend payment date. Subject to the provisions of the Rules and Regulations of the NDS, the dividend day may be
designated as at the date of adoption of the resolution or within the next three months, counting from that day. The dividend is
paid on the day specified in the resolution of the General Meeting, and if the resolution of the General Meeting does not specify
such a day, the dividend is paid on the day determined by the Supervisory Board.
Pre-emption right
The shareholders of the Company have the right to subscribe for the new shares of the Company in relation to the number of
Shares held (pre-emptive right). The Company's shareholders have the right of priority to acquire new shares of the Company
in relation to the number of Shares held, with the pre-emptive right also for issuing securities convertible into shares of the
Company or incorporating the right to subscribe for shares of the Company.
The resolution on increasing the share capital of the Company should indicate the day according to which the shareholders of
the Company are designated who have the right to collect new shares (day of subscription right). The subscription right can’t
be determined later than within six months from the day the resolution was passed.
The agenda of the General Meeting at which a resolution to increase the share capital of the Company is to be adopted should
specify the proposed day of subscription right. Depriving the Company's shareholders of the right to acquire the shares of the
new issue of the Company may take place only in the interest of the Company and in the event that it was announced in the
agenda of the General Meeting. The Management Board presents the General Meeting with a written opinion justifying the
reasons for the deprivation of the pre-emptive right and the proposed issue price of new shares of the Company or the method
of its determination. A majority of at least four fifths of votes is required to pass a resolution regarding the deprivation of the
Company's shareholders rights.
The above-mentioned requirements regarding the adoption of a resolution regarding the deprivation of the current shareholders
of the Company's pre-emptive rights are not applicable if:
• the resolution on capital increase states that the new shares of the Company are to be fully covered by the financial
institution (underwriter), with the obligation to offer them to the shareholders of the Company in order to enable them
to exercise the pre-emptive right on the terms specified in the resolution;
• the resolution states that the new shares of the Company are to be taken up by the underwriter in the event that the
shareholders of the Company, with whom the pre-emptive right is used, will not take part or all of the shares offered
to them.
Right to a share in the assets in the case of the liquidation of the Company
If the Company is liquidated, the assets remaining after the satisfaction or securing of the creditors of the Company are divided
between the shareholders of the Company on a pro rata basis to their contributions to the share capital.
The right to participate in the General Meeting and voting rights
The shareholder exercises the right to vote at General Meetings. Pursuant to the Code of Commercial Companies, General
Meetings may be ordinary (ordinary General Meetings) or extraordinary (Extraordinary General Meetings).
Each Action gives the right to one vote at the General Meeting.
A shareholder of the Company may participate in the General Meeting and exercise the right to vote in person or through
a proxy. A shareholder of the Company intending to participate in the General Meeting through a proxy must give the proxy
proxies in writing or in electronic form. The Company takes appropriate actions to identify the Company's shareholder and
proxy in order to verify the validity of the power of attorney granted in electronic form.
A detailed description of the manner of verifying the validity of the power of attorney granted in electronic form includes an
announcement on convening the General Meeting.
Pursuant to the Articles of Association, participation in the General Meeting by means of electronic communication is allowed,
subject to the following. In the event that the announcement on convening the General Meeting contains information about the
possibility of shareholders participating in the General Meeting using electronic means of communication, the Company is
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
obliged to provide shareholders with the opportunity to participate in the General Meeting using electronic means of
communication.
The detailed rules for conducting the General Meeting using electronic means of communication are determined by the
Management Board, taking into account the provisions of the Regulations of the General Meeting. The Management Board
announces the rules on the Company's website along with the announcement on convening the General Meeting.
A shareholder of the Company holding shares registered on more than one securities account may appoint separate proxies to
exercise the rights attached to shares registered on each account.
If a representative of a shareholder of the Company at the General Meeting is a member of the Management Board, a member
of the Supervisory Board, liquidator, employee of the Company or a member of the bodies or employee of a subsidiary or
a subsidiary of the Company, the power of attorney may authorize to represent only one General Meeting.
The proxy is obliged to disclose to the shareholder of the Company circumstances indicating the existence or the possibility of
a conflict of interests. In this case, granting a further power of attorney is unacceptable. The proxy referred to above votes in
accordance with the instructions provided by the shareholder of the Company.
Each share gives the right to one vote at the General Meeting. The Articles of Association do not provide for voting preference.
A shareholder may vote differently from each of the shares held. A proxy may represent more than one shareholder of the
Company and vote differently from the shares of each shareholder of the Company.
A shareholder of the Company may not, either personally or by proxy, vote on adopting resolutions regarding his liability towards
the Company for any reason, including granting a vote of acceptance, exemption from obligations towards the Company and a
dispute between him and the Company. The above limitation does not apply to voting by a shareholder of the Company as
a proxy of another shareholder when adopting resolutions regarding the person referred to above.
Only persons who are shareholders of the Company sixteen days before the date of the General Meeting (day of registration of
participation in the General Meeting) have the right to participate in the General Meeting. In order to participate in the General
Meeting, those entitled from the dematerialized Bearer Stocks of the Company should request the entity maintaining their
securities account to issue a personal certificate on the right to participate in the General Meeting. The demand should be
presented not earlier than after the announcement of convening the General Meeting and no later than the first weekday after
the date of registration of participation in the General Meeting.
Holders of registered shares and temporary certificates, as well as pledgees and users who have the right to vote, have the right
to participate in the General Meeting, if they are entered into the book of shares on the day of registration of participation in the
General Meeting.
The list of persons entitled to participate in the General Meeting is determined on the basis of the list prepared by the entity
keeping the securities deposit in accordance with the Act on Trading in Financial Instruments and on the basis disclosed in the
Company's share register on the day of registration of participation in the General Meeting. The above list is displayed at the
Company's office for three days preceding the day of the General Meeting. The Company's shareholder may request that the
list of shareholders entitled to participate in the General Meeting be sent to him free of charge via e-mail, providing his own
e-mail address to which the list should be sent.
In relation to shares registered on a collective account, a certificate confirming the right to participate in the General Meeting
shall be a document with appropriate content issued by the holder of the said account. If the omnibus account is maintained
by NDS (or an entity employed by NDS to perform duties related to the maintenance of securities), information on the holder of
such an account should be disclosed to NDS (or an entity employed by NDS to perform duties related to the operation of the
securities depository) ) by the entity conducting a collective account for it before the first issue of such a document.
On the basis of the above-mentioned documents, the omnibus account holder will prepare a list of persons authorized to
participate in the General Meeting. If the omnibus account holder is not a NDS participant (or a bank employed by NDS in order
to perform duties related to the securities depository), the list of persons authorized to participate in the General Meeting is
delivered through a NDS participant (or a bank that NDS has employed to perform its duties associated with keeping a securities
depository).
The Company's shareholder may transfer the Shares in the period between the date of registration of participation in the General
Meeting and the date of closing the General Meeting.
Right to place particular matters on the agenda
A shareholder or shareholders of the Company representing at least one twentieth of the Company's share capital may request
that specific matters be placed on the agenda of the next General Meeting. The request should be submitted to the Management
Board no later than twenty one days before the set date of the General Meeting. The request may be submitted in electronic
form. The Management Board is obliged to announce immediately, but no later than eighteen days before the set date of the
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
General Meeting, changes to the agenda introduced at the request of the Company's shareholders. The announcement is made
in a manner appropriate for convening the General Meeting.
Manner in which the General Meeting is convened
The General Meeting is convened through an announcement made on the Company's website and in a manner specified for
the provision of current information in accordance with the Act on Public Offering. The announcement should be made at least
twenty-six days before the date of the General Meeting. The announcement about the General Meeting should include in
particular:
• the date, time and place of the General Meeting and the detailed agenda,
• a precise description of the procedures for participation in the General Meeting and the exercise of voting rights,
• day of registering participation in the General Meeting,
• information that only persons who are shareholders of the Company on the registration date of participation in the
General Meeting have the right to participate in the General Meeting,
• an indication of where and how a person entitled to participate in the General Meeting may obtain the full text of
documentation to be presented to the General Meeting and draft resolutions or, if no resolutions are envisaged,
comments of the Management Board or Supervisory Board regarding matters introduced into the agenda the General
Meeting or issues that are to be included in the agenda before the date of the General Meeting,
• indication of the address of the website on which information on the General Meeting will be made available.
Pursuant to the Regulation on Reports, the Company will be required to submit in the form of a current report, among others
the date, time and place of the General Meeting together with its detailed agenda.
In addition, in the event of a planned amendment to the Statute, the current provisions, the content of the proposed
amendments and if, due to a large scope of intended changes, the Company makes a decision to prepare a new uniform text,
the new uniform text of the Articles of Association together with the calculation of its new provisions. The content of draft
resolutions and attachments to the projects to be discussed at the General Meeting that are relevant to the resolutions adopted
shall also be announced in the form of a current report.
Venue of the General Meeting
General Meetings are held in the Company’s registered office.
Right to propose draft resolutions to the Company
A shareholder or shareholders of the Company representing at least one-twentieth of the share capital may submit to the
Company in writing or using electronic communication means draft resolutions regarding matters included in the agenda of
the General Meeting or issues to be included in the agenda prior to the date of the General Meeting. The company immediately
publishes draft resolutions on its website.
Right to demand the issuance of duplicates of motions
Each shareholder of the Company has the right to demand copies of motions regarding issues included in the agenda of the
next General Meeting. Such a request should be submitted to the Management Board, no later than one week before the General
Meeting.
Right to demand that the list of participants of the General Meeting be verified
Immediately after the election of the chairman of the General Meeting, an attendance list containing a list of participants of the
General Meeting should be drawn up, specifying the number of shares of the Company that each of them presents and their
votes. The attendance list should be signed by the chairman of the General Meeting and presented during the meeting. At the
request of shareholders holding one-tenth of the share capital represented at the General Meeting, the attendance list should
be checked by a committee elected for this purpose, composed of at least three persons. Applicants have the right to choose
one member of the commission.
Right to information
The Management Board is obliged to provide the Company's shareholder, during the General Meeting, upon request with
information regarding the Company, if it is justified for the assessment of a matter covered by the agenda of the General
Meeting. If there are important reasons to do so, the Management Board may provide information in writing outside the General
Meeting. In such a case, the Management Board is obliged to provide information not later than within two weeks from the day
the shareholder filed a request at the General Meeting.
The Management Board refuses to provide information if it could cause damage to the Company, a company associated with
the Company or a company or a cooperative subsidiary of the Company, in particular by disclosing technical, commercial or
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
organizational secrets of the company. A member of the Management Board may refuse to provide information if the provision
of information could be the basis of his criminal, civil or administrative liability.
The information provided to the Company shareholder should be made available to the public in the form of a current report.
A shareholder who was refused to disclose the information requested during the General Meeting and who filed an objection to
the Minutes may submit an application to the registry court to oblige the Management Board to provide information. Such
a request should be submitted within one week from the end of the General Meeting at which information was refused.
A shareholder may also submit an application to the registry court for obliging the Company to publish information provided to
another shareholder outside the General Meeting. Pursuant to the Regulation on Reports, the Company will be obliged to provide
in the form of a current report information provided to a shareholder following the Management Board's obligation by the
registry court in the cases referred to above.
Right to demand the issuance of duplicates of the annual financial statements
Each shareholder of the Company has the right to request copies of the Management Board's report on the Company's
operations and financial statements along with a copy of the Supervisory Board's report and the auditor's opinion no later than
fifteen days before the General Meeting.
Right to request the election of the Supervisory Board by separate groups
At the request of the Company's shareholders representing at least one fifth of the Company's share capital, the Supervisory
Board should be elected by the next General Meeting by voting in separate groups. In this case, the mode provided for in the
Statute will not be applicable and the shareholders will apply the procedure provided for in the Code of Commercial Companies.
The mechanism of such selection is as follows: the total number of Company shares is divided by the total number of members
of the Company's Supervisory Board. Shareholders who represent such a number of shares may form a separate group to elect
one member of the Supervisory Board and may not vote in the selection of other members. If, after a vote in the voting mode,
separate groups in the Supervisory Board remain vacancies, shareholders who have not participated in the creation of any
group will be entitled to elect other members of the Supervisory Board. If the election of the Supervisory Board is made by way
of voting in separate groups, the limitation of the preference for voting rights does not apply, and each Action gives the right to
one vote, excluding restrictions on shares that do not entitle to exercise voting rights.
Right to appeal against the resolutions of the General Meeting
The Company's shareholders are entitled to appeal against resolutions adopted by the General Meeting by way of an action to
repeal a resolution or an action for annulment of a resolution.
Action for the revocation of a resolution
A resolution of the General Meeting that is contrary to the Statute or decency and which harms the interest of the Company or
intended to harm a shareholder of the Company may be appealed against by way of action against the Company for repealing
the resolution.
An action to cancel a resolution of the General Meeting should be brought within one month from the date of receipt of
information about the resolution, however not later than within three months from the date of adopting the resolution.
Action to have a resolution declared invalid
A resolution of the General Meeting contrary to the Act may be challenged by an action brought against the Company for the
annulment of a resolution.
An action for annulment of a resolution of the General Meeting should be brought within thirty days from the date of its
announcement, but no later than one year from the date of adoption of the resolution.
Entities authorised to challenge resolutions of the General Meeting
The following persons have the right to file an action seeking to have a resolution of the General Meeting declared invalid or an
action for the revocation of a resolution of the General Meeting:
• the Management Board, the Supervisory Board and the individual members thereof;
• a shareholder of the Company who voted against the resolution and who upon the adoption thereof requested that
his objection be recorded in the minutes of the General Meeting;
• a shareholder of the Company who was refused participation in the General Meeting without providing a good reason;
• the shareholders of the Company who were not present at the General Meeting – only if the General Meeting was
improperly convened or in the case of a resolution on a matter which was not included on the agenda.
Change to the Rights Entrusted with the Company’s Shareholders
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
A change in the rights of shareholders in the form of amending the provisions of the Statute requires a resolution of the General
Meeting adopted by a three-fourths majority of votes and an entry in the Register of Entrepreneurs of the National Court
Register. In addition, a resolution to amend the Articles of Association, increasing the benefits of the Company's shareholders
or reducing the rights granted personally to the Company's shareholders, requires the consent of all shareholders of the
Company to whom it applies.
Redemption of Shares
Shares may be redeemed by way of a decrease in the share capital of the Company, however, the redemption requires the
consent of the shareholder of the Company. The Statute does not contain a provision regarding the compulsory retirement of
the Shares.
The conditions, legal basis and procedure for redemption of shares and the amount of remuneration for redeemed shares or
justification for redemption without remuneration shall be determined each time by the General Meeting in the form of
a resolution
Right to Request the Appointment of a Special-Purpose Auditor
According to art. 84 of the Act on Public Offer, at the request of a shareholder or shareholders of the Company, holding at least
5% of the total number of votes, the General Meeting may adopt a resolution regarding the examination by a court expert of
a specific issue related to the creation of the Company or conducting its affairs. These shareholders may, for this purpose,
request that an extraordinary General Meeting be convened or that the matter of adopting this resolution be placed on the
agenda of the next General Meeting. If the shareholders decide to take advantage of the first option and within two weeks from
the date of requesting convening such a General Meeting, the Extraordinary General Meeting will not be convened, the registry
court may authorize the shareholders of the Company to submit the request to convene an extraordinary General Meeting. The
court appoints the chairman of this General Meeting. If shareholders decide to use the second option and request that the
resolution be placed on the agenda of the next General Meeting, such request must be delivered to the Management Board in
writing no later than twenty one days before the planned date of the General Meeting.
The resolution of the General Meeting on the selection of the auditor for special matters should specify in particular:
• the data of the special-purpose auditor, which auditor should be approved in writing by the requesting shareholder;
• the subject and the scope of the audit, which should comply with the contents of the request, unless the requesting
party consented in writing to change the subject and scope of the audit;
• the types of documents that should be made available to the auditor by the Company; and
• the start date of the audit, which should not be later than three months from the date of the adoption of the resolution.
If the General Meeting fails to adopt the resolution in accordance with the request or adopts such resolution in breach of Article
84 clause 4 of the Act on Public Offering, the requesting parties may, within 14 days of the date of the adoption of the resolution,
request that the registry court appoint the identified entity as a special purpose auditor.
The auditor for special matters may only be an entity having the expertise and qualifications necessary to examine the matter
specified in the resolution of the General Meeting, which will ensure the preparation of a reliable and objective audit report. The
auditor for special matters may not be an entity providing services to the Company, its parent or subsidiary in the audited period,
as well as its parent entity or a significant investor within the meaning of the Accounting Act. The auditor for special matters
may also not be an entity that belongs to the same capital group as the entity that provided the services referred to above.
The Management Board and the Supervisory Board are required to make available to the special-purpose auditor such
documents as have been specified in the resolution of the General Meeting upon the appointment of the special purpose auditor,
or upon the decision of the court on the appointment of the special purpose auditor, and to provide the auditor with the
explanations necessary for carrying out the audit.
The special purpose auditor is required to present to the Management Board and the Supervisory Board of the company
a written report on the audit results. The Management Board is required to announce the report in the form of a current report.
The report of the special purpose auditor may not disclose information that constitutes a technical, trade or organisational
secret of the Company, unless it is necessary for justifying the position presented in the report.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The Management Board is required to submit a report on the consideration of the audit findings at the next General Meeting.
4.13 Change of the Articles of Association of the Company
Change of the Articles of Association of the Company in accordance with the provisions of the Commercial Companies Code,
is within the competence of the General Meeting. The resolution concerning amendments to the Statute is adopted by
a majority of three-quarters of votes.
Resolution on amendments to the statute, increasing the benefits of shareholders or limiting the rights granted personally to
individual shareholders in accordance with art. 354 Commercial Companies Code, requires the consent of all shareholders
concerned.
4.14 The main features of internal control and risk management in relations to the process
of preparing separate and consolidated financial statements
The system of internal control and risk management in relation to the process of preparing separate financial statements and
consolidated financial is directly under the Management Board of the parent company. Supervision over the process of
preparation of financial statements lies with the Financial Director. Financial statements are prepared by the Finance and
Accounting Department of the parent company under the supervision of the Chief Accountant. The Parent Company also
controls and analyses costs in terms of financial targets.
In order to eliminate the risks associated with the preparation of financial statements, also of the Group subsidiaries are
annually audited by the independent auditor. The Group constantly monitors the performance of individual areas and compares
to financial targets. The annual financial statements of the Parent Company and the annual consolidated financial statements
of the Group are audited by an independent auditor. While the half-year financial statements of the Parent Company and
consolidated half-year financial statements of the Group are reviewed by the certified auditor. The quarterly and half-yearly
condensed consolidated financial statements of the Group as well as the annual financial statements of the Parent Company
and the Group are approved prior to publication by the Management Board of the Parent Company.
4.15 Remuneration Policy
According to the internal system of remuneration, employees receive salary for the work corresponding to the type of work
performed and the qualifications required for its performance, taking into account the quality and quantity of work performed.
4.15.1 Remuneration of the Management Board members
The remuneration of Board members is determined adequate to their function and to the scale of operations of the company.
The total remuneration consists of the following:
• Fixed remuneration – flat monthly base compensation (for a calendar month).
• variable remuneration– supplementary remuneration for a given financial year depending on the extent to which
management objectives are attained. The employment contracts with the members of the Management Board shall
determine the amount and the components of remuneration, also provide the opportunity to receive additional
commissions or annual bonus granted in the amount and under the conditions specified separately. According to the
adopted policy of variable remuneration components, employees holding key management positions may receive
variable remuneration paid in cash and in the form of a financial instrument.
Key parameters determining the variable remuneration components have been described in the Policy of Variable
Remuneration Components in X-Trade Brokers DM S.A. of 12 December 2016.
Assumptions of implementation of the Variable Remuneration Components Policy are determined by the Supervisory
Board, acting as the Remuneration Committee, with the approval of the budget of the brokerage house for the year.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The Supervisory Board, after verification of the fulfilment of the criteria and justification for obtaining the Variable
Component of Remuneration may approve granting of a premium in derivatives based on the value of XTB shares, for
the realization of plans for the year.
The bonus is determined by the Supervisory Board in the form of a resolution on the terms specified in the Policy of
Variable Remuneration Components. The bonus must meet the following conditions:
o take into account the company's results for the period in which the person holds a position, but not longer than
for the last 3 financial years;
o should consider the way of performance of the tasks assigned to a person holding a managerial position based
on internal organizational rules of the company and on the basis of regulations of organizational units directed
by that person for the period in which the person holds a managerial position, but not longer than for the previous
3 years.
The employment contracts of the members of the management board do not provide for severance pay in case of termination.
Due to the fact that the members of the management board were concluded non-competition agreements, in respect of
compliance with this prohibition on competition after termination of employment of board members, they shall be entitled to
compensation, the amount of which was determined as follows:
• Member of Management Board – Mr Paweł Szejko is entitled to compensation amounting to 50% of gross salary
received by the employee before the termination of employment for a period corresponding to the non-competition,
payable in 12 monthly instalments;
The tables below presents the remuneration received by each member of the Management Board in 2020 and 2019. These
benefits include base salaries, bonuses, contributions to social security paid for by the employer and supplementary benefits.
In 2020 and 2019, members of the Management Board received remuneration on the basis of employment contract.
Fixed remuneration
NAME AND SURNAME
FIXED REMUNERATION RECEIVED FROM
THE COMPANY IN THE YEAR: (IN PLN’000))
2020
2019
Omar Arnaout
737
486
Filip Kaczmarzyk
493
426
Paweł Szejko
397
371
Jakub Kubacki
367
307
Andrzej Przybylski
1
364
227
1
) Andrzej Przybylski on 1 May 2019 was appointed a member of the Management Board responsible for supervising the risk management system.
Variable remuneration
NAME AND SURNAME
VARIABLE REMUNERATION RECEIVED FROM THE
COMPANY IN THE YEAR: (IN PLN’000))
1
2020
2019
Omar Arnaout
1 000
249
Filip Kaczmarzyk
700
228
Paweł Szejko
500
171
Jakub Kubacki
360
107
Andrzej Przybylski
2
180
150
1)
At least 40% of the variable remuneration component paid out in the form of a financial instrument is settled and paid over a period of three to five years, with this period
being determined taking into account the business cycle, the nature and risk of the obligations of that person. In case, the total remuneration of that person in the
previous financial year exceeds the PLN equivalent of EUR 1.000.000 of the average published by the National Bank of Poland in force on the last day of the previous
year, the above applies to 60% of the variable remuneration components.
2
) Andrzej Przybylski on 1 May 2019 was appointed a member of the Management Board responsible for supervising the risk management system.
Non-wage benefits enjoyed by individual members of the management board and key managers include health benefits,
vacation benefits, provision of recreation and sports, and Christmas vouchers. In addition, in the reporting period board
members - Filip Kaczmarzyk, Jakub Kubacki were provided with a company car
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
4.15.2 Agreements concluded with the management, including compensation in case of
resignation or dismissal from the position without a material ground or their removal
or dismissal is due to the Company’s merger by acquisition
As at 31 December 2020, and as at the date of publication of this report in the Parent Company and the Group companies there
were no agreements with management providing for compensation in case of their resignation or dismissal from the position
without a material reason or if their removal or dismissal is due to merger of the Parent Company by acquisition.
4.15.3 Remuneration of the Supervisory Board members
The table below presents the remuneration received by the members of the Supervisory Board of the Company. The total
remuneration include gross salaries and contributions to social security paid for by the employer. In 2020 and 2019 the
members of the Company’s Supervisory Board received remuneration on the basis of their appointment.
NAME AND SURNAME
FIXED REMUNERATION RECEIVED FROM
THE COMPANY IN THE YEAR: (IN PLN’000))
2020
2019
Jakub Leonkiewicz
46
45
Łukasz Baszczyński
44
43
Jarosław Jasik
44
43
Bartosz Zabłocki
44
43
Grzegorz Grabowicz
44
43
4.15.4 Information on liabilities arising from pensions and similar benefits for former
members of management, supervisory and administrative bodies
As at 31 December 2020 there were no liabilities arising from pensions and similar benefits for former members of
management, supervisory or administrative bodies, as well as no liabilities incurred in relation with these pensions.
4.15.5 Changes in the remuneration policy
On 5 March 2020 the Ordinary General Meeting of the Company adopted a remuneration policy for Members of the
Management Board and Members of the Supervisory Board.
4.15.6 Assessment of the remuneration policy
The general principles of the remuneration policy are aimed to ensure the coherence of the system of remuneration and
additional benefits for employees with the strategy of long-term development of the company and taking into account the costs
adopted in the financial plan, while maintaining compliance of risk management and stability of the company.
Additionally, assumptions of the variable components of the remuneration for persons in key positions, which should
strengthen the relationship between the amount of the variable part of the remuneration and the implementation of long-term
company growth, contributes significantly to the stabilization of the company's operations and its shareholder value growth.
Evaluation of the remuneration policy is under the Supervisory Board, which exercises ongoing supervision over the adopted
remuneration policy, subjects them to review and makes recommendations to the Management Board as to possible changes
in order to ensure a competitive level and effectiveness of remunerations, and ensuring their transparency, compliance with
legal regulations and internal justice
4.15.7 Sponsorship, charity and similar activities
The Group did not conduct material sponsorship, charity and other similar activities in the reporting period.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
4.15.8 Description of diversity policy
X-Trade Brokers Dom Maklerski S.A. follows a policy of diversity and a policy of equal treatment for all the Company’s
employees, its authorities and key managers, because of its firm belief that diversity, as a fundamental value of contemporary
society, has a significant impact on the development, competitiveness and innovation of our organization.
The pursuit of a policy of diversity can be seen, among other things, in hiring employees of different gender, age, educational
background, qualifications, professional experience, nationality, ethnic background, religion, denomination, nondenominational
character, political views, state of health, psychosexual orientation, family status, lifestyle, place of residence, form, scope and
basis of employment, ensuring respect, tolerance and equal treatment in the workplace for all employees, as well as creating
a work environment conducive to making the most of the above differences for the good of the organization.
The policy of diversity pursued at X-Trade Brokers Dom Maklerski S.A. is aimed at exploiting the potential of our employees,
their skills, talents, passions, knowledge and qualifications to the full.
We create an organizational culture focused on achieving the Company’s objectives by building in-house teams which vary in
terms of gender, age and qualifications, which makes it possible to resolve problems in a more effective manner, leads to
a better working environment, boosts the creativity of project teams, and enables effective knowledge sharing.
In the implementation of one of the important aspects of the policy of diversity, the Company offers internships and traineeships
to university students and graduates with various job profiles and gives them the opportunity to pursue a career within our
organization.
As part of the policy of diversity, X-Trade Brokers Dom Maklerski S.A. also promotes and supports charitable initiatives initiated
by its employees.
Managing diversity also consists of including provisions for preventing discrimination and mobbing as well as other regulations
which specify the standards for equal treatment, protection against violence, harassment or unfair dismissal in the policies and
procedures in place at XTB. The principles of equal treatment in employment are described in the Company’s internal
documents, among others, in the Labour Regulations, and are freely available to all employees.
In the scope of diversification in connection with the selection of X-Trade Brokers Dom Maklerski S.A authorities the Company
has implemented the Diversity Policy in relation to the Members of the Management Board of the Company. The company
provides a variety of qualifications and competences in terms of education, professional experience and the skills of the
selected staff, including the managerial staff, in order to guarantee comprehensive and reliable performance of the tasks
entrusted to it. In addition, as part of the Diversity Policy during recruitment to the authorities of the Company in X-Trade Brokers
Dom Maklerski S.A. professional qualifications, reputation, professional experience, predispositions to perform duties within
a given position or function, as well as gender, age, place of origin and education are taken into account.
The members of the Company’s authorities are specialists in various areas of knowledge and are equipped with varied industry-
specific experience which corresponds to the functions they currently perform. The individual competencies of the members
of the Company’s authorities complement each other in such a manner as to ensure an appropriate level of collegial
management at X-Trade Brokers DM S.A.
5. Other information
5.1 Audit company authorised to audit the financial statements
On 7 November 2018, the Company’s Supervisory Board in accordance with § 19 item 2 point i) of the Company’s Articles of
Association and in accordance with § 8 item 2 point h) of the Supervisory Board’s Regulations has adopted a resolution
regarding the appointment of the entity authorized to audit the Company’s financial statements for 2019-2020. The appointed
entity is PricewaterhouseCoopers spółka z ograniczoną odpowiedzialnością Audyt sp.k, with its registered office in Warsaw,
address: st. Lech Kaczyński 14 entered under the number 144 (further "PwC") onto the list of entities entitled to carry out the
audit of financial statements. The choice has been made in accordance with applicable laws.
On 25 January 2019, between X-Trade Brokers Dom Maklerski S.A. and PricewaterhouseCoopers concluded an agreement on:
• audit of financial statements for the years ended 31 December 2019 and 31 December 2020, respectively;
• review of condensed interim financial statement for the period of 6 months ended on 30 June 2019 and on 30 June
2020;
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Additionally, on 10 January 2020 an annex was signed to the above-mentioned agreements for:
• performing the assurance service regarding the assessment of Company’s compliance with law regarding the client’s
assets holding in the period from 1 January 2019 until 31 December 2019;
In previous years, the Company used consultancy services provided by other PwC entities mainly in terms of tax consulting. In
the Company’s opinion, the provided services do not affect the provision of the required level of impartiality and independence
of the auditor.
The total remuneration of the entity authorized to audit the financial statements for the current and previous year, separately
for the audit of the annual financial statements, other assurance services, including review of the financial statements and other
services was disclosed in notes
31 and 30
, respectively to the Separate and Consolidated financial statements.
5.2 The information on the significant court proceedings, arbitration authority or public
administration authority
As of 31 December 2020 and as at the submission date of this report the Parent company and its subsidiaries were not
a party to any significant proceedings pending before arbitration authority. The most important of the ongoing proceedings
were indicated below.
Court proceedings
The Company and Group companies are parties to several court proceedings related to the Group’s operations. The
proceedings in which the Company and Group companies appear as defendants are above all related to employees’ claims and
clients’ claims. As at the submission date of this report the total value of the claims brought against the Company and/or the
Group Companies amounted to PLN 16,5 million, which consists of two suits brought by the employee with the total value of
PLN 730 thousands in suits brought by clients with the total value of PLN 8,2 million and moreover, one proceeding brought by
ESBANK Bank Spółdzielczy regarding the alleged failure to apply financial security measures by the Company. Below are
presented the most significant, in the Company’s view:
• on January 5 2018, the Financial Ombudsman received a request from the client to investigate the legitimacy of
restoring by the Company of this client's margin in the amount of PLN 131 000, i.e. the amount resulting from the loss
of transactions closed by the Company. Their closing took place as a result of the mechanism of closing the position
after 365 days from the day of their opening. This mechanism has been described in the regulations on the provision
of brokerage services. On February 19, 2019 a lawsuit in the case under consideration was filed with the District Court.
On April 26, 2019 the Company lodged an appeal. On December 7, 2020 a judgment has passed, according to which
the claim was dismissed, while on February 22, 2021 the Company received the justification of the judgement.
• law suit dated August 2019 regarding Company’s alleged illegal actions delivered to the Company in December 2019
– value of the claim is PLN 7 million. In previous reports the Company informed that there was a possibility of filing a
suit by one of the Company’s clients who accused the Company of improper execution of the agreement concluded
with Company for provision of services consisting in the execution of orders to buy or sell property rights, keeping
property rights accounts and cash accounts, by allegedly delaying and interrupting execution of the transactions via
the trading platforms provided. The management board finds client’s claims groundless. The only reason for the loss
of the customer was his wrong investment decisions. This has been clearly demonstrated, among others, during the
audits of the Polish Financial Supervision Authority (PFSA) in 2016, in the subsequent correspondence of the company
with the supervisor, and in the expertise of an independent consultancy company, Roland Berger, which analysed the
client's transaction history. The analysis confirmed that the customer's transactions were not delayed, and the timing
of his orders was even faster than the average for other clients;
• law suit brought by ESBANK Bank Spółdzielczy dated July 2020, delivered to the Company in November 2020 – value
of the proceeding is approximately PLN 7,6 million. In this case in February 2020 the Company received a pre-trial
payment order. The damage was to consist in the Company's failure to apply financial security measures, which lead
to effective appropriation of funds by an employee of Bank Spółdzielczy, who was also a client of the Company. The
Company considers the charges made in the tender offer to be completely unfounded. In December 2020 the
Company filed the response to the law suit.
Proceedings against XFR Financial Ltd. (the company currently operating under the name XTRADE Europe Ltd.)
On November 18, 2016, the Company filed a lawsuit against XTRADE Europe Ltd. (formerly: XFR Financial Ltd. or "XFR") based
in Cyprus for securing claims in connection with violation of the principles of fair competition, in which it brought, among others:
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
(i) forbidding XFR to use the word and figurative word "XTRADE" and (ii) forbidding XFR to use the word mark "XTRADE" as the
domain name. The Court of Appeal in Warsaw secured the Company's claims against XTRADE Europe Ltd. for prohibiting
XTRADE Europe Ltd. from using as a company designation or services (i) verbal and word-graphic designations "XTB",
"X-Trade", "XTrade" , "X" and (ii) the word sign xtrade.eu. The company has applied to the Warsaw-Śródmieście District Court
for enforcement due to the fact that XTRADE Europe Ltd. has not ceased to use as a company designation or provided services
owned by the company, despite the relevant decision of the Court of Appeal in Warsaw of March 15 2017. On January 12, 2018,
the District Court for Warsaw-Śródmieście in Warsaw issued a decision pursuant to which XTRADE Europe Ltd. was ordered
to pay PLN 5,000 to the Company. There was also a threat of ordering payment to the Company in the event of any subsequent
violation by the debtor of the obligation to comply with the decision of the Court of Appeals in Warsaw of 15 March 2017.
Therefore, on April 19, 2018, the Company applied to the District Court for an order against XTRADE Europe Ltd. for PLN 100 000
in connection with the failure by XTRADE Europe Ltd. to secure the security established by the Court of Appeal. During the
enforcement proceedings, XTRADE Europe Ltd. closed its branch in Warsaw and declared that it had ceased to provide services
to recipients in Poland. In connection with the decision of November 28, 2018, the District Court dismissed the Company's
request and determined that, as at the date of issuing the decision, the XTRADE markings were no longer used in Poland by
XTRADE Europe Ltd. By virtue of the decision of March 27, 2019 the District Court in Warsaw, he dismissed the company's
complaint.
Before the District Court in Warsaw, from 12 April 2017, proceedings were pending due to the Company's action to prohibit
XTRADE Europe Ltd. from violating the principles of fair competition, consisting in the unlawful use by the defendant as
a company designation or as financial services, brokerage and consulting services. financial, brokerage and brokerage services,
word and word and graphic markings "XTB", "X-Trade", "XTrade" and "X".
On July 12, 2019, the District Court in Warsaw, in a case against Xtrade Europe Ltd., issued a judgment in which: (i) ordered the
defendant XTRADE EUROPE LTD to refrain from acts of unfair competition against the plaintiff X-TRADE Brokers Dom Maklerski
S.A. in Warsaw, consisting in the unlawful use by the defendant as a company designation or of financial services rendered,
financial intermediation and consultancy, brokerage and brokerage services, including services provided via the Internet, using
specialized computer software, as well as training services, including in materials advertising and in the name of the Internet
domain xtrade.com, as well as on the websites available at: www.xtrade.eu and xtrade.com, the following markings in the
territory of the Republic of Poland: (a) the word markings "XTB", "X-Trade", "XTrade", "Xtrade"; (b) the symbols xtrade.eu and
xtrade.com; (ii) ordered the defendant XTRADE EUROPE LTD to submit and publish, at his own expense and with his own effort,
within 2 (two) months from the announcement of the final judgment in the case and after changing the name of the defendant's
company pursuant to paragraph 1 of the final judgment, the statement on the decision referred to in the judgment content in
the following media: a) "Gazeta Giełdy i Inwestorów Parkiet"; b) on the defendant's website - on the home page; c) on websites
identified by domains: http://www.parkiet.com/, http: // www .gazetaprawna.pl / and http://rp.pl (iii) in the event that before the
publication of the statement there was a change of the defendant company, the defendant in the content of the statement in
place of the words "XTRADE EUROPE LTD" is obliged to use the name of the company current as of the date of publication
statements; and (iv) authorized the plaintiff to publish the statement at the defendant's expense in the event of the defendant's
failure to comply with the obligation to publish the statement on the content and within the time limits specified in paragraph 2
of the judgment, and obliged the defendant to reimburse the costs incurred by the plaintiff.
The verdict is partially invalid, an appeal was filed on behalf of the Company to the extent that the court dismissed the action
for prohibiting Xtrade Europe Ltd. from using XTRADE graphic signs. As at 25.10.2019, no impact of the appeal from Xtrade
Europe Ltd. was noted. To the extent that the judgment became final, an application for an enforcement clause was lodged.
The executive title was delivered on October 16 this year. The non-contested judgment is enforceable by Xtrade Europe Ltd. –
on February 3, 2020 the Company was requested to provide information on the status of enforcement of the judgement.
In addition, the Munich Regional Court, in a judgment of 25 July 2017, issued a ban on the use of the designations "XTRADE"
and "XTRADE EUROPE Ltd." in Germany, confirming that the designations are confusingly similar to the trademarks reserved
by the Company. In addition, Xtrade Europe Ltd. was also required to provide information on the extent and number of past use
of the marks and to pay damages, the amount of which has not yet been determined. On April 19, 2018, the Court of Appeal
dismissed the appeal of the Cypriot company - the verdict prohibiting the use of the XTRADE sign in Germany is final. As at the
date of submitting this report, proceedings are still pending to order XTRADE Europe Ltd. to pay the costs of legal representation
and to enforce a final judgment. Proceedings enforcing the ruling ban were pending before European Union Intellectual Property
Office (EUIPO) as regards the annulment of conflicting marks of Xtrade Europe Ltd. On March 20, 2020, EUIPO issued a decision
rejecting the application for a declaration of invalidity. On 19 May 2020, an appeal was filed with the Board of Appeal of EUIPO.
Currently we are waiting for the decision of the authority.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Administrative and control proceedings
The Company and the Group Companies are party to several administrative and control proceedings related to the Group’s
business. The Company believes that below are presented the most significant among them:
• On September 27, 2018, the Company received information about imposition onto the Company pursuant to art. 167
para. 2 point 1 in connection with art. 167 para. 1 point 1 of the act on Trading in Financial Instruments a fine of PLN
9.9 million in connection with the violation of the law, in particular in the area of providing brokerage services to the
Company's clients. In the Company’s opinion, the imposition of a fine for above-mentioned fraud is not justifiable and
is not reflected in the facts. The PFSA refused to take the evidence requested by the Company (including the expert’s
opinion) and did take into account independent expert’s opinions submitted by the Company. Acting in the best
interest of the Company, its employees and shareholders, as well as having clients best interest in mind, the
Management Board appealed the abovementioned decision by filing on October 29, 2018, complaint against the PFSA
decision to Provincial Administrative Court (hereinafter the “PAC”). On June 6, 2019, the PAC dismissed the Company's
plaint against the Commission's decision to impose a financial fine in the amount of PLN 9.9 million. The Court
decision is not legally binding yet. After delivery by PAC a copy of the ruling along with its justification, the Company's
Management Board decided to lodge a final cassation appeal to Supreme Administrative Court, which was lodged on
August 16, 2019.
• By letter dated July 16, 2019, the French supervisory authority, AMF, informed about initiation of control at the
Company’s French branch pursuant to Article L.621-9 of the French Monetary and Financial Code in order to verify
if the Company respects professional obligations. On July 19, 2019, inspection activities were initiated by AMF. The
control was a comprehensive assessment of activity of the Company's branch in France, among others, based on the
regulations of the MiFID II Directive, MIFIR Regulations, the European Securities and Markets Authority (ESMA)
requirements and the French anti-corruption law Sapin II.
On February 10, 2020, the Company received a control report indicating that the inspectors found irregularities and
deficiencies in the implementation and enforcement of the applicable laws and regulations by the Company’s branch
in France, in the response to which on March 9, 2020 the Company lodged substantiated objections in accordance
with the provisions in force. In a letter of October 9, 2020, the Company was notified of the commencement of
administrative proceeding initiated by AMF, with regard to the irregularities detected during the AMF’s inspection at
the Company's branch in France. The Company was requested to present its position regarding the detected
irregularities and the conducted implementations resulting from the protocol of February 10, 2020. The Company
submitted its clarification in a letter dated November 20
th
2020. Administrative proceeding conducted by AMF may
lead to the imposition of penalties or other sanctions on the Company under the AMF supervisory powers.
• In a letter dated March 30, 2020, the German pension insurance institution, Deutsche Rentenversicherung, informed
about the initiation of an inspection in the German branch of the Company starting from April 21, 2020 under paragraph
28p of the fourth book of the German Social Code (SGB IV). The subject of control was,
inter alia
, (i) correctness of
contributions and social security reports, including adequate security in the event of the insolvency of loan
agreements, fees under the Act on reimbursement of expenses and write-offs due to insolvency for the period from 1
January 2016 to 31 December 2019 (ii ) determination of salaries subject to accident insurance and their allocation to
individual risk points for a given insurer for the period from 1 January 2016 to 31 December 2019 (iii) taxes,
contributions and reporting obligations under the Act on social insurance for artists (in German: Künstlersozialkasse)
for the period from 1 January 2016 to 31 December 2019. On December 21
st
, 2020, the control protocol with the
administrative decision on the completion of the control was received in writing by the Company's Branch. According
to the letter in question, the inspection did not find any violations that would result in recommendations. The only
detected breach concerned the overpayment of benefits to the artists' social insurance fund in accordance with § 28p
1a SGB IV for the period 2016-2019, which will result in the reimbursement of overpaid contributions to the Company's
Branch.
• As part of exercising supervisory powers, in a letter of May 29, 2020, the PFSA announced the initiation of an inspection
starting from June 1, 2020. The subject of the inspection was to check whether the Company's operations comply
with the law, regulations, conditions set out in permits and fair trading principles or the interests of the principals. The
scope of the control covered the technical and organizational conditions of the business. On September 23, 2020, the
Company received a control protocol in which the inspectors indicated two violations of the law. The Company,
referring to the control protocol, undertook to exercise due diligence in order to eliminate the identified irregularities
and also submitted reservations to the protocol. On November 12
th
, 2020, the Company received a letter in which the
PFSA did not take into account the objections raised by the Company and on the same day a letter with three
recommendations for implementation within a 30-day period. However, it cannot be excluded that the identified by
PFSA irregularities in the Company's operations, may constitute the basis for,
inter alia
, initiation of administrative
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
proceedings to impose penalties or other sanctions on the Company under the supervisory powers of the PFSA or
other authorities.
• by letter dated November 27
th
, 2020, the French Branch of the Company was informed of the initiation of control by
the French supervisory authority Autorité de contrôle prudentiel et de résolution - ACPR Banque de France against the
Company's Branch, pursuant to articles L. 612-23 and R.612- 22 of the Monetary and Financial Code. The audit is
intended to assess the compliance of the anti-money laundering and anti-terrorist financing system. The inspection
activities started on December 2
nd
, 2020. As of the submission date of this report, the control has not been completed.
Regulatory environment
The Group operates in a highly regulated environment imposing on it certain obligations regarding the respect of complying
with many international and local regulatory and law provisions. The Group is subject to regulations concerning inter alia
(i) sales practices, including customer acquisition and marketing activities, (ii) maintaining the capital at a certain level,
(iii) practices applied in the scope of preventing money laundering and terrorist financing and procedures for customer
identification (KYC), (iv) reporting duties to the regulatory authorities and reporting to the trade repository, (v) the obligations
regarding the protection of personal data and professional secrecy, (vi) the obligations in the scope of investors protection and
communicating of relevant information on the risks associated with the brokerage services, (vii) supervision over the Group’s
activity, (viii) inside information and insider dealing, preventing the unlawful disclosure of inside information, preventing market
manipulation, and (ix) providing information to the public as the issuer.
The sections below describe the most relevant, from the Company’s point of view, changes of regulatory obligations occurring
during the last period covered by this report and the changes that will enter into force in the forthcoming period.
Act amending the Act on Public Offering, on Conditions for the Introduction of Financial Instruments to the Organized Trading
System and on Public Companies
On October 16, 2019, Sejm adopted an amendment to the Act on public offering and the conditions of financial instruments to
organized trading, and on public companies. The most important assumptions: (a) the obligation to adopt a remuneration policy
for members of the management board and supervisory board of a public company by the general meeting at least every four
years - the solutions adopted in the policy should contribute to the implementation of the business strategy, long-term interests
and stability of the company. The policy should include a description of fixed and variable components of remuneration, as well
as bonuses and other monetary and non-monetary benefits that may be granted to members of the management board and
the supervisory board. The supervisory board should prepare an annual remuneration report, which will then be reviewed by
the general meeting; (b) obligations in transactions with related entities - the conclusion of a significant transaction requires
the consent of the company's supervisory board or, if the articles of association provide so, a general meeting, while a significant
transaction within the meaning of the amendment is a transaction concluded by the company with a related entity whose value
exceeds 5% of the total assets Act on Accounting of September 29, 1994, established on the basis of the last approved financial
statement of the company. If a significant transaction concerns the interests of a member of the supervisory board or
a shareholder, respectively, he does not participate in making decisions to consent to the conclusion of this transaction. The
company publishes information on a significant transaction on its website at the time of conclusion of the transaction at the
latest. The information obligation excludes: (i) transactions concluded on market terms as part of the company's normal
operations, (ii) transactions concluded with a 100% subsidiary, and (iii) transactions related to the payment of remuneration to
members of the management board or the supervisory board due in accordance with the company's remuneration policy;
(c) changes in the scope of shareholder identification - any public company will be able to apply to the National Depository for
Securities, brokerage house or bank keeping the account for information about shareholders.
On November 5, 2019, the bill was signed by the President. Date of entry into force of the provisions is divided - part of the law
appeared within 14 days of the announcement, part on January 1, 2020, and part will come into force on September 3, 2020.
Due to the coronavirus epidemic which took place in the first half of 2020, on May 27, 2020, the Regulation of the Minister of
Finance on setting a different date for the adoption by the company's general meeting of a resolution on the remuneration
policy for members of the management board and supervisory board entered into force - in accordance with the Regulation,
the deadline for implementing the remuneration policy was extended to August 31, 2020, however, irrespective of the above,
the resolution on adopting the remuneration policy was adopted by the Company’s General Meeting on April 20, 2020. The
company exercises due diligence in order to comply with the obligations arising from the act amending the act on public offering
and the conditions for introducing financial instruments to an organized trading system and public companies. However, it
cannot be excluded that a given rule or requirement will be interpreted by the Group in a manner inconsistent with the act which
may be connected with risk of supervisory activities and other administrative measures specified in binding laws and may
require incurring by the Company further significant financial outlays and implementation of the significant organizational
changes.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
The draft regulation of the Minister of Finance amending the regulation on internal capital, risk management system,
supervisory and supervisory review and evaluation program, as well as the remuneration policy in a brokerage house
On April 9, 2020, the draft regulation of the Minister of Finance amending the regulation on internal capital, risk management
system, supervisory and supervisory review and evaluation program, as well as the remuneration policy in a brokerage house,
was published on the website of the Government Legislation Centre. The most important assumptions of the project:
(i) determining the necessary changes in the national legal order in connection with the entry into force of the European Union
legal regulations on capital requirements for financial institutions, the so-called CRD V/CRR II package; (ii) changing the
settlement period of variable remuneration components; (iii) introducing additional criteria for the payment of variable
remuneration components for members of the management board and senior management of the brokerage house. The
project is currently at the review stage.
The draft act amending the Banking Law and certain other acts, including the act on trading in financial instruments
On April 9, the draft act amending the Banking Law and certain other acts, including the act on trading in financial instruments,
was published on the website of the Government Legislation Centre. The most important assumptions of the project:
(i) implementation of EU law in connection with the entry into force of European Union legal regulations on capital requirements
for financial institutions, the so-called CRD V / CRR II package; (ii) introducing a standard methodology and a simplified
standard methodology for the assessment of interest rate risk; (iii) authorizing the Polish Financial Supervision Authority to
dismiss a member of the management board of the brokerage house if a given person does not meet the requirements
necessary to perform a given function; and (iv) clarifying the definition of a person whose professional activity has a significant
impact on the risk profile of the brokerage house. The project was passed to the I reading in the Public Finances Commission
at Sejm.
The draft Act on the liability of collective entities for acts prohibited under penalty
On 11 January 2019, the government bill on the liability of collective entities for acts prohibited under penalty was submitted to
the Sejm. The purpose of the draft Act is to increase the effectiveness of a tool for administering sanctions to collective entities,
especially in the case of combating serious economic and fiscal crimes. The most important assumptions:
(i) broadening the foundations of collective entities' responsibility - the inclusion in the act of behaviours recognized as the own
behaviour of collective entities that characterizes the offense; (ii) the collective entity's liability for all acts prohibited under
penalty as a crime or fiscal offense; (iii) resignation from the requirement to obtain a prior request, i.e. a conviction of a natural
person; (iv) the company is also liable if the identity of the perpetrator has not been established; (v) unlimited, open catalogue
of crimes; (vi) the company has the burden of proving that due diligence has been exercised; (vii) extension of the catalogue of
penalties; (viii) compulsory management as a preventive measure; and (ix) whistle-blower protection. The project was directed
to consultations.
Preventing use of the financial system for money laundering or terrorist financing - the so-called V AML Directive
On July 9, 2018, the Directive (EU) 2018/843 of the European Parliament and of the Council (hereinafter referred to as the
"Directive V AML"), amending the Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes
of money laundering or terrorist financing (hereinafter referred to as the "IV AML Directive") and amending the Directives
2009/138/EC and 2013/36/EU came into force. The main assumption of the directive is to create within the European Union
conditions for the efficient exchange of information in order to increase the effectiveness of counteracting money laundering
and terrorist financing. In accordance with the assumptions of the Directive V AML, European Union member states were
obliged to implement the provisions of the Directive V AML until January 10, 2020.
Polish legislator failed to transpose the provisions of Directive V AML within the required deadline. On March 4, 2020, a draft
act amending the Act on Counteracting Money Laundering and Financing of Terrorism and some other acts (hereinafter referred
to as the "Project") was published, which aims to implement the provisions of the AML V Directive into the Polish legal order.
also numerous details of the provisions of the Act of March 1, 2018 on counteracting money laundering and terrorist financing
(under the AML IV Directive. The most important assumptions of the Project include: (i) extension of the list of obligated
institutions, (ii) changes in definitions, including the definition of the actual beneficiary and the group, (iii) extension of the
catalogue of cases in whose obligated institutions apply financial security measures, (iv) expanding the catalogue of premises
for a higher risk of money laundering and terrorist financing, and (v) changes in the scope of applying financial security
measures. The project was passed to the I reading in the Public Finances Commission at Sejm.
The Company exercised due diligence in order to comply with obligation under act on prevention of money laundering practices
and financing of terrorism and the regulation on the transfer of information about transactions and a form identifying the
obligated institution. However, it cannot be excluded that a given rule or requirement will be interpreted by the Group in a manner
inconsistent with the act which may be connected with risk of supervisory activities and other administrative measures
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
specified in binding laws and may require incurring by the Company further significant financial outlays and implementation of
the significant organizational changes.
Draft act on the consideration of complaints and disputes of clients of financial market entities and on the Financial Education
Fund
On September 21, 2020 on the website of the Government Legislation System a draft act on the consideration of complaints
and disputes of clients of financial markets entities and on the Financial Education Fund was published. The purpose of the act
is to increase the effectiveness of the proceedings in matters of protection of collective consumer interests. According to the
assumptions, the act is to enter into force on January 1, 2021, except for some provisions which will come into force accordingly
on November 16, 2020 and December 31, 2020. Main assumptions of the project: (i) most of the existing competences of the
Financial Ombudsman will be passed to the President of the Office of Competition and Consumer Protection; (ii) the President
of the Office of Competition and Consumer Protection will obtain competence to protect financial market entities’ clients, which
will include,
inter alia
, the possibility of intervening in individual cases arising from the submission of complaints; and (iii) out-
of-court proceedings will be held by the coordinator for out-of-court dispute resolution between the client and the financial
market entity, who will be working next to the President of the Office of Competition and Consumer Protection. The project is
currently at the stage of review. The Project is currently in Sejm after the stage of I reading.
Draft act amending the Trading in financial instruments act and other acts
On October 23, 2020 on the website of the Government Legislation System a draft act amending the Trading in financial
instruments act and other acts was published. According to the assumptions, the act is to enter into force of June 26, 2021.
Main assumptions of the project: (i) division of the investment firms into the categories based on their size and connections
with other financial and economic entities; (ii) the application of prudential supervision for investment firms which, due to their
size and interconnectedness with other financial and economic entities, are not considered systemically important entities;
(iii) regulating, by appropriate application of the provisions of the CRR, the structure of own funds of investment companies; (iv)
an obligation for small and unrelated investment firms to hold their own funds equal to their fixed minimum capital requirement
or one quarter of their fixed overheads calculated on the basis of their activities in the previous year; (v) setting a minimum own
funds requirement for tier two investment firms corresponding to their fixed minimum capital requirement, one quarter of their
fixed overheads for the previous year or the sum of their requirement on the basis of a set of risk factors tailored to the specificity
of investment firms; (vi) obliging investment firms to comply with liquidity requirements, resulting in mandatory internal
procedures to monitor and manage liquidity requirements; (vii) an obligation to disclose relevant information, for example on
own funds and liquidity requirements; (viii) making the capital requirements of the investment firm dependent on the type of
activity authorized or authorized by the investment firm to provide or operate; and (ix) obliging investment firms to demonstrate
compliance with a fixed minimum capital requirement at all times equal to the required share capital. The project is currently
at the stage of review.
5.3 Employment information
As at 31 December 2020, the Group employed 532 people, including 335 persons employed by the Company. The Group's
employment structure is dominated by employees involved in sales. The Group does not employ a significant number of
temporary employees.
The table below presents information on the number of employees of the Parent Company, its foreign branches and Group
Companies on dates indicated therein
AS AT
31.12.2020
31.12.2019
Parent Company
335
275
Foreign branches
112
90
Group Company
85
80
Total
532
445
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
5.4 Major research and development achievements
In the reporting period, the Company conducted works in compilation and developing of highly innovative, comprehensive
solutions in the field of transactions and Internet investments ("R & D"). The main aim of the above works is to develop
innovative technologies and solutions which could allow further development of products offered to clients.
Applied research and development aimed to develop of necessary tools for effective functioning of XTB’s transactional systems
as well as modernization and upgrade of CRM systems in accordance with identified needs. The elimination of errors and
providing the functionality and safety of systems and database were those which focused on research areas. Also research
and development focused on development of new electronic trade systems. The main types of activities in terms of research
and development contain:
• developing the IT infrastructure of XTB, which amongst others would ensure effective network, continuous servers’
development as well as other active device in XTB,
• creating new or improving current software solutions supporting XTB operations;
• creating and developing significant transactional applications and CRM systems,
• developing solutions in the area of increasing work safety in the network as well as external access,
• developing solutions in data storage security,
• creating and implementing new and innovative hardware, software and program solutions in the company,
• analysis of product development opportunities, in terms of current technological solutions,
• improving the level of security of the processed data, both in terms of data storage and transmission protocols.
6. Statement and information of the Management Board
Statement of the Management Board of X-Trade Brokers Dom Maklerski S.A. on the reliability of preparation of the consolidated
and separate financial statements
The Management Board of X-Trade Brokers Dom Maklerski S.A. declares that, to the best of its knowledge, the consolidated
and separate financial statements for 2020 and comparative data have been prepared in accordance with the applicable
accounting principles and reflect in a true, reliable and clear financial and financial situation and the financial result of the Group
and the Company, respectively. In addition, the Management Board declares that activity report contains a true picture of the
development and achievements of the Group and the Company, respectively, including a description of the basic threats and
risk.
Information of the Management Board of X-Trade Brokers Dom Maklerski S.A. about appointing an audit company to audit
financial statements
Hereby, the Management Board of X-Trade Brokers Dom Maklerski S.A. informs that on the basis of the statement of the
Supervisory Board, an auditing company authorized to audit financial statements, undertaking consolidated and separate
financial statements for 2020 was selected in accordance with the regulations, including the selection and procedure for
selecting an audit firm. At the same time, the Management Board of X-Trade Brokers Dom Maklerski S.A. informs that the audit
company and the registered auditors performing the review meet the requirements indispensable for issuing an objective and
independent report on the annual consolidated and separate financial statements, in line with the binding provisions of the law
and professional standards and that the applicable regulations related to the rotation of the audit firm and the key statutory
auditor and mandatory grace periods are observed. In addition, the Management Board of X-Trade Brokers Dom Maklerski S.A.
informs that the Issuer has a policy of selecting an audit firm to carry out statutory audit of X-Trade Brokers Dom Maklerski
S.A. financial statements and the policy of carrying out the permitted non-audit services by the audit firm conducting the audit,
by entities related to this audit firm and by any member of the network to which the audit firm belongs, including services
conditionally exempt from the prohibition of provision by an audit company.
X-Trade Brokers Dom Maklerski S.A. Group
Management Board report on the operations for the year ended 31 December 2020
(Translation of a document originally issued in Polish)
Warsaw, 9 March 2021
Omar Arnaout
Filip Kaczmarzyk
President of the
Management Board
Member of the
Management Board
Paweł Szejko
Jakub Kubacki
Member of the
Management Board
Member of the
Management Board
Andrzej Przybylski
Member of the
Management Board
WWW.XTB.PL
