ANNUAL REPORT 2014/15

Transcription

1 RAPORT FOR THE FINANCIAL YEAR 2014/15 Warsaw/June

2 Capital Group Kredyt Inkaso Spółka Akcyjna in Warsaw CONSOLIDATED FINANCIAL REPORT OF KREDYT INKASO S.A.CAPITAL GROUP FOR THE FINANCIAL YEAR 2014/15 (period from to ) drawn up according to the International Financial Accounting Standards approved by the European Union Warsaw, June

3 CONTENTS CONSOLIDATED FINANCIAL REPORT OF KREDYT INKASO S.A.CAPITAL GROUP... 2 SELECTED CONSOLIDATED FINANCIAL DATA... 7 CONSOLIDATED BALANCE SHEET... 8 CONSOLIDATED TOTAL INCOME STATEMENT CONSOLIDATED CASH FLOW STATEMENT CONSOLIDATED CHANGE TO SHAREHOLDERS EQUITY BASIC ECONOMIC AND FINANCIAL RATIOS SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED FINANCIAL STATEMENTS GENERAL INFORMATION Information on the dominant company Composition of the Management Board and the Supervisory Board of the Dominant Company Information on the Capital Group BASIS OF DRAWING UP AND ACCOUNTING PRINCIPLES Basis of drawing up the Consolidated Financial Statements Changes to standards and interpretations of the IFRS Statement of compliance Changes to standards or interpretations in force and applied by the Group since Application of standards and interpretations prior to their coming into effect Published standards and interpretations which did not come to effect for periods commencing on 1 January 2014 and their effect on the Groups statements Significant elements of accounting policy Consolidation Transactions in foreign currencies Operating segments Intangible assets Tangible fixed assets Deferred income tax assets Short-term receivables Purchased receivables Cash and cash equivalents Short-term prepayments and accruals Share capital Cost of Bonds Issue and own shares Supplementary reserve (agio) Reserve for deferred income tax Reserve for pensions and similar benefits Other reserves Liabilities Other accruals Revenues Overheads Other costs of the core business Income tax Consolidated cash flow statement Adjustments of errors and changes to accounting principles UTILISING INFLOWS FROM ISSUE OF SECURITIES Warsaw, November

4 4. STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ON COMPLIANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS WITH THE APPLICABLE ACCOUNTING PRINCIPLES STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ON APPOINTMENT OF THE ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENTS INFORMATION ON OPERATING SEGMENTS MERGER OF BUSINESS ENTITIES NOTES TO THE CONSOLIDATED BALANCE SHEET INTANGIBLE ASSETS AND GOODWILL Goodwill Intangible assets TANGIBLE FIXED ASSETS INVESTMENT REAL ESTATE LONG TERM CAPITAL INVESTMENTS RECEIVABLES AND LOANS OTHER FINANCIAL ASSETS PREPAYMENTS AND ACCRUALS DEFERRED INCOME TAX ASSETS STOCK RECEIVABLES DUE TO INCOME TAX SHORT-TERM RECEIVABLES DUE TO AWARDED COSTS OF PROCEEDINGS FROM OTHER ENTITIES PURCHASED RECEIVABLES CASH AND CASH EQUIVALENTS EQUITY Share capital Own Shares Supplementary capital Exchange rate difference from revaluation Retained profit Equity falling to the non-controlling interests Distribution of profit of the Dominant Company for the year 2012/ Number of shares and earnings per share (EPS) PAID DIVIDENDS AND DIVIDEND POLICY CREDITS, LOANS, OTHER LOAN INSTRUMENTS Credits and loans Issued bonds Bonds issued by Kredyt Inkaso S.A Bonds issued by KI I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty LIABILITIES DUE TO LEASE RESERVE DUE TO DEFERRED INCOME TAX RESERVES TRADE LIABILITIES AND OTHER LIABILITIES

5 28. LIABILITIES DUE TO INCOME TAX NOTES TO THE CONSOLIDATED TOTAL INCOME STATEMENTS NET REVENUES COSTS OF BUSINESS ACTIVITIES OTHER REVENUES AND OPERATING COSTS FINANCIAL REVENUES AND COSTS INCOME TAX NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT ADDITIONAL INFORMATION TO THE CONSOLIDATED CASH FLOW STATEMENT FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS Additional information on method of valuation of financial instruments recognized in the consolidated financial statements in the fair value Reclassification Exclusion from the balance sheet Method of valuation of financial instruments FINANCIAL RISK MANAGEMENT Credit risk Liquidity risk Market risk: interest rate risk Market risk: risk of change of statutory interest rates and the National Bank of Poland interest rates Market risk: foreign currency risk Market risk: price fluctuation risk COST OF CAPITAL OTHER DISCLOSURES NUMBER OF SHARES AND EARNINGS PER ONE SHARE (EPS) ENTERPRISE VALUE COMPANY S AUTHORITIES, GOVERNING BODIES, KEY PERSONNEL Changes to the governing bodies of the Company Remuneration Remuneration of the Management Board Remuneration of the Supervisory Board Value of remunerations, awards and benefits paid out, due or potentially due to the managing and supervising persons Information on benefits for key management personel Loans granted to the key personnel and the persons related to them Transactions with the key personnel OPTIONS, EMPLOYEE SHARES PROGRAM TRANSACTIONS WITH RELATED ENTITIES REMUNERATION OF AUDITORS ISSUES, REDEMPTION AND REPAYMENT OF DEBT AND CAPITAL SECURITIES

6 45. SIGNIFICANT EVENTS WHICH OCCURRED AFTER THE BALANCE SHEET DATE AND WERE NOT DISCLOSED IN THE FINANCIAL STATEMENTS FOR A GIVEN REPORTING PERIOD INFORMATION ON SIGNIFICANT EVENTS RELATED TO PREVIOUS YEARS DISCLOSED IN THE FINANCIAL STATEMENTS FOR THE CURRENT PERIOD CONTINGENT ASSETS AND LIABILITIES INFORMATION ON INCOME, COSTS AND RESULTS ON DISCONTINUED BUSINESS ACTIVITY INFORMATION ON GRANTED GUARANTEES AS WELL AS SECURITY INTERESTS ON THE CAPITAL GROUP ASSETS OTHER INFORMATION WHICH, ACCORDING TO KREDYT INKASO S.A. IS SIGNIFICANT FOR ASSESSING ITS EMPLOYMENT, PROPERTY AND FINANCIAL SITUATION AS WELL AS FINANCIAL RESULT AND THEIR CHANGES AND THE INFORMATION SIGNIFICANT FOR ASSESSING THE ABILITY TO MEET OBLIGATIONS BY THE CAPITAL GROUP COMMENTARY EXPLAINING THE SEASONAL OR CYCLICAL CHARACTER OF BUSINESS ACTIVITY IN THE REPORTING PERIOD FINANCIAL STATEMENTS DRAWN UP IN HIGH INFLATION ENVIRONMENT EMPLOYMENT IN THE CAPITAL GROUP APPROVAL FOR PUBLICATION

7 SELECTED CONSOLIDATED FINANCIAL DATA SELECTED FINANCIAL DATA WITH CONVERSION TO EURO in PLN thousand in EUR thousand PROFIT AND LOSS ACCOUNT Sales revenues Operating profit (loss) Profit (loss) before tax Net profit (loss) Net profit (loss) falling to shareholders of the dominant entity Earnings per share (in PLN) 3,10 2,58 0,74 0,61 Diluted earnings per share (in PLN) 3,23 2,68 0,77 0,64 Average exchange rate PLN/EUR in the period X X 4,1791 4,2149 CASH FLOW STATEMENT Net operating cash flows Net investment cash flows (39 352) (12 285) (9 416) (2 915) Net financial cash flows (381) (91) Net change in cash and cash equivalents (8 930) (2 119) Average exchange rate PLN/EUR in the period X X 4,1791 4,2149 BALANCE SHEET Assets Long-term liabilities Short-term liabilities Equity Equity falling to the shareholders of the dominant company Average exchange rate PLN/EUR as of the end of the period X X 4,0890 4,1713 Conversion into EURO was calculated in the following way: 1. For items from the Profit and loss account and the Cash flow account the average rate of exchange for a given period was applied, calculated as the arithmetic average of the National Bank of Poland rates of exchange (table A) binding as of the last day of each month in a given period. In the period from 01 April 2014 to 31 March 2015, the average amounts to PLN/EUR 4,1791 and in the period from 01 April 2013 to 31 March 2014 equals to PLN/EUR 4, For items from the Balance sheet the average rate of exchange of NBP (table A) as of the last day of the period, i.e. as of 31 March 2015, was applied, which was equal to PLN/EUR 4,0890 and as of 31 March 2014 the rate of exchange equal to PLN/EUR 4,1713 was applied. 7

8 CONSOLIDATED BALANCE SHEET ASSETS Note Fixed assets Goodwill Intangible assets Tangible fixed assets Investments real estate Investment in subsidiaries Investments in affiliates Receivables and loans Derivatives - - Other long term financial assets Long term prepayments and accruals Assets due to deferred income tax Fixed assets Current assets Stock Receivebles due to construction service agreements - - Trade receivables and other receivables Receivables due to current income tax Receivables due to awarded costs of legal proceedings Purchased receivables Loans Other short-term financial assets Short-term prepayments and accruals Cash and cash equivalents Assets classified as designated for sale - - Current assets Total assets

9 Liabilities Note Equity 21 Equity falling to the shareholders of the dominant company Share capital Own shares (-) (500) (500) Capital from the sale of shares above their nominal value Capital from revaluation of financial assets available for sale - - Other capital (542) (334) Retained profit: Net profit (loss) falling to she shareholders of the dominant company Profits (loss) brought forward Supplementary reserve established out of profit Capital reserve established out of profit - - Equity falling to the shareholders of the dominant company Non-controlling interests Equity Liabilities Long-term liabilities Loans, credits and other debt instruments Financial leasing Derivatives - - Other liabilities Reserves due to deferred income tax Liabilities and reserves for employee benefits - - Other long term reserves Long term prepayments and accurals Long term liabilities Short-term liabilities Trade liabilities and other liabilities Liabilities due to the current income tax Credits, loans and other debt instruments Financial lasing Derivatives - - Liabilities and reseves for employee benefits 67 - Other short term reserves Short term prepayments and accruals Liabilities related to assets designated for sale - - Short term liabilities Liabilities Total liabilities

10 CONSOLIDATED TOTAL INCOME STATEMENT Continued activity Note 4 quarters accumulatively quarters accumulatively (comparative) Net revenues Gross sales profit (loss) Cost of sales - - Overheads Other costs of core activity Other operating revenues Other operating costs Profit (loss) from sales of subsidiaries (+/-) - - Profit (loss) from operating activity Financial revenues Financial costs Share in profit (loss) of entities valuated by the property rights method(+/-) - - Profit (loss) before tax Income tax (1 426) Net profit (loss) from continued activity Discontinued activity Net profit (loss) from discontinued activity - - Net profit (loss) Net profit (loss) falling to: - shareholders of the dominant company Non-controlling interests (151) 303 Other total income Revaluation of assets Financial assets available for sale: - Revenues (losses) included in the period in other total income - Amounts transferred to the financial result Cash flow hedges - Revenues (losses) included in the period in other total income - Amounts transferred to the financial result - Amounts included in the initial value of secured items Currency exchange differences from valuation of entities operating abroad (208) (296) Currency exchange differences transferred to the financial result sale of foreign entities Share in other total income of entities valuated by the property rights method Income tax related to components of other total income Other total revenues after tax (208) (296 Total income Total income falling to - shareholders of the dominant company non-controlling interest (151)

11 CONSOLIDATED CASH FLOW STATEMENT Cash flows from operating activity Note 4 quarters accumulatively quarters accumulatively (comparative) Profit (loss) before tax Adjustments Depreciation and revaluation write-offs of tangible fixed assets Depreciation write-offs of intangible assets Change in the fair value of investment real estate - - Profit (loss) from financial assets (liabilities) valued in the fair value through the profit and loss account (2 429) - Purchased receivables depreciation from the result account Purchased receivables purchases and outlays for portflolios (75 082) ( ) Revaluation write-offs due to the loss of the value of financial assets - - Profit (loss) from sale of non-financial fixed assets (1 318) (863) Profit (loss) from sale of financial assets (other than derivatives) - - Profit (loss) due to exchange rate differences - - Cost of interest Income from interest and dividends (713) (1 284) Cost of payments in the form of shares (incentive programs) - - Share in profit (loss) of associated entities - - Other adjustments - - Total adjustments (7 214) (35 860) Change to inventory - - Change to the state of receivables (1 029) Change to the state of liabilities (7 889) Change to the state of reserves and accruals Change to the state due to construction agreements - - Change to current capital Inflows (expenditures) from settlement of derivatives - - Paid interest on operating activity - - Paid income tax (560) (520) Net cash from operating activity

12 Cash flows from investment activity Expenditures for purchase of intangible assets (1 562) (1 549) Inflows from sale of intangible assets (0) - Expenditures for purchase of fixed tangible assets (909) (1 648) Inflows from sale of tangible fixed assets - - Expenditures for purchase of investment property (1 271) - Inflows from sale of investment property Net expenditures for purchase of subsidiaries - (6 290) Net inflows from sale of subsidiaries - - Received repayment of granted loans Granted loans (7 961) (5 089) Expenditures for purchase of remaining financial assets (92 021) (2 000) Inflows from sale of remaining financial assets Inflows from received government grants - Received interest Received dividends - - Net cash from investment activity (39 352) (12 285) Net cash flow from financial activity Net Inflows due to issue of shares - - Purchase of own shares - (117) Transactions with non-controlling interests without loosing control - - Inflows due to issue of debt securities Buyout of debt securities - (69 000) Inflows due to incurred loans and credits Repayment of credits and loans (32 501) (62) Repayment of liabilities related to financial leasing (581) (642) Paid interest (24 142) (25 900) Paid dividends (222) (228) Net cash flows from financial activity (381) Change to the net cash flows and their equivalents (8 930) Cash flows and their equivalents as of the beginning of the period Change due to the exchange rate diferrences Cash flows and their equivalents as of the end of the period

13 CONSOLIDATED CHANGE TO SHAREHOLDERS EQUITY Consolidated change to shareholders equity for the period from 1 April 2014 to 31 March 2015 Capital falling to shareholders of the Dominant Undertaking Note Share capital Own shares (-) Capital from sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit Total Noncontrolling interests Equity, total Balance as of (500) (334) Changes to the accounting principles (policy) and adjustment of the basic error Balance after adjustments (500) (334) Changes to equity in the period from to Purchase of own shares Issue of shares due to realization of options (program of payment with shares) Valuation of options (program of payment with shares) Change to the structure of capital group (transactions with noncontrolling interests) Dividends (163) (163) Others (350) (350) 11 (339) Total transactions with owners (350) (350) (152) (501) Net profit for the period from to Other total income after tax for the period from to (208) - (208) - (208) Total income (208) Transfer to retained profit ( sale of revaluated fixed assets) Balance as of (500) (542)

14 Consolidated change to shareholders equity for the period from 1 April 2013 to 31 March 2014 Capital falling to shareholders of the Dominant Undertaking Notes Share capital Own shares (-) Capital from sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit Total Noncontrolling interests Equity, total Balance as of (382) (41) Changes to the accounting principals (policy) and adjustment of the basic error ( ) - (4 288) ( ) ( ) Balance after adjustments (382) (41) Changes to equity in the period from to Issue of shares - (117) (117) - (117) Issue of shares due to realization of options (program of payment with shares Valuation of options (program of payment with shares) Change to the structure of capital group (transactions with noncontrolling interests) Dividends (49) (49) Transfer of financial result to equity (29) (29) - (29) Total transactions with owners - (117) (29) (146) (49) (195) Net profit for the period from to Other total income after tax for the period from to (293) (293) (293) Total income (293) Transfer to retained profit (sale of revaluated fixed assets) Balance as of (500) (334)

15 BASIC ECONOMIC AND FINANCIAL RATIOS RATIO ANALYSIS ratio numerator denominator ratio value Profitability and efficiency ratios ROA (ROAMA) net profit average assets 7,4% 7,0% ROE net profit average equity 19,1% 19,2% efficiency ratios operating cost income 33,9% 34,5% efficiency ratios operating costs EBIT 51,2% 52,6% net profitability net profit income 39,9% 38,4% EBIT profitability EBIT income 66,3% 65,7% EBITDA profitability EBITDA income 68,8% 68,4% adjusted operating cash CFO 1 flows (no denominator) balance sheet structure ratios balance sheet structure ratios balance sheet structure ratios balance sheet structure ratios Capital structure equity balance sheet total 38,7% 38,2% adjusted equity balance sheet total 38,7% 38,2% adjusted equity balance sheet revaluated on purchased portfolios 38,7% 38,2% purchased receivables equity 194,4% 217,7% Debt and liquidity ratios debt/assets debt balance sheet total 61,3% 61,8% debt/equity debt equity 158,6% 162,0% debt/adjusted equity debt adjusted equity 158,6% 162,0% share of interest bearing debt interest bearing debt balance sheet total 57,4% 60,2% share of interest bearing debt interest bearing debt equity 148,5% 157,6% share of interest bearing debt interest bearing debt adjusted equity 148,5% 157,6% share of short-term debt interest bearing STD interest bearing debt 45,5% 18,0% share of long-term debt interest bearing LTD interest bearing debt 54,5% 82,0% short-term debt/equity STD equity 76,7% 31,6% long-term debt/equity LTD equity 81,9% 130,3% Ratios of income (and cash) coverage of debt Ratios of income (and cash) coverage of debt) Ratios of income (and cash) coverage of debt) Average monthly income from receivables + cash average monthly income from receivables average monthly income from receivables debt 18,0% 14,3% STD 37,2% 73,3% debt 3,2% 3,3% EBITDA/debt EBITDA STD 39,3% 98,8% EBITDA/debt EBITDA debt 19,0% 19,3% EBITDA/debt EBITDA interest bearing debt 20,3% 19,8% coverage of interest gross profit + financial costs financial costs 248,1% 221,0% 15 15

16 Economic and financial ratios were calculated as the quotient of the quantity described in the column numerator by the quantity described in the column denominator. Apart from items presented in the consolidated balance sheet, consolidated total income statement and consolidated cash flow statement, the following financial quantities (based on the mentioned ones) were applied to calculations. Term average assets means the average of the total asset value as of the date of ratio calculation and 12 months earlier. We did not have off-balance sheet items in the presented periods, so the assets are at the same time the assets adjusted for off-balance sheet items (managed assets). Balance sheet total means the total of all assets equal to the total of all liabilities presented in the consolidated balance sheet. Average equity means the average of the equity as of the date of the ratio calculation and 12 months earlier. Term Adjusted equity means equity decreased by the revaluation reserve. Average adjusted equity means the average of adjusted equity as of the date of the ratio calculation and 12 months earlier. Term receivables means the balance sheet state of purchased receivables (according to their fair value) as of the date of the ratio calculation. Debt means the value of all liabilities (short-term and long-term). Abbreviation LTD means long-term liabilities. Interest bearing LTD means long-term liabilities that cause the necessity to pay interest (total of long-term liabilities relative to bonds issued and long-term liabilities relative to leasing). Abbreviation STD means short-term liabilities. Interest bearing STD means short-term liabilities, which cause the necessity to pay interest (total of short-term liabilities relative to bonds issued and short-term liabilities relative to leasing). Interest bearing debt means the total of interest bearing STD and interest bearing LTD. EBIT profit means operating profit. EBITDA profit means EBIT profit plus depreciation. Average monthly income from receivables means annualized income from receivables divided by 12. Operating costs were calculated as the total of sales costs, overheads, other costs of the core business and other operating costs. Abbreviation EBITDA means EBIDTA adjusted by depreciation of assets and by revaluation of portfolios of receivables

17 SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. General information 1.1. Information on the dominant company The dominant company of Kredyt Inkaso S.A. Capital Group ( Capital Group, Group ) is Kredyt Inkaso Spółka Akcyjna ( Dominant Company, Issuer, Company ). Company s registered office: Registration Court: Date of registration: Entry No. KRS: Regon (statistical number): NIP : PKD : Warszawa, 39A Domaniewska Str. District Court for the Capital City of Warsaw, XIII Commercial Division of the National Court Register 28 December in the present legal form (joint stock company) 19 April in the previous legal form (limited partnership) Z - other financial service activity, not classified elsewhere, except insurance and pension funds 1.2. Composition of the Management Board and the Supervisory Board of the Dominant Company In the period from 1 April 2013 until the balance sheet date the composition of the Company s Management Board was not subject to change. Composition of the Management Board as of the Date of the Consolidated Financial Statements Approval for Publication was: 1) President of the Management Board Mr Paweł Robert Szewczyk 2) Vice-President of the Management Board Mr Jan Paweł Lisicki As of the Approval Date, the composition of the Supervisory Board of the Dominant Company was as follows: 1) Chairman of the Supervisory Board Mr Ireneusz Andrzej Chadaj 2) Vice-Chairman of the Supervisory Board Mr Krzysztof Misiak 3) Secretary of the Supervisory Board Mr Marek Gabyjelski 4) Member of the Supervisory Board Mr Tomas Mazurczak 5) Member of the Supervisory Board Mr Robert Gajor 6) Member of the Supervisory Board Mr Andrzej Soczek 17 17

18 1.3. Information on the Capital Group Kredyt Inkaso S.A. Capital Group comprises the following entities: 1) Kredyt Inkaso S.A., with the registered office in Warsaw, dominant company, 2) Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme (S.A.), with the registered office in Luxembourg, L-2557 Luxembourg, 18, rue Robert Stumper, subsidiary 3) Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty, with the registered office in Warsaw, ul. Rodziny Hiszpańskich 1, Warsaw, subsidiary, 4) Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty, with the registered office in Warsaw, ul. Rodziny Hiszpańskich 1, Warsaw, subsidiary, 5) Kancelaria Forum S.A., with the registered office in Zamość, ul. Okrzei 32, Zamość, a subsidiary, 6) Kancelaria Prawnicza FORUM radca prawny Krzysztof Piluś i spółka spółka komandytowa, with the registered office in Warsaw, ( Forum Law Firm ), ul. Domaniewska 39A, Warsaw, subsidiary, 7) KI Nieruchomości Sp. z o.o. in organization, with the registered office in Warsaw, ul. Domaniewska 39A, Warsaw, a subsidiary 8) FINSANO Consumer Finance Spółka Akcyjna Spółka Komandytowa with its registered office in Warsaw ( FINSANO SA ), Domaniewska 39A, Warsaw, subsidiary 9) FINSANO Consumer Finance Spółka Akcyjna, with its registered office in Warsaw ( FINSANO SK ), Domaniewska 39A, Warsaw, subsidiary 10) Legal Process Administration Sp. z o.o. ( LPA ) with its registered office in Zamosc, being a subsidiary dependant indirectly 100% on the Dominating Entity. LPA is a subsidiary dependant directly on Kancelaria FORUM S.A., 11) Kredyt Inkaso Investments RO S.A., with its registered office in Bucharest, being a subsidiary dependant directly 75% on the Company and indirectly 25% (through the subsidiary of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A, with its registered office in Luxembourgh), 12) Kredyt Inkaso Investments BG EAD S.A., with its registered office in Sophia, being the subsidiary dependant indirectly 100% on the Company and being the subsidiary dependant directly on subsidiary Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. with its registered office in Luxmbourg. 13) Kredyt Inkaso RUS Limited Liability Company (LLC), with its registered office at the Cheremetievo Airport Business Center 2, Moscow region in Russia, subsidiary. 14) RNG DEBT Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty with its registered office in Warsaw is the subsidiary indirectly dependant 100% on the Company, being the subsidiary directly dependant on the subsidiary Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. with its registered office in Luxemblurg. 15) Kredyt Inkaso RECOVERY EOOD with its registered offcie in Sphia is the subsidiary indirectly dependant in 100% on the Company, being the subsidiary directly dependant on the subsidiary Kredyt Inkaso Investments BG EAD S.A.,with its registered office in Sophia

19 The Annual Consolidated Financial Statements of Kredyt Inkaso S.A. Capital Group includs the Dominant Company and fourteen subsidiaries: Name of a subsidiary Consolidation method Group s share in equity: Degree of control Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme (S.A.) full 100% 100% 100% 100% Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny full 100% 100% 100% 100% Zamknięty Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny full 100% 100% 100% 100% Zamknięty Kancelaria Forum S.A. full 100% 100% 100% 100% Kancelaria Prawnicza FORUM radca prawny Krzysztof Piluś i spółka spółka komandytowa full 85% 85% 85% 85% KI Nieruchomości Sp. z o.o. full 100% 100% 100% 100% FINSANO Consumer Finance S.A. full 100% 100% 100% 100% FINSANO Consumer Finance Spółka Akcyjna Spółka Komandytowa full 100% 100% 100% 100% Legal Process Administration Sp. z o.o. full 100% 100% 100% 100% Kredyt Inkaso Investments RO S.A. full 100% 100% 100% 100% Kredyt Inkaso Investments BG EAD S.A. Kredyt Inkaso RUS Limited Liability Company (LLC) RNG DEBT Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty full 100% 100% 100% 100% full 90% 0% 90% 0% full 100% 0% 100% 0% Kredyt Inkaso RECOVERY EOOD full 100% 0% 100% 0% Term of the Dominant Company and companies included in the Capital Group, covered by the consolidation is indefinite. The core business of the Dominant Company and its subsidiaries is trading in debt packages in the domestic market and legal activities. The subject matter of activity of the Dominant Company, according to its Statute is: a. other financial service activity, not classified elsewhere, except insurance and pension funds in PKD Z; b. financial leasing in PKD Z; c. other forms of granting credits in PKD Z; d. other activity supporting finance services, except insurance and pension funds in PKD Z; e. execution of building projects related to buildings construction in PKD Z; f. purchase and disposal of immovable property on the company s own account in PKD Z; g. rental and management of own or leased immovable property in PKD Z; h. legal activity in PKD Z, i. other consultancy services in the fields of business activity and management - in PKD Z, j. photocopying, preparing documents and other specialized activity supporting handling office in PKD Z, 19 19

20 k. activity performed by collection agencies and credit bureaus in PKD Z, l. operating call centres in PKD Z, m. other out of school forms of education, not classified elsewhere in PKD B; n. brokerage activity connected with securities and stock exchange products market - in PKD Z; o. activity connected with funds management - in PKD Z. p. accounting and bookkeeping activities; tax consulting in PKD Z. r. activities of financial holding companies in PKD Z. s. activities of head offices and holdings excluding financial holdings - in PKD Z. 2. Basis of drawing up and accounting principles 2.1. Basis of drawing up the Consolidated Financial Statements The Consolidated Financial Statements of Kredyt Inkaso S.A. Capital Group ( consolidated financial statements ) were drawn up in accordance with the International Financial Reporting Standards (hereinafter referred to as IFRS ), approved by the European Union, binding as of 31 March 2014 and in to the extent required by the Ordinance of the Minister of Finance dated 19 February 2009 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 (Journal of Laws No. 33, item 259 as amended) and comprises period from 1 April 2014 to 31 March 2015 and a comparable period from 1 April 2013 to 31 March Functional currency of the Dominant Company and all subsidiaries as well as the currency in which these financial statements were presented is Polish zloty PLN), and all amounts are expressed in PLN thousand (unless it was indicated otherwise). The present Financial Statements were drawn up assuming the going concern of the Group s companies in the foreseeable future. As of the Date of Approval there are no circumstances posing a threat to the going concern of undertakings included in the Group. The Capital Group named the consolidated balance sheet as the consolidated statement of the financial standing 2.2. Changes to standards and interpretations of the IFRS Statement of compliance The present Consolidated Financial Statements were drawn up in accordance with the IFRS as well as in accordance with interpretations announced in the form of ordinances of the European Commission, published and binding during drawing up of the present financial statements Changes to standards or interpretations in force and applied by the Group since 2014 New or amended standards and interpretations, which have been in effect since 1 January 2013 and their impact on the Group s consolidated financial statements: New IFRS 10 Consolidated financial statements The new standard replaces the bigger part of the IAS 27 Consolidated and stand alone financial statements. The IFRS 10 introduces a new definition of control, however the principles and procedures of consolidation are not subject to change. The group has ecvaluated the effect of the new standard on its financial statements. Application of the new definition of control does not change the range of the consolidated entities and does not affect the financial statements

21 New IFRS 11 Common contractual agreements The IFRS 11 replaces the IAS 31 Share in common ventures. In the new standard the accounting approach to common contractual agreements results from its economic contents i.e. rights and obligations of the parties. Additionally the IFRS 11 cancels the possibility of settlement of an investment in common ventures by means of proportional consolidation. Such investments are settled by means of the property rights method. The group has evaluated the effect of the new standard on its financial statements. Due to the fact that the Group doesn t have and hasn t had common framework agreements, introduction of the new standard has not affected its financial statements. New IFRS 12 Disclosure of information on shares in other entities The IFRS 12 defines the requirements related to disclosure of information on consolidated and nonconsolidated entities, in which the entity drawing up the statements has significant engagement. It allows investors to asses the risk the Group is exposed to. The change has not had a significant effect on the financial statements of the Kredyt Inkaso Group. Amendment to IAS 27 Stand alone financial statements and to IAS 28 Investments in affiliates and common ventures Amendments to IAS 27 and 28 are the consequence of introducing the IFRS 10, IFRS 11 and IFRS 12. The IFRS 27 will only relate to stand alone financial statements and the IAS 28 includes in its scope investments in common ventures, however the methodology of the property rights is not subject to changes. Amendment to IFRS 32 Financial instruments: presentation The amendment introduces the detailed explanation of applying conditions of presenting assets and financial liabilities in net amounts. Due to the fact that The Group does not present the assets item and and the liabilities item in net values, its introduction have not affected the financial statements. Amendment to the IFRS 10 Consolidated financial statements, the IFRS 11 "Common contractual agreements and the IFRS 12 Disclosure of information on shares in other entities Amendments to the newly issued standards relating to consolidation introduce clearer than up to now temporary regulations and some discharges as regards presentation of comparable data. Amendment to the IFRS 10 Consolidated financial statements, the IFRS 12 Disclosure of information on shares in other entities and the IAS 27 Stand alone financial statements The amendment consists in introducting of a discharge from the consolidation obligation by investment entities. The investment entity is the one that complies with the following definition: o Obtains funds from one or several investors for the purposes of providing these investors with services of investment management, o Declares to the investors that its business objective is investment of funds exclusively for the purposes of achieving returns on the increase of the value of investment and/or dividends o Evaluates effectiveness of its investments on the basis of their fair value. The Group has performed evaluation and decided that it does not fulfill the definition of the investment entity. Amendment to the IAS 36 Loss of the assets value When introducing the new IFRS 13 Establishing the fair value the Board established new disclosures of information related to the loss of value. However its range was defined too widely, therefore further amandement narrowing the obligation to disclose the recoverable value to assets and centers that have lost their value was introduced. The Group has applied new principles of disclosures in relevant notes

22 Amendments to the IAS 39 Financial instruments: recognizing and valuation Current IAS 39 regulations were causing a situation where, in the case when the entity defined the derivative as an collateral item and as a result of the change of regulations the other party to the derivative contract was replaced with the so called central supplier (e.g. settlement agency), the collateral relation had to be terminated. Due to introducing the amendment to the standard such situations will not result in termination of collateral. The change to the standard has not affected the Group s financial statements. Standards and interpretations obligatory in the version published by the International Accounting Standards Board but not approved by the European Union, are shown below in the section related to standards and interpretations that did not come to effect Application of standards and interpretations prior to their coming into effect In the present consolidated financial statements the early voluntary application of standards interpretations was not utilized Published standards and interpretations which did not come to effect for periods commencing on 1 January 2014 and their effect on the Groups statements Up to the day of drawing up the present consolidated financial statements the new or updated standards and interpretaions, effective for annual periods following after the year 2014 were published: New IFRS 9 Financial Instruments: classification and valuation The new standard is to replace the present IAS 39. Changes introduced by the standard in accounting of financial instruments include, first of all: or o o o Other cathegories of financial assets, the method of assets valuation depends on; allocation of assets to a cathegory is performed depending on the business model relating to a given asset component, New principles of collaterals accountning reflecting to the higher degree the risk management, The new model of the loss of value of financial assets based on the anticipated losses and creating the necessity of the faster recognizing costs in the financial result. The standard is in effect for annual periods commencing on 1 January 2018 or later. The Group is in the process of evaluation of the effect of the standard on the consolidated financial statements. New KIMSF 21 Public fees The new interpretation introduces principles definig the moment of recognizing liabilities due from fees and taxes imposed by the government bodies other than the income tax regulated in the IAS 12. The interpretation is a specification of the principles defined by the IAS 37 Reserves, contingent liabilities and contingent assets. In the opinion of the Group the interpretation will not have an effect on the consolidated financial statements. Pursuant to the decision of the Board, the interpretation is in effect for annual periods commencing on 1 January 2014 or later, however its coming into effect in the European Union is obligatory for annual periods commencing on 17 June 2014 or later, therefore the Group shall start its application starting from Amendment to the IAS 19 Employee benefits The amendments consist in specifying the principles of the course of actions in the case when the employees make payments to cover the cost of certain benefits program. The Group has decided that the amdendment will not affect its consolidated statements. The amendments are in effect for annual periods commencing on 1 July 2014 or later

23 Amendments to IFRS 2, IFRS 3, IFRS 8, IAS 16, IAS 24, IAS 38 resulting from the Annual adjustments project: cycle which become effective for annual periods commencing on 1 July 2014 or later. Adjustments to standards include: o IFRS 2: The Board has specified the standard by changing or introducing new definitions of the following terms: market condition, condition of rendering services, condition to acquire rights, condition related to performance. The Group has decided that the amendment will not affects its financial statements. o IFRS 3: The Board specified the principles of valuation of conditional payment following the day of take-over so that they are in compliance with other standards (mainly with the IFRS 9 / IFRS 39 and IAS 37). The Group has decided that the amendment will not affects its financial statements. o IFRS 8: the Board imposed on the entities performing mergers of operating segments the requirement of additional disclosures related to these joined segments and economic features due to which the merger was performed. The Group has decided that the amendment will not affect its financial statements. o IFRS 8: the standard after the amendment stipulates that the disclosure obligation of agreeing the sum of the assets of the segments with the assets indicated in the balance sheet is obligatory only when the asset values are disclosed devided into segments. The Group has decided that the amendment will not affect its financial statements. o IAS 16 and IAS 38: The Board introduced an adjustment to the principle of calculating the gross amount and the cumulated write-off of an asset (intangible asset) in the case of applying the revaluated value model. The Group has decided that the amendment will not affect its financial statements. o IAS 24: Definition of the related entity was extended by the entities providing services of the key management personnel and relevant findings. The Group has decided that the amendment will not affect its financial statements. Amendments to the IFRS 3, IFRS 13 and IAS 40 resulting from the Annual adjustments project: cycle which become effective for annual periods commencing on 1 July 2014 or later. Adjustments to standards include: o IFRS 3: it has been specified that excluded from the standard are the transactions of creating common conventional agreements (joint arrangements) in reports on these common conventional agreements. The Group has decided that the amendment will not affect its financial statements. o IFRS 13: The Board has specified the scope of application of release related to valuation of a portfolio of assets and financial liabilities in the net amount. The has Group decided that the amendment will not affect its financial statements. o IAS 40: The Board has specified that in the case of the purchase of an investment property, one should also consider,whether it is a purchase of the group of assets or joining ventures according to the principles defined in the IFRS 3. The Group is in the process of evaluation of the effect of the amendment on the consolidated financial statements. New IFRS 14 Regulatory Deferral Accounts The new standard relates exclusively to entities which are switching to the IFRS and pursue activities in industries, where the government regulates the applied prices such as supply of natural gas, electricity or water. The standard allows to continue the accounting policy related to recognizing revenues from such activity applied prior to switching to the IFRS both in the first statements drawn up according to the IFRS and later. The new regualtions will not affect the Groups consolidated financial statements. The standard is in effect for annual periods commencing on 1 January 2016 and later

24 New IFRS 15 Revenue from Contracts with Customers The new standard shall replace the current IAS 11 and IAS 18 ensuring one consistent model of recognizing revenues. The new 5-step model shall make the recognition dependant on gaining the client s control over a good or a service. Additionally the standard introduces additional requirements of disclosing information on a few detailed issues. The new standard may change the time and the amount of the revenues recognized by the Group however the Group has not finalized the process of analysis of its influence on the financial statements. The standard becomes effective for annual periods commencing on 1 January 2017 or later. Amendment to IFRS 11 Common conventional agreements Pursuant to the amendment the entity purchasing shares in the common activity constituting business (undertaking) will have to apply principles defined in the IFRS 3 for including assets and liabilities of the common activity, meaning, among other things, to evaluate assets and liabilities in the fair value and establish the company value. The Group anticipates that the amendment will not affect its financial statements. The amendment is effective for annual periods commencing on 1 January 2016 or later. Amendment to IAS 16 Tangible fixed assets and IAS 38 Intangible Assets According to the amendment, the method of amortisation of tangible assets based on the achieved revenues from utilising the asset component is inadmissible. In case of intangible assets applying this method has been limited. The Groups anticipates that the amendment will not affect its financial statements. The amendment is effective for annual periods commencing on 1 January 2016 or later. Amendment to IAS 16 Tangible fixed assets and IAS 41 Agriculture The amendment stipulates that production plants (e.g. vines, fruit trees) shall be excluded from the IAS 41 range and included in the IAS 16 range as tangible assets created on one s own. Due to this amendment performing valuation of these plants in the fair value as of each balance day, which was required by IAS 41 up till now, shall not be necessary. The amendement is effective for annual periods commencing on 1 January 2016 or later. Amendment to IAS 27 Stand alone financial statements Pursuant to the introduced adjustment to the stand alone statements, shares in the subsidiary, common undertaking or in the associated entity will be possible to be valuated also by means of the property rights method. Up till now the IAS 27 stipulated exclusively valuation in the purchase price or according to ISFR 9/ IAS 39. The amendment does not concern consolidated financial statement therefore it shall have no effect on the report of the Group. Amendments are effective for annual periods commencing on 1 January 2016 or later. The Group intends to implement the aforementioned regulations within timelines forseen to be applied by standards or interpretaions Significant elements of accounting policy Consolidation In the Capital Group, the Dominant Company and the subsidiaries: Kredyt Inkaso Portfolio Investments (Luxembourg) S.A., Kancelaria Forum S.A., KI Nieruchomości Sp. z o.o. prepare financial statements in accordance with the principles resulting from IFRS approved by the European Union and the financial year of the mentioned undertakings comprises the period from 1 April of the previous year to 31 March of the next year. Kancelaria Prawnicza FORUM radca prawny Krzysztof Piluś i spółka spółka komandytowa and Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty and Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty keep their accounting books in compliance with the accounting policy (rules) specified by the Polish Accounting Act and secondary provisions issued on its basis, and moreover their financial year is a calendar year. Thus, the consolidated financial statements comprise relevant transformations aimed at making the financial statements of this entity to be in accordance with rules applied by the dominant company

25 Subsidiaries Subsidiaries are the companies, including companies not being commercial companies (e.g. civil partnership) that are controlled by the Group. It is assumed that the Group exercises control over an undertaking if it is able to manage the financial and operating policy of the undertaking, aimed at obtaining benefits from its operations. Subsidiaries are subject to consolidation in accordance with a full method. Consolidation procedures In the process of drawing up financial statements, financial statements of the Dominant Company and subsidiaries are combined by summing up similar items of assets, liabilities, equity, income and costs. In order to ensure presentation in the consolidated financial statements the financial information on the capital group in such a manner as if it constituted an individual commercial undertaking; the following steps should be taken: a) making exclusions of the investment carrying value of the Dominant Company in each subsidiary and this part of equity of each subsidiary that corresponds to the share of the Dominant Company and the goodwill or profit is recognized in accordance with IFRS 3, b) identify the non-controlling interest in profits and losses of consolidated subsidiary undertakings for a given reporting period, and c) identify the non-controlling interest in net assets of consolidated subsidiary undertakings separately from the ownership interest of the Dominant Company in those net assets. Non-controlling interest in net assets includes: 1) value of the non-controlling interests as of the date of the primary merger, calculated in accordance with IFSR 3, and 2) changes in the equity per non-controlling interest starting from the merger date. Should potential voting rights occur, proportions of division of profits and losses and changes in equity between the Dominating Undertaking and the non-controlling interest is estimated on the grounds of existing ownership interests, not allowing for the possibility of exercising or changing potential voting rights Transactions in foreign currencies Transactions denominated in currencies other than Polish zloty are converted into PLN at the exchange rate binding on the date of transaction (spot exchange rate). Cash items denominated in foreign currencies are valuated according to the closing exchange rate (spot exchange rate) i.e. at the exchange rate of the leading bank ING Bank Śląski S.A. from the first quotation at the balance sheet date. Non-cash balance sheet items recorded according to the historical cost, denominated in foreign currency, are valuated at the exchange rate of the transaction date. Non-cash balance sheet items recorded according to the fair value, denominated in foreign currency are valuated at the exchange rate of the date of the fair value estimation Operating segments An operating segment is a component of an entity: a) that engages in business activities from which it may earn revenues and incur expenses (including income and expenses related to transactions with other components of the same entity); b) whose operating results are reviewed regularly by the entity s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and c) for which separate financial information is available The Group s operating activity was divided into: - Segment of trade in receivables, comprising wholesale trade in receivables resulting from mass services

26 - Segment of legal activity, comprising representing the Group s companies in court and enforcement proceedings and providing services of legal counsel and representation in proceedings at law in civil and commercial cases to external entities. - Corporate functions constituting reconciliation item and including activity related to the activity connected with management and administration and other support functions and other activity not included into distinguished segments. Revenues of the segment is the income generated either from sale to external clients or transactions with other segments that are presented in the consolidated total income statement and may be directly allocated to a given segment and along with a relevant part of income that may be allocated to this segment based on rational reasons. Costs of the segment are the costs consisting of the costs connected with sale to external clients and costs of transactions made with other segments that result from operating activity of a given segment and may be directly allocated to this segment along with a relevant part of the Group s costs that may be allocated to this segment based on rational reasons. Result of a segment is estimated at the level of an operating result. Assets of the segment are operating assets applied by the segment in an operating activity that may be directly allocated to a given segment or may be allocated to this segment basing on the rational reasons. In particular, assets relative to income tax are not allocated to assets of the segment. Segment s revenues, result and assets are estimated prior to making exclusions of transactions between segments following elimination within the segment Intangible assets Intangible assets are considered these components of assets which result from agreements or other legal titles regardless of the fact whether they are marketable or not. Initial valuation of intangible assets was calculated at the acquisition price resulting from a separate transaction. After the initial recognition, intangible assets valuation was calculated at the acquisition price after deduction of amortization; moreover the factor which as a rule decreases the valuation is the total amount of impairment write offs. The mentioned factor did not occur in the reporting period. The period and the method of amortization of the intangible assets with the defined period of usage were verified at the end of the reporting period. Verified period of intangible assets usage did not differ from the previous estimations. Amortization write-offs from intangible assets are calculated according to a straight-line method during the period of anticipated period of usage, which is following for individual categories of intangible assets used in the presented periods: - for system software - 33%, 33% or 50% - for production software - 30% or 50% Amortization rates applied for intangible assets in previous periods do not differ from those, which were verified and applied in the reporting period. Due to this fact, net values of intangible assets estimated according to the previous rules and those, which are valid at present, are the same. In the presented reporting periods no prerequisites for impairment of other components of intangible assets occurred. The component of intangible asset is removed from a balance sheet register when it is sold or if further benefits resulting from its usage or sale are not anticipated. Goodwill Goodwill as of the merger date is valuated at the purchase price, constituting the surplus of the cost of merger of economic undertakings over the share of the acquiring undertaking in net fair value of possible to identify assets, liabilities, contingent liabilities set as of the acquisition date (all material days of exchange in the case of acquisitions being the result of several following one after another transactions). Goodwill is valuated at the end of the reporting period at the purchase price decreased by hitherto total impairment write offs and decreases relative to the sale of part of shares to which it was previously attributed to. Revaluation write offs are not subject to reversing

27 Goodwill is subject to impairment test at the end of the reporting period, in which reasons for impairment occurred Tangible fixed assets The following fixed assets are classified as tangible fixed assets: 1) the ones maintained by the Company in order to use them in business activities, 2) the ones to be used for the time longer than one period, 3) in relation to which there is the probability that they will generate economic benefits, 4) the value of which can be estimated in a reliable manner. The following assets were classified as tangible fixed assets: 1) improvements in third party fixed assets (buildings), 2) machinery, technical equipment, 3) other fixed assets, 4) fixed assets under construction. As of the date of initial recognition, fixed assets were valuated at the purchase price. In the tangible fixed assets used by the Company, no significant parts of fixed assets (components) of which period of usage would differ from the period of usage of the whole tangible fixed asset were identified. In the presented periods straight-line method of tangible fixed assets depreciation was applied, resulting from the anticipated useful life of a tangible fixed asset, with the exception of notebooks depreciated according to a degressive method at the ratio equal 2. The basis of tangible fixed assets depreciation in the period of applying IFRS is the initial value decreased by residual value. Depreciation rates applied for tangible fixed assets in previous periods do not differ from those that were verified and applied in the reporting period. Depreciation was calculated applying rates resulting from anticipated periods of usage, which are following for already owned tangible fixed assets: Investments in third party fixed assets (buildings) - 10% Computers (work stations) - 30% Notebooks - 30% Servers - 30% Computer specialist equipment - 30% Photocopiers and high-output printers - 28% Telecommunications systems - 20% Cars - 20% Furniture - 20% Specialized office equipment (e.g. mailing equipment, high-output shredders) - 14% Depreciation begins when a tangible fixed asset is available for usage and it ends for tangible fixed assets removed from the balance sheet register Deferred income tax assets Deferred income tax assets were estimated at the amount that is meant to be deducted from income tax in the future, in relation to negative temporary timing differences that will result in decrease of taxable base in the future, calculated in a conservative manner. While valuating deferred income tax assets, the tax rate equal to 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the mentioned item of assets will be effectuated Short-term receivables Trade receivables, receivables relative to income tax, receivables relative to awarded costs of proceedings and other receivables are classified as short-term receivables

28 Receivables are subject to valuation as of each balance sheet date due to the fact that the reasons for their impairment occurred. Receivables are revaluated taking into consideration the probability of their payment by means of establishing revaluation write offs at the end of the reporting period. They are mainly all receivables resulting from the Company s business activity consisting in trade and management of debts. Book value of receivables corresponds to their fair value Purchased receivables The initial recognition of the purchased portfolio of receivables is performed based on the purchase price. The purchase price consists of the purchase price of the asset component (i.e. amount due to the seller reduced by taxes subject to the write-off: goods and services tax and the excise tax). Rabates, discounts granted by the seller as well as other similar reductions and recoveries decrease the purchase price of the asset component. According to the rule of caution for receivables from the bankrupt, liquidated or other entities from which the company is not anticipating to obtain positive cash flows the initial value is established at the zero value. Purchased receivables are classified as financial instruments valuated at the fair value. As of each balance sheet day the valuation of financial instruments to the fair value is performed.the result of the valuation is transferred to the profit and loss account. The fair value of each of the portfolios of receivables is established by Kredyt Inkaso S.A. by means of the estimation method, as the current value of anticipated, discounted with the internal return rate (IRR) net cash flows (planned cash flows reduced by the planned direct collection cost) generated by the portfolio of receivables Cash and cash equivalents Cash and cash equivalents include cash in hand and at bank as well as other cash equivalents, i.e. bank deposits with the maturity not exceeding three months. The mentioned cash was valuated at the nominal value, whereas bank deposits at the amount of due amount. Book value of those assets corresponds to their fair value Short-term prepayments and accruals Short-term prepayments and accruals comprise prepaid costs i.e. incurred expenditure related to future reporting periods and interest related to financial lease that is to be settled within 12 months of the reporting date Share capital Company s share capital is presented at the nominal value, in accordance with the Statutes of the Company and the entry in the National Court Register Cost of Bonds Issue and own shares External cost directly relating to Bonds issue decrease the value of equity from the issue of bonds over their nominal value. The remaining costs are charged to the profit and loss account at the time when they are borne. Should Kredyt Inkaso S.A. or its subsidiaries make a purchase of Company s capital instruments, the amont paid, including the cost related directly to the purchase, shall decrease equity assigned to the Company s shareholders and is presented separately in the balance sheet as Own shares up to the moment of shares redemption or re-issue. Own shares are recognized as of the date of the transaction settlement Supplementary reserve (agio) The reserve is established out of the surplus of the issue value of shares over their nominal value less costs of the issue

29 Reserve for deferred income tax Reserve for deferred income tax was established in the amount that will result in increasing the liability relative to income tax in the future, due to the occurrence of positive temporary differences between balance sheet value of assets and liabilities and their tax value. While valuating the reserve for deferred income tax, the tax rate of 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the reserve will be released Reserve for pensions and similar benefits Pursuant to regulations of the labour law, employees of the Company are entitled to receive retirement severance pay, which is paid once at the moment of retiring. The estimated amount of the reserve for retirement benefits turned out to be of no significance that is why we desisted from its recognizing and presentation Other reserves Other reserves are established when the existing obligation that results from the past events is incumbent on Company and it is probable that its fulfilment will cause the necessity of outflow of economic benefits and it is possible to estimate the mentioned obligation in a reliable way. The established reserves are classified respectively as other operating costs, financial costs depending on circumstances that are connected with the future liability Liabilities Liabilities are valuated at the end of the reporting period in the amount of due payment, with the exception of liabilities relative to bonds issue. Liabilities relative to bonds issue are valuated at the moment of initial recognition at the fair value less costs of transaction. As of the balance sheet date, the valuation was calculated according to the amortized cost applying the effective interest rate (adjusted acquisition price) and divided according to the term of generated cash flow into short-term and long-term part. Liabilities relative to legal persons income tax are presented in the due amount, applying the rate in effect in the countires, where the tax obligation occured Other accruals Accruals are calculated as of the reporting date, if it is necessary, in the amount of probable liabilities falling to the current reporting period. Grants are recognized only when there is sufficient certainty that the Group will meet conditions related to a given grant and that the given grant will in fact be received. Grants related to a given cost item is recognized as revenue in the manner corresponding to costs, which are to be compensated by the grant. Grants financing a component of assets is gradually recognized as income (in the item other income) over periods proportionally to amortization write offs established for this component of assets. Due to presentation reasons, in the consolidated balance sheet, the Capital Group does not deduct donations from the balance sheet value of assets but presents donations as income of future periods in the item Accruals Revenues Net revenues include - revenues from purchased debts (collection of debts on our own account and at our own risk) recognized at the moment of obtaining them in the amount obtained, reduced by depretiation of portfolios assigned to the current period and adjusted by the result of a portfolio valuation. - other revenues recognized as of the maturity date and amount, reduced by corresponding other costs Overheads Overheads comprise all other costs incurred by the Company which were not classified as the own cost of income and other cost of core business and were also incurred in relation to Company s operating activity

30 Other costs of the core business Other costs of core business comprise cost of contact centre maintenance, costs of handling the purchased debts in the pre-action stage and other costs connected with the purchased debts management, not recognized in the own cost of obtained revenue Income tax Obligatory burden of the result consists of: current and deferred tax. Current tax liability was calculated on the basis of tax result of a given period, based on the rate in effect in a given country. Deferred tax was calculated on the basis of the balance sheet method as the tax subject to refund or payment in the future, basing on the differences between balance sheet value and tax value of assets and liabilities Consolidated cash flow statement The Company prepares consolidated cash flow statement according to the indirect method. In the operating activity, the cash flows relative to receivables considered by the Company as financial instruments valued at the fair value were disclosed. The result is transferred to the profit and loss account Adjustments of errors and changes to accounting principles In the consolifated financial statements we have not introduced any adjustments to accounting principles, having effect on financial data presented for comparative periods were made: 3. Utilising inflows from issue of securities On 9 May 2014, the subsidiary Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty with its registered office in Warsaw, issued secured 3-year term K series bearer bonds of the total nominal value of PLN 1 000,000 each of the total nominal value of PLN 50 million. The obtained funds were allocated for financing the purchase of the portfolio of monetary receivables of the bank ING Bank Śląski S.A. with its registered office in Katowice against debtors of the total nominal value of PLN , Statement of Kredyt Inkaso S.A. Management Board on compliance of the Consolidated Financial Statements with the applicable accounting principles We hereby state that to the best to our knowledge, the Consolidated Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2014 to 31 March 2015, as well as the comparative data were prepared in accordance with the binding accountancy principles and they reflect in a true, fair and clear manner the financial standing and result of the Capital Group, and that the report on the operations of the Capital Group contains reliable description of development, achievements and the situation of the Capital Group, including the description of the main risks and hazards. The presented consolidated financial statements comply with all requirements of IFRS adopted by the European Union

31 5. Statement of Kredyt Inkaso S.A. Management Board on appointment of the entity authorized to audit financial statements We hereby state that the entity authorized to audit the financial statements, which audited the Consolidated Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2014 to 31 March 2015 was appointed in accordance with the binding legal provisions and that the mentioned entity as well as statutory auditors, who audited the consolidated financial statements, complied with the conditions of issuing independent and unbiased opinion on the annual financial statements audit, in accordance with binding professional standards. 6. Information on operating segments The Group s operating activity is allocated to: - segment of trade in receivables that comprises wholesale trade in receivables arising from mass services, - segment of legal activity, consisting in representing the Group s companies in court and enforcement proceedings and providing external entities services of legal counsel and representation in proceedings at law in civil and commercial cases. - corporate functions (CF) constituting reconciliation item and including activity relative to the activity connected with management and administration and other support functions and other activity not included into distinguished segments. Allocation of companies of Kredyt Inkaso S.A. Capital Group to operating segments is presented in the table below. Company s name Operating segment Kredyt Inkso S.A. Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme (S.A.) Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Kancelaria Forum S.A. Kancelaria Prawnicza FORUM radca prawny Krzysztof Piluś i spółka spółka komandytowa KI Nieruchomości Sp. z o.o. FINSANO Consumer Finance Spółka Akcyjna FINSANO Consumer Finance S.A. Spółka Komandytowa Legal Process Administration Sp. z o.o. Kredyt Inkaso Investments RO S.A. Kredyt Inkaso Investments BG EAD S.A. Kredyt Inkaso RUS Limited Liability Company (LLC) RNG DEBT Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Kredyt Inkaso RECOVERY EOOD trade in receivables, CF trade in receivables trade in receivables trade in receivables CF legal activities CF FK FK FK Trade in receivables Trade in receivables Trade in receivables Trade in receivables Trade in receivables 31 31

32 Operating segments - for the period from to OPERATING SEGMENTS Specification Segment of trade in receivables Segment of legal services Corporate functions Consolidation exclusions Total for the period from to External sale Sale between segments (30 807) - Total revenues (30 807) Total operating costs (30 807) Other operating revenues Other operating costs Segment s result Financial revenues 713 Financial costs Profit before tax Income tax 131 Net profit Specification Segment of trade in receivables Segment of legal services Corporate functions Total Other information: Depretiation Loss of value of intangible fixed assets Assets of reporting segment Liabilities and capital of reporting segment Expenditures for fixed assets of operating segment Operating segments - for the comparative period from to OPERATING SEGMENTS Specification Segment of trade in receivables Segment of legal services Corporate functions Consolidation exclusions Total for the period from to External sale Sale between segments (17 430) - Total revenues (17 430) Total operating costs (17 430) Other operating revenues Other operating costs Segment s result (5 398) Financial revenues Financial costs Profit before tax Income tax (1 426) Net profit

33 Specification Segment of trade in receivables Segment of legal services Corporate functions Total Other information: Depretiation Loss of value of intangible fixed assets Assets of reporting segment Liabilities and capital of reporting segment Expenditures for fixed assets of operating segment All assets are assigned to reporting segments. Goodwill was allocated to reporting segments. Assets utilized jointly by reporting segments are assigned on the grounds of revenues generated by individual reporting segments. All liabilities are assigned to reporting segments. Liabilities assigned to various reporting segments are allocated proportionally to the value of segments assets. INFORMATION ON GEOGRAPHIC AREAS from to From to Revenues Fixed assets Revenues Fixed assets Poland Romania Other countries Total Merger of business entities No merger of business entities in the financial year 2014/2015 took place

34 NOTES TO THE CONSOLIDATED BALANCE SHEET 8. Intangible assets and goodwill 8.1. Goodwill As of 31 march 2015, Kredyt Inkaso S.A. Capital Group performed evaluation of the economic value of goodwill in accordance with requirements of IAS 36 and it did not discover the presence of any reasons for goodwill impairment, neither in whole nor in the part of it. Goodwill Kancelaria Forum S.A Kredyt Inkaso Portfolio Investments (Luxembourg) S.A KI Nieruchomości Sp. z o.o Kredyt Inkaso RUS Limited Liability Company Total goodwill CHANGE TO THE BALANCE SHEET VALUE OF THE COMPANY From to From to Gross value Balance as of the beginning of the period Merger of business entities Sale of subsidiaries (-) - - Net exchange rate differences from valuation - - Other adjustments Gross value as of the end of the period: Write-offs due to the loss of value Balance as of the beginning of the period - - Write-offs recognized as cost in the period - - Net currency exchange differences from conversion - - Other adjustments - - Write-offs due to the loss of value as of the end of period - - Goodwill balance sheet value as of the end of period

35 8.2. Intangible assets Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total State as of Gross carrying value Cumulated write off and revaluation write-down (512) (2 510) - (180) - (3 202) Net carrying value State as of Gross carrying value Acumulated write-offs and revaluation write-downs (316) (2 481) - (147) - (2 944) Net carrying value Changes to intangible assets by generic groups for the period from to specification Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (399) - (342) (1 241) (1 981) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (196) (506) - (266) - (968) Net balance sheet value as of Changes to intangible assets by generic groups for the period from to specification Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) (1 666) (1 666) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (167) (604) - (147) - (918) Net balance sheet value as of

36 9. Tangible fixed assets Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total State as of Gross carrying value Cumulated write off and revaluation write-down (695) (3 702) (441) (1 359) - (6 197) Net carrying value State as of Gross carrying value Acumulated write- offs and revaluation write-downs (502) (2 956) (256) (1 007) - (4 722) Net carrying value Changes to tangible fixed assets by generic groups for the period from to CHANGE TO THE CARRYING VALUE OF TANGIBLE FIXED ASSETS Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (103) (65) (53) (2 193) (2 414) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (193) (746) (185) (417) - (1 540) Net carrying value as of Specification Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, 8 leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (59) (101) (19) (10 712) (10 891) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (170) (1 060) (140) (469) - (1 839) Net carrying value as of

37 Changes to tangible fixed assets by generic groups for the period from to Tangible fixed assets recognized off-balance sheet used under rent, hire or other contract, including lease contract, of which: 0 0 Total tangible fixed assets recognized off-balance sheet Investment real estate Investment real estate State at the beginning of period Increases related to property purchase Increases resulting from activated later expenditures Decreases related to sale (3 427) (1 124) Reclassification of tangible fixed assets Valuation at the fair value increases decreases (282) Other changes State at the end of period The component of reclasification of tangible fixed assets is the office building in Lublin purchased by KI Nieruchomości Sp. z o.o. in 2011, which is utilized in 50% for the own needs of the oerating Center in Lublin. The reclassification was made at the purchase price. The Group valuates investment real estate in the fair value. Valuation in the fair value was devided into three groups, depending on the origin of entry data to be used for valuation: level 1 entry data at level 1 is the prices noted (non-adjusted) on active markets for identical assets or liabilities the company has access to on the day of valuation, level 2 entry data at level 2 is the entry data other than the noted prices considered at level 1, which are noticeable in case of a given asset or liability component, either indirectly or directly, level 3 entry data at level 3 is the not noticeable entry data related to a given asset or liability component

38 The value of particular real estate as per the valuation hierarchy in the fair value for individual balance sheet days was as follows: State as of Town Type Level 1 Level 2 Level 3 Kędzierzyn- Koźle Total fair value Industrial lot Zielona góra Dwelling building Szymanowice Land real estate (inn) Rzeszów Industrial lot Balice Building lot Brenna Pension Skałka Land without buildings Nadolice Wielkie Real estate with buildings Czeladź Building lot Skarżysko- Kamienna Commercial real estate Ważne Młyny Dwelling building Ląd Industrial buildings Sulmierzyce Industrial warehouse Górki Wielkie Dwelling building Mława Real estate with building Kamienica Polska Dwelling bulding Kożuchy Utility building Biała Piska Industrial real estate Bełchatów Building lot Białka Dwelling house Bełchatów Building lot Wolsztyn Dwelling building Wejcherowo Dwelling flat Łęczna Dwelling flat Lublin Dwelling building 300 Rumia Dwelling flat Wrocław Dwelling flat Nieczajna Dwelling flat Chybie Dwelling building Total real estate

39 State as of Town Type Level 1 Level 2 Level 3 Białka Tatrzańska Kędzierzyn- Koźle Total fair value Dwelling house with guest rooms Industrial lot Zielona Góra Dwelling house Jeleśnia Resort under construction Szymanowice Land property (inn) Nidzica Terraced house Rzeszów Industrial lot Balice Plot of land Brenna Pension Wisła Dwelling house Pątnów Developed land property Skałka Undeveloped land property Nadolice Wielkie Developed land property Czeladź Plot of land Wilkowo Plot of land Total Real estate (level 1) Fair value was defined by the market method sales price from transaction performed after the Balance Day (level 2) Fair value was defined by the market method which reflects transactions related to similar real estate, performed recently. The value was adjusted by the factors related to the appraised real estate, however their impact on the price was minimal. The fair value of all real estate was established either on the basis of sales prices from transactions performed after 31 March 2014 but before the Approval Day or on the basis of appraisal of an independant real estate appraiser drawn up as of the Balance Day. The Management Board has aknowledged that the current usage of all investment real estate is in compliance with its greatest and best usage. 11. Long term capital investments Shares in entities valuated by means of the property rightrs method do not occur. Co-controlled Companies consolidated by means of proportional method do not occur. 12. Receivables and loans For the purposes of presentation in the balance sheet, the Company separates the class of receivables and loans (ISFR 7.6). In the long term part, receivables and lans are presented in the balance sheet in one item. In the short term part the Company, according the the requirements of ISFR 1, presents separately trade receivables and other receivables. The balance sheet items from the class of receivables and loans is shown in the belowe teble

40 RECEIVABLES AND LOANS Fixed assets: Receivables Loans Long term receivables and loans Current assets: Trade receivables and other receivables Pożyczki Short-term receivables and loans Receivables and loans including: Receivables Loans TRADE RECEIVABLES AND OTHER RECEIVABLES Financial Assets (IAS 39): Trade receivables and other receivables Revaluation write-downs due to trade receivables (-) - - Net trade receivables Receivables from sale of fixed assets - - Retained cash (deposit) relative to construction services agreements - - Other deposits - - Other receivables Revaluation write-downs of other financial receivables (-) - - Other net financial receivables Financial receivables Non-financial assets (apart from IAS 39): - Receivables relative to tax and other benefits Prepayments and advance payments - - Other non-financial receivables Revaluation write-downs of non-financial receivables (-) - - Non-financial receivables Total short term receivables

41 13. Other financial assets Within the framework of other financial assets the Group presents the following investments: OTHER FINANCIAL ASSETS Short-term assets Long-term assets Financial assets valued at the depreciated cost:: Treasury debt securities Commercial debt securities Other Financial assets valued at the depreciated cost: Financial assets available for sale: Shares of listed companies Shares, bonds of unlisted companies Debt securities Other Financial assets available for sale Financial assets valued at the fair value by the profit and loss account: Shares of the listed companies Debt securities Investment fund companies Purchased debt Other Financial assets valued at the fair value by the profit and loss account Total other financial assets For the purposes of valuation the Group distinguishes the following categories of financial assets IAS 39: Loans and receivables (PiN), Financial assets valued in the fair value through the profit and loss account designated for trade (IAS 39.9 def. of category pt. a) AWG-O, Financial assets valued in the fair value through the profit and loss account - designated at the primary recognition for valuation in the fair value (IAS def. of category pt. b) AWG-W Investments maintained until maturity (IUTW), Financial assets available for sale (ADS), Security derivatives (IPZ), Assets beyond the scope of IAS 39 (beyond IAS39)

42 State as of Fixed assets: Categories of financial instruments according to IAS 39 PiN AWG-O AWG- W IUTW ADS IPZ Beyond IAS 39 TOTAL Receivables and loans Derivatives Other long-term financial assets Current assets: Trade receivables and other receivables Loans Purchased receivables Other short-term financial assets Cash and cash equivalents Total category of financial assets State as of Fixed assets: Receivables and loans Derivatives Other long-term financial assets Current assets: Trade receivables and other receivables Loans Purchased receivables Other short-term financial assets Cash and cash equivalents Total category of financial assets Prepayments and accruals PREPAYMENTS AND ACCRUALS Short term settlements Long-term settlements Assets prepayments and accruals: Rent from lease Other active costs Assets total prepayments and accruals Liabilities prepayments and accruals: Received grants Revenues of future periods Other settlements Liabilities total prepayments and accruals

43 15. Deferred income tax assets ASSETS DUE TO DEFERRED INCOME TAX Titles of temporary differences State as of Assets: Intangible assets Tangible fixed assets Investment real estate Trade receivables Construction agreements Reserves and accruals Tax loss Valuation and settlement of financial instruments Other assets Liabilities: Liabilities for employee benefits Balance as of the beginning of the period Profit and loss account Change to: Other totoal income Settlement of merger Net exchange rate differencesf rom revaluation * Balance as of the end of the period Reserves for employee benefits Other reserves Trade liabilities Credits, loans other debt instruments Other liabilities 518 Other: Unsettled tax losses Total State as of Assets: Intangible assets Tangible fixed assets Investment real estate Trade receivables Construction agreements Reserves and accruals Tax loss Valuation and settlement of financial instruments Other assets Liabilities: Liabilities for employee benefits Reserves for employee benefits Other reserves 52 (52) Trade liabilities Credits, loans other debt instruments 363 (200) 163 Other liabilities Other: Unsettled tax losses 886 (511) 375 Total (579)

44 16. Stock Item does not occur. 17. Receivables due to income tax Receivables due to income tax State as of the beggining of the periodn na początek okresu Increases Decreases State as of the end of the period (96) (16) Short-term receivables due to awarded costs of proceedings from other entities Item does not occur. 19. Purchased receivables Receivables purchased from other entities financial assets available for sale Total debts purchased from other entities Change to the value of purchased receivables State as of the beginning of period Increase, including: due to purchase of portfolios of receivables due to valuation at the fair vale other - - Decrease, of which: (45 602) (39 456) - relative to valuation at the fair value relative to recognition in costs of debts purchase (45 602) (39 456) - other - - State as of the end of period

45 20. Cash and cash equivalents Cash and cash equivalents Cash in hand and at the bank in PLN Cash in hand and at bank in other currencies Cash Short term deposits - - Other - - Total cash and cash equivalents Equity Share capital SHARE CAPITAL Number of shares Nominal value of shares (PLN) 1 1 Share Capital Series Number of shares Value of series/issue according to the nominal value (PLN thousand) series A shares Manner of the capital covering from transformation into a joint stock company Date of registration Right to dividend (from the date) series B shares cash series C shares cash series E shares cash series F shares issue of bonus shares pursuant to art. 442 KSH series G shares in-kind contribution series H shares cash Total number of shares Total share capital Nominal value of one share (in PLN) 1.00 All aforementioned shares are ordinary shares, without preference and limitations of rights to shares. As of the Approval Date the Company s share capital amounts to PLN

46 21.2. Own Shares OWN SHARES REMAINING THE PROPERTY OF ENTITY OR ITS RELATED ENTITIES Buyuer (name of entity) No. of shares (units) Purchase price value No. of shares (units) Purchase price value Kredyt Inkaso S.A Total as of the end of the period On 9 July 2012 the Ordinary General Assembly of the Shareholders of Kredyt Inkaso S.A. adopted a resolution authorising the Company to purchase units of own shares for the purpose of their redemption ( Program ). The Program shall be carried out until the moment when the total amount of funds used for implementation of the Program reaches ,72 PLN, however, not longer than 9 July On 27 November 2012 the Company s Management Board specified the detailed conditions of the Program. Whereby, the Oridnary Assembly, in order to finanse the implementation of the Program, created a special suplementary reserve Suplementary reserve for the purchase of own shares in the amount of PLN ,72. Creation of the Suplementary Reserve occured through the separation of the amount of PLN ,72 from the funds accumulated in the sumplementary reserve coming from profit generated by the Company, which could be designated to be devided i.e. from the amount of profit for the financial year 2011/2012. As for 31 March 2015 the Company haspurchased the total of own shares, constituting 0,2363% of the Company s share capital, for the total price of PLN 500 thousand PLN Supplementary capital Supplementary Capital Capital due to the issue of shares above their nominal value Supplementary (agio) Capital from issue of shares above their nominal value results from the excess of stock issue price above their nominal value Exchange rate difference from revaluation The Item Exchange rate differences from revaluation comprises the exchange rate differences due to conversion into Polish zloty of the financial statements of the foreign entities and capital groups. The effect of the deffered income tax is excluded. Exchange rate differences from revaluation State at the beginning of the period (334) (41) Różnice kursowe z przeliczenia (208) (293) Deferred income tax 0 0 State as of the end of the period (542) (334) 46 46

47 21.5. Retained profit Retained profit Current period net profit (loss) Profits (losses) brought forward Supplementary capital established out of profit reserve capital for purchase of own shares Reserve capital established out of profit - - Retained earnings Equity falling to the non-controlling interests Non-controlling interests Kancelaria FORUM Kredyt Inkaso RUS Total In 2015 and 2014 equity falling to the non-controlling interests was adjusted by its share in the result of individual companies of the Group, paid and declared dividends and revaluation reserve. No changes resulting from repurchase of minority shareholders (changes in shares of the dominating undertaking in the number of votes) have taken place Distribution of profit of the Dominant Company for the year 2012/2013 On 29 July 2014, during the Shareholder s Ordinary General Assembly, the Financial Statements for the financial year 2012/2013 was approved. No resolution on payment of dividend was adopted. However, the resolution on covering the Company s net loss for the for the financial year commencing on 1 April 2013 and ending on 31 March 2014 amounting to PLN , 22 was adopted, allocated in full to cover losses from previous years Number of shares and earnings per share (EPS) In the reporting period no issue of new shares series took place. As of the Approval Date, the Company s share capital amounts to PLN Net profit (loss) falling to one ordinary share is calculated the same way for each share. Shares do not differ between each other in the right to the net profit share. The basic profit per share is caluculated by means of the formula net profit falling to shareholders of the dominant entity devided by the number of ordinary shares occurring in a given period. While calculating the diluted profit per share the effect of the purchase of own shares by the dominant company is considered. The calculation of the profit per share is presented in the below table: 47 47

48 PROFIT (LOSS) PER ONE SHARE Number of shares used as a formula denomminator Weighted average number of ordinary shares Diluting impact of options interchangeable into shares (500) (500) Weighted average number of ordinary shares Continued activity Net profit (loss) on continued activity (in thousands) Basic profit (loss) per share (PLN) 3,10 2,58 Net diluted profit (loss) per share (PLN) 3,23 2,68 Discontinued activity Net profit (loss) on discontinued activity Basic profit (loss) per share (PLN) Diluted profit (loss) per share (PLN) - - Continued and discontinued activity Net profit (loss) Basic profit (loss) per share (PLN 3,10 2,58 Diluted profit (loss) per share (PLN) 3,23 2, Paid dividends and dividend policy Dividends paid out in the last 3 financial years Financial year Profit earned Allocated for payments Converted per one share 2011/12 PLN thousand PLN 0 thousand PLN 0 - including cash dividend - PLN 4 139,68 thousand PLN 0,32 - including dividend in the form of shares - PLN 0 thousand PLN /13 PLN thousand PLN 0 thousand PLN 0 - including cash dividend including dividend in the form of shares /14 PLN thousand PLN 0 thousand PLN 0 - including cash dividend including dividend in the form of shares The Company s dividend policy is based invariably on the assumption that its amount should depend on gained financial results and capital needs connected with the purchase of further debt portfolios, implementation of Company s development strategy as well as other strategic investments. The Company s Management Board is of the opinion that in the next years it will be possible to pay out a cash dividend at least at the level of 1/5 part of the generated profit. The Management Board also allows the possibility of payout of dividend in the form of shares (subject to confirmation of formal and technical possibilities) granted to the current shareholders as, so called, bonus stocks including part of the profit allocated to be shared

49 In the situation when a decision on payment of a dividend in the form of shares is made, granting to the current sharehloders of bonus stocks will result in the increase of the Company s share capital. The increase of the Company s share capital will be carried out using funds accumulated in the Company s capital reserve established for the purposes of financing the issue of bonus stocks. If the shareholders were to be granted the fractional part of shares, then such parts will be attributable to the shareholders and the Company will pay the difference between the issue price and the nominal value of the fractional parts of shares attributable to them, but not assumed. These payments will be made using the capital reserve established for the purposes of financing the issue of bonus stocks. In the situation, when the issue price of bonus stocks exceedes their nominal value, the surplus will be covered using the capital reserve established for the purposes of financing the issue of bonus stocks by way of transferring the equivalent of the amount of the surplus to the Company s supplementary reserve. As a result of the above events, there will be amounts transferred from the capital reserve established for the purpose of financing the issue of bonus stocks into the Company s share capital and the supplementary reserve as well as for the payment of the equivalent for the non-attributable to the shareholdres fraction parts and possible costs related to the issue. Therefore the shareholders will pay neither nominal nor issue price for the shares because these payments will be made by the Company using the capital reserve, established for the purposes of financing the issue of bonus stocks. Bonus stocks attributable to the shareholders will not require to be assumed by them (record). The day when the list of shareholders entitled to profit sharing is made, will be the same day of payment of the dividend in cash and in the form of granting bonus stocks, making the circle of shareholders the same for both forms. Historical data do not effect or change the Company s dividend policy. 23. Credits, loans, other loan instruments The value of credits, loans and other loan instruments included in the consolidated financial statements is shown in the following table: Short- term assets Long-terrm assets Financial liabilities valued at the depreciated cost: Credits in credit bank Credits on current account Loans Debt securities Financial liabilities valued at depreciated cost: Financial liabilities set to be valued at the fair value by the profit and loss account Credits in credit bank Debt securities Other Financial liabilities set to be valued at the fair value by the profit and loss account Total credits, loans and other loan instruments Information on the type and range of the risk, to which the Capital Group is exposed due to the incurred credits, loans and other loan instruments is shown in the below table: 49 49

50 23.1. Credits and loans State as of kredyt KI I NS FIZ kredyt KI II NS FIZ Total credits and loans Currency PLN PLN Interest rate Variable paid out every 3 months Variable paid out every 3 months Date of incurring liability Maturity date Balance sheet value In PLN In thousan currency d Long term Liability Short terrm Kredyt Inkaso Capital Group s financing is based on variable interest rates. Those are WIBOR interest rates increased by margin. Margin reflects the risk connected with the Group s financing. Credits are denominated in PLN. On 11 July 2014 the subsidiary Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty with its registerd ofice in Warsaw concluded with FM Bank PBP Spółka Akcyjna with its registered office in Warsaw ANNEX No. 1 to the agreement of 25 July Parties decided to increase the available amount of credit of PLN 10 million by additional PLN 7 million with the final date of availability until 10 December On 25 February 2015the subsidiary Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. with its registered office in Luxembourg concluded with Getin Noble Bank Spółka Akcyjna with its registered office in Warsaw a loan agreement for the amount of PLN 35 million. The credit term has been forseen until 1 April On 27 February 2015 the first tranch of credit in the amount of PLN ,71 was released. The second tranch in the amount of PLN , 29 was released after the reporting period on 17 April As of 31 March 2015, the value of KI LUX credit amounting to PLN 15,1 million was collateralized with assets of KI LUX and the value of KI I NS FIZ credit amounting to PLN 14 million was collateralized with the assets of KI II NS FIZ. Until the Approval Date no cases of failure to pay the principal or interest on credits or infringement of other terms of credit agreements occurred. In the period from 1 April 2014 to 31 March 2015, PLN 29,5 million was repaid, out of the incurred KI II NS FIZ credit repaying this way the entire KI II NS FIZ credit as well as PLN 3 million of the KI I NS FIZ credit

51 23.2. Issued bonds Bonds issued by Kredyt Inkaso S.A. Bond series Interest rate Date of incurring liability Maturity date Nominal value Balance sheet value Long term Liability Short terrm State as of Series S03 bonds Series S04 bonds series S05 bonds Series U01 bonds Series U02 bonds Series U03 bonds Series W1 bonds Series W2 bonds Variable; paid out every 6 months; WIBOR 6M+6%; Variable; paid out every 6 months; WIBOR 6M+5%; Variable; paid out every 6 months; WIBOR 6M+6%; Variable; paid out every 6 months; WIBOR 6M+5,5%; Variable; paid out every 6 months; WIBOR 6M+5,4%; Variable; paid out every 6 months; WIBOR 6M+5,7%; Variable; paid out every 6 months; WIBOR 6M+4,2%; Variable; paid out every 6 months; WIBOR 6M+4,4%; Total as of All the above bonds are not subject to guarantees or collateral. The Company may make a decision about an early buyout in relation to series U01, U02 and U03 bonds. Series S03, S04, S05, U01, U02, U03, W1 and W2 bonds are listed on the maket of bonds Catalyst, mainained on transaction platforms of the Stock Exchange in Warsaw and BondSpot. Until the Approval Date no cases of failure to pay the principal or interest on bonds or infringement of other terms of issue took place. The total amount of the interest paid out by Kredyt Inkaso S.A. in the reporting period amounted to over PLN 18,8 million. No payment was due for bonds issued up till now in the period from 1 April 2014 until 31 March

52 Bonds issued by KI I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty CHARACTERISTICS OF FINANCIAL LIABILITIES VALUED AT THE DEPECIATED COST Percentage Date of incurring liability Maturity date Nominal value Balance sheet value Liability Long-term Shortterrm State as of I K Variable; paid out every 3 months; WIBOR 3M+5%; Variable; paid out every 6 months; WIBOR 6M+3,85%; Total as of All the above bonds are subject to collaterals on the set of receivables held by KI NS FIZ. The Company has the right to an early buyout of the I series bonds 12 months after their issue and the right to an early buyout of the K series bonds by, from the third to the fifth interest period inclusive. The K series bonds are listed on the maket of bonds Catalyst, mainained on transaction platforms of the Stock Exchange in Warsaw and BondSpot. Until the Approval Date no cases of failure to pay the principal or interest on bonds or infringement of other terms of issue took place. The total interest amount paid out by KI I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty in the reporting period amounted to over PLN 3 million. No payment was due for bonds issued up till now in the period from 1 April 2014 until 31 March Liabilities due to lease BALANCE SHEET VALUE OF LIABILITIES DUE TO FINANCIAL LEASING Long term State as of Gross balance sheet value Revaluation write-downs - - Net balance sheet value Short term State as of Gross balance sheet value Revaluation write-down - - Net balance sheet value Liabilities due to operating lease (off-balance sheet) Liabilities relative to concluded agreements of offices lease for the period up to 1 year from 1 to 5 years from 5 to 10 years lease of the office in Warsaw - Company's registered office lease of the office in Zamość - Company's Operating Centre lease of the office in Lublin Company s Operating Centre

53 25. Reserve due to deferred income tax DEFERRED INCOME TAX Balance as of the beginning of the period: Assets due to the deferred income tax Reserve due to the deferred income tax Deferred income tax saldo as of the beginning of the period (1 076) (3 010) Change in the period affecting: Profit and loss account (+/-) Other total income (+/-) (67) - Settlement of the merger of economic entities - - Other (including net exchange rate differences from revaluation) - - Deferred income tax per saldo as of the end of the period, including: (600) (1 076) Assets due to the deferred income tax Reserve due to the deferred income tax RESERVE DUE TO DEFERRED INCOME TAX Titles of interim differences State as of Balance as of the beginning of the period Profit and loss account Change to: Other total income Settlement of merger Exchange rate differences from revaluation Balance as of the end of the period Assets: Intangible assets Tangible fixed assets Investment real estate 352 (87) Trade Receivables Construcdtion agreements Other assets 185 (99) Liabilities: - Trade liabilities Credits, loans and other loan instruments Other liabilities Total State as of Assets: Intangible assets Tangible fixed assets Investment real estate 419 (67) Trade Receivables Construcdtion agreements Other assets (2 060) Liabilities: Trade liabilities Credits, loans and other ldebt instruments (386) Other liabilities Total (2 513)

54 26. Reserves The value of reserves included in the consolidated financial statements and their changes in individual periods are as follows: OTHER RESERVES Short-term reserves Long-term reserves Reserves for employee benefits Reserve for research 890 Other reserves - 0 Total other reserves CHANGE TO THE STATE OF OTHER RESERVES Court cases Losses from construction agreements Reserves for: Cost of restructuring For the period from to State as of the beginning of the period Increase of reserves included as cost in the period Dissolution of reserves included as income in the period (-) Utilisation of reserves (-) Increase through merger of business entities Other changes (net currency exchange differences from conversion) State of reserves as of for the period from to State as of the beginning of the period Increase of reserves assumed as cost in the period Dissolution of reserves assumed as income in the period (-) Utilisation of reserves (-) Increase through merger of business entities Other changes (net currency exchange differences from conversion) State of reserves as of other total 27. Trade liabilities and other liabilities TRADE LIABILITIES AND OTHER LIABILITIES Financial liabilities (IAS 39): Trade liabilities Liabilities due to the purchase of fixed assets - - Other financial liabilities - - Financial liabilities Non-financial liabilities (beyon IAS 39): - - Liabilities due to taxes and other benefits - - Prepayments and downpayments received for supplies - - Liabilities due to construction service agreements - - Downpayments received for constructions services - - Other non-financial liabilities Non-financial liabilities Total short-term liabilities *Categories of financial instruments as per IAS 39 Total 54 54

55 State as of Long term liabilities: ZWG-O ZWG-W ZZK IPZ Beyond MSR39 Credits, loans, other loan instruments Financial leasing Derivatives Other liabilities Short-term liabilities - - Trade liabilities and other liabilities Credits, loans, other loan instruments Financial leasing Derivatives Total financial liabilities category Stan na Long term liabilities: Credits, loans, other loan instruments Financial leasing Derivatives Other liabilities Short-term liabilities Trade liabilities and other liabilities Credits, loans, other loan instruments Financial leasing Derivatives Total financial liabilities category Liabilities due to income tax Liabilities due to income tax State as of the beginning of the period 79 3 Increases Decreases (621) (602) Stated as of the end of the period

56 NOTES TO THE CONSOLIDATED TOTAL INCOME STATEMENTS 29. Net revenues Net revenues Revenues Revenues Payments from debtors Depreciation of portfolios (45 602) (39 456) Revaluation of portfolios Other revenues Cost of other revenues (6 667) (3 788) Total Revaluation of portfolios 3 Q of 2014/15 from to Q of 2014/15 from to / /15 from to from to Verification of prognosis (6 479) (7 522) (14 001) - Change due to the change of the discount rate Total In the current period we carried on revaluation of portfolios. The risk free rate being a component of the dicount rate decreased from 4,14% to 2,02%. The decrease results from the fact that due to the decrease of interest rates, profitability of 10-year term State Treasury bonds which constitute the fisk free rate is decreasing. Verification of prognosis is due to these three factors: - we verified cases, which cannot be pursued in the course of the electronic proceedings. We carried on the write off of the value of these cases by PLN thousand, where the projected outlays would exceede the planned recoveries from these receivables (3Q), - we revaluated Russian portfolios by PLN thousand. Revaluation is due to a significant drop of the currency exchange rate of rubel in relation to zloty (4Q)., - we revaluated a part of corporate cases, in which there was a decrease of the value of collaterals by PLN thousand

57 30. Costs of business activities Costs by type Depreciation Consumption of materials and energy Outsourcing Taxes and charges Salaries Social insurance and other benefits Other costs by category Total costs by category Overheds Other cost of core activity Own cost of sales, sales cost and cost of overheads Other revenues and operating costs Other operating revenues Profit on sale of intangible fixed assets - 43 Evaluation of investment real estate to the fair value - - Reverted revaluation write-offs due to the loss of the value of assets and intangible assets - - Reverted revaluation write-offs of the value of financial receivables - - Reverted revaluation write-offs of the value of non-financial receivables - - Reverted revaluation write-offs of the value of stock - - Dissolved unused reserves - - Received penalties and damages - - Received grants Other revenues Total other operating revenues Other operating costs Loss on sale of intangible fixed assets - - Evaluation of investment real estate to the fair value - - Write-offs due to the loss of the company value - - Write-offs due to the loss of the value of assets and intangible assets - - Revaluation write-offs of the value of financial receivables - - Revaluation write-offs of the value of non-financial receivables - - Revaluation write-offs of the value of stock - - Reverted revaluation write-offs of the value of stock (-) - - Creating reserves - - Paid penalties and damages - - Other costs Total other operating costs

58 32. Financial revenues and costs FINANCIAL REVENUES Revenue due to interest related to financial instruments not valued in the fair value by the financial result: Cash and cash equivalents (deposits) Loans and receivables - - Debt securities maintained until maturity - - Revenue due to interest related to financial instruments not valued in the fair value by the financial result Profit on valuation and realization of financial instruments valued in the fair value by the profit and loss account: Shares of listed companies - - Debt securities (661) 399 Investment funds units - - Profit on valuation and realization of financial instruments valued in the fair value by the profit and loss account (661) 399 Profit (loss) (+/-) due to exchange rate differences - Cash and cash equivalents - - Loans and receivables - - Financial liabilities valued by depreciated cost - - Profit (loss) (+/-) due to exchange rate differences - - Profit on assets available for sale, transferred from capital - - Dividends on financial assets available for sale - - Reverted revaluation write-offs of the value of receivables and loans - - Reverted revaluation write-offs of the value of investments maintained until maturity - - Interest on financial assets under a write-off - - Other financial revenues Total financial revenues FINANCIAL COST Cost of interest due to financial instruments not valued in the fair value by the financial result: Liabilities due to financial leasing - - Loans in credit account Loans in current account - - Loans - - Debt securities Trade liabilities and other liabilities Cost of interest due to financial instruments not valued in the fair value by the financial result Loss due to valuation and realization of financial instruments valued in the fair value by the profit and loss account: Shares of listed companies - - Debt securities - - Investment funds units - - Loss due to valuation and realization of financial instruments valued in the fair value by the profit and loss account - - Profit (loss) (+/-) due to exchange rate differences Cash and cash equivalents - - Loans and receivables - - Financial liabilities valued by depreciated cost

59 Profit (loss) (+/-) due to exchange rate differences - - Loss on assets available for sale, transferred from capital - - Revaluation write-offs of the value of receivables and loans - - Revaluation write-offs of the value of investments maintained until maturity - - Revaluation write-offs of the value of financial assets available for sale - - Other financial cost Total financial cost Income tax Income tax Current income tax Settlement of tax for the reporting period Adjustments of tax burden for previous periods - - Current income tax Deferred income tax Occurence and reversal of temporary differences (475) (1 935) Settlement of unused tax losses - - Deferred income tax (475) (1 935) Total income tax 131 (1 426) Result before tax Tax rate applied by the Dominant Company 19% 19% Income tax as per the national rate of the Dominant Company Agreements on income tax due to: Revenues not subject to taxation (-) - 49 Tax effect of taxable revenues constituting revenues according to tax regulations not being accounting revenues (+) (18 714) (13 202) % of revenues Costs permanently not constituting tax deductible cost Tax effect of taxable costs constituting revenues according to tax regulations not being accounting costs (+) % of costs (334) - - Tax basis - - Current income tax Applied average tax rate 0% 2% TAX RATES APPLIED BY COMPANIES OF THE GROUP Poland 19% 19% Romania 16% 16% Bulgaria 10% 10% Luxembourg 29,22% 29,22% Russia 20% 20% 59 59

60 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT 34. Additional information to the consolidated cash flow statement Structure of cash and cash equivalents in the cash flow statement Cash flow and cash equivalents disclosed in the balance sheet Adjustments: Exchange rate differences from the balance sheet valuation of cash in other currency - - Non-realized interest on cash (-) - - others - - Cash and cash equivalents disclosed in the cash flow statement

61 FINANCIAL INSTRUMENTS 35. Financial instruments Changes to the fair value of assets and financial liabilities Comparison of the balance sheet value of assets and financial liabilities to their fair value is as follows (the summary comprises all assets and financial liabilities regardless of whether in the consolidated financial statements they are recognized in the depreciated cost or in the fair value): Assets: Class of financial Instrument Fair value Balance sheet value Fair value Balance sheet value Loans Trade receivables and other receivables Derivative financial instruments Debt securities Shares of listed companies Shares of non-listed companies* Units of investment funds Purchased receivables Other classes of other financial assets Cash and cash equivalents Liabilities: Credits in kredit accounts Credits in current account Loansd Debt securities Financial leasing Derivative financial instruments Trade liabilities and other liabilities *This item does not include shares valued in the purchase price due to lack of possibility of credible establishing of the fair value Additional information on method of valuation of financial instruments recognized in the consolidated financial statements in the fair value The below table illustrates assets and financial liabilities valuated by the Group in the fair value, qualified to a specific level in the fair value hierarchy: level 1 noted prices (without making adjustments) from active markets for identical assets and liabilities, level 2 entry data for valuation of assets and liabilities, other that noted prices, recognized to the extent of level 1, noticeable on the basis of variables coming from active markets, level 3 entry data for valuation of assets and liabilities, not established on the basis of variables coming from active markets. ASSETS AND FINANCIAL LIABILITIES VALUED IN THE FAIR VALUE ACCORDING TO THE VALUATION LEVEL 61 61

62 Class of financial instrument Level 1 Level 2 Level 3 Total Fair value State as of Assets: Shares of listed companies Shares of non-listed companies* Units of investment funds Purchased receivables Derivative trade instruments Derivative hedge instruments Debt securities valued in the fair value Other classes of other financial assets Total assets Liabilities Derivative trade instruments (-) Derivative hedge instruments Debt securities valued in the fair value ( ) ( ) Loans (29 067) (29 067) Loans valued in the fair value (-) Total Liabilities (-) - - ( ) ( ) Net fair value State as of Assets: Shares of listed companies Shares of non-listed companies* Units of investment funds Purchased receivables Derivative hedge instruments Debt securities valued in the fair value Total assets Liabilities: Derivative trade instruments (-) Derivative hedge instruments (-) Debt securities valued in the fair value (-) ( ) ( ) Loans (39 341) (39 341) Loans valued in the fair value (-) - - Total liabilities (-) - - ( ) ( ) Net fair value *This item does not include shares valued in the purchase price due to lack of possibility of credible establishing of the fair value In the reporting period no significant transfers between level 1 and level 2 of the instruments fair value took place Reclassification The Capital Group did not reclassify the components of financial assets, which would cause the change to the principles of valuation of these assets between the fair value and the purchase price or the method of depreciated cost

63 35.3. Exclusion from the balance sheet As of the Capital Group did not have financial assets, transfers of which are not not qualified to be excluded from the balance sheet Method of valuation of financial instruments Short-term trade receivables and other receivables are valuated at the fair value. Cash and cash equivalents include cash at hand, bank deposits payable on demand, other short-term investments with original maturity dates up to three months and high liquidity. They arevalued at the nominal value. Book value of cash corresponds to their fair value. Purchased receivables comprise receivables purchased at ones own risk and account, which are classified by the Company as financial instruments valued according to the fair value. As of each balance sheet day the valuation of financial instruments to the fair value is performed.the result of the valuation is transferred to the profit and loss account. The fair value of each of the portfolios of receivables is established by Kredyt Inkaso S.A. by means of the estimation method, as the current value of anticipated, discounted with the internal return rate (IRR) net cash flows (planned cash flows reduced by the planned direct collection cost) generated by the portfolio of receivables. Liabilities due to bonds issue, credits and liabilities related to lease are measured as of the moment of initial recognition at the fair value decreased by transaction costs. As of the balance sheet date, the valuation was calculated according to amortized cost applying effective interest rate method (at the adjusted acquisition price) and divided according to the date of generated cash flow into short-term and long-term part. Short-term trade liabilities and other liabilities are measured at the fair value. Provided, it does not cause distortion of the information contained in the financial statements, the Group applies simplified methods of assets and liabilities valuation. Financial assets and liabilities in relation to which the Group applies simplifications are valuated at the moment of initial recognition in the later period, also at the end of reporting year respectively at the amount to be received or due to be paid. 36. Financial risk management Credit risk Kredyt Inkaso S.A. Capital Group s operations are related to taking over credit risk from debts sellers (original debtors). As of the balance sheet date the Group held purchased debts with the balance sheet value (fair value) of about PLN 446 million and of the nominal value of approximately PLN 5,17 billion, which constitute the primary element of its assets (about 75% of assets). The mentioned debts as a whole are subject to credit risk, consequently, proper management of this kind of risk is the key element in our operations. We manage credit risk first of all at the moment of debt portfolios purchase by means of appropriate valuation and selection of components and characteristics of a portfolio. The fair value of debts presented in the balance sheet reflects their credit risk. We systematically, on the last day of each reporting period verify the valuation of the purchased debts basing on income forecasts prepared according to historical data (current value of future cash flows). Zero fair value is assumed for debts of bankrupt, liquidated or other entities in relation to which we do not expect to gain positive cash flows. As of the balance sheet date Kredyt Inkaso S.A. Capital Group s debts portfolio consisted of about 765 thousand of cases. Debts value is to a great extent spread between debtors, however in the Group s portfolio there are individual cases with a nominal value considerably different from the typical one. Diversification of debts value into a considerable amount of individual cases allows us to expect that actual income will not significantly differ from the expected one

64 The table below shows information on maximum exposure to the credit risk Loans Trade receivables and other financial receivables Financial instruments valued in the fair value through financial result Other classes of other financial assets - - Cash and cash equivalents Contingent liabilities due to granted guarantees - - Total exposure to credit risk The presented information on credit risk relates to the state as for 31 March It is representative of the entire reporting period. The below table presents information on diversification of receivables as regards the size of debt. from amount of debt to share in the nominal value (in %) share in the number of cases (in %) % 40.29% % 26.25% % 14.33% % 8.91% % 7.47% x 46.82% 2.74% All receivables in our portfolio are overdue (not paid on maturity). We systematically continue to work on improving the model of valuation of receivables and the credit risk assessment Liquidity risk Nominal values of the Group s liabilities as of 31 March 2014 divided into maturity dates are presented below. liabilities due to up to 1 month from 1 month to 3 months amount as per due date from 3 months to 1 year from1 year to 2 years over 2 years bonds Credit KI LUX credit of KI I NS FIZ trade liabilities financial lease TOTAL Remark: the amounts of liabilities depending on the future interest rates are marked out with italics 64 64

65 In the reporting period (and in previous periods) we paid all our liabilities in due term. We obtain income from debts of a considerable number of debtors, which contributes to regular and constant inflow of cash. We manage liquidity through appropriate depositing cash in such a way so as the structure of deposits suits the structure of liabilities and in a way that enables the Company to take advantage of the opportunities of debts purchase that occur in the market. In order to increase efficiency of applying equity we also take advantage of external financing (mainly bonds issues). At present, the overall debt ratio equals 37.6% of assets, which is generally considered a safe level of debt and enables to increase it further. In the future periods we also intend to take advantage of the loan capital, which will facilitate further development of operations and payment of liabilities Market risk: interest rate risk Interest rate risk is related to the following financial instruments of the Group: purchased receivables cash and cash equivalents bonds issued liabilities relative to financial lease For cash and cash equivalents and liabilities relative to financial lease the impact of interest rates change on the financial result or the level of Company s equity is very slight. Bonds issued and purchased debts are exposed to the interest rate risk, which is of great significance for the Company. Below, we present the sensitivity to interest rate changes analysis for those two groups of financial instruments. The average nominal value of bonds in the reporting period amounts to PLN 285,7 thousand, the whole of which constitutes the nominal value of bonds with variable interest (depending on WIBOR 6 months and WIBOR 3 months). The possible change to interest rate will have a significant impact on the value of interest paid, and to some extent on the fair value of bonds recognized in the balance sheet, established by the amortized cost method. The balance sheet value of purchased debts is constituted by the discounted expected value of future cash flows generated by these debts. Change in market interest rates will change the discount rate (here we assume the weighted average cost of capital - WACC) and as a result the valuation of debts. For the purposes of the sensitivity analysis we have assumed that the maximal typical annual change in the level of market interest rates equals +/- 150 base points. We present the impact of such volume of changes on the financial result of the reporting period and the level of equity as of the balance sheet date, assuming the simultaneous and equal increase (decrease) of all market interest rates taking place at the beginning of the annual reporting period. Sensitivity analysis of financial instruments related to interest rate change actual value increase by 150 bp decrease by 150 bp new value change new value change BALANCE SHEET: ASSETS purchased receivables BALANCE SHEET: LIABILITIES issued bonds credit of KI I NSFIZ credit LUX PROFIT AND LOSS ACCOUNT revaluation of receivables financial cost related to interest on bonds financial revenues/costs settlement and valuation of financial instruments net profit (considering 19% tax)

66 If in the last year, starting from 1 April 2014, the increase of interest rates by 150 base points had occurred, and it had remained at least over the whole 12-month reporting period, the net profit would have been lower by PLN thousand. Correspondingly, the drop in interest rates by 150 base points would cause the increase in the net profit by PLN thousand Market risk: risk of change of statutory interest rates and the National Bank of Poland interest rates Apart from the risk of interest rate change, the level of statutory interest rates according to which the interest on overdue debts is calculated is also of great significance for us (in case of bank receivables the level of the NBP interest rates may have the influence on the level of calculated interest). That is why the specific form of interest rate change risk relative to the changes of statutory interest rate changes determined by the ordinance of the Council of Ministers and interest rates determined by the central bank may also be noticed in Kredyt Inkaso S.A. Capital Group business activity. For the Group, the increase in income and the balance sheet value of purchased debts (as a result of the increase in forecasted cash flows according to which we valuate debts) will be the result of the increase of statutory interest rate. Statutory interest rates decrease will have a reverse effect. At the same time one can notice that when the change of statutory interest rates corresponds to changes of interest rates shaped by financial market, changes in income are accompanied by relevant change of costs related to investment in debts purchase, so as a result the Company s financial result may change only slightly. Historical observations show that decisions of the Council of Ministers on changes of statutory interest rates often do not keep up with changes taking place on financial markets. Managing the risk of statutory interest, we try to influence actively the process of shaping them. In March 2008, when despite a significant increase in market interest rates the low level of statutory interest determined in 2005 was still valid (11.5%) we put forward a motion to include into the debate of the Council of Ministers the proposal to pass the new ordinance on the level of statutory interest (however it is difficult to estimate the actual influence of this motion on the decision of the Council of Ministers). On 15 December 2008, the increase of statutory interest rates to the level of 13% came into effect (Journal of Laws of 12 December 2008 No. 220, item 1434). As of 23 December 2014 the ordinance of the Council of Ministers of 16 December 2014 on the rate of statutory interest (Journal of Laws of 2014, item 1858) defining the new rate of statutory interest at the level of 8% has come into effect. The change of the statutory rates from 13% to 8% has proven necessary due to the lowering by the Board for Fiscal Policy of the amount of the basic NBP rate (reference rate) Market risk: foreign currency risk The Group is exposed to a foreign currency risk resulting from short term receivables and liabilities, cash and cash equivalents, investment expenses and liabilities from credits in foreign currency. Group s exposure to the foreign currency risk as regards the exchange rate at the end of the reporting period is as follows: Currency structure of financial instruments as of 31 March 2015 RON BGN RUB Total after conversion to PLN Short term receivables Cash Financial assets valued in the fair value Liabilities due to account of credits, loans Trade liabilities and others

67 Currency structure of financial instruments as of 31 March 2014 RON BGN RUB Total after conversion to PLN Short term receivables Cash Financial assets valued in the fair value Liabilities due to account of credits, loans Trade liabilities and others While drawing up the financial statement, the following exchange rates for the most significant foreign currencies were applied: As of 31 March 2015 Average exchange rate Exchange rate at the end of the reporting period 1 RON 0,9447 0, BGN 2,1368 2, RUB 0,0756 0,0661 As of 31 March 2014 Average exchange rate Exchange rate at the end of the reporting period 1 RON 0,9318 0, BGN 2,1336 2, RUB 0,0874 0,0852 Analysis of sensitivity to the foreigh currency risk. Analysis of impact of potential change of the value of accounting financial instruments (state as of 31 March 2015) on the gross financial result and the equity as regards the hipotetical change of exchange rate of significant foreign currencies in relations to the currency of presentation (PLN). As of 31 March 2015 Exchange rate change Gross financial result Impact on equity RON/PLN +/- 10% +/- +/- BGN/PLN +/- 10% +/- +/- RUB/PLN +/- 10% +/- +/

68 As of 31 March 2014 Exchange rate change Gross financial result Impact on equity RON/PLN +/- 10% +/ /- 891 BGN/PLN +/- 10% +/ /- 568 RUB/PLN +/- 10% +/ / Market risk: price fluctuation risk The only financial instrument exposed to price fluctuation risk is the purchased debts portfolio. The current assessment of their value depends on forecasted future cash flows. The significant change of macroeconomic conditions or legal regulations can influence the level of debtors payments, and consequently the debts valuation. 37. Cost of capital The Company applies WACC ratio (weighted average cost of capital) as the measure of average cost of capital. We apply WACC as the discounting factor for the needs of purchased debts fair value calculation and as an element of the assessment of the quality of financing sources structure. WACC is calculated as average annual, expressed in the percent of values cost of individual categories of capital, with the weights equal to those capitals values. For loan capital, its actual cost for the Company is calculated deducting from the cost of interest paid the savings on income tax relative to the incurred financial cost (tax shield). Cost of capital is estimated based on the capital of the Dominating Undertaking in the Group, i.e. Kredyt Inkaso S.A., since the dominating undertaking finances business activities of subsidiary undertakings and a working capital credit obtained by KI II NS FIZ, being the only external source of financing among subsidiaries. WACC calculation capital value paid by the Company capital cost after allowing for tax shield equity ,67% 10,67% bonds issued ,30% 6,72% credit of KI LUX ,66% 3,30% credit of KI I NS FIZ ,05% 5,05% debt from lease transactions 315 5,82% 4,71% interest-free debt ,00% 0,00% Total WACC 8,22% * Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty pursuant to the Act on Corporate Income Tax is exempt from income tax Kredyt Inkaso S.A. stock exchange capitalization value was assumed as equity. The rate of return on equity expected by investors was calculated according to the Sharpe s model as the sum of the risk-free rate of interest and the product of the market risk premium and beta. Risk-free rate for long-term investments was determined on the basis of data related to the profitability of 10-year term bonds of the State Treasury. The methodology applied by us assumes determining this profitability basing on tenders of the Ministry of Finance. However, at the date nearest to the balance sheet date, no 10-year bonds were offered for sale, therefore as of 31 March 2015, in order to calculate it, we assumed profitability of series DS0725 treasury bonds with the maturity date falling in July 2025 resulting from quotations at the WSE on 31 March 2015, published by i.e. 2,23%. Market risk premium for the Polish capital market was assumed at the level of 7,03% (data published by A. Damodaran on the website: Beta for Kredyt Inkaso S.A. shares was determined as equal to 1,2. Cost of interest on bonds is the weighted average of current effective interest rates on bonds, applied while calculating their fair value

69 OTHER DISCLOSURES 38. Number of shares and earnings per one share (EPS) In the reporting period no issue of new shares series took place (see: 21, Equity). As of the Approval Date, the Company s share capital amounts to PLN Calculation of earnings per one share A. Net profit (loss) for the reporting period B. Net profit (loss) from continued activity C. Net profit (loss) falling to ordinary shareholders for the purposes of calculating the basic profit per one share (meter) D. Net profit (loss) falling to ordinary shareholders for the purposes of calculating the diluted profit per one share (meter) E. Number of issued shares F. Average weighted number of ordinary shares disclosed for the purposes of calculating the basic profit per one share (denominator ) (in thousands) G. Average weighted number of ordinary shares disclosed for the purposes calculating the diluted profit per one share (denominator ) (in thousands) H. Net profit (loss) on continued activity per one share basic (PLN) (and quotient B/F) Net profit (loss) on continued activity per one share diluted (PLN) (and quotient B/G) Net profit (loss) for the reporting period per one share basic (PLN) (and quotient C/F) Net profit (loss) for the reporting period per one share diluted (PLN) (and quotient D/G) ,10 2,58 3,23 2,68 3,10 2,58 3,23 2,68 Net profit (loss) falling to one ordinary share is calculated the same way for each share. Shares do not differ between each other in the right to the net profit share. 39. Enterprise value Enterprise value is calculated in the following manner: enterprise value= Company s market value +net debt, where net debt is understood as the value of liabilities minus receivables and the market valuation of Kredyt Inkaso S.A. was assumed as the enterprise value. As of 31 March 2015, the value of the Capital Group s enterprise calculated in such a way amounted to PLN 676,5 million, and as of 31 March 2014, it amounted to PLN 588,7 million

70 40. Company s Authorities, governing bodies, key personnel Changes to the governing bodies of the Company On 24 June 2013 the Company s Supervisory Board appointed for the next term two current Members of the Management Board. Composition of the Management Board as of the Date of the Consolidated Financial Statements Approval for publication was: 1) President of the Management Board Mr Paweł Robert Szewczyk 2) Vice-President of the Management Board Mr Jan Paweł Lisicki As of the Approval Date the composition of the Supervisory Board of the Dominating Undertaking was as follows: 1) Chairman of the Supervisory Board Mr Ireneusz Andrzej Chadaj 2) Vice-Chairman of the Supervisory Board Mr Krzysztof Misiak 3) Secretary of the Supervisory Board Mr Marek Gabyjelski 4) Member of the Supervisory Board Mr Tomas Mazurczak 5) Member of the Supervisory Board Mr Robert Gajor 6) Member of the Supervisory Board Mr Andrzej Soczek Remuneration Remuneration was presented divided into categories defined in IAS 24 Disclosure of information on related entities Remuneration of the Management Board Remuneration Remuneration for the period for the period First Name and Surname from from till till Paweł Szewczyk Jan Paweł Lisicki Artur Górnik Sławomir Ćwik Total The management Board additionally receives remuneration from the Incentive Program, described in detail in pt Principles of the Incentive Program in the Report of the Kredyt Inkaso S.A. Management Board on operations of the Capital Group for the financial year Remuneration of the Supervisory Board Principles of remuneration of Members of the Supervisory Board: Member of the Supervisory Board shall be entitled to the monthly remuneration in the amount of 1/3 of the average remuneration in enterprise sector excluding payments from profit for distribution (according to GUS (Central Statistical Office)). The Chairman of the Supervisory Board shall be entitled to position allowance in the amount of the average monthly remuneration in enterprise sector excluding payments from profit for distribution. Other members of the Supervisory Board shall be entitled to the following allowances: for participation in the audit committee, in the amount of 1/3 of the average monthly remuneration in enterprise sector excluding payments from profit for distribution for performance of function of the secretary of the Supervisory Board, in the amount of 1/3 of the average monthly remuneration in enterprise sector excluding payments from profit for distribution for performance of the function of the Vice-Chairman of the Supervisory Board, in the amount of 1/3 of the average remuneration in enterprise sector excluding payments from profit for distribution in the period in which the Chairman does not perform his function

71 Member of the Supervisory Board shall not be entitled to remuneration if he submits statement about his resignation from remuneration. In a given month, Member of the Supervisory Board shall be entitled to remuneration and due allowance for performing his function in the amount corresponding to the proportion of the number of meetings in which he participated to the total number of meetings of the Supervisory Board in a given month. In a given month, Member of the Audit Committee shall be entitled to the allowance for participation in the audit committee, in the amount corresponding to the proportion of the number of meetings in which he participated to the total number of meetings of the Audit Committee in a given month. If no meetings are held in a given month, Members of the Supervisory Board shall also be entitled to remuneration and allowances. Short-term employment benefits for the Supervisory Board members Remuneration for the period from till Remuneration for the period from till Chadaj Ireneusz Dłużniewski Paweł 0 9 Filipiak Tomasz 0 14 Gabryjelski Marek Gajor Robert Misiak Krzysztof Bogacki Sylwerster Buchajska Agnieszka 16 8 Buchajski Adam Value of remunerations, awards and benefits paid out, due or potentially due to the managing and supervising persons Did not occur, apart from the aforementioned remunerations Information on benefits for key management personel Did not occur, apart from the aforementioned remuneration Contracts concluded between the Companies of the Capital Group and managing persons providing for compensation in case of their resignation or dismissal Managing persons working for the Dominating Undertaking on the basis of an employment contract for the period ending on the date following the date of approval of the report of the Management Board on the company s operations and financial statements by the General Assembly. Potential compensation in case of their resignation or dismissal results from the provisions of the labour code. Additional rights of the parties not resulting directly from the provisions of the labour code have not been defined in the contracts

72 40.4. Share in shareholding and in the number of votes at the General Assembly One of the Members of the Management Board is as at the same time the Company s shareholder. As of 31 March 2015 and as of the Approval Date the state is as follows: Shareholder State as of 31 March 2015 number of shares % votes at the GA State as of the Approval Date number of shares % of votes at the GA Management Board: Paweł Szewczyk Supervisory Board: Ireneusz Chadaj (through his spouse, Monika Chadaj) Tomasz Mazurczak ,07% ,07% , ,83% ,02% ,02% Other shareholders ,08% ,08% Loans granted to the key personnel and the persons related to them Did not occur Transactions with the key personnel Did not occur 41. Options, employee shares program The information on options and employee share programs was included in the Report of the Management Board on Operations in the item Transactions with related entities All transactions between the related entities in the Capital Group were typical and routine transaction concluded in the market environment and its character and conditions resulted from the current operational activity carried out by the entities in the Capital Group Information on significant transactions made by the Dominating Undertaking or subsidiaries with related entities on terms other than arm s length In the period subject to the financial statements, in the Group no transactions with related entities on conditions other than the market ones occurred. 43. Remuneration of Auditors Appointed by the Supervisory Board, Grant Thornton Frąckowiak Sp. z ograniczoną odpowiedzialnością Sp. k. with its registered office in Poznan, is the entity authorized to review the Annual Financial Statements of Kredyt Inkaso S.A. and the Annual Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2014 to 31 March The relevant contract on the audit of our stand-alone financial statements was concluded on 18 September 2014 and its subject matter is the semi-annual review and the audit of the annual consolidated and the stand-alone financial statements of Kredyt Inkaso S.A. for the financial year from 1 April 2014 to 31 March

73 Period ended on 31 March 2015 Grant Thornton Frąckowiak Period ended on 31 March 2014 Eurofin Sp. z o.o. Remuneration in relation ot the Dominant Company due to: audit* attestation services relative to information prepared for needs of registration document 0,0 0,0 Remuneration for audit ** in relation to subsidiaries 66,0 66,0 * Remuneration for audit comprises net amounts due and paid to the entity authorized to audit financial statements for the audit of stand-alone and consolidated financial statements of the Dominating Undertaking and review of interim stand-alone and consolidated financial statements. ** Remuneration for audit comprises gross amounts due and paid to the entities authorized to audit financial statements for the audit of financial statements and the review of interim financial statements of the subsidiaries. We are not obliged to pay any other remuneration to the entity performing the audit of the consolidated and stand-alone financial statements and reviewing interim consolidated and stand-alone financial statements of the Dominating Undertaking and to entities auditing financial statements and reviewing financial statements of subsidiaries for the financial year ending on 31 March Issues, redemption and repayment of debt and capital securities On 9 may 2014 the subsidiary Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty issued secured 3 year term K series beared bonds of the nominal value of PLN 1 000,00 each, of the total nominal value of PLN 50 million. The fund is authorized to an early buyout of Bonds at its request. The bonds are secured in the meaning of regulations of the act on bonds with the registered pledge established on the set of receivables, which the Fund purchased on the grounds of the sale agreement dated 9 December The valuation of the subject matter of the pledge performed by an authorized expert,stipulates that the estimated fair value of the subject matter or the pledge constitutes the amount not less than POL 94 million.. No payment was due for bonds issued up till now in the period from 1 April 2014 until 31 March 2015 In the reporting period we regularly paid out intrest to the owners of S03, S04, S05, U01, U02 and U03, W1 and W2 series bonds issued by Kredyt Inkaso S.A. as well as the I and K series issued by the subsidiary Kredyt Inkaso I NSFIZ. The total amount of the paid-out interest amounted to PLN 21,8 mil. (PLN 18,8 million of interest on bonds issued by Kredyt Inkaso S.A. and over PLN 3 million interest on bonds of Kredyt Inkaso I NSFIZ) 45. Significant events which occurred after the balance sheet date and were not disclosed in the financial statements for a given reporting period On 27 April 2015 Kredyt Inkaso S.A. issued units of the X series ordinary bearer bonds, of the nominal value of PLN 1 000,00 each, of the total nominal value of PLN ,

74 The bonds are the unsecured bearer bonds not having the form of a document (dematerialized) and are registered in the register maintained by Erste Securities Polska S.A., and subsequently shall be transferred to the system of dematerialized securities maintained by the National Register of Securities S.A.. The bonds may be introduced to the alternative trading system Catalyst, organized by BondSpot or the Warsaw Stock Exchange in Warsaw. The amount of interest on bonds is variable (fixed during the interest period) and is the equivalent of the sum of WIBOR6M and the interest margin amounting to 3,6% per annum. In case, when the increase of the financial debt ratio, reduced by the state of cash flows disclosed in the Issuer s last consolidated financial statements to the equity of the Issuer s Capital Group disclosed in the Issuer s last consolidated financial statements exceeds 200%, the margin will be increased by 25 base points per annum. The increased margin shall apply in establishing the interest rate for interest periods falling directly after the interest period, where the level of the financial ratio has exceeded 200%. The increased margin shall not be the basis for establishing the interest rate for interest periods falling directly after the interest period, where the level of the financial ratio has been decreased to 200% at the most. In case of the delay in the interest payment, the amount of the interest rate for interest accumulating after the interest payment day (including this day), when the payment was supposed to have been made, shall be established according to the statutory interest rate. The maturity term of the Bonds is three years and six months and the day of redemption of the Bonds shall be 29 October Interest on Bonds shall be payable in the six month periods (27 October 2015, 27 April 2016, 27 October 2016, 27 April 2017, 27 October 2017, 27 April 2018, 20 October The Issuer shall be entitled to the early redemption of Bonds, in total or in part, at his request, however not earlier than in the fifth interest payment term. In such case the Bondholder commission shall amount to: 0,5% of the nominal value of one Bond (if the day of such redemption falls for 27 October 2017) and 0,25% of the nominal value of one Bond (if the day of such early redemption falls for 27 April 2018). On 17 April 2015 the condition precedent suspending payment of the second tranch of the credit incurred by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. with its registered office in Luxembourg at Getin Noble Bank Spółka Akcyjna with its registered office in Warsaw. The condition of releasing the second tranch of the credit in the amount of PLN ,29 was submitting to the Bank the certificate from TFI (investment fund), managing the fund confirming that the Borrower holds C series Investment Certificates, issued by OMEGA Wierzytelności Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty of the total issue value of PLN ,00 fully paid. Therefore, pursuant to the agreement of 25 February 2015 the total amount of credit of PLN 35 million was released. The credit period has been forseen until 1 April Funds from the credit shall ne allocated and utilized to finance the current economic activity. Interest rate of the credit is based on the variable interest rate WIBOR 1 M, increased by the margin, payable on monthly basis. Credit collateral is: (a) the registered pledge established by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. on portfolios of receivables and the ordinary and the registered pledge against the C series investment certificates, issued by OMEGA Wierzytelności Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty in the amount of: ; (b) power of attorney to current accounts held by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. in Getin Noble Bank S.A; (c) statement of submission to enforcement of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A.; (d) guarantee of Kredyt Inkaso S.A. up to the amount of PLN ,00, together with the statement of submission to enforcement. The aforementioned collaterals were established on 25 February Pledge against the set of receivables On 25 Februrary 2015 Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. concluded with the Bank a registered pledge agreement on the set of receivables pursuant to which Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. established, for the benefit of the Bank, the registered pledge on rights in the form of the set of rights receivables due to the Pledger of the total value of PLN ,92 as of 31 January 2015 and of the same identification value of the set of receivables in accounting books of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A.. The highest amount of collateral is PLN ,

75 Pledge against investment certificates On 25 February 2015 Kredyt Inkaso Investments (Luxembourg) S.A. concluded with the Bank the agreement of the ordinary and the registered pledge against the C series investment certificates, issued by OMEGA Wierzytelności Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty, in the amount of , whereas the ordinary pledge will expire automatically at the time of recording the registered pledge in the pledge register. The registered pledge shall encumber the subject matter of the pledge up to the complete repayment of the Bank s receivables. The Pledger has undertaken that during the term of the agreement, he shall not sell or encumber the subject matter of the pledge without the written consent of the Bank. The book value of C Series investment certificates in accounting books of the Subsidiary amounts to PLN ,29, as of the day of conclusion of the agreement. The value of the subject matter of the pledge on the day of conclusion of the agreement amounts to PLN ,00, whereas, up to the day of payment of the first loan installment the certificates have been paid to the total amount of up to PLN ,29. The Pledger is obliged to make a payment towards the certificates not paid in full until the date of payment of the second loan installment. 46. Information on significant events related to previous years disclosed in the financial statements for the current period Did not occur. 47. Contingent assets and liabilities As of the reporting date, the Company has contingent liabilities due to conclusion of agrements: Agreement on co-operation dated 19 March 2010 with TFI Allianz Polska Spółka Akcyjna with the registered office in Warsaw (Investment Funds), pursuant to which the Parties committed themselves to co-operate in the scope of seeking investment opportunities for Kredyt Inkaso I NSFIZ and to execute its investments. The Company and the Investment Fund agreed to the extent of an investments by Kredyt Inkaso I NSFIZ. We undertook to, among others, search for and analyse debt portfolios for the needs of purchasing them by Kredyt Inkaso I NSFIZ, ensure financing of Kredyt Inkaso I NSFIZ investments, ensure financing of the process of generating income from investments. The Investment Funds undertook to, among others, make investments recommended by us in the manner indicated in the recommendation and to meet procedural conditions necessary for making recommended investments. In the period from 1 April 2014 to 31 March 2015 validity of projects UDA-RPLU /09 i UDA-RPLU /10 has expired. Agreement No UDA-RPLU /09 concluded on 22 April 2010 between the Company and Lubelski Voivodeship (Lubelska Agencja Wspierania Przedsiębiorczości with the registered office at ul. Graniczna 4, Lublin- Intermediate Body of 2nd degree) on carrying out the project: Creating a synergy effect as a result of the simultaneous implementation of three IT systems: IT Security, Document Content Recognition, Financial and Accounting. Pursuant to the concluded agreement, the Company should obtain co-financing in the form of a development subsidy amounting to PL , which constitutes 60% of the total project value. In case of identifying breaching provisions of the Agreement by the Company, it will be obliged to return the total amount or the part of the amount of co-financing. Lubelska Agencja Wspierania Przedsiębiorczości may terminate the agreement, which may cause the necessity of returning by the Company the amount of co-financing along with the interest calculated in the manner that is the same as for tax arrears. In connection with the agreement we already should have obtained amounts of co-financing in the year 2012, after a positive result of inspection in December The final received amount of cofinancing amounted to PLN Agreement No UDA-RPLU /10 concluded on 21 December 2010 between the Company and and Lubelski Voivodeship (Lubelska Agencja Wspierania Przedsiębiorczości with the registered office at ul. Graniczna 4, Lublin- Intermediate Body of 2nd degree) on carrying out the project: Improvement of competitiveness of Kredyt Inkaso Company by implementing the innovative system of performance management. Pursuant to the agreement, the Company should obtain co-financing amounting to PLN , which constitutes 50% of the total project value. In case of identifying breaching provisions of 75 75

76 the Agreement by the Company, it will be obliged to return the total amount or the part of the amount of co-financing. Lubelska Agencja Wspierania Przedsiębiorczości may terminate the agreement in cases provided in the agreement, which may cause the necessity of returning by the Company the amount of cofinancing along with the interest calculated in the manner that is the same as for tax arrears. Audits resulting from projects WND-RPLU /09 and WND-RPLU /10 are possible until 29 July 2015 but they can only concern verification of correctness of the performance of the agreement. The obligation to store documentation pertaining to projects shall rest with the Company until 31 December Information on income, costs and results on discontinued business activity They did not occur. 49. Information on granted guarantees as well as security interests on the Capital Group assets On 11 July 2014 the subsidiary Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty with its registerd ofice in Warsaw concluded with FM Bank PBP Spółka Akcyjna with its registered office in Warsaw ANNEX No. 1 to the agreement of 25 July Parties decided to increase the available amount of credit of PLN 10 million by additional PLN 7 million with the final date of availability until 10 December Credit collateral is: (a) the registered pledge established by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. on portfolios of receivables and the ordinary and the registered pledge against the C series investment certificates, issued by OMEGA Wierzytelności Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty in the amount of: ; (b) power of attorney to current accounts held by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. in Getin Noble Bank S.A; (c) statement of submission to enforcement of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A.; (d) guarantee of Kredyt Inkaso S.A. up to the amount of PLN ,00 złotych, together with the statement of submission to enforcement. The aforementioned collaterals were established on 25 February Pledge against the set of receivables On 25 Februrary 2015 Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. concluded with the Bank a registered pledge agreement on the set of receivables pursuant to which Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. established, for the benefit of the Bank, the registered pledge on rights in the form of the set of rights receivables due to the Pledger of the total value of PLN ,92 as of 31 January 2015 and of the same identification value of the set of receivables in accounting books of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A.. The highest amount of collateral is PLN ,

77 Pledge against investment certificates On 25 February the Subsidiary concluded with the Bank the agreement of the ordinary and the registered pledge against the C series investment certificates, issued by OMEGA Wierzytelności Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty, in the amount of , whereas the ordinary pledge will expire automatically at the time of recording the registered pledge in the pledge register. The registered pledge shall encumber the subject matter of the pledge up to the complete repayment of the Bank s receivables. The Pledger has undertaken that during the term of the agreement, he shall not sell or encumber the subject matter of the pledge without the written consent of the Bank. The book value of C Series investment certificates in accounting books of the Subsidiary amounts to PLN ,29, as of the day of conclusion of the agreement. The value of the subject matter of the pledge on the day of conclusion of the agreement amounts to PLN ,00, whereas, up to the day of payment of the first loan installment the certificates have been paid to the total amount of up to PLN ,29. The Pledger is obliged to make a payment towards the certificates not paid in full until the date of payment of the second loan installment. As of 31 March 2014, no guarantees or security pledges on the assets of the Capital Group occurred. On 15 May 2012, the District Court for the capital city of Warsaw, XI Commercial Register of Pledges Division entered into the Register of Pledges the pledge on the set of receivables owned by the Issuer s subsidiary, i.e. Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty, KI 1 Subfund with its registered office in Warsaw. The mentioned receivables were purchased by KI II NS FIZ on 8 March 2012, pursuant to the agreement on debt portfolio purchase concluded with Getin Noble Bank S.A. with its registered office in Warsaw. Registered pledge constitutes legal security of the payment by KI II NS FIZ in favour of Getin Noble Bank S.A. with its registered office in Warsaw of the working capital credit along with interest, contracted up to the amount of PLN 40.5 million, established on the set of receivables constituting 100% of receivables purchased by virtue the aforementioned receivables assignment agreement entered into on 8 March Pledge by registration was registered pursuant to the petition of KI II NS FIZ for establishing a pledge by registration with the highest priority in favour of Getin Noble Bank S.A. 50. Other information which, according to Kredyt Inkaso S.A. is significant for assessing its employment, property and financial situation as well as financial result and their changes and the information significant for assessing the ability to meet obligations by the Capital Group Apart from the information disclosed in these financial statements, we do not possess any information significant for assessing the Capital Group s situation. 51. Commentary explaining the seasonal or cyclical character of business activity in the reporting period Operations of the Capital Group are not seasonal; they consist in collecting debts, first of all in court. The presented model of business generates income in the relatively short period following the debts portfolio purchase, and then in a long-term perspective in the course of executing legal procedures of debt collecting (mainly enforcement proceedings), also as a result of their reopenings after the periods of adjournment. At the same time, costs are accumulated first of all in the initial stage of purchased debt portfolios collection (first of all related to court proceedings and instituting debt enforcement proceedings)

78 52. Financial statements drawn up in high inflation environment Accumulated interim inflation rate for the last 3 years for each of the periods included in the present financial statements did not exceed 100%; therefore, there was no necessity for adjusting the financial statements by the price index. 53. Employment in the Capital Group Employment in the Company, in the individual reporting periods, divided into professional groups: employment No. of persons employment No. of persons Average employment for 12 months 314, ,9 289 Employment as of the balance sheet date, of which: 332, , office workers 329, , labourers 2,4 3 2,

79 54. Approval for publication The Management Board of the Dominant Company has approved for publication the present Annual Consolidated Financial Statements, drawn up for the period from 1 April 2014 to 31 March 2015, together with the comparative data, on 19 June 2015 ( Approval Date ). President of the Management Board Paweł Szewczyk Vice-President of the Management Board Jan Paweł Lisicki Signature of the person in charge of drawing up the consoliodated financial statements Director of Financial Department/CFO Piotr Podłowski 79 79