2014 Annual Report TABLE OF CONTENTS

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS OF PCC INTERMODAL SA FOR 2014

2 TABLE OF CONTENTS I. STATEMENT OF THE MANAGEMENT BOARD REGARDING DUE DILIGENCE IN PREPARATION OF THE FINANCIAL STATEMENT...3 II. DECLARATION OF THE MANAGEMENT BOARD REGARDING THE ENTITY AUTHORISED TO AUDIT FINANCIAL STATEMENTS...4 III. LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD OF THE PARENT COMPANY...5 IV. SELECTED CONSOLIDATED FINANCIAL DATA...7 V. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...8 VI. CONSOLIDATED STATEMENT OF FINANCIAL POSITION...9 VII. CONSOLIDATED STATEMENT ON CHANGES IN EQUITY VIII. CONSOLIDATED CASH FLOW STATEMENT IX. EXPLANATORY NOTES AND OTHER INFORMATION X. REPORT ON ACTIVITY OF THE GROUP XI. DECLARATION REGARDING CORPORATE GOVERNANCE IMPLEMENTATION

3 I. STATEMENT OF THE MANAGEMENT BOARD REGARDING DUE DILIGENCE IN PREPARATION OF THE FINANCIAL STATEMENT The Management Board of PCC Intermodal S.A. declares that to the best of its knowledge the consolidated annual financial statement for the period from 01 January 2014 to 31 December 2014 and the comparable data have been prepared in accordance with the applicable accounting regulations and give a true, reliable and transparent view of the economic and financial position of PCC Intermodal S.A. Group and its profit. Furthermore, we declare that the report on the activities of PCC Intermodal S.A. Group gives a true picture of the development, achievements and situation of the Group, including a description of the basic threats and risk. Gdynia, 16 March 2015 Dariusz Stefański President of the Management Board Adam Adamek Vice President of the Management Board 3

4 II. DECLARATION OF THE MANAGEMENT BOARD REGARDING THE ENTITY AUTHORISED TO AUDIT FINANCIAL STATEMENTS The Management Board of PCC Intermodal S.A. declares that to the best of its knowledge the entity authorised to audit financial statements and which conducts the audit of the consolidated annual financial statement has been selected in accordance with the provisions of law. The said entity and expert auditors which audit the said financial statement met the requirements necessary to express an unbiased and independent opinion about the consolidated annual financial statement, in accordance with applicable provisions of law and professional standards. Gdynia, 16 March 2015 Dariusz Stefański President of the Management Board Adam Adamek Vice President of the Management Board 4

5 III. LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD OF THE PARENT COMPANY Dear Ladies and Gentlemen, Gdynia, 16 March 2015 We present with pleasure and satisfaction the results of 2014, which confirm the validity of the adopted and consistently implemented longterm development strategy of PCC Intermodal S.A. Group, connected with expansion of the regular intermodal connections network in Central and Eastern Europe. Modern and environmentally-oriented intermodal transport gradually changes the transport landscape in this part of Europe. I am extremely proud that only 10 years after the Parent Company has launched the first intermodal train we managed to build the transport network that operates more smoothly than ever. A team of young, but experienced and committed employees is, undoubtedly, our greatest asset and a guarantee of further dynamic development. Taking this opportunity, I would like to thank all those people who have been with us from the very beginning, but also those who have joined us recently, and with their enthusiasm and energy constantly stimulate us to take on new ambitious challenges. To meet market expectations, we continue to invest in the development of modern cargo handling terminals, we increase the frequency of existing intermodal connections and open the new ones, not forgetting to improve profitability and ensure competitiveness of our services. We place great emphasis on timely deliveries, we expand the range of offered services, develop longterm relationships with customers based on the quality and reliability of our services. The first results of our investment activities and operational changes can be assessed on the basis of 2014 results. In the forthcoming months we will finish terminal investments in Kutno, and in the second half of 2015 we plan to open new terminals in Brzeg Dolny and Gliwice. It is the best possible gift for the tenth anniversary of the company and a solid base for the next years of operation. Intermodal transport market in our country is growing very rapidly, and any ongoing infrastructure investments will ultimately improve its quality, thus allowing to look to the future even with more optimism. We also welcome the growing understanding and improving awareness of benefits brought by intermodal transport in both operational, economic, and social sphere. We still face many challenges. We believe that, as announced, the quality of linear infrastructure will soon improve, and legislators will listen to our voices and will take decisions supporting in real terms the development of this industry in the future. Although we are proud of current results, but most of all we look to the future and already now take steps to guarantee our stable and dynamic development in the coming years. Intermodal is a set of requirements, inspiration, new ideas and innovative solutions. In retrospect, we are aware of what we have achieved and, at the same time, we know how much there is still to be done, to be improved. 5

6 I believe, however, that we are on the right path and go in the right direction and that, thanks to brave decisions and pioneering solutions, we create new quality and new intermodal standards. Sincerely, Dariusz Stefański President of the Management Board of PCC Intermodal S.A. 6

7 IV. SELECTED CONSOLIDATED FINANCIAL DATA in thous. PLN in thous. EUR Revenue from sales of products and services 185, ,955 44,237 35,610 Operating profit (loss) 7, , Profit (loss) before tax 6, , Net profit (loss) 7, , Net cash flows from operations 13,285 (423) 3,171 (101) Net cash flows from investment activities (85,235) (3,254) (20,346) (772) Net cash flows from financial activities 75,668 7,497 18,062 1,780 Total net change in cash and cash equivalents 3,718 3, Profit (loss) per one ordinary share (in PLN/EUR) Total assets 215, ,740 50,484 30,078 Equity 81,531 74,098 19,129 17,866 Share capital 77,566 77,566 18,198 18,703 Long-term liabilities 101,421 25,949 23,795 6,257 Short-term liabilities 32,224 24,693 7,560 5,954 Closing balance of shares (units) 77,565,556 77,565,556 77,565,556 77,565,556 Book value per one share (in PLN/EUR) Diluted book value per one share (in PLN/EUR) Declared or paid dividend per one share (in PLN/EUR)

8 V. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note in thous. PLN Continued operations Revenue from sales of products and services , ,955 Costs of products and services sold , ,465 Gross profit (loss) on sales 18,017 11,490 General administration costs 15 11,543 11,991 Other operating revenue 16 1,635 1,977 Other operating costs 16 1, Operating profit (loss) 7, Financial revenue Financial expenses Profit (loss) before tax 6, Income tax 18 (451) (410) Net profit (loss) on continued operations 7, Discontinued operations Net profit (loss) on discontinued operations 0 0 Net profit (loss) 7, Other comprehensive income due to: Components that will not be subsequently transferred to the statement of comprehensive (12) 0 income, including: Actuarial gains and losses (15) 0 Income tax 3 0 Components that may be subsequently transferred to the statement of comprehensive 0 0 income: Net other comprehensive income (12) 0 Other comprehensive income 7, Net profit (loss) attributable to: shareholders of the Parent Company 7, non-controlling interest 0 0 Total comprehensive income attributable to: shareholders of the Parent Company 7, non-controlling interest 0 0 Profit (loss) per one share (in PLN) on continued operations Diluted profit (loss) per one ordinary share (in PLN) on continued operations Weighted average number of ordinary shares (units) 77,565,556 77,565,556 Weighted average diluted number of ordinary shares (units) 77,565,556 77,565, March 2015 CHIEF ACCOUNTANT FINANCIAL DIRECTOR VICE-PRESIDENT OF THE MANAGEMENT BOARD PRESIDENT OF THE MANAGEMENT BOARD Małgorzata Jędrzejewska Wojciech Baraniak Adam Adamek Dariusz Stefański 8

9 VI. CONSOLIDATED STATEMENT OF FINANCIAL POSITION Note in thous. PLN as at as at ASSETS Fixed assets 169,620 94,655 Tangible fixed assets ,362 92,073 Intangible assets Investments in other entities Deferred income tax assets 24 2,589 1,925 Current assets 45,556 30,085 Inventory Receivables for deliveries and services ,600 16,014 Current tax receivables 26 9,382 3,352 Other receivables Cash and cash equivalents 28 13,151 9,427 Fixed assets held for sale 0 0 Total assets 215, ,740 EQUITY & LIABILITIES Equity attributed to shareholders of the Parent Company 81,531 74,098 Share capital 29 77,566 77,566 Supplementary capital from the issue of shares above their nominal value 31 44,544 44,544 Other supplementary capital Other comprehensive income 30 (12) 0 Exchange from translation of subsidiary operations 5 2 Retained earnings (48,076) (48,547) Profit / loss for the current year 7, Equity of minority shareholders 0 0 Total shareholders' equity 81,531 74,098 Long-term liabilities 101,421 25,949 Long-term loans and borrowings 34 61,223 6,452 Other long-term financial liabilities 34 2,677 4,331 Provision for deferred tax Provision for retirement benefits and similar Subsidies 37 36,766 14,622 Short-term liabilities 32,224 24,693 Short-term loans and borrowings 34 2, Other short-term financial liabilities 34 2,354 2,540 Trade and other liabilities 36 17,225 11,253 Current tax liabilities Other short-term liabilities 36 1,063 9,179 Provision for retirement benefits and similar Other short-term provisions 33 7, Subsidies Deferred income 0 62 Total liabilities 133,645 50,642 Total equity and liabilities 215, ,740 Book value 81,531 74,098 Number of shares (units) 77,565,556 77,565,556 Book value per one share (in PLN) Diluted number of shares (units) 77,565,556 77,565,556 Diluted book value per one share (in PLN) March 2015 CHIEF ACCOUNTANT FINANCIAL DIRECTOR VICE-PRESIDENT OF THE MANAGEMENT BOARD PRESIDENT OF THE MANAGEMENT BOARD Małgorzata Jędrzejewska Wojciech Baraniak Adam Adamek Dariusz Stefański 9

10 VII. CONSOLIDATED STATEMENT ON CHANGES IN EQUITY Share capital Supplementary capital from the issue of shares above their nominal value Other suppleme ntary capital in thous. PLN Other comprehe nsive income Exchange from translation of subsidiary operations Retained earnings Profit / loss for the current year Total shareho lders' equity As at ,566 44, (48,547) ,098 Previous years' loss/profit brought forward (471) 0 Profit / loss for the current year ,442 7,442 Exchange from translation of subsidiary operations Actuarial gains/losses (12) (12) Minority shares As at ,566 44, (12) 5 (48,076) 7,442 81,531 Share capital Supplementary capital from the issue of shares above their nominal value Other suppleme ntary capital in thous. PLN Other comprehe nsive income Exchange from translation of subsidiary operations Retained earnings Profit / loss for the current year As at ,566 44, (34,098) (14,449) 73,625 Previous years' loss/profit brought forward (14,449) 14,449 0 Profit / loss for the current year Exchange from translation of subsidiary operations Minority shares As at ,566 44, (48,547) , March 2015 Total shareh olders' equity CHIEF ACCOUNTANT FINANCIAL DIRECTOR VICE-PRESIDENT OF THE MANAGEMENT BOARD PRESIDENT OF THE MANAGEMENT BOARD Małgorzata Jędrzejewska Wojciech Baraniak Adam Adamek Dariusz Stefański 10

11 VIII. CONSOLIDATED CASH FLOW STATEMENT in thous. PLN Cash flows from operations Net profit (loss) 7, Total adjustments 5,843 (894) Amortisation and depreciation 4,526 4,245 Exchange gains (losses) (6) 56 Interest and profit sharing (dividend) Profit (loss) on investment activities (51) (52) Change in inventory (235) 36 Change in receivables (11,687) (2,282) Change in provisions 7, Changes in liabilities 6,503 (2,995) Change in prepayments and accruals (727) (525) Net cash from operating activities 13,285 (423) Cash flows from investment activities Inflows Sales of fixed tangible assets and intangible assets Outflows 85,330 3,326 Purchase of fixed tangible assets and intangible assets 85,330 3,326 Net cash from investment activities (85,235) (3,254) Cash flows from financial activities Inflows 79,107 20,954 Loans and borrowings 56,334 5,000 Interest Other financial inflows 22,747 15,862 Outflows 3,439 13,457 Repayment of loans and borrowings ,307 Payments made under finance lease agreements 2,916 2,647 Interest Net cash from financial activities 75,668 7,497 Total net change in cash and cash equivalents 3,718 3,820 Opening balance of cash and cash equivalents 9,427 5,652 Net foreign exchange differences 6 (45) Cash and cash equivalents closing balance, including: 13,151 9,427 restricted cash March 2015 CHIEF ACCOUNTANT FINANCIAL DIRECTOR VICE-PRESIDENT OF THE MANAGEMENT BOARD PRESIDENT OF THE MANAGEMENT BOARD Małgorzata Jędrzejewska Wojciech Baraniak Adam Adamek Dariusz Stefański 11

12 IX. EXPLANATORY NOTES AND OTHER INFORMATION 1. General information The PCC Intermodal S.A. Group (the Group) is composed of PCC Intermodal S.A. (the Parent Company) and PCC Intermodal GmbH (the Subsidiary). The Group was established on , i.e. at the time of purchase by PCC Intermodal S.A. of 100% shares in PCC Intermodal GmbH. Therefore, starting from , PCC Intermodal S.A. Group draws up consolidated financial statements in accordance with IAS / IFRS. These consolidated financial statements of the Group cover the year ended 31 December 2014 and includes comparative data for the year ended 31 December The core business of the Parent Company is organisation of the intermodal transport. The subsidiary is engaged in service activities supporting intermodal transport, including management of the terminal in Frankfurt (Oder). The Parent Company PCC Intermodal S.A. ul. Hutnicza Gdynia Phone: Fax: Website: Registration: District Court Gdańsk-Północ, 8th Commercial Division of the National Court Register KRS: Regon [statistical number]: NIP [Tax Identification Number]: According to the Articles of Association the duration of the Parent Company is unlimited. Subsidiary PCC Intermodal GmbH Moerser Str Duisburg HRB: According to the Articles of Association the duration of the Subsidiary is unlimited. 2. Organisational description of the Group The Group, which was established in January 2013, includes PCC Intermodal S.A. and the Subsidiary PCC Intermodal GmbH, with its registered office in Duisburg. The Parent Company owns 100% of the share capital and 100% of the voting rights of the Subsidiary Company. The consolidation is carried out using the full method. PCC Intermodal S.A. is a part of the PCC Group an international holding which belongs to PCC SE a company with its registered office in Duisburg (Germany) which is, at the same time, the major 12

13 shareholder of PCC Intermodal S.A. PCC SE owns a total of 48,000,000 shares in the Parent Company, which constitutes 61.88% of Company's share capital and gives PCC SE the right to exercise 73.15% of votes in the general meeting (the situation as at the date of drawing up this report). 3. Composition of the Management Board and the Supervisory Board of the Parent Company The Parent Company's governing body is the Management Board composed of: Dariusz Stefański President of the Management Board Adam Adamek Vice President of the Management Board. Both members of the Management Board held their positions for the entire period covered by this report, i.e. from 1 January to 31 December On 11 June 2014, the Supervisory Board of the Parent Company adopted a resolution on the appointment of current members of the Board for the next joint three year term. The Parent Company's supervisory body is the Supervisory Board. On 31 December 2014 the Supervisory Board was composed of: Alfred Pelzer Chairperson of the Supervisory Board Wojciech Paprocki Vice Chairperson of the Supervisory Board Thomas Hesse Member of the Supervisory Board, Artur Jędrzejewski - Member of the Supervisory Board, Daniel Ozon Member of the Supervisory Board. Composition of the Supervisory Board did not change throughout the entire period covered by this report, i.e. from 1 January to 31 December Approval of the statements for publication These consolidated financial statements were approved for publication by the Management Board of the Parent Company on 16 March After their publication no one has the right to change them. 5. Statement of compliance These financial statements have been prepared in accordance with IFRS and IAS as approved by the European Union, published and effective as at 31 December 2014, and in accordance with the requirements set out in the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information published by issuers of securities and conditions considered as equivalent to information required by the laws of a non-member State. The Subsidiary keeps its accounts in accordance with German Accounting Standards (HBII). In the event of any inconsistency, the consolidated financial statements include adjustments not included in the accounts of the Subsidiary, introduced to adjust the financial statements to IAS/IFRS. 13

14 6. Basis for preparation of the financial statements The consolidated financial statements have been prepared under the historical cost convention, except for certain financial instruments that are measured at fair value. The consolidated financial statements have been drawn up with the assumption of going concern of the Group in the predictable future. At the date of approval of these financial statements, no circumstances indicating a threat to the business continuation by companies of the Group were found. 7. The measurement currency and the presentation currency and conversion principles The Polish zloty is the measurement currency of the Parent company and the reporting currency of the consolidated financial statements. EUR is the functional and reporting currency of the Subsidiary. All presented financial data are expressed in thous. PLN, unless indicated to the contrary. Selected financial data have been converted to euro in accordance with the following principles: individual items of the statement of financial position have been converted based on the exchange rates applicable on the last day of the period, that is on and ; individual items of the statement of comprehensive income and the cash flow statement have been converted based on the exchange rates which are an arithmetic mean of average exchange rates announced by the National Bank of Poland for EUR, applicable on the last day of every month in a given reporting period (for the period and for the period ); PLN average exchange rates in relation to EUR in analysed periods were the following: Financial period Average exchange rate in the period Exchange rate as at the last day of the period Changes to the applied accounting regulations (policy) In accordance with Article 55 par. 5 of the Accounting Act of 29 September 1994, purchase by PCC Intermodal S.A. of 100% shares in PCC Intermodal GmbH on resulted in an obligation to draw up the consolidated financial statements according to IFRS. On the Extraordinary General Meeting of PCC Intermodal S.A. passed a resolution No. 2/2013 on the basis of which it was decided that the separate financial statements of the Parent Company for the periods falling after 31 December 2012 shall be prepared in accordance with IFRS. Accordingly, the Management Board of the Parent Company, by means of the Resolution No. 2/2013 dated introduced the new Accounting Policy of PCC Intermodal S.A., adjusted to IFRS, as valid from 1 January

15 The date of transition to IFRS (both in terms of separate statements and consolidated statements) is 1 January The last financial statements of the Parent Company prepared in accordance with the Polish accounting standards, as defined in the Accounting Act, were the financial statements prepared for the year ended 31 December New standards and interpretations The following new or amended standards and interpretations issued by the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC) are effective from 1 January 2014: IFRS 10 "Consolidated Financial Statements" IFRS 11 "Joint Arrangements" IFRS 12 "Disclosure of Interests in Other Entities" IAS 27 "Separate Financial Statements" IAS 28 "Investments in Associates and Joint Ventures" Amendments to IAS 32 "Offsetting Financial Assets and Financial Liabilities" Recommendations concerning transitory provisions (Amendments to IFRS 10, IFRS 11 and IFRS 12) Investment Units (Amendments to IFRS 10, IFRS 12 and IAS 27) Amendments to IAS 36 "Recoverable Amount Disclosures for Non-Financial Assets" Amendments to IAS 39 "Novation (renewal) of Derivatives and Continuation of Hedge Accounting" Application of the new standards will have no material impact on the financial statements of the Group. The following standards and interpretations have been issued by the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC), but have not yet entered into force at the balance sheet date: IFRS 9 "Financial instruments" Amendments to various standards resulting from the annual review of the International Financial Reporting Standards (Annual Improvements ) Amendments to various standards resulting from the annual review of the International Financial Reporting Standards (Annual Improvements ) Amendment to IAS 19 "Defined Benefit Plans - Employee Contributions" IFRS 14 "Regulatory Deferral Accounts" Interpretation of IFRIC 21 "Levies" IFRS 15 "Revenue from Contracts with Customers" Amendments to IFRS 11, "Accounting for Acquisition of Interests in Joint Operations" Amendments to IAS 16 and IAS 38 "Clarification of Accepted Methods of Depreciation and Amortisation" Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants " Amendments to IAS 27 "Equity Method in Separate Financial Statements" 15

16 Amendments to IFRS 10 and IAS 28, "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" Amendments to various standards resulting from the annual review of the International Financial Reporting Standards (Annual Improvements ) The Group has not decided to adopt earlier any of the standards, interpretations or amendments, which have not yet entered into force. The Management Board of the Parent Company is in the process of analysis and evaluation of their impact on the Company's accounting rules (policies) and on future financial statements. 10. Corrections of errors made in previous periods There were no prior periods' errors that require correction in the statement of the current period 11. Significant values based on the professional judgement and estimates If a transaction is not regulated in any standard or any interpretation, the Management Board of the Parent Company uses its judgement to determine and apply such accounting policies, which will ensure that the financial statements will contain relevant and reliable information and will: accurately, clearly and fairly present the economic and financial standing of the Group, results of its operations and cash flows, reflect the economic substance of transactions, be objective, be prepared in accordance with the prudence principle, be complete in all material respects. Preparation of financial statements requires the Management Board of the Parent Company to make estimates, because some information contained in the financial statements cannot be measured accurately. The Management Board reviews these estimates based on changes in factors taken into account in making estimates, on new information or experiences from the past. Therefore, the estimates made at 31 December 2014 may be changed in the future. The main areas where the management's professional judgement is of importance or the main areas at risk associated with uncertainty of estimates are as follows: Amortisation/depreciation rates Amortisation and depreciation rates are established on the basis of expected economic usability periods of tangible fixed assets and intangible assets. The Group annually reviews the economic usability periods based on current estimates. Provisions Starting from 2014, provisions for retirement benefits are established using actuarial valuations. Provisions for unused holiday leaves are estimated by the financial services staff. Provisions for anticipated costs of trade, unused holiday leaves and other receivables are disclosed in Note

17 Receivables' write-downs The Group creates allowances for impairment losses of receivables in accordance with established internal procedures. Description of write-downs is presented in Note 27. Deferred tax When creating the deferred income tax assets the Group takes into account their potential use in the foreseeable future, taking into account the prudence principle. The asset is reckoned towards the deferred income tax assets based on an assumption of generation of the future tax profit and of the use of accumulated losses from previous years. Deterioration of tax results could make this assumption unjustified. The Management Board of the Parent Company reviews estimates as to the probability of recovery of deferred tax assets by analysing changes in factors taken into account for their purposes, new information and past experiences. In order to optimise tax costs related to the potential use of tax losses from previous years, the Parent Company decided, starting from , to reduce tax depreciation rates for fixed assets depreciated on the straight-line basis to 0.01 %. Description of the deferred tax assets and liabilities is presented in Note Accounting principles The Parent Company has not changed its accounting principles as compared to those presented in the annual report for The selected assumptions of current accounting policies are presented below Principles of consolidation The consolidated financial statements include the financial statements of PCC Intermodal S.A. and the financial statements of its Subsidiary for the period of The financial statements of the Subsidiary are prepared for the same reporting period as the Parent Company's statements, using consistent (though not the same) accounting principles, on the basis of uniform accounting principles applied for transactions and economic events of similar nature. In order to eliminate any discrepancies, the applied accounting principles are corrected and adjusted. All significant inter-company balances and transactions between Group companies, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless they prove impairment. The Subsidiary is consolidated in the period from the date of control take-over by the Parent Company, and ceases to be consolidated from the date that control ceases. The control by the Parent Company takes place when it holds directly or indirectly, through its subsidiaries, more than half of the votes in a given company unless it may be proved that such ownership cannot be regarded as a control. Control is also exercised when the Parent Company has the possibility to affect the financial and operating policies of a given entity. 17

18 12.2 Conversion of items denominated in foreign currencies The Parent Company Transactions denominated in currencies other than the Polish zloty are translated into Polish zloty using the exchange rate prevailing at the transaction date or the rate announced for a given transaction in accompanying futures contract. At the end of the reporting period, assets and liabilities denominated in currencies other than the Polish zloty are translated into Polish zloty at the average exchange rate set for a given currency by the National Bank of Poland prevailing at the end of the reporting period. Non-monetary assets and liabilities recognised at historical cost denominated in a foreign currency are disclosed at historical cost prevailing on the transaction date. Non-monetary assets and liabilities recognised at fair value expressed in a foreign currency are translated using the exchange rate prevailing at the date of re-measurement to fair value. The conversion at the date of control / joint control take-over At the date of control take-over by the Parent Company over the Subsidiary, all items of the financial statements expressed in foreign currency are translated into Polish zloty according to the average exchange rate for a given foreign currency announced by the National Bank of Poland applicable on that date. Measurement as of the Balance Sheet Day Financial statements of the Subsidiary are translated into Polish currency as follows: items of the statement of financial position, with the exception of equity, are converted based on the average exchange rate established by the National Bank of Poland for the end of the reporting period; items of the statement of comprehensive income are converted based on the average exchange rate announced by the National Bank of Poland for the last day of each financial month of the reporting period; equity, converted as at the date of control take-over by the Parent Company, based on the average exchange rate announced for that day by the National Bank of Poland, is recognised in that amount in subsequent consolidated financial statements. Exchange differences arising from translation are recognised directly in equity as a separate component. They consist in particular of: exchange differences resulting from translation into Polish currency of equity according to the average exchange rate announced for each currency by the National Bank of Poland at the balance sheet date and exchange differences arising from translation into Polish currency of net financial result according to the average exchange rate announced for each currency by the National Bank of Poland at the balance sheet date. 18

19 PLN average exchange rates in relation to EUR in analysed periods were the following: Financial period Average exchange rate in the period Exchange rate as at the last day of the period Tangible fixed assets Tangible fixed assets are recognised at purchase price/ production cost less accumulated depreciation and any impairment losses. The initial value of tangible asset comprises its purchase price plus all costs directly related to the purchase and asset adaptation to be suitable for use. The cost also includes the cost of replacing parts of machines and equipment when it is incurred, if the recognition criteria are met. Costs incurred after the date of placing the asset for service, such as maintenance and repair costs, are recognised when incurred. Fixed assets at the time of purchase are divided into component parts which are items of significant value, which can be assigned different economic usability periods. Essential spare and service parts are recognised as tangible fixed assets and are not depreciated. The carrying value of a tangible asset is recognised with regular cost of major overhauls, which are necessary to prevent the defects, and whose value at each reporting period differs significantly. The value of the overhaul is depreciated during the period before the next overhaul or before the end of useful life of the fixed asset, depending on which moment occurs first. Any remaining carrying value of the previous overhaul cost is removed from the carrying value of the asset. Methods of tangible assets depreciation and annual depreciation rates are shown below: Fixed assets group Name Method Annual rate of the balancesheet depreciation Annual rate of the tax depreciation 0 Land and the right of perpetual usufruct Straight-line 0% 0% 1 Buildings and premises Straight-line 1.5% - 25% 0.01% 2 Civil and water engineering structures Straight-line 1.5% - 25% 0.01% 3 Boilers and power generating units Straight-line 4% - 14% 0.01% 4 Machinery, devices and general equipment Straight-line 7% - 30% 0.01% 5 Specialist machinery, devices and general equipment Straight-line 7% - 25% 0.01% 6 Technical equipment Straight-line 1.5% - 25% 0.01% 7 Means of transport Straight-line 5% - 80% 0.01% Tools, appliances, movables and equipment with an initial net value Straight-line 10% - 50% 0.01% 8 of PLN 400 to 3,500 Tools, appliances, movables and equipment below net value of PLN 400 Single write-off 100% 100% 19

20 If circumstances occurring when the consolidated financial statements were drawn up indicate that the carrying value of tangible assets may be non-recoverable, such assets are reviewed for potential impairment. Where there are indications of impairment and the carrying value exceeds the estimated recoverable value, the value of such assets or cash-generating units to which these assets belong, is reduced to the level of recoverable amount. Impairment losses are recognised in the statement of comprehensive income under other operating expenses. In the event of cessation of the cause for which an impairment loss was made, the equivalent of the whole or part of the asset is subject to appropriate adjustment in the revaluation reserve or other operating income. Depreciation method, depreciation period and the end (residual) value should be reviewed at each balance sheet date. Any changes resulting from verification are recognised as changes in estimates. Land is not depreciated. Rights to perpetual usufruct of land are displayed in tangible fixed assets and are treated as land. Rights to perpetual usufruct of land are used by the Group for its core business operations. Rights to perpetual usufruct of land used by the Group for its investment activity, are recognised in accordance with IAS 40 in their fair value as investment property. Launched investments concerning tangible assets under construction or assembly are recognised at acquisition or production cost. Tangible assets under construction are not depreciated until construction is completed and the asset is placed for service Goodwill Negative goodwill represents the excess of the fair value of the identifiable net assets of the subsidiary or associate over acquisition price at the date of control take-over, or date from which significant control is exercised. The surplus after the valuation relates directly to the profit of the financial year in which the acquisition took place. Goodwill represents the excess of the acquisition price of a particular entity or its parts over the fair value of net assets acquired. At the end of the reporting year the impairment test is carried out. For any impairment loss an allowance is made, which is recognised directly in other operating expenses Intangible assets Intangible assets are initially valued at acquisition or production cost. After initial recognition, intangible assets are carried at their acquisition or production cost less any accumulated amortisation and / or impairment losses. Expenditure on intangible assets manufactured in-house, with the exception of capitalised expenditures for development work, is not capitalised and is included in the cost of the period in which it is incurred. 20

21 Methods of intangible assets amortisation and annual amortisation rates are shown below: Fixed assets group 9 Name Method Annual rate of the balancesheet amortisation Annual rate of the tax amortisation Intangible assets under PLN 400 Single write-off 100% 100% Intangible assets PLN 400-3,500 Straight-line 50% 50% Intangible assets above PLN 3,500 Straight-line 14% - 50% 14% - 50% Intangible assets are amortised over the life and tested for impairment whenever there are indications of loss of their value External financing costs (borrowing costs) External financing costs directly attributable to the acquisition or manufacture of assets that require significant time to put them to service, are capitalised as a part of the acquisition or production cost until these assets are ready for use or sale. The external financing costs consist of interest and exchange gains or losses to the amount of the interest cost adjustment. Other external financing costs are recognised as expenses when incurred Leases Lease contracts under which substantially all the risks and rewards are transferred to the Group in respect of the leased asset, in accordance with the provisions of IAS 17 are classified as finance leases. Such contracts (where the Group is the lessee) result in disclosing leased assets and their respective liabilities in the Group balance sheet. Initially (at initial recognition) assets and liabilities are recognised at the lower of the two values; the fair value of the leased asset at the inception of the lease (if it is possible to determine) or the present value of minimum lease payments at the inception of the lease. Lease payments (rent) incurred by the Group are apportioned between reduction of the outstanding lease liability and financial expenses. Financial expenses are accounted for and recognised in the statement of comprehensive income during the period of the lease. Finance leases are depreciated in accordance with the rules adopted for tangible assets. If there is no reasonable certainty that the lessee will obtain ownership by the end of the lease, the asset is depreciated over the shorter of the asset's lease term or its useful life Recoverable value of the long-term assets At each balance sheet date the Group assesses the assets for indications of impairment. If there is such an indication the Group makes a formal estimate of the recoverable amount. If the carrying value of an asset or cash-generating unit exceeds its recoverable value, the value is impaired and an impairment write down is recognized up to the level of the recoverable value. The recoverable value is one of two values depending on which of them is higher: the fair value less costs of sale and value in use of the asset or cash generating unit. 21

22 In determining value in use, estimated future cash flows are discounted to present value using a gross discount rate that reflects the current market value of money in time and the risks associated with the asset. For an asset that does not generate cash in a manner substantially independent, the recoverable value is determined for the cash generating unit to which the asset belongs Financial instruments Financial instrument is any contract that gives rise to a financial asset for one party and a financial liability or equity instrument for another party. The Group classifies financial instruments that are measured at fair value, hierarchically in accordance with the three main levels of the fair value, reflecting the basis adopted for valuation of each instrument. The fair value hierarchy is as follows: Level 1 - quoted market prices in active markets for identical assets and liabilities (such as quoted shares and bonds). Level 2 - prices in active markets, but other than quoted market prices - determined directly (by comparison with actual transactions) or indirectly (through techniques based on actual transactions) - for example most derivatives. Level 3 - Prices not originating in active markets. Position of the financial instrument in the fair value hierarchy is determined by the lowest measurement basis affecting determination of its fair value. The Group classifies financial assets into the following categories: Financial assets at fair value through profit and loss; Loans and receivables; held-to-maturity financial assets;; Financial assets available for sale. Financial liabilities are divided into: Financial liabilities at fair value through profit and loss; Financial liabilities at amortised cost; The basis of classification is the purpose of acquiring the financial assets and their character. The Group establishes the classification of its financial assets at initial recognition and verifies the classification at each reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Depending on their maturity they are classified as fixed assets (assets due within the period longer than one year from the reporting date) or current assets (assets due within one year from the reporting date ) Loans and receivables are measured at the balance 22

23 sheet date at amortised cost. Trade receivables and bank deposits and other cash equivalents, as well as loans and acquired unlisted debt instruments not included in other categories of financial assets are mainly classified to this group. Financial assets available for sale Financial assets available for sale are financial instruments other than derivatives designated as "available for sale" or not elsewhere classified. As financial assets available for sale, the Group mainly classifies equity investments not subject to consolidation. Financial assets available for sale are classified as fixed assets unless the investment is intended for disposal within one year from the balance sheet date, and otherwise they are classified as current assets. Financial assets available for sale are measured at each reporting date at fair value, and gains and losses (except for impairment losses) are recognised in equity. Financial liabilities at fair value through profit and loss; Financial liabilities are measured at the time of their inclusion in the accounts at fair value. The initial valuation includes transaction costs, except for financial liabilities classified as at fair value through profit or loss. The transaction costs of financial liability disposal are not included in the subsequent valuation of these liabilities. The financial liability is recognised in the statement of financial position when the Group becomes a party to the agreement (contract) from which the financial liability arises. Financial liabilities at amortised cost Other financial liabilities not classified as financial liabilities at fair value through profit or loss (financial result) are classified as financial liabilities measured at amortised cost. The Group classifies in this category mainly trade and other liabilities and borrowings. Liabilities included in this category are measured at amortised cost using the effective interest rate method Inventory Purchased materials are disclosed in the actual purchase prices and their record is carried out using the value method. Expenditures are valued at actual acquisition cost using the FIFO method. The value of the final inventory is determined on the basis of monthly physical inventory (quantity and value). Services in progress are valued at technical manufacturing cost at the end of each month. Determination of services in progress is carried out by comparing costs and revenues of individual orders within a given month. The value of services in progress is represented by costs of orders within a given month for which no revenue was recognised (revenue value within a given order in a month is zero ) Inventories are disclosed at net value, i.e. at cost less impairment losses. The write-downs on the inventory are made in relation to loss of their value in order to bring the inventory to the level of the net realisable value. Impairment losses are recognised in the statement of comprehensive income, as cost of sales. Reversal of inventories impairment loss is recognised as an adjustment to cost of sales. 23

24 12.11 Receivables for deliveries and services and other receivables Receivables for deliveries and services and other receivables are valued at the balance sheet date at amortised cost (i.e. discounted using the effective interest rate) less accumulated impairment losses. In the case of short-term receivables with a maturity date of up to 360 days, this valuation corresponds to the amount receivable. When the effect of time value of money is significant, receivables are determined by discounting the expected future cash flows to their present value using a gross discount rate that reflects current market assessments of the time value of money. If the discounting method was used, an increase in receivables due to the passage of time is recognised as financial income. Receivables not representing financial assets are initially recognised at their nominal value and are measured at the balance sheet date in the amount due. Receivables are adjusted taking into account the probability of their repayment, by means of respective write-down. Allowance for impairment of receivables is established when there is objective evidence that it will not be possible to collect all amounts due according to the original contractual terms. Assessment of whether there is objective evidence of impairment of receivables is performed on a current basis, after receiving information on the objective evidence that may determine the impairment, but not more rarely than at the balance sheet date. If there is objective evidence of impairment of receivables carried at amortised cost, the amount of the impairment loss is determined as the difference between the carrying value of receivables and the present value of future cash flows discounted using the effective interest rate. The probability of future cash flows is determined based on an analysis of historical data. The amount of write-downs may be reduced if the Management Board has reliable documents which show that the receivables are secured and their payment is highly probable. In particular, the write-off is made in the amount of 100% in respect of receivables: from debtors in liquidation or bankruptcy to the amount of receivables not covered by the guarantee or other collateral reported to the liquidator or official receiver in bankruptcy proceedings; from debtors in the event of dismissal of the bankruptcy petition, if the debtor's assets are not sufficient to cover the costs of the bankruptcy proceedings - in the full amount of the debt; contested by the debtor (receivables in dispute), where the debtor delays payment, and according to assessment of its economic and financial situation, debt payment in the contractual amount is not probable - to the amount of the claim not covered by the guarantee or other collateral; claimed in court. Receivables' write-downs are recognised in other operating expenses. Reversal of receivables' writedowns is recognised in subsequent periods if the impairment was reduced, and the growth of receivables' value may be attributed to events occurring after recognition. As a result of the reversal, the carrying value of financial assets may not exceed the amortised cost that would have been determined if the impairment loss had not been previously recognised. Reversal of the impairment loss is recognised in the statement of comprehensive income as an adjustment to other operating expenses or as other operating income. 24

25 12.12 Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value Other assets and prepaid expenses The Group recognises assets as prepayments, if the following conditions are met: if they result from past events - expenditure incurred for the operational objective; if they can be reliably measured; if they relate to future reporting periods. Prepayments are recognised in the amount of incurred, reliably established expenses that relate to future periods and will bring economic benefits to the Group in the future. Prepayments are recognised in relation to time covered or the amount of the benefits. The time and manner of settlement is justified by the character of settled costs in accordance with the prudence principle. At the end of the reporting period, the Group assesses prepaid expenses in order to check whether the degree of certainty as to economic benefits to be achieved at the end of the current financial period is sufficient to be able to demonstrate an item as an asset. Prepaid expenses are presented in the statement of financial position under "Other receivables" Equity In the financial statements of the Group, the equity is composed of: share capital recorded in the amount recognised in the Articles of Association and the National Court Register of the Parent Company; Supplementary capital from the issue of shares above their nominal value; other supplementary capital; other comprehensive income; revaluation reserve; other reserve capital; exchange differences arising on the translation of subsidiary operations; retained earnings, which consist of retained profit or accumulated loss from previous years; profit or loss for the current period Interest-bearing bank credits, loans, borrowings and debt securities On initial recognition, all bank credits, loans, borrowings and debt securities are initially recognised at cost, being the fair value of cash received less the costs associated with obtaining the credit/loan. After initial recognition, interest-bearing credits, loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. 25

26 The amortised cost includes the costs associated with obtaining the credit/loan and any discount or premium on settlement. Gains and losses are recognised in the statement of comprehensive income when the liability is removed from the statement of financial position Trade and other liabilities Liabilities are the current obligation, resulting from past events, the fulfilment of which is expected to result in an outflow from the Group of resources embodying economic benefits. Liabilities are measured at their payable value. If the effect of changes in time value of money is significant, the long-term liabilities are presented in the current (discounted) value. The liability is classified as short-term liability if it: is expected to be settled in the normal operating cycle; is held primarily for the purpose of trading; is due within 12 months from the balance-sheet date; or the Group does not have an unconditional right to defer settlement of the liability for at least twelve months from the balance sheet date. The liabilities that do not meet the above criteria are classified as the long-term liabilities. If the Group expects, and has the ability to refinance or roll over the liability for at least twelve months after the balance sheet date under an existing credit agreement, the liability is classified as the longterm, even if it would be otherwise due within the shorter period. However, when refinancing or rolling over the liability is not at the discretion of the Group (for example, there is no agreement to refinance), it may not be considered that there is the possibility of refinancing, and the liability is classified as the short-term liabilities. Certain short-term liabilities, such as trade liabilities and some accruals for the costs of salaries and other operating costs, are part of the working capital used in the normal operating cycle. Such items related to operating activities are classified as short-term liabilities even if they are due to be settled more than twelve months from the balance sheet date Provisions Provisions are created when the Group has an obligation (legal or customary) as a result of past events, and if it is probable that the fulfilment of this obligation will cause an outflow of economic benefits, and if it is possible to make a reliable estimate of the amount of the obligation. When the effect of time value of money is material, the provision is determined by discounting the expected future cash flows to their present value using a gross discount rate that reflects current market assessments of the time value of money and of the probable risk related to the liability. If the discounting method was used, an increase in provisions due to the passage of time is recognised as financial expense. 26

27 12.18 Employee benefits Retirement benefits In accordance with the provisions on the remuneration of employees applicable for the Parent Company, employees are entitled to retirement benefits. The Parent Company does not assign assets that would be used for future retirement benefits. The Parent Company creates a provision for future retirement benefits in order to allocate costs to relevant periods. The value of future retirement benefits is calculated by a qualified actuary using the method of accumulated future benefits, taking into account the projected increase in remuneration, which is the basis for assessment of future benefits, the assumed discount rate, under the condition of remaining in employment with the current employer (the probability of acquiring the right to a one-time retirement benefit). The provision amount is updated once a year - at the end of the year. The adjustment increasing or decreasing the amount of the provision is recognised in other operating expense. Benefits associated with the termination of employment In the event of termination of employment, the employees of the Parent Company are entitled to benefits provided for by the labour laws applicable in Poland, an equivalent for unused annual leave. The provision for the equivalent for unused holiday leaves is updated on the last day of the financial year and on the last day of the quarter of that year Accrued expenses and deferred income Accrued expenses are liabilities to pay for goods or services that have been realised but not paid, invoiced or formally agreed with the supplier, including amounts due to employees. Despite the fact that sometimes there is a need to estimate the amount or timing of accruals, the uncertainty is usually lower than for provisions. The Group establishes accruals for anticipated costs: whose creation is certain or highly probable; that arise from past events and will result in use of existing or future assets of the Group; for which it can be reliably estimated. Accruals are presented in the statement of financial position together with the liabilities. Deferred income is booked prudently and matching revenues and expenses. Deferred income relates mainly to the cash received to finance the acquisition or production of tangible fixed assets. Settlement is carried out by a gradual increase in other operating income by an amount equal to the depreciation of these assets in part financed by these funds. This applies in particular to subsidies for the purchase of fixed assets. 27

28 12.20 Deferred tax The Group determines deferred taxes using the liability method. This method is based on differences between the tax base of an asset or liability and its carrying value. Deferred income tax is determined using tax rates and laws that are expected to apply when the asset is realised or the provision is settled, based on tax rates and tax laws in force at the balance sheet date. Deferred tax liabilities arise as a result of taxable temporary differences between the tax bases of assets and liabilities and their carrying amounts. Deferred tax assets arise from deductible temporary differences between the tax bases of assets and liabilities and their carrying amounts and unused tax losses and tax credits transferred for further periods. Deferred tax assets are recognised only if there is a likelihood of generating future taxable income in amount allowing it to deduct temporary differences or to use tax losses. Deferred tax assets and the provision for deferred income tax are not discounted. Deferred tax assets and deferred tax liabilities are offset when the Group companies: have a legally enforceable right to offset the recognised amounts; deferred tax assets and the provision for deferred income tax relate to income tax imposed by the same tax authority on the same tax payer or different tax payers, which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously. The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be reached to realise in part or in whole the deferred tax assets. Income tax relating to items recognised outside the statement of comprehensive income is recognised in other comprehensive income or directly in equity Revenues from sales Revenues are recognised to the extent that it is probable that the Group will receive economic benefits associated with the transaction concerned and if the revenue amount can be reliably measured. Revenues are recognised net of value added tax (VAT). Revenues are measured at the fair value of the consideration received or receivable. Revenues are measured at the present discounted value if the effect of changes in time value of money is material (and the period to obtain payment that is longer than 360 days is considered as such). When recognising revenues the following criteria must be also met. Provision of services Revenues from the provision of services that can be reliably estimated are recognised by reference to the stage of completion if their completion level may be determined. 28

29 Interest Interest income is recognised as it accrues (using the interest rate method, which defines the discount rate for future cash income during the estimated financial instruments usage period) in relation to the net carrying amount of the financial asset. Dividends Dividends are recognised at the time of establishment of the shareholders' rights to receive them. Government subsidies The Group recognises government subsidies at the time of the reasonable assurance that the subsidy will be received and that the Company will comply with the relevant conditions. In order to recognise government subsidies, both of the above conditions must be met. Where the subsidy relates to an asset, its fair value is recognised as deferred income and then it is gradually written off, by way of equal annual downs, to the statement of comprehensive income for the estimated service life of a related asset item. If the subsidy relates to a given expenditure, it is recognised as revenue proportionally to the costs which the subsidy was to compensate. If the subsidy is a form of compensation for costs or losses already incurred, or has been granted to the entity in order to provide it with immediate financial support, with no future related costs, it is recognised as revenue in the period in which it becomes receivable. Tangible fixed assets and intangible assets received in the form of subsidies are recognised at fair value Costs of products and services sold Cost of products and services sold includes: service costs incurred during the reporting period; costs of provisions relating to the reporting period; adjustment to the cost of services in progress. General administration costs are shown separately in the statement of comprehensive income. Production costs that are directly attributable to revenues recognised by the Group affect the financial result for the reporting period in which they were incurred. Costs of production that can be only indirectly assigned to revenues or other benefits achieved by the Group affect the financial result in the part in which they relate to the reporting period, ensuring that they match the income or other economic benefits. 29

30 12.23 Other operating revenue and cost Other operating revenues and costs cover in particular items related to: disposal of tangible fixed assets and intangible assets; creation / dissolution (release) of impairment write-downs for fixed assets, intangible assets and debts; creation and dissolution (release) of provisions, with the exception of provisions related to financial operations or recognised as cost of sales; compensation, penalties and fines and other costs unrelated to normal operations; transferring or acquiring, free of charge of which by donation, assets, including cash Financial income and expenses Financial income and expenses include, in particular, revenues and expenses related to: disposal of financial assets; revaluation of financial instruments; interest; exchange rate differences resulting from operations during the reporting period and the valuation of assets and liabilities at the end of the reporting period, except for exchange differences recognised in the initial value of the assets to the extent that they are regarded as an adjustment to interest costs. Current tax Income tax Current tax is calculated based on the tax result (taxable base) for the financial year. Profit (loss) for tax purposes differs from the net profit (loss) in connection with the exclusion of non-taxable income and the costs which are not tax deductible expenses. Tax is calculated based on the tax rates applicable in the financial year. Deferred tax Changes in the reporting period in the carrying amounts of assets and provisions for deferred income taxes are recognised in the statement of comprehensive income, unless they relate to items recognised in the statement of financial position, with changes in the carrying amounts recognised in equity and not in the statement of comprehensive income. 13. Information about operating segments The core business of the Group is the intermodal transport, which consists of several stages: railway transport, cargo handling and other terminal operations, car transport and related forwarding services. No operating segments under IFRS 8 have been distinguished for management purposes as part of the Group operations. The Management Board analyses Group's financial condition (as a single operating segment) on the basis of financial statements. 30

31 13.1 Products and services Revenue from sales of services 185, ,955 - intermodal transport 168, ,147 - forwarding 16,354 13, Geographical structure of sales Geographical breakdown of sales was carried out by location of customers. Recipient's country Poland 73,867 61,969 EU countries 90,818 68,485 The rest of the world 20,636 19,501 Total 185, , Major customers The revenues from sales amounting to PLN 185,321 thous. (in 2013: PLN 149,955 thous.) include revenues of PLN 21,061 thous. (in 2013: PLN 18,108 thous.) from the sales to the Company's largest customer. No other single customer accounted for more than 10% of sales revenue both in 2013 and in Revenues from sales In the analysed period, revenues from the sale of services amounted to PLN 185,321 thous. (in the comparative period - PLN 149,955 thous.), which accounted for 100% of total sales revenue. 15. Costs by type, including employee benefits Costs by type Amortisation and depreciation 4,526 4,245 Material and energy consumption 4,429 3,735 External services 153, ,646 Taxes and fees 1,843 1,379 Employee benefits 18,427 16,391 Other costs by type 1,388 1,432 Consolidation note (5,327) (5,170) Total costs by type: 178, ,658 Change in the inventory, work-in-progress as well as prepayments and accruals Cost of products manufacturing for the entity s own needs (251) (239) Total, including 178, ,456 Costs of products and services sold 167, ,465 General administration costs 11,543 11,991 Employee benefits Payroll 16,097 14,368 Social insurance and other benefits 2,330 2,023 Total 18,427 16,391 31

32 16. Other operating revenue and cost Other operating revenue Gain on disposal of non-financial fixed assets Subsidies Penalties and damages Released provisions Remuneration of the payer of the personal income tax and the social insurance contributions 3 2 Profit on subsidiary purchase transaction 0 6 Other Total 1,635 1,977 In 2013, the Parent Company recognised revenue from the received EU subsidy to co-finance construction of the terminal in Kutno in the amount of PLN 842 thous. A part of this amount (PLN 688 thous.) related to settlement of amortisation from the initial value corresponding to the co-funding amount for the period from the start of amortisation until the inflow of the subsidy. Other operating costs Penalties and damages Created provisions Receivables' impairment allowances Membership fees Charitable contributions 0 6 Other Total 1, Financial revenue and expenses Financial revenue Interest Foreign exchange gains Total Financial expenses Interest Foreign exchange losses 0 84 Other 36 0 Consolidation note 0 (2) Total Income tax 18.1 Tax burden Income tax applied to financial result Current tax 3 7 Deferred tax (454) (417) Total income tax (451) (410) 32

33 Income tax related to other comprehensive income Income tax related to actuarial gains/loss 3 0 Total income tax related to other comprehensive income Reconciliation of gross financial result before tax to the tax base Profit /(loss) before tax 6, Increase in tax costs 3,691 2,509 Costs that do not constitute tax deductible costs 6,614 5,549 Increase in tax revenues Non-taxable revenues 403 1,216 Tax-free income 43 0 Consolidation note (12) (15) The basis for calculating the income tax 9,528 1,917 Use of previous years' loss 9,525 1,910 Current income tax disclosed in the statement of comprehensive income Deferred income tax Deferred income tax assets as at as at Tax loss 1,246 1,246 Depreciation / amortisation differences 1, Receivables' write-downs 2 28 Exchange rate differences on receivables valuation 0 13 Exchange rate differences on cash valuation 0 9 Exchange rate differences on loan valuation 2 0 Exchange rate differences on investment credit valuation 3 0 Exchange rate differences on leasing valuation 18 1 Exchange rate differences on liabilities valuation 21 0 Provision for retirement benefits and holiday leaves Provision for balance sheet inspection costs 9 9 Remaining provisions Unpaid interest 1 0 Payroll and ZUS liabilities 45 5 Total deferred income tax assets, of which: 2,589 1,925 applied to the financial result 2,586 1,925 applied to equity

34 Provision in respect of deferred income tax as at as at Exchange rate differences on cash 2 0 Surplus of tangible assets net value over liabilities Exchange rate differences on receivables valuation 26 0 Exchange rate differences on liabilities valuation 0 7 Total deferred income tax liability, of which: applied to the financial result applied to equity Net profit (loss) attributable to one share Net profit / loss per 1 share for every period is calculated by dividing the net profit / loss for a given period by the weighted average number of shares in the given reporting period. Diluted profit / loss per share is equal to the basic profit / loss, as there are no instruments dilutive for profit / loss per share. During the periods under analysis no discontinued operations were noted Net profit (loss) on continuing operations in thous. PLN 7, Weighted average number of ordinary shares 77,565,556 77,565,556 Weighted average diluted number of ordinary shares 77,565,556 77,565,556 Basic profit / loss per one share in PLN Diluted profit/ loss per one ordinary share in PLN Tangible fixed assets The tangible fixed assets include the following generic groups: Generic groups of fixed assets as at as at Land (including the right to perpetual use of land) 11,271 10,217 Buildings, premises, civil and water engineering structures 63,464 38,778 Technical equipment and machines 2,322 2,484 Means of transport 27,209 20,074 Other tangible assets Tangible assets under construction 25,466 14,372 Advances for tangible assets under construction 36,341 5,900 Total 166,362 92,073 34

35 Buildings, Advances Technical Tangible premises, civil Other for tangible equipment Means of assets Tangible assets movement table for 2014 Land and water tangible assets TOTAL and transport under engineering assets under machines construction structures construction Gross value of tangible assets as at ,217 40,903 3,532 33, ,372 5, ,119 Increase (due to) 1,054 26, , ,875 57, ,387 Purchase, receipt of tangible assets under construction 1,054 25, , ,452 Capital expenditure on tangible assets under construction ,293 57, ,873 External financing costs (borrowing costs) , ,062 Decrease (due to) , ,781 27,139 67,643 Sale, liquidation , ,723 Receipt of tangible assets under construction ,781 27,139 64,920 Gross value of tangible assets as at ,271 66,375 3,695 41, ,466 36, ,863 Accumulated depreciation as at ,125 1,048 13, ,046 Depreciation for the period (due to) , ,455 Depreciation charge 0 1, , ,359 Sale / liquidation of tangible assets 0 (232) (64) (1,600) (8) 0 0 (1,904) Accumulated depreciation as at ,911 1,373 14, ,501 Allowances for impairment losses as at Increases Decreases Allowances for impairment losses as at Net value of tangible assets as at ,271 63,464 2,322 27, ,466 36, ,362 35

36 Tangible assets movement table for 2013 Land Buildings, premises, civil and water engineering structures Technical equipment and machines Means of transport Other tangibl e assets Tangible assets under construc tion Advances for tangible assets under construction Gross value of tangible assets as at ,084 41,019 3,427 30, ,156 5,821 96,948 Increase (due to) 2, , , ,259 Tangible assets of the Subsidiary at the acquisition date Purchase, receipt of tangible assets under construction 2, , ,961 Capital expenditure on tangible assets under construction , ,777 External financing costs (borrowing costs) Other Decrease (due to) , ,088 Sale, liquidation ,108 Receipt of tangible assets under construction , ,980 Gross value of tangible assets as at ,217 40,903 3,532 33, ,372 5, ,119 Accumulated depreciation as at , , ,445 Depreciation for the period (due to) , ,601 Depreciation of tangible assets of the Subsidiary at the acquisition date Depreciation charge , ,077 Sale / liquidation of tangible assets 0 (65) (46) (368) (2) 0 0 (481) Accumulated depreciation at ,125 1,048 13, ,046 Allowances for impairment losses as at Increases Decreases Allowances for impairment losses as at Net value of tangible assets as at ,217 38,778 2,484 20, ,372 5,900 92,073 TOTAL 36

37 The value of capitalised borrowing costs in tangible fixed assets amounted to PLN 2,062 thous.in 2014, while in 2013 it was PLN 419 thous In 2014 there were concluded lease contracts for trailers and cars, off-balance sheet, with a value of PLN 490 thous. The value of fixed assets held under finance lease contracts amounted to PLN 9,032 thous. as at and PLN 10,501 thous. as at In 2014, the Parent Company entered into operating lease contracts for cars, off-balance sheet, with a value of PLN 449 thous. Fixed assets that are pledged as collateral of credit agreements are set out in note 34. The total value of tangible fixed assets purchased in 2014 was PLN 49,117 thousand, while the value of purchased intangible assets was PLN 174 thous. The above-mentioned amount of PLN 4,542 thous. constituted the settlement of a part of the advance paid in 2012 against the construction of crane at the terminal in Frankfurt (joint investment with the city of Frankfurt). The remaining advance payment to be settled is PLN 1,400 thous. Besides, in connection with the ongoing construction work in 2014, advance was paid to contractors in Brzeg Dolny in the amount of PLN 20,298 thous. and in Gliwice - PLN 3,507 thous. Besides, advances were paid for cranes in Kutno, in the amount of PLN 11,111 thous. and other advances of a total balance of PLN 24 thous. In the analysed period, there was also accepted for use the second stage of construction of the terminal in Kutno in the value of PLN 25,733 thous. and extension of the terminal in Dębica in the value of PLN 655 thous. The right of perpetual usufruct was bought in Brzeg Dolny of the value of PLN 1,054 thous. Besides, cargo handling equipment, trailers and other means of transport, of PLN 10,081 thous., were purchased and adapted for use. The net value of fixed assets sold in the analysed period was PLN 819 thous. Gain on sale of tangible assets (mainly means of transport) amounted to PLN 51 thous. Liabilities under investment purchases at amounted to PLN 669 thousand, (Including PLN 42 thous. to affiliated entities), at these liabilities amounted to PLN 8,997 thous. (including PLN 8,891 thous. to affiliated entities). At the end of 2014 there was created a provision for work performed in Kutno and not invoiced, in the amount of PLN 6,389 thousand. As at , investment commitments arising from agreements concluded before the balance sheet date, which would be met in the future, amounted to PLN 89.1 million and are related to construction work in Brzeg Dolny (PLN 42 million) and in Gliwice (PLN 23.2 million) as well as to purchase and assembly of cranes in Kutno (PLN 9.1 million) and in Gliwice (PLN 14.8 million). These amounts include investment obligations related to projects subject to funding from the European Union. 37

38 Key investment projects disclosed under tangible assets under construction are presented in a table below: Project name as at as at Terminal in Kutno 6,171 2,825 Terminal in Brzeg Dolny 9,904 7,682 Terminal in Gliwice Terminal in Frankfurt 5, Terminal in Sosnowiec 2,426 2,426 Other terminals Other tangible assets under construction Total 25,466 14, Intangible assets Intangible assets are amortised over their estimated useful life. The Company has no intangible assets produced in-house. 38

39 Changes in intangible assets (by generic groups) 2014 Acquired concessions, patents, licences, including software Expenditure on intangible assets TOTAL Gross value of intangible assets as at Increase (due to) Purchase, receipt of intangible assets under construction Capital expenditure on intangible assets under construction Decrease (due to) Sale, liquidation Gross value of intangible assets as at ,020 Accumulated amortisation as at Amortisation for the period (due to) Depreciation charge Sale / liquidation Accumulated amortisation as at Allowances for impairment losses as at Increases Decreases Allowances for impairment losses as at Net value of intangible assets as at

40 Acquired concessions, Changes in intangible assets (by generic groups) 2013 patents, licences, including software Gross value of intangible assets as at Increase (due to) 193 Purchase, receipt of intangible assets under construction 193 Decrease (due to) 45 Sale, liquidation 45 Gross value of intangible assets as at Accumulated amortisation as at Amortisation for the period (due to) 125 Depreciation charge 169 Sale / liquidation (44) Accumulated amortisation at Allowances for impairment losses as at Increases 0 Decreases 0 Allowances for impairment losses as at Net value of intangible assets as at Acquisition of economic units No economic units were acquired in On 24 January 2013, PCC Intermodal SA acquired 100% of the shares of PCC Intermodal GmbH from PCC SE, with economic effect as of 1 January 2013 (the right to participate in profits). Payment for the acquired shares, in the amount of EUR 25 thous., was made in cash, from own funds. PCC Intermodal GmbH is an exclusive operator of the terminal in Frankfurt, providing its services to PCC Intermodal S.A. 23. Investments in other entities Investments in other entities (PLN 45 thous.) constitute unlisted equity securities representing the right to share that could potentially benefit the Group in the form of dividends, and their fair value was determined based on the purchase price. 24. Deferred income tax assets Deferred income tax assets Opening balance 1,925 1,378 - including applied to equity 0 0 Increases including applied to equity 3 0 Decreases including applied to equity 0 0 Closing balance 2,589 1,925 - including applied to equity

41 25. Inventory Inventory as at as at Materials at purchase price Work-in-progress (at generation cost) Total inventory The Group has not established any allowances for impairment of inventories. No category of inventory was used to secure borrowings in 2013 and Trade and other receivables Receivables as at as at Trade receivables 21,600 16,014 Security deposits, guarantees Tax receivables 9,382 3,352 Prepayments, of which: insurance subscription other prepayments Other receivables Total net receivables 31,661 20,149 Trade and other receivables are measured at amortised cost less impairment losses. The book value of receivables approximates their fair value. Description of risks related to receivables from trade and other receivables and the Group's policy on the management of these risks is contained in section Assets write-downs Assets write-downs Opening balance of receivables' write-downs Recognition of write-downs Use of write-downs Release of write-downs offset in other operating income 1 0 Closing balance of receivables' write-downs In 2014, write-downs on receivables of a value of PLN 187 thous. were used or released and new write-downs were made to the amount of PLN 50 thous. In 2013, there were made write-down on trade receivables in the amount of PLN 16 thous., and bad debts, previously covered by write-downs of a value of PLN 65 thous., were written off. 41

42 28. Cash and cash equivalents Cash and cash equivalents as at as at Cash at bank 13,140 9,422 Cash on hand 11 5 Other cash 13,151 9,427 Cash at banks earns interest at floating rates, which depend on short-term interest rates in the interbank market. Short-term deposits are made for varying periods of between one day and three months, depending on the requirements of the Group for cash, and earn interest at fixed interest rates. 42

43 29. Share capital During the financial year there were no changes in the share capital of the Parent Company. SHARE CAPITAL (STRUCTURE) as at Series / issue Type of shares Type of preferential rights attached to shares Type of limitation of rights to shares Number of shares Value of the series / issuance according to the face value Form of capital coverage Date of registratio n Right to dividend (as of the date) A registered 2 votes in General Meeting no 32,539,332 32,539,332 from conversion B bearer shares no no 28,269,668 28,269,668 from conversion C bearer shares no no 6,756,556 6,756,556 share issuance D bearer shares no no 10,000,000 10,000,000 share issuance Total number of shares 77,565,556 Total share capital 77,565,556 Face value of one share (in PLN) = 1.00 All issued shares have a nominal value of 1.00 PLN and have been fully paid. The series A shares carry 2 votes per share. The shares of any series have equal rights to dividends. 43

44 30. Other comprehensive income Other comprehensive income Opening balance 0 0 Actuarial gains and losses (15) 0 Deferred tax on actuarial gains and losses 3 0 Closing balance (12) Other reserves The excess of the issue price over the nominal value of shares as at amounted to PLN 44,544 thous. Other supplementary capital in the amount of PLN 62 thous. PLN is the capital created in accordance with the statute above the statutory (minimum) value. The item "Exchange differences arising on the translation of subsidiary operations" includes exchange differences relating to the translation of financial statements of the foreign Subsidiary into Polish zloty. 32. Provision for deferred income tax Provision in respect of deferred income tax Opening balance including applied to equity 0 0 Increases including applied to equity 0 0 Decreases including applied to equity 0 0 Closing balance including applied to equity Remaining provisions Remaining provisions retirement benefits provision for unused holiday other leaves provisions As at Creation ,226 Release Use As at ,226 Remaining provisions retirement benefits provision for unused holiday leaves other provisions As at Creation Release Use As at The provisions for retirement benefits and similar include estimates for liabilities in respect of unused holiday leaves and retirement provisions. 44

45 In the item "Other provisions", the Group recognised the provision for investment liabilities arising from the construction work carried out in 2014 on terminal in Kutno and not invoiced, in the amount of PLN 6,389 thousand. Besides, there is recognised the provision for trading costs, representing the estimated value of the best Management Board estimates concerning future outflow of economic benefits associated with the concluded trade agreements, including fees, services, etc. (PLN 490 thous.). These provisions are short-term and will be used in the first quarter of The Group also established a provision for auditing and consulting services (PLN 347 thous.). Remaining provisions as at as at the long-term part the short-term part 7, Total provisions 7, The Group did not establish any provisions for litigations, fines, penalties and damages in 2013 and Retirement and similar benefits The Group pays retirement benefits to the retiring employees in the amount provided for in the Labour Code. Therefore, based on the evaluation carried out by a qualified actuary, the Group establishes a provision for the current value of liabilities due to retirement benefits. In 2013 and earlier, the Group evaluated the provision on its own, without actuarial assistance. Changes in liabilities due to retirement and pension benefits are presented in the table below: Retirement benefits Opening balance Interest expense 1 0 Current employment cost 6 0 Paid benefits (2) 0 Actuarial gains and losses 15 0 Adjustment (8) (6) Closing balance Item "Actuarial gains and losses" is a result of changes in assumptions about the discount rate and the estimated wages/salaries growth rate. as at as at Discount rate (%) 2.3% 3.5% Expected remuneration growth rate 3.5% no 34. Credits, loans and finance lease liabilities Long-term financial liabilities as at as at Investment credit Loans from related entities 52,048 5,885 Loans from other entities 8,910 0 Financial lease liabilities 2,677 4,331 Other long-term financial liabilities 63,900 10,783 45

46 Short-term financial liabilities as at as at Investment credit Loans from related entities Loans from other entities 1,541 0 Financial lease liabilities 2,354 2,540 Total short-term financial liabilities 5,204 2,957 The subsidiary company has no borrowings and loans, only a liability under car lease (value of the liability as at PLN 144 thous.). On 25 February 2014, PCC Intermodal SA signed a loan agreement with PCC SE (the main shareholder of the Parent Company holding 61.88% of the share capital) in the maximum amount of PLN 70 million, at a fixed rate on an annualised basis. The proceeds from the loan were used to finance the investments in intermodal terminals. Until the end of 2014 an amount of PLN 46 million was used. At the date of this report, the balance of the loan is PLN 42 million. The maximum loan repayment date is (extended to under a subordination agreement signed with BGK and PCC SE, which is described in more detail in the remainder of this note). On 3 November 2014, the Parent Company took a loan from akf leasing Polska S.A. in the amount of EUR 1,486,368 for purchase of five pieces of handling equipment. The loan is repaid in monthly instalments and a final repayment date is The loan is primarily secured by a registered pledge on the loan asset. In November 2014 the Parent Company also signed a loan agreement with PKO Leasing S.A. for an amount of EUR 3,127,800 to finance the purchase of two gantry cranes of RMG type to be installed in the terminal in Kutno. The loan is repaid in monthly instalments and a final repayment date is It is primarily secured by a registered pledge on the loan asset. Until the end of 2014 the Parent Company has received the first tranche of the above-mentioned loan in the amount of EUR 962,400. On 8 January 2015 two agreements were signed between PCC Intermodal S.A. and Bank Gospodarstwa Krajowego (BGK), under which BGK granted to the Parent Company an operating credit and an investment credit for the total amount of PLN 40,959,596. The investment credit worth PLN 37,959,596 will be launched in tranches until 31 October 2015 for financing of capital expenditures related to construction of the terminal in Brzeg Dolny. The credit was granted for a period up to 31 December 2025, and its primary security are: a mortgage on real estate in Kutno to the amount of PLN 57,000,000 (established on 2 February 2015), a mortgage on real estate in Brzeg Dolny to the amount of PLN 57,000,000 (established on 5 February 2015), PCC SE surety and subordination agreement concerning two loan agreements concluded by PCC Intermodal S.A. with PCC SE (for EUR 1,419,000 and PLN 70,000,000). Under the subordination agreement, which was announced by the Parent Company in the current report No. 5/2015, repayment to PCC SE of the aforementioned loans may take place provided that the Parent Company fully repays credits taken in BGK. It was, however, arranged for a partial repayment of the loan taken from PCC SE in the amount of PLN 70,000,000, equal to an equivalent of an investment credit taken from BGK. The second agreement with BGK concerns the revolving overdraft facility to the amount of PLN 3,000,000, for the period until 7 July 2016, to finance VAT on capital expenditures related to the construction of the terminal in Brzeg Dolny. It is secured inter alia by a mortgage on real estate in Brzeg Dolny up to an amount of PLN 4,500,000 (established on 6 February 2015). 46

47 As at , the Group had the following credits and loans: Funds provider Type of credit / loan Credit/loan amount according to the contract Amount payable in PLN Short-term liability in PLN Long-term liability in PLN PKO Bank Polski S.A. (earlier Nordea Bank Polska S.A.) investment credit EUR 323, , , , PCC SE loan: EUR 1,419, ,157, , ,048, PCC SE loan: up to PLN 70,000,000 46,881, , ,000, akf leasing Polska S.A. loan: EUR 1,486, ,341, ,212, ,129, PKO Leasing S.A. loan: EUR 3,127, ,108, , ,780, cont. Funds provider PKO Bank Polski S.A. (earlier Nordea Bank Polska S.A.) Date of borrowing Payment Date monthly Payments Interest rate Securities EURIBOR 1M+ bank margin registered pledge on the fixed asset along with the assignment of rights under the insurance policy; blank promissory notes PCC SE * Single write-off fixed interest rate no PCC SE * Single write-off fixed interest rate no akf leasing Polska S.A monthly fixed interest rate PKO Leasing S.A monthly EURIBOR 1M+ bank margin registered pledge on the fixed asset along with the assignment of rights under the insurance policy; blank promissory notes registered pledge on the fixed asset along with the assignment of rights under the insurance policy; blank promissory notes * According to the above described credit agreements and subordination agreements signed with BGK in 2015, repayment of loans from PCC SE may in principle take place after repayment of total credit to BGK or after

48 Under finance lease contracts the Group operates handling equipment, trailers, cars and IT equipment. The Group has an option to purchase the equipment under lease at the end of the contract. The Group's liabilities arising from finance leases are secured by the lessors' rights to assets covered by the contract. The list of established collaterals for Group's financial liabilities as at : Blank promissory notes - in accordance with the promissory notes, the creditor, in the event of a breach of contract has the right to fill out a promissory note for the amount corresponding to the debt, including interest and costs of legal proceedings; promissory notes secure credit and loan agreements, leases and assets co-financing agreements; Registered pledges on handling equipment and cranes; Assignment of rights under insurance policies for tangible assets subject to financing. Additionally, in 2015, as collateral for BGK credits, there were established mortgages on real estate in Kutno (up to PLN 57 million) and in Brzeg Dolny (up to PLN 57 million and PLN 4.5 million), surety was granted by PCC SE and PCC SE loans subordination agreement was signed (which was described in more detail in the earlier part of this note). 35. Operating leases Liabilities under operating leases are recognised off-balance sheet and relate to cars. Operating leases as at as at Within 1 year Within 1-5 years Total Trade and other liabilities Liabilities as at as at Trade liabilities 17,225 11,253 Security deposits, guarantees Tax liability Investment liabilities 669 8,997 Other liabilities Total liabilities 18,906 20,892 48

49 37. Subsidies Received asset subsidies As at Increase in the period Subsidies included in other operating income As at Construction of an intermodal container terminal with accompanying objects in 14,915 12, ,260 Kutno. Construction of an intermodal container terminal with accompanying objects in 105 9, ,167 Brzeg Dolny. Extension of an intermodal container terminal with accompanying facilities in Gliwice. Total subsidies 15,020 22, ,363 Received asset subsidies As at Increase in the period Subsidies included in other operating income As at Construction of an intermodal container terminal with accompanying objects in 0 15, ,915 Kutno. Construction of an intermodal container terminal with accompanying objects in Brzeg Dolny. Total subsidies 0 15, ,020 At the balance sheet date, the Parent Company was the beneficiary of EU aid in the form of grants to assets for three investment projects under the Operational Programme Infrastructure and Environment, 7.4. Development of intermodal transport. On 12 August 2014, the Parent Company signed amendments to agreements concluded with the Centre for EU Transport Projects (Centrum Unijnych Projektów Transportowych, CUPT) for financing investment projects carried out under the name of: "Construction of an intermodal container terminal with accompanying facilities in Kutno" and "Development of an intermodal container terminal with accompanying facilities in Gliwice". Pursuant to the signed amendments, an amount of grants awarded to the Company will be increased: for investment in Kutno by an amount of PLN 3,191, (i.e. from the present amount of PLN 32,657, to PLN to 35,849,332.86), for investment in Gliwice by an amount of PLN 987, (i.e. from the present amount of PLN 17,656, to PLN 18,644,077.77). 38. Financial instruments The main financial instruments used by the Group include leases, bank credits and loans and cash. The main purpose of these financial instruments is to raise funds for the Group's operations. The Group also has other financial instruments such as trade receivables and liabilities that arise directly from its operations. The main risks arising from financial instruments include interest rate risk, liquidity risk, foreign currency risk and credit risk. The Management Board of the Parent Company reviews and agrees rules for managing each of these risks - these rules are summarised below. The Group also monitors 49

50 the market price risk arising from all financial instruments that it holds. In the period covered by the statement, the Group did not use any derivative instruments Financial instruments' classification Details Loans granted and receivables Financial assets available for sale Financial liabilities at amortised cost As at , including: 34, ,122 Assets 34, Investments in other entities Trade receivables 21, Other receivables Cash and cash equivalents 13, Equity and liabilities ,122 Long-term loans and borrowings ,223 Other long-term financial liabilities - lease 0 0 2,677 Short-term loans and borrowings 0 0 2,850 Other short-term financial liabilities - lease 0 0 2,354 Trade liabilities ,225 Other liabilities Specification Loans granted and receivables Financial assets available for sale Financial liabilities at amortised cost As at , including: 25, ,990 Assets 25, Investments in other entities Trade receivables 16, Other receivables Cash and cash equivalents 9, Equity and liabilities ,990 Long-term loans and borrowings 0 0 6,452 Other long-term financial liabilities - lease 0 0 4,331 Short-term loans and borrowings Other short-term financial liabilities - lease 0 0 2,540 Trade liabilities ,253 Other liabilities 0 0 8,997 50

51 38.2 Interest rate risk The Group has liabilities under lease and credit agreements as well as loans for which interest is computed on a floating interest rate. Therefore there is a risk of interest rates increase in relation to the contract date (increase in debt servicing costs). Information on liabilities subject to interest rate risk is shown below. During the reporting period, the Group held liabilities bearing floating interest rate, and the lack of assets to offset risk. Due to slight variations in interest rates in recent periods, as well as the lack of expected rapid changes in interest rates in subsequent reporting periods, the Group did not apply interest rate hedging, considering that the interest rate risk was not significant. Regardless of the current situation, the Group monitors its exposure to interest rate risk and interest rate forecasts and does not preclude adoption of protective measures in the future. In 2014, the Parent Company took out a loan with a variable interest rate, which resulted in increase in exposure to interest rate risk. The following table presents the balance-sheet value of the Group's financial instruments exposed to interest rate risk, broken down into different age categories. As at Fixed interest rate <year 1-3 years 3-5 years >5 years Total Liabilities 2,493 3,798 1,332 52,048 59,671 Bank credits Loans from related entities ,048 53,039 Loans from other entities 1,212 3,798 1, ,342 Financial lease liabilities Floating interest rate <year years years >5 years Total Liabilities 2,711 4,732 1, ,433 Bank credits Loans from related entities Loans from other entities 329 1,890 1, ,109 Financial lease liabilities 2,064 2, ,741 As at Fixed interest rate <year 1-3 years 3-5 years Total Liabilities 726 6, ,943 Bank credits Loans from related entities 107 5, ,992 Financial lease liabilities Floating interest rate <year 1-3 years 3-5 years Total Liabilities 2,231 4, ,797 Bank credits Loans from related entities Financial lease liabilities 1,921 3, ,920 51

52 Floating rate interest on financial instruments is updated at intervals of less than one year. Fixed rate interest on financial instruments is determined for the entire period to maturity / due date of these instruments. Other financial instruments of the Group, which are not included in the above tables, are not interest bearing and are therefore not subject to interest rate risk Currency risk The Subsidiary operates in Germany, where EUR is the currency. Transactions in other currencies are negligible in terms of value, and therefore further analysis of the currency risk will only cover the Parent Company. A significant part of the Parent Company's sales is conducted in foreign currencies. Costs of purchased services are also incurred in different currencies. Currency risk is associated primarily with changes in exchange rates of EUR and USD. Exposure to risk associated with other currencies is not material. Trade and other as at as at receivables by currencies Currency PLN % Currency PLN % PLN 10,142 47% 7,059 44% EUR 2,300 9,804 45% 2,129 8,830 55% USD 506 1,775 8% % Total 21, % 16, % Cash and cash as at as at equivalents by currencies Currency PLN % Currency PLN % PLN 9,668 74% 2,500 27% EUR 688 2,931 22% 1,597 6,622 72% USD % % Total 13, % 9, % Trade and other as at as at liabilities by currencies Currency PLN % Currency PLN % PLN 8,056 44% 6,511 58% EUR 2,201 9,383 51% 940 3,898 35% USD % % Total 18, % 11, % 52

53 Credits, loans and as at as at finance lease by currencies Currency PLN % Currency PLN % PLN 47,954 70% 1,636 12% EUR 4,928 21,006 30% 2,919 12,105 88% USD 0 0 0% 0 0 0% Total 68, % 13, % The Parent Company also has interests in subsidiaries of EUR 10 thous. Any adverse changes in exchange rates of foreign currencies, in which the Parent Company carries out settlements or makes payments, may adversely affect the business, financial condition or results of Company operations. The Parent Company monitors the exposure to foreign exchange risk, but recognising the risk as insignificant in its business, uses a natural hedging. In the event of significant increase in such risk, the Parent Company allows for the use of appropriate financial instruments, especially derivatives. 53

54 38.4 Market risk sensitivity analysis Interest rate risk Currency risk Value of Impact on the result Impact on capital Impact on the result Impact on capital Position in the the +15% in -15% in +15% in -15% in financial +100 pb in PLN -100 pb in PLN +100 pb in PLN -100 pb in PLN position in PLN/USD PLN/USD PLN/USD PLN/USD statements as at thous pb in +100 pb in +15% in -15% in +15% in -15% in pb in USD -100 pb in USD PLN USD USD PLN/EUR PLN/EUR PLN/USD PLN/USD +100 pb in +100 pb in -100 pb in EUR -100 pb in EUR EUR EUR Assets 34, ,264 (2,264) 0 0 Investments in other entities (7) 0 0 Trade receivables 21, ,734 (1,734) 0 0 Other financial receivables Cash and cash equivalents Equity and liabilities (3) , (520) ,122 (94) (4,690) 4, Trade liabilities 17, (1,476) 1, Bank credits 583 (6) (88) Loans 63,490 (41) (2,491) 2, Financial lease liabilities 5,031 (47) (572) Other financial liabilities (63)

55 The Group assessed potential changes in market risk as follows: 1 p.p. change in PLN percentage rate (growth or drop in the percentage rate) 1 p.p. change in EUR percentage rate (growth or drop in the percentage rate) 15% change of PLN/USD exchange rate (growth or drop in the exchange rate); 15% change of PLN/EUR exchange rate (growth or drop in the exchange rate); The above values were determined on an annual basis. The sensitivity analysis carried out by the Group does not consider the impact of taxation Price risk The Group is not exposed to price risk related to financial instruments, but there is a risk of adverse changes in prices of services - both provided and purchased by the Group. Increase in the number of companies dealing with intermodal transport results in intensive competition and leads to fees decline at certain routes even below the break-even point. The Group has taken steps to strengthen sales in the most profitable sectors. The Group is also exposed to rising prices of purchased materials and services. Cooperation with some suppliers is based on signed contracts with fixed rates, but most of the prices of services provided to the Group depend on the current economic situation and market competition Credit risk The Group is exposed to credit risk, defined as the risk that creditors will not fulfil their obligations, which may result in loss for the Group. Maximum exposure to credit risk as at was PLN 21,721 thous. and has been estimated as the balance-sheet value of financial receivables. As at Overdue receivables that have not lost their value Age structure of financial receivables Nominal value of receivables Due receivables that have not lost their value <30 days days days >181 days Trade receivables 21,600 16,620 4, Other financial receivables - security deposits

56 As at Overdue receivables that have not lost their value Age structure of financial receivables Nominal value of receivables Due receivables that have not lost their value <30 days days days >181 days Trade receivables 16,014 12,408 3, Other financial receivables - security deposits As at , the share of receivables for deliveries and services of the Group's four largest customers accounted for 29.8% of total receivables balance. The balance of any other customer does not exceed 5% of the total receivables for deliveries and services. In the opinion of the Group, with respect to receivables for deliveries and services there is no significant concentration of credit risk. Concentration of risk associated with trading activities is limited due to the fact that the Group enters into transactions with a large number of contractors. The Group takes measures to reduce credit risk, inter alia by checking credibility of customers and the ongoing monitoring of their situation. The above-mentioned measures are taken in line with internal procedures and regulations. Due to small (in the opinion of the Board) risk of customers insolvency, receivables are not covered by trade credit insurance. Considering the above, in the opinion of the Management Board of the Parent Company, the credit risk has been recognised in the financial statement through write-downs. Write-downs on credit losses As at 1 January Increases - write-down charged to other operating expenses Use Release - reversed write-down in other operating income 1 0 As at 31 December The credit risk associated with money deposited in banks is considered to be insignificant, as the Group has entered into transactions with institutions with an established financial position Liquidity-related risk The Group is exposed to liquidity risk, defined as the risk of losing the ability to meet its liabilities in a timely manner. The risk is due to potential restrictions on access to financial markets, which may result in the inability to obtain new financing or refinancing for its debt. The level of risk will increase with the increase of the scale of the Group's investments. The Group will try to limit this risk by ensuring adequate income stream, such as from EU subsidies, credits, leases and loans. Analysis of financial liabilities at intervals is shown below. The presented amounts of cash flows represent the Group's maximum exposure to risk. 56

57 As at Age structure of financial liabilities Total liabilities <30 days Liabilities due within the period 31 to 90 days 91 to 180 days 181 to 365 days >365 days (see a note below) Trade liabilities 17,225 16, Bank credits Loans from related entities 53, ,048 Loans from other entities 10, ,910 Financial lease liabilities 5, ,131 2,677 Other financial liabilities Total financial liabilities 86,998 18, ,090 2,058 63,945 Liabilities due over 365 days 1-3 years 3-5 years >5 years Trade liabilities Bank credits Loans from related entities ,048 Loans from other entities 5,688 2, Financial lease liabilities 2, Other financial liabilities Total financial liabilities 8,575 2,692 52,678 As at Age structure of financial liabilities Total liabilities <30 days Liabilities due within the period 31 to 90 days 91 to 180 days 181 to 365 days >365 days (see a note below) Trade liabilities 11,253 10, Bank credits Loans from related 5, ,885 entities Financial lease liabilities 6, ,210 4,331 Other financial liabilities 8,997 2,537 1,107 5, Total financial liabilities 33,990 13,961 1,768 6,047 1,371 10,843 Liabilities due over 365 days 1-3 years 3-5 years >5 years Trade liabilities Bank credits Loans from related entities 5, Financial lease liabilities 4, Other financial liabilities Total financial liabilities 10,

58 38.8 Capital management The Group manages its capital in order to preserve its ability to continue operations, including investment plans, so that it can generate returns for shareholders and benefits to other stakeholders. The Group monitors the return on capital and debt to equity ratio. In the years presented in this report, these ratios were as follows: Indicator Formula Equity profitability net income/equity 0.6% 9.1% Equity debt long- and short-term liabilities / shareholders' equity 68.3% 163.9% The increase in the debt to equity ratio is due to the increase in the share of foreign capital in financing activities (EU subsidies and loans). 39. Contingent liabilities and receivables Tax settlements Tax settlements and other regulated areas of activity may be subject to administrative audit by authorities authorised to impose severe fines and penalties. No reference to established regulations in Poland results in a lack of legal clarity and consistency. Frequent differences in opinions as to the legal interpretation of tax regulations within state authorities and between authorities and enterprises, give rise to uncertainties and conflicts. Tax settlements may be subject to tax audit for a period of five years starting from the end of the year in which the tax was paid. As a result of audits, the existing tax settlements of the Group may be subject to additional tax liabilities. 40. Transactions with related entities Transactions with related entities are made based on the market price and market conditions. 58

59 The following are the Group's transactions with related entities. The "parent company" means an entity controlling the Group, i.e. PCC SE, holding 61.88% of the share capital of PCC Intermodal S.A. Revenues from sales to related entities Revenue from sales of products and services Revenues from sales of goods and materials Revenues from sales of tangible fixed assets and intangible assets Other operating revenue - Parent Company other related entities 19, Total revenues from sales to related entities 19, Purchases from related entities Purchase of products and services Purchase of goods and materials Purchase of tangible fixed assets and intangible assets License for the use of the trade mark Other - Parent Company ,831 2,055 - other related entities , Total purchases from related entities ,285 1,831 2,055 Revenues from sales to related entities Revenues from sales of products and services Revenues from sales of goods and materials Revenues from sales of tangible fixed assets and intangible assets Other operating revenue - Parent Company other related entities 17, Total revenues from sales to related entities 17, Purchases from related entities Purchase of products and services Purchase of goods and materials Purchase of tangible fixed assets and intangible assets License for the use of the trade mark Other - Parent Company , other related entities 1, , Total purchases from related entities 1, ,519 1,

60 The following balances of receivables and liabilities with related entities have been identified in the statement of financial position: Receivables from related entities as at as at Parent Company other related entities 3,216 1,656 Total receivables from related entities 3,216 1,656 Liabilities towards related entities as at as at Parent Company 53,516 6,379 - other related entities 137 9,026 Total liabilities towards related entities 53,653 15, Remuneration of the Management Board and the Supervisory Board of the Parent Company Below: remuneration and other benefits paid in 2014 and 2013 to the members of the Management Board and Supervisory Board of the Parent Company in PLN. Management Board Remuneration in PLN Additional health insurance Dariusz Stefański 603, , , , Adam Adamek 463, , , , Total 1,066, , , , Supervisory Board Remuneration in PLN Alfred Pelzer 69, , Wojciech Paprocki 45, , Daniel Ozon 45, , Artur Jędrzejewski 45, , Total 206, , In 2013 and 2014, the Parent Company and the Subsidiary did not enter into any significant transactions with members of the Management Board and the Supervisory Board. The Group has not granted loans to the above persons. 60

61 42. Employment structure Average employment in the Group in the analysed periods was as follows: Employment The Management Board of the Parent Company 2 2 The Management Board of the Subsidiary 1 1 Administration Sales and marketing Other Total average employment Remuneration of the auditor or an entity authorised to examine financial statements Remuneration of the auditor in respect of services for PCC Intermodal S.A. in 2013 and 2014 is presented below in thous. PLN. Remuneration of the auditor Audit of annual financial statements Review of interim financial statements Tax consulting services 4 0 Other services 12 0 Total remuneration of the auditor Important events after the balance sheet date On 8 January 2015 two agreements were signed between PCC Intermodal S.A. and Bank Gospodarstwa Krajowego (BGK), under which BGK granted to the Parent Company an operating credit and an investment credit for the total amount of PLN 40,959,596. The investment credit worth PLN 37,959,596 will be launched in tranches until 31 October 2015 for financing of capital expenditures related to construction of the terminal in Brzeg Dolny. The loan was granted for a period up to 31 December 2025, and its primary security are: a mortgage on real estate in Kutno to the amount of PLN 57,000,000, a mortgage on real estate in Brzeg Dolny to the amount of PLN 57,000,000, PCC SE surety and subordination agreement concerning two loan agreements concluded by PCC Intermodal S.A. with PCC SE (for EUR 1,419,000 and PLN 70,000,000). The second agreement concerns the revolving overdraft facility to the amount of PLN 3,000,000, for the period until 7 July 2016, to finance VAT on capital expenditures related to the construction of the terminal in Brzeg Dolny. It is secured primarily by a mortgage on real estate in Brzeg Dolny up to an amount of PLN 4,500,000. Mortgages as collateral for claims arising from these agreements have been established on 2, 5, 6 February 2015 (dates of entries to the land and mortgage register made by the competent court). And on 11 February 2015, a tripartite subordination agreement was signed (between BGK, PCC Intermodal S.A. and PCC SE), under which repayment of the above-mentioned loans to PCC SE may take place provided that the Company fully repays credits taken in BGK. It was, however, arranged for a partial repayment of the loan taken from PCC SE in the amount of PLN 70,000,000, equal to an equivalent of an investment credit taken from BGK. On 25 February 2015, PCC Intermodal S.A. concluded with AAE AHAUS ALTATTER EISENBAHN AG (AAE) an agreement for the lease of carriages to be used for transport of intermodal cargo in domestic and international traffic. With regard to individual carriages the agreement will enter into 61

62 force on the date of carriages delivery to PCC Intermodal S.A. and will expire upon their return, under the conditions specified in the agreement. Carriages will be handed over in parts until the end of They will be leased for a minimum period of 2 years. This period will start from the date on which a given part of carriages is handed over. PCC Intermodal S.A. has the right to extend the lease for another year under the terms of the agreement. The agreement of will replace the agreement dated (which was announced by the Company in the prospectus and in current reports No. 19/2010 and 61/2011). The estimated value of the described above agreement is EUR 2,333 thous. (i.e. PLN 9,721,144.40). 16 March 2015 CHIEF ACCOUNTANT FINANCIAL DIRECTOR VICE-PRESIDENT OF THE MANAGEMENT BOARD PRESIDENT OF THE MANAGEMENT BOARD Małgorzata Jędrzejewska Wojciech Baraniak Adam Adamek Dariusz Stefański 62

63 X. REPORT ON ACTIVITY OF THE GROUP 1. Characteristics of the activity PCC Intermodal S.A. Group focuses on two main areas of activity: intermodal transport services, including door-to-door transport of containers based on regular rail connections between ports and terminals, synchronised car transport within 150 km from the cargo handling terminal and terminal services such as reloading, handling trains, storage of containers, cleaning, maintenance and repair of containers; forwarding services. Group's operation is based on 5 land cargo handling terminals located in Brzeg Dolny (own terminal), in Gliwice (in the area leased from the Silesian Logistics Centre - Śląskie Centrum Logistyki Sp.o.o.), in Kutno (own terminal), in Frankfurt (Oder) (in the area leased from the city of Frankfurt - the terminal managed by the related company - PCC Intermodal GmbH) and in Dębica (in the area leased from PKP S.A. companies). PCC Intermodal S.A. offers regular connections between these terminals and seaports in Gdańsk, Gdynia, Hamburg, Rotterdam and Antwerp. In 2014, the Parent company also started offering connections to / from Brest through the terminal in Małaszewicze. Land transport of containers to/from land terminals is organised by subcontractors, the cooperation with which is based on individual orders or concluded agreements. The entity responsible for organisation of logistics processes is the Parent company's headquarters in Gdynia whilst offices in Sosnowiec, Brzeg Dolny, Gliwice and Kutno ensure efficiency and coordination of the said processes. The Subsidiary manages the Frankfurt terminal and runs the sales office in Hamburg. Group's operation is based on its own and rented railway platforms, tractors and semitrailers.. 2. Group of Companies The PCC Intermodal S.A. Group, which was established in January 2013, includes PCC Intermodal S.A. and the Subsidiary PCC Intermodal GmbH, with its registered office in Duisburg. The Parent Company owns 100% of the share capital and 100% of the voting rights of the Subsidiary Company. The consolidation is carried out using the full method. The Subsidiary is responsible for the management of Frankfurt terminal and for running the sales office in Hamburg. PCC Intermodal S.A. is a recipient of its services in nearly 100%. PCC Intermodal S.A. is a part of the PCC Group an international holding which belongs to PCC SE a company with its registered office in Duisburg (Germany) which is the major shareholder of PCC Intermodal S.A. PCC SE owns a total of 48,000,000 of the Parent Company's shares which constitutes 61,88% of Company's share capital and gives PCC SE the right to exercise 73,15% of votes in the general meeting of shareholders (the situation as on the date of drawing up of this report). The PCC Group conducts its business activity in the following branches of industry: chemistry, power engineering and transport. Financial statements of PCC Intermodal S.A. are subject to full consolidation conducted by its parent company PCC SE. 63

64 3. Shareholding structure of the Parent Company The table below presents the structure of shareholders with at least 5% of votes in the General Meeting of Shareholders of the Parent Company as at and at the date of submission of this report, compiled on the basis of notifications received from shareholders (pursuant to Articles 69 and 87 of the Act on Public Offer and the Conditions for Admitting Financial Instruments to the Regulated System of Trading and on Publicly Traded Companies). Shareholder Number of shares Participation in the share capital Number of votes in the GMS Participation in the votes in GMS PCC SE - series A (privileged) 32,539, % 65,078, % PCC SE ordinary shares 15,460, % 15,460, % PCC SE - total 48,000, % 80,539, % DB Schenker Rail Polska S.A. ordinary shares 10,809, % 10,809, % Quercus Towarzystwo Funduszy Inwestycyjnych S.A. ordinary shares 6,020, % 6,020, % Other ordinary shares 12,735, % 12,735, % Total 77,565, % 110,104, % To the knowledge of the Parent Company's Management Board no other shareholders hold, directly or indirectly, shares authorising them to at least 5% of the total number of votes in GMS. The series A shares are privileged in respect of voting rights and give their owner the right to 2 votes per every share. All series A shares are owned by PCC SE. Shareholding structure according to participation in the votes in GMS 11,56% 73,15% PCC SE 5,47% 9,82% DB Schenker Rail Polska S.A. Quercus Towarzystwo Funduszy Inwestycyjnych S.A. Other 64

65 Shareholding structure according to percentage in the share capital 16,42% 61,88% PCC SE 7,76% DB Schenker Rail Polska S.A. 13,94% Quercus Towarzystwo Funduszy Inwestycyjnych S.A. Other 4. Economic and financial standing of the Group The image of the Group is mainly affected by the activity of the Parent Company, whose balance sheet total for 2014 accounted for 99.9% of balance sheet total of the Group. Consolidated sales revenue for 2014, excluding mutual trading with the Subsidiary, converted according to the average exchange rate, was lower than the separate revenue of PCC Intermodal S.A. by about 1 thous. PLN. 4.1st Sale structure and quantitative statistics The core business of PCC Intermodal S.A. Group is the organisation of intermodal transport, which generates 91.2% of sales revenue. 8.8% of revenue is attributable to freight forwarding activities. 65

66 Participation of particular fields of activity in generation of sales revenue in 2013 and 2014 was the following: Revenue structure by activity in 2013 Revenue structure by activity in ,2% 90,8% 8,8% 91,2% intermodal transport forwarding intermodal transport forwarding In 2014 the Group recorded 20% increase in number of transported containers in relation to the previous year. The number of containers transported throughout 2014 amounted to 93.5 thous. (144 thous. TEU), with 77.7 thousand units (125.2 thous. TEU) in A chart below presents a number of transported containers in individual quarters of 2013 and The number of containers transported in individual quarters of 2013 and 2014 (in number of units) Q1 Q2 Q3 Q

67 4.2nd Major suppliers and recipients The structure of the Group's suppliers did not change significantly in 2014 compared to 2013: more than 36% of purchased services come from three contractors. The main Group's suppliers in 2014 were the following companies (rail transport): Supplier The share of the costs of products and Relation to PCC Intermodal S.A. services sold LOTOS KOLEJ Sp. z o.o. 19.6% unrelated company Rurtalbahn Cargo GmbH 10.6% unrelated company ITL Eisenbahngesellschaft GmbH 6.1% unrelated company The degree of customers portfolio diversification increased as compared to last year. The share of sales to three largest customers in 2014 amounted to approximately 24.4% of total sales and was below the level of 2013 (28,5%). The following were three major customers of the Group in Recipient Share in sales revenue Relation to PCC Intermodal S.A. MSC Poland Sp. z o.o. 11.4% unrelated company PCC Rokita S.A. 7.0% related company Eucon Shipping & Transport Ltd. 6.0% unrelated company Information about geographic sales structure is presented in point 13 of the Explanatory notes and additional information. 4.3rd Investment projects Total invested funds in 2014 amounted to about PLN 79.7 million (increase in tangible assets). In the past year, the Group continued the development of terminal infrastructure, with outlays amounting to nearly PLN 68.7 million, according to the following breakdown. Terminal Capital expenditure on infrastructure in thous. PLN Kutno 40,190 Brzeg Dolny 23,574 Gliwice 3,916 Frankfurt 5,098* Other terminals 469 * The above-mentioned amount of PLN thous. constituted the settlement of a part of the advance paid in 2012 against the construction of crane at the terminal in Frankfurt (joint investment with the city of Frankfurt). These investments mainly related to construction work on the terminal in Kutno and Brzeg Dolny, and partial payment for cranes, which will be launched in Kutno in In addition, the Group incurred expenditures on handling equipment, trailers and other means of transport with a total value of more than PLN 10 million. Other capital expenditure was PLN 0.9 million. 67

68 On 20 January 2014, PCC Intermodal SA signed with PCC Rokita SA and Ekologistyka Sp. z o.o. (related entities) agreements pursuant to which it acquired the right of perpetual usufruct to undeveloped properties located in Brzeg Dolny, to be used for the construction of a handling terminal. Other (developed) properties designed for this project were purchased from PCC Rokita S.A. and Ekologistyka Sp. z o.o., based on agreements dated 17 December The total value of land, property and movables located therein, acquired for the project in Brzeg Dolny amounts to PLN 8.3 million. On 15 May 2014 the tender procedure for a general contractor for the expansion of terminal in Gliwice was completed and the Parent Company signed an agreement with Strabag Sp. z o.o. with a value of PLN 26.7 million. On 10 July 2014 and on 13 August 2014 PCC Intermodal S.A. signed amendments to the agreement dated 9 August 2013, concluded with a consortium of Berger Bau Polska Sp. z o.o. and Berger Bau GmbH (general contractor for construction work on the terminal in Brzeg Dolny). Under these amendments, the parties agreed to change to 18 August 2015 the date of completion of construction work and of final settlement and obtaining the occupancy permit for the object of the agreement of 31 October Furthermore, the parties agreed to change the remuneration for completion of work under the agreement by its increasing to an amount of PLN 57,143, (original value of the agreement amounted to PLN 47,356, net). Both of these amendments were associated with the need to perform additional work. On 11 April 2014 the Parent Company signed with Hans Kuenz GmbH a contract for delivery, installation and commissioning of two RMG cranes in the terminal in Kutno, as well as for provision of services in this respect, for a total value of EUR 5.1 million (approximately PLN 21.4 million). According to the schedule, completion of work is planned for the end of May On 31 October 2014, the Parent Company signed an agreement with Cargotec Finland Oy for delivery with assembly and commissioning of two gantry cranes of RTG type as well as for their maintenance services at the terminal in Gliwice. The total value of the agreements is EUR 3,534 thousand, i.e. PLN 14,858 thousand. According to the schedule, completion of work is planned for the end of October

69 4.4th Selected items of the statement of financial position Selected items of the statement of Dynamics financial position (in thous. PLN) in thous. in thous. Structure Structure 2014/2013 PLN PLN Fixed assets 169, % 94, % 79.2% Tangible fixed assets 166, % 92, % 80.7% Intangible assets % % 2.0% Investments in other entities % % 0.0% Deferred income tax assets 2, % 1, % 34.5% Current assets 45, % 30, % 51.4% Inventory % % 46.2% Trade receivables 21, % 16, % 34.9% Other short-term receivables 10, % 4, % 143.3% Cash and cash equivalents 13, % 9, % 39.5% Total assets 215, % 124, % 72.5% Equity 81, % 74, % 10.0% Long-term liabilities 101, % 25, % 290.8% Provisions % % 38.8% Loans and borrowings 61, % 6, % 848.9% Other long-term financial liabilities 2, % 4, % (38.2%) Subsidies 36, % 14, % 151.4% Short-term liabilities 32, % 24, % 30.5% Provisions 7, % % 1,857.6% Loans and borrowings 2, % % 583.5% Other short-term financial liabilities 2, % 2, % (7.3%) Trade liabilities 17, % 11, % 53.1% Subsidies % % 50.0% Other short-term liabilities 1, % 9, % (82.7%) Total equity and liabilities 215, % 124, % 72.5% The value of total assets at amounted to PLN 215,176 thous. and increased by PLN 90,436 thous. (72.5%) compared to the balance as at Fixed assets increased by PLN 74,965 thousand y/y (79.2%). In 2014, work was continued on the expansion of terminals in Brzeg Dolny, Gliwice, Kutno (described in more detail in point 4.3.). Terminal in Dębica was also put to use. Slightly smaller but also dynamic growth was observed in the value of current assets, which increased in 2014 by PLN 15,471 thousand (51.4%) compared to the previous year, mainly due to the increase in other short-term receivables (mostly receivables in respect of VAT) by PLN 5,926 thousand, receivables in respect of deliveries and services by PLN thousand and cash by PLN 3,724 thousand. In 2014, there were also significant changes in the structure of liabilities. Despite the increase in the equity value by PLN 7,433 thousand, y/y, its share in funding sources decreased from 59.4% in 2013 to 37.9% at the end of In connection with the ongoing intensive investments the need for external financing increased. Liabilities in respect of loans and borrowings increased from PLN 6,869 thousand as at to PLN 64,073 thousand as at , and the carrying value of not cleared funds from the grant increased in 2014 by PLN 22,343 thousand. In 2014, PCC Intermodal S.A. signed a framework loan agreement with PCC SE for a maximum amount of PLN 70 million, for the purpose of financing investment in intermodal terminals. Until the end of 2014 an amount of PLN 46 million was used. At the date of this report, the balance of the loan is PLN 42 million. 69

70 The Parent Company also took a loan n from akf leasing Polska S.A. in the amount of EUR 1,486,368 for purchase of five pieces of handling equipment (funds were received in 2014) and from PKO Leasing S.A. for an amount of EUR 3,127,800 to finance the purchase of two gantry cranes of RMG type to be installed in the terminal in Kutno (in 2014 the first tranche of the above-mentioned loan was received in the amount of EUR 962,400). As a result of these activities, mainly the long-term liabilities increased (by 290% y/y), so that despite the decline in the value of equity, net working capital remained positive, which means that the fixed capital covers all fixed assets and part of current assets. Increase in "Provisions" is due to recognition in this item, as at the end of 2014, of a liability in the amount of PLN 6,389 thousand to contractors for construction work done in Kutno in 2014 but not invoiced. 4.5th Selected items of the statement of comprehensive income Selected items of the statement of comprehensive income (in thous. PLN) Dynamics 2014/2013 Revenues from sales of products and services 185, , % Costs of products and services sold 167, , % Gross profit (loss) on sales 18,017 11, % General administration costs 11,543 11,991 (3.7%) Other operating revenue 1,635 1,977 (17.3%) Other operating costs 1, % Operating profit (loss) 7, ,177.4% Financial revenue % Financial expenses (55.2%) Gross profit (loss) 6, ,360.7% Net profit (loss) 7, ,480.0% In 2014 the Group generated sales revenues of PLN 185,321 thous., by 23.6% higher than in the previous year. A chart below presents an amount of revenue in each quarter. 70

71 Revenue from sales in individual quarters of 2013 and 2014 (in thous. PLN) Q1 Q2 Q3 Q Cost of sales incurred in 2014 was higher by 18.5% compared to the previous year, while its structure has not changed significantly y/y. The breakdown of costs by type in 2013 and 2014 is as follows: Costs by type Structure Structure Dynamics 2014/2013 Amortisation and depreciation 4, % 4, % 6.6% Material and energy consumption 4, % 3, % 18.6% External services 153, % 128, % 19.1% Taxes and fees 1, % 1, % 33.6% Employee benefits 18, % 16, % 12.4% Other prime costs 1, % 1, % (3.1%) Consolidation note (5,327) (2.9%) (5,170) (3.5%) Total costs by type 178, % 150, % 18.5% Higher growth rate of sales revenues than of operating costs had a positive impact on the result achieved by the Group on its core business in The Group generated gross profit on sales of PLN 18,017 thousand, by 56.8% higher than last year. 71

72 Result from gross sales in individual quarters of 2013 and 2014 (in thous. PLN) Q1 Q2 Q3 Q4 The Group closed 2014 with operating profit of PLN 7,077 thous. and a net profit of PLN 7,442 thous. (in the profit of PLN 554 thous. and PLN 471 thous., respectively). The net result in individual quarters of 2013 and 2014 (in thous. PLN Q1 Q2 Q3 Q

73 4.6th Selected items from the cash flow statement Selected items of the cash flow statement (in thous. PLN) Net cash flows from operations 13,285 (423) Net cash flows from investment activities (85,235) (3,254) Net cash flows from financial activities 75,668 7,497 Total net cash flows 3,718 3,820 PCC Intermodal S.A. Group reached in 2014 the positive balance of cash flows from operating activities, which amounted to PLN 13,285 thousand. A negative value of net cash flows from investment activities in the amount of PLN 85,235 thousand is due to high levels of investment in tangible assets, which was mostly financed from external sources (positive cash flows from financial activities in the amount of PLN 75,668 thousand. Comparison of years 2013 and 2014 shows the scale of increase of the Group's investment activities. 4.7th Selected financial ratios Selected financial ratios Formula Profitability ratio Gross profitability of sales Gross sales result/sales revenue 9.7% 7.7% EBIT profitability Earnings Before Interest and Taxes / sales revenue 3.9% 0.3% EBITDA profitability Earnings Before Interest, Taxes, Depreciation and Amortisation / sales revenue 6.3% 3.1% Net profitability Net income/sales revenue 4.0% 0.3% ROA Net income/total assets (Return On Assets) 3.5% 0.4% ROE Liquidity ratio Net income/closing balance of shareholders' equity (Return On Equity) 9.1% 0.6% 3rd degree liquidity current assets/short-term liabilities nd degree liquidity (current assets - inventories/short-term liabilities) st degree liquidity Cash and cash equivalents/short-term liabilities Current assets management ratios Rotation of receivables (in days) Rotation of liabilities (in days) Debt ratio average trade receivables / revenue from sale of services *365 days average trade and other liabilities / costs of services sold *365 days General debt ratio long- and short-term liabilities / assets 62.1% 40.6% Shareholders' equity debt ratio long- and short-term liabilities / shareholders' equity 163.9% 68.3% Debt-to-equity ratio long-term liabilities / equity 124.4% 35.0% *) average balance of receivables, inventories and liabilities is calculated as an arithmetic mean of the value of items of the opening balance and the closing balance. Profitability and liquidity ratios With the gradual improvement in financial results, the Group has progressively improved profitability ratios. In 2014 gross profitability of sales amounted to 9.7%, compared to 7.7% in the same period of last year, while net profitability increased from 0.3% in 2013 to 4.0% in

74 Net margin in individual quarters of 2013 and ,0% 4,0% 5,1% 4,3% 4,5% 2,0% 1,7% 1,6% 1,7% 2,0% 0,0% ,0% -4,0% -6,0% -4,8% Q1 Q2 Q3 Q4 The current and fast liquidity ratios increased (from 1.2 in 2013 to 1.4 in 2014), mainly due to an increase in cash at the end of The Group manages the liquidity risk by current accounting for EU subsidies under the signed cofunding contracts, financing operations with the use of credits, loans and leases. Due to insignificant participation of inventory in the structure of assets, the values of both current and quick liquidity ratios are very similar. Efficiency and debt ratios More favourable cash conversion cycle was observed in 2014 thanks to improved performance indicators. Both the receivables collection and the liabilities turnover ratio decreased by 2 days y/y. Due to the intensive investment activity, the use of external financing (loans and grants) has significantly increased, which is reflected in the debt ratios increase. Total debt ratio increased from 40.6% at the end of 2013 to 62.1% at the end of 2014, while the equity debt ratio from 68.3% to 163.9% y/y. Despite a significant increase in debt, the net working capital is positive, which, with increasing liquidity ratios, proves the lack of the Group's solvency problems. 5. Prospects and trends in Group development and factors relevant to the development of the Group Continuation of the Parent Company's investment operations and development The development strategy of PCC Intermodal S.A. involves the construction and development of a network of intermodal container terminals. Currently, the Parent Company organises national and international transport of containers based on 5 handling terminals: Kutno, Brzeg Dolny, Gliwice, Frankfurt and Dębica. A part of them has already undergone the process of modernisation and development in order to meet the growing transport needs of economic regions in which they are located. The second stage of Kutno terminal expansion has been completed, there are on-going works in Brzeg Dolny and Gliwice. The started investment activities will continue in the coming years. It is 74

75 planned to complete the construction project in Brzeg Dolny and Gliwice and to put gantry cranes in Kutno and Gliwice into operation until the end of In subsequent years, investments are also planned in container terminals in so-called "Eastern wall" of the country. This location will allow the Parent Company to offer intermodal services throughout Poland. According to the idea of intermodal transport, the radius of container transport from / to the land terminal should not exceed150 km. The biggest investment of the Parent Company is to be the construction of dry port at the back of seaports of Trójmiasto Intermodal Container Yard (ICY) in Zajączkowo Tczewskie. ICY is a project of construction of logistics and distribution facilities that will enable effective and efficient handling of cargo and the optimisation of the supply chain both from the sea into the land (and vice versa) and in intra-european relations from west to east and from north to south. Dry port in Tczew is meant to relieve Trójmiasto of car traffic associated with the transport of containers. It is intended to be a logistics and warehouse base that supports both road transport at a distance of about 200 km, and rail transport to the entire Polish territory. Currently, the conceptual work is carried out and a feasibility study is being developed. 75

76 These investment projects will be implemented in the long term and their completion date depends on the Parent Company's financial condition and ability to obtain financing. PCC Intermodal S.A. aims to strengthen its competitive position in core business areas. The planned development includes both an increase in sales volume, and improvement of operating profitability. The external and internal factors which have had or might have (in the future) an impact on the development of the Group are, for example: financial market conditions affecting the foreign exchange risk, interest rates risk and the availability of funding sources; fluctuations of exchange rates, primarily EUR and USD in relation to PLN; thy dynamic development of Polish ports (increased capacity of sea terminals) and the improving quality of infrastructure in the coastal zone are capable of capturing more of the containers to intermodal transport; support by the European Union of transport corridors under the TEN-T programme and co-funding of development projects; actions of Polish legislators - the European Court of Justice judgement of May 2013 obliged PLK to refrain from increasing the rates for access to the railway infrastructure above the set level, which should have a positive impact on the development of railway transport, increase in the 76