CAPITAL GROUP CONSOLIDATED PERIODIC REPORT OF BEST S.A. S CAPITAL GROUP FOR Q1 2016

Transcription

1 CAPITAL GROUP CONSOLIDATED PERIODIC REPORT OF BEST S.A. S CAPITAL GROUP FOR Q GDYNIA, 10 MAY

2 CONTENTS I. SELECTED FINANCIAL DATA OF THE CONSOLIDATED PERIODIC REPORT OF BEST S.A. S CAPITAL GROUP FOR Q II. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BEST S.A. S CAPITAL GROUP FOR A 3-MONTH PERIOD ENDED ON 31 MARCH CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION prepared as of 31 March 2016 (PLN 000) CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONDENSED CONSOLIDATED CASH FLOW STATEMENT CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES... 9 III. QUARTERLY DISCLOSURES OF BEST S.A. FOR A 3-MONTH PERIOD ENDED 31 MARCH CONDENSED SEPARATE STATEMENT OF FINANCIAL POSITION CONDENSED SEPARATE STATEMENT OF COMPREHENSIVE INCOME CONDENSED SEPARATE CASH FLOW STATEMENT CONDENSED SEPARATE STATEMENT OF CHANGES IN EQUITY NOTES IV. SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED REPORT OF BEST S.A. CAPITAL GROUP FOR Q

3 I. SELECTED FINANCIAL DATA OF THE CONSOLIDATED PERIODIC REPORT OF BEST S.A. S CAPITAL GROUP FOR Q PLN 000 EUR 000 SELECTED CONSOLIDATED FINANCIAL DATA I. Operating revenues 56,533 33,712 12,978 8,126 II. Profit before tax 34,579 16,888 7,938 4,070 III. Net profit 34,273 13,911 7,868 3,353 IV. Net profit attributable to BEST s Shareholders 34,088 13,838 7,826 3,335 V. Comprehensive income 34,273 13,911 7,868 3,353 VI. Comprehensive income attributable to BEST s Shareholders 34,088 13,838 7,826 3,335 VII. Number of shares (in 000) basic 21,003 20,853 21,003 20,853 VIII. Number of shares (in 000) diluted 21,103 20,853 21,103 20,853 IX. Earnings per share (in PLN/EUR) X. Diluted earnings per share (in PLN/EUR) XI. Net operating cash flow (24,617) 12,041 (5,651) 2,902 XII. Net cash flow from investing activities (3,909) (1,835) (897) (442) XIII. Net cash flow from financing activities 12,352 25,816 2,836 6,222 XIV. Total net cash flow (16,174) 36,022 (3,712) 8,682 As of: XV. Total assets 746, , , ,879 XVI. Liabilities 393, ,147 92,094 96,479 XVII. Equity 353, ,961 82,842 66,399 XVIII. Equity attributable to BEST s Shareholders 353, ,929 82,831 66,392 XIX. Share capital 22,328 20,966 5,231 4,920 3

4 SELECTED SEPARATE FINANCIAL DATA PLN 000 EUR I. Operating revenues 9,159 8,920 2,103 2,150 II. Profit (loss) before tax (8,074) (1,949) (1,854) (470) III. Net profit (loss) (8,393) (1,582) (1,927) (381) IV. Comprehensive income (8,393) 3,296 (1,927) 794 V. Number of shares (in 000) basic 21,003 20,853 21,003 20,853 VI. Number of shares (in 000) diluted 21,103 20,853 21,103 20,853 VII. Earnings (loss) per share (in PLN/EUR) (0,40) (0,08) (0,09) (0,02) VIII. Diluted earnings (loss) per share (in PLN/EUR) (0,40) (0,08) (0,09) (0,02) IX. Net operating cash flow (40,805) 1,674 (9,368) 403 X. Net cash flow from investing activities 1,010 7, ,905 XI. Net cash flow from financing activities 23,815 26,844 5,467 6,470 XII. Total net cash flow (15,980) 36,422 (3,669) 8,778 As of: XIII. Total assets 707, , , ,147 XIV. Liabilities 478, , , ,829 XV. Equity 229, ,645 53,836 47,318 XVI. Share capital 22,328 20,966 5,231 4,920 PLN exchange rate in the periods covered by the financial statements and the comparative financial data a) Average EUR exchange rates of the NBP in 2016 Exchange rate as of PLN/EUR Average exchange rate for Q PLN/EUR b) Average EUR exchange rates of the NBP in 2015 Exchange rate as of PLN/EUR Average exchange rate for Q PLN/EUR Average EUR exchange rates used for the translation of selected financial data: The items of assets and equity & liabilities were translated at average rates of the National Bank of Poland (NBP) determined as of the respective balance sheet date. The items of the statement of comprehensive income and the cash flow statement were translated using an exchange rate constituting the arithmetic mean of average exchange rates of the National Bank of Poland applicable at the end of each month of the presented reporting period. 4

5 II. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BEST S.A. S CAPITAL GROUP FOR A 3-MONTH PERIOD ENDED ON 31 MARCH CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION prepared as of 31 March 2016 Note ASSETS Cash and cash equivalents 27,020 43,194 Trade receivables 1,936 1,432 Income tax receivables Assets held for sale 0 1 Other receivables 9,085 9,934 Acquired claims , ,102 Investments in jointly controlled entities ,418 97,127 Investment property 8,222 8,220 Investments in associates , ,953 Inventory Property, plant and equipment 10,005 8,736 Intangible assets 13,352 11,948 Goodwill Deferred tax assets Other assets 1,608 1,234 Total assets 746, ,108 EQUITY AND LIABILITIES Liabilities: 393, ,147 Liabilities due to employee benefits ,610 3,652 Income tax liabilities 0 52 Trade and other liabilities ,164 6,300 Liabilities due to loans, borrowings, bonds and leases , ,150 Provisions for employee benefits Deferred tax provision , Equity attributable to BEST s Shareholders: 353, ,929 Share capital ,328 20,966 Share premium ,628 5,494 Other reserve capitals 1,325 1,281 Retained profits 289, ,188 Equity attributable to non-controlling interests Total equity 353, ,961 Total equity and liabilities 746, ,108 5

6 2. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the reporting period from 1 January to 31 March 2016 (single-step) Note comparative Operating revenue, including: ,533 33,712 Profit from share in a jointly controlled entity 12,291 5,940 Profit from share in an associate 0 0 Operating expenses 16,541 13,359 Payroll and employee benefits 7,039 5,445 Depreciation/amortisation Third party services 2,788 1,773 Taxes and charges 5,002 5,013 Other operating expenses Operating profit 39,992 20,353 Financial revenue Financial expenses 5,767 3,647 Profit before tax 34,579 16,888 Income tax ,977 Net profit, of which attributable to: 34,273 13,911 BEST s shareholders 34,088 13,838 Non-controlling interests Other items of net comprehensive income 0 0 Net comprehensive income, of which attributable to: 34,273 13,911 BEST s shareholders 34,088 13,838 Non-controlling interests Earnings per share from continued operations: Ordinary Diluted

7 3. CONDENSED CONSOLIDATED CASH FLOW STATEMENT for the reporting period from 1 January to 31 March Note comparative Operating cash flows Profit before tax 34,579 16,888 Adjustments for: (59,144) (4,383) Measurement and settlement of financial assets (12,291) (5,940) Depreciation and impairment of non-current assets Interest and profit sharing 5,755 3,644 Result on investing activities 0 21 Movement in inventory (3) 5 Movement in receivables Movement in short-term liabilities 316 4,865 Movement in other assets, equity and liabilities (406) (209) Movement in direct investments in claims (53,772) (7,797) Movement in indirect investments in claims 1 (205) Other items, net Net cash from operating activities before tax (24,565) 12,505 Income tax cash flows (52) (464) Net cash from operating activities after tax (24,617) 12,041 Cash flow from investing activities Inflows from the sale of intangible assets, and property, plant and equipment 0 17 Acquisition of intangible assets, and property, plant and equipment (3,907) (1,852) Expenditures on investment properties (2) 0 Net cash from investing activities (3,909) (1,835) Cash flow from financing activities Inflows from the issue of debt securities 44,565 54,887 Net inflows from issue of shares 36,496 0 Redemption of debt securities (25,000) (24,187) Repayment of borrowings and bank loans (36,500) 0 Commissions and interest paid on financial liabilities (6,952) (4,746) Payments due to lease (87) (61) Payments from net profit to non-controlling interests (170) (77) Net cash from financing activities 12,352 25,816 Movement in net cash (16,174) 36,022 Cash at the beginning of the period 43,194 37,455 Cash at the end of the period 27,020 73,477 7

8 4. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the reporting period from 1 January to 31 March 2016 (PLN 000) Share capital Share premium Other reserve Retained profits Equity attributable to Non-controlling interests Total equity capitals BEST s shareholders Equity as of ,966 5,494 1, , , ,961 Financial result for the current period ,088 34, ,273 Other items of comprehensive income Total comprehensive income for the reporting period ,088 34, ,273 - Contributions from and payouts to equity holders: 1,362 35, ,540 (170) 36,370 Issue of ordinary shares 1,362 35, ,496-36,496 Measurement of the incentive programme Dividends and profit shares paid to equity holders (170) (170) Equity as of ,328 40,628 1, , , ,604 Equity as of ,966 5,494 (36) 173, , ,835 Financial result for the current period ,838 13, ,911 Other items of comprehensive income Total comprehensive income for the reporting period ,838 13, ,911 Contributions from and payouts to equity holders: (78) (78) Dividends and profit shares paid to equity holders (78) (78) Equity as of (comparative) 20,966 5,494 (36) 187, , ,668 8

9 5. NOTES to the condensed consolidated financial statements of BEST S.A. s Capital Group for a 3-month period ended on 31 March Information on BEST S.A. s Capital Group and consolidated entities BEST S.A. (BEST or the Issuer) was established by a notarial deed on 12 April The registered office of BEST is located in Gdynia, ul. Łużycka 8A. The Company is entered in the Register of Entrepreneurs kept by the District Court Gdańsk-Północ in Gdańsk, 8 th Commercial Department of the National Court Register, under no. KRS The Issuer s shares are listed at the Warsaw Stock Exchange in the continuous trading system. BEST is the parent company of BEST S.A. s Capital Group (BEST Group) and, as of 31 March 2016, it held capital commitments (directly or indirectly) in the following subsidiaries, jointly controlled entities and associates: Item BEST TFI S.A.(Investment Fund Company) Total Type of relationship Consolidation Year of incorporation Registered Number in the share method office court register 100% subsidiary full 2007 Gdynia BEST Capital Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych (BEST Capital FIZAN, FIZAN) 100% subsidiary full 2014 Gdynia 1050 BEST I NSFIZ 100% subsidiary full 2005 Gdynia 221 BEST II NSFIZ 100% subsidiary full 2008 Gdynia 368 Best Nieruchomości sp. z o.o. (BEST Nieruchomości) 100% subsidiary full 2000 Gdynia Best Capital (CY) Ltd. (BEST Capital) 100% subsidiary full 2012 Limmasol, Cyprus HE Gamex sp. z o.o. (Gamex) 100% subsidiary full 2015 Gdynia Actinium Inwestycje sp. z o.o. (Actinium Inwestycje), formerly: Actinium sp. z o.o. S.K.A. 100% subsidiary full 2015 (transformation) Gdynia Actinium sp. z o.o. (Actinium) 100% subsidiary full 2013 Gdynia Gamex Inwestycje sp. z o.o. (Gamex Inwestycje) Kancelaria Radcy Prawnego Rybszleger Sp. k. (Law Firm) 100% subsidiary full 2015 Gdynia % subsidiary full 2011 Gdynia BEST III NSFIZ 50% jointly-controlled equity method 2011 Gdynia 623 Kredyt Inkaso S.A. (Kredyt Inkaso) 32,99% associate equity method 2006 (transformation) Warsaw On 21 April 2016, the Extraordinary Shareholders Meeting of BEST Capital adopted a resolution on dissolving the company and initiating liquidation proceedings according to the Cypriot law, with the effect of deregistering BEST Capital from the Cypriot register of companies. 9

10 On 22 April 2016, the merger between BEST (acquiring company) on the one hand, and Gamex, Gamex Inwestycje and Actinium Inwestycje on the other hand (acquired companies) was registered in the National Court Register. The merger was performed according to Article item 1 of the Commercial Companies Code, i.e. by transferring all assets of the acquired companies to BEST. BEST Group s structure and capital participation in jointly-controlled entities and associates+ as of the date of these financial statements are presented in note Basis for preparing these condensed consolidated financial statements BEST and BEST Group prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS), as approved by the European Union. These consolidated financial statements of BEST Group were prepared in a condensed version according to IAS 34 Interim Financial Reporting, as approved by the European Union, and according to the accounting standards applicable to interim financial statements, as adopted by the European Union, published and effective at the time of preparing these statements. The following amendments to IFRS are effective as of 1 January 2016: Amendments to IAS 19 Employee Benefits, Amendments to IFRS , Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture: Bearer Plants, Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation, Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations, Amendments to IAS 27 Equity Method in Separate Financial Statements, Amendments to IAS 1, Amendments to IFRS Adopting the standards effective as of 1 January 2016 did not materially affect BEST Group s accounting policy or the presentation of data in the financial statements. The following standards and interpretations were issued by the International Accounting Standards Board, but were not approved by the European Union or do not apply to these statements: IFRS 9 Financial Instruments effective for annual periods beginning on or after 1 January 2018, IFRS 14 Regulatory Deferral Accounts The European Commission decided not to begin the process of adopting this standard as an interim standard, and decided to wait until the publication of a final standard, IFRS 15 Revenue from Contracts with Customers effective for annual periods beginning on or after 1 January 2018, IFRS 16 Leases effective for annual periods beginning on or after 1 January 2019, Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The European Commission delayed the effective date indefinitely, Amendments to IFRS 10, IFRS 12 and IAS 28 effective for annual periods beginning on or after 1 January 2016 (not approved by the EU), Amendments to IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses effective for annual periods beginning on or after 1 January 2017, Amendments to IAS 7 Statement of Cash Flows effective for annual periods beginning on or after 1 January 2017, Clarification to IFRS 15 Revenue from Contracts with Customers effective for annual periods beginning on or after 1 January The above amendments are currently analysed by BEST Group for their influence on the consolidated financial statements. 10

11 These condensed consolidated financial statements were prepared based on the following measurement principles: at fair value for: financial instruments measured through the financial result (claims acquired), investment property, assets held for sale and incentive programme settled in equity instruments, at amortised cost less any impairment losses for: other financial assets and liabilities, at historical cost less amortisation/depreciation or impairment losses for: non-financial assets and liabilities (in particular, for property, plant and equipment, and intangible assets), equity method, taking account of impairment losses, for: investments in jointly controlled entities and associates. Unless indicated otherwise, all amounts presented in the statements are rounded to PLN thousands. The presentation currency of the statements is the Polish zloty due to the fact that 100% of revenue of BEST Group entities is denominated in this currency. In the opinion of the parent company s Management Board, there are no factors which could be a material threat to BEST Group s continued going concern status; therefore, these financial statements were prepared on a going concern basis Changes in the applied accounting principles (policy) and methods of preparing the financial statements When preparing these condensed consolidated financial statements, BEST Group applied the same accounting principles as in the annual consolidated financial statements for 2015, which were published on 21 March In 2015, BEST Group introduced changes to the presentation of data, which are described in detail in note to the consolidated financial statements for As a result, BEST Group restated the data for a comparative 3-month period of Condensed consolidated statement of comprehensive income for the period from to : Published data Adjustments Comparative data Adjustments for: Operating revenue, including: 33, ,712 Increase in value of interests in jointly controlled entities 5,940 (5,940) 0 Profit from share in jointly controlled entities 0 5,940 5,940 Other operating revenue Operating expenses, including: 13, ,359 Consumption of materials and energy 237 (237) 0 Payroll 4,490 (4,490) 0 Social insurance and employee benefits 955 (955) 0 Payroll and employee benefits 0 5,445 5,445 Other, including: consumption of materials and energy other operating expenses Other operating revenue 47 (47) 0 Other operating expenses 51 (51) 0 11

12 Condensed consolidated cash flow statement prepared as of : Published data Adjustments Comparative data Operating cash flows Profit before tax 16, ,888 Adjustments for: (4,178) (205) (4,383) Movement in indirect investments in claims 0 (205) (205) Net cash from operating activities before tax 12,710 (205) 12,505 Cash flow from investing activities Acquisition of financial assets (205) Net cash from investing activities (2,040) 205 (1,835) Condensed consolidated statement of changes in equity as of : Published data Adjustments Comparative data Adjustments for: Supplementary capital 15,298 (15,298) 0 Revaluation reserve (36) 36 0 Unsettled profit from previous years 163,575 (163,575) 0 Financial result for the current period attributable to BEST s Shareholders 13,838 (13,838) 0 Share premium 0 5,494 5,494 Other reserve capitals 0 (36) (36) Retained profits 0 187, , Corporate bodies of consolidated entities of BEST Group BEST S.A. In 2016, the composition of BEST s Management Board did not change and, as of the date of these statements, it is as follows: 1. Krzysztof Borusowski President of the Management Board 2. Marek Kucner Vice-President of the Management Board 3. Barbara Rudziks Member of the Management Board On 5 January 2016, Krzysztof Robert Kaczmarczyk was appointed Member of the Supervisory Board. Therefore, as of the date of these statements, the composition of the Supervisory Board is as follows: 1. Sławomir Lachowski Chairman of the Supervisory Board 2. prof. Leszek Pawłowicz Vice-Chairman of the Supervisory Board 3. Katarzyna Borusowska Member of the Supervisory Board 4. Patrycja Kucner Member of the Supervisory Board 5. prof. Pasquale Policastro Member of the Supervisory Board 6. prof. Dariusz Filar Member of the Supervisory Board 7. Krzysztof Robert Kaczmarczyk Member of the Supervisory Board 12

13 BEST TFI S.A. and investment funds In 2016, the composition of the Investment Fund Company s Management Board did not change and, as of the date of these statements, it is as follows: 1. Krzysztof Stupnicki President of the Management Board 2. Krzysztof Borusowski Member of the Management Board 3. Marek Kucner Member of the Management Board In 2016, the composition of the Investment Fund Company s Supervisory Board did not change and, as of the date of these statements, it is as follows: 1. prof. Witold Orłowski Chairman of the Supervisory Board 2. Mirosława Szakun Vice-Chairman of the Supervisory Board 3. Andrzej Ladko Member of the Supervisory Board In 2016, the Investment Fund Company managed all investment funds of BEST Group (BEST I NSFIZ, BEST II NSFIZ and BEST Capital FIZAN) and the jointly controlled fund BEST III NSFIZ. Other entities The general partner responsible for running the Law Firm is licensed lawyer Urszula Rybszleger. On 21 April 2016, the Extraordinary Shareholders Meeting of BEST Capital adopted a resolution on dissolving the company and initiating liquidation proceedings. Andreas Raftis was appointed as the company s liquidator. By the adoption date of the above resolution, BEST Capital s directors were as follows: 1. Krzysztof Borusowski Director 2. Marek Kucner Director 3. Epssona Consultants Limited Director 4. Nosbor Services Limited Director 5. Totaltrust Management Limited Director On 22 April 2016, the merger between BEST (acquiring company) on the one hand, and Actinium Inwestycje, Gamex and Gamex Inwestycje on the other hand was registered. By the merger date, the Members of the Management Boards of the acquired companies were: Actinium Inwestycje Gamex Gamex Inwestycje Members of the Management Boards of BEST Group companies: BEST Nieruchomości Actinium sp. z o.o. Edward Jednoralski President of the Management Board Łukasz Winkowski President of the Management Board Edward Jednoralski President of the Management Board Jacek Straszkiewicz President of the Management Board Edward Jednoralski President of the Management Board 5.5. Adjustments of errors from previous periods During the reporting period, there were no adjustments concerning previous periods which must be accounted for in these interim condensed consolidated financial statements Notes on seasonal or cyclic nature of BEST Group's business in the presented period BEST Group s business is not of cyclical or seasonal nature. 13

14 5.7. Selected explanatory data to assets, liabilities, capitals, net financial result and selected estimates Acquired claims movements in the reporting period Opening balance 337, ,013 Increases (decreases), including: 53,772 86,089 purchase of new claims portfolios 44,678 85,125 revaluation of claims 9, Closing balance, including current value of estimated net flows: 390, ,102 recoverable within 1 year 61,854 62,787 recoverable between 1 and 5 years 238, ,580 recoverable in above 5 years 90,917 73,735 In the reporting period, BEST Group acquired 2 bank claims portfolios containing claims with a nominal value of PLN 322 million. Presented below are items affecting the revaluation of claims in Q1 2016: Revaluation of claims: change in value on account of flows from claims (7,419) change of estimation parameters 16,513 Claims with a fair value of PLN 90,031 thousand represent a security for the repayment of bonds, as referred to in note Investments in jointly controlled entities As of As of Investment in the jointly controlled entity BEST III NSFIZ 109,418 97,127 Number of certificates in thousands 22,140 22,140 Share in the total number of votes in % 50,00 50,00 Value at the acquisition price 22,140 22,140 Total change in the value of investment in jointly controlled entity 87,278 74, Opening balance 97,127 98,143 Redemption of certificates 0 (6,772) Increase in the value of investment for the reporting period 12,291 5,756 Closing balance 109,418 97,127 14

15 Investments in associates As of As of Investment in the associate Kredyt Inkaso S.A. 174, ,953 Number of shares in thousands 4,268 4,268 Share in the total number of votes in % 32.99% 32.99% Value at the acquisition price 171, ,293 Increase in the share value, accumulated from the acquisition date 3,660 3,660 In the reporting period, BEST Group did not change the value of its share in the associate Kredyt Inkaso because no information was available on the net asset value of Kredyt Inkaso S.A. Group as of 31 March The net asset value is a basis for measuring that investment with the equity method. The associate announced that it planned to publish the data as of 31 March 2016 on 17 June Acquisition and sale of PP&E and intangible assets In Q1 2016, BEST Group acquired PP&E and intangible assets, and expended PLN 3,535 thousand to develop its proprietary software for managing claims. In Q1 2015, those investments amounted to PLN 1,601 thousand Deferred income tax As of As of Deferred tax assets, including: 10,672 10,543 Deferred tax assets subject to offsetting 10,660 10,532 Deferred tax assets not subject to offsetting Deferred income tax provision, including: 11,783 11,346 Deferred tax provision subject to offsetting 10,943 10,652 Deferred tax provision not subject to offsetting Deferred tax assets after offsetting Deferred tax provision after offsetting 1, BEST Group offsets deferred income tax assets against deferred income tax provisions if it holds an enforceable legal title for offsetting. 15

16 Deferred tax assets before offsetting Temporary negative difference on account of: tax losses provisions for retirement and disability benefits liabilities due to employee benefits receivables other items Total As of , ,543 Increases Decreases As of , ,672 As of , ,523 Increases 4, , ,156 Decreases ,136 As of , ,543 BEST Group is not a tax group and recognises assets on account of the tax losses of consolidated entities. This item includes mainly assets on account of BEST s tax losses. In Q1 2016, BEST s tax loss amounted to PLN 87.3 million. Due to uncertainty concerning the future taxable income, allowing negative temporary differences to be offset, BEST did not recognise assets on account of that loss in the amount of PLN 16.6 million in the current period Deferred tax provision before offsetting Temporary positive difference on account of: PP&E and IA* receivables investment property investments in subsidiaries and jointly controlled entities financial liabilities and assets financed with them As of , , ,346 Increases Decreases As of , , ,783 As of , ,755 Increases 1, , ,451 Decreases , ,860 As of , , ,346 *IA intangible assets Total 16

17 Liabilities due to employee benefits As of As of Liabilities due to remunerations 1,436 1,611 Provision due to bonuses 936 1,115 Provision due to unused holidays 1, Total 3,610 3, Trade and other liabilities As of As of Trade liabilities, including: 2,348 3,246 liabilities related to investments in PP&E and intangible assets Liabilities due to taxes and contributions to statutory employee insurance 2,321 1,357 Liabilities due to surplus and unsettled repayment of debt 1,407 1,458 Other liabilities Deferred revenue 3 3 Total, including: 6,164 6,300 long-term 1 1 short-term 6,163 6, Liabilities due to loans, borrowings, bonds and leases As of As of Liabilities due to bonds issue 344, ,192 Liabilities due to borrowings received 36,501 73,002 Liabilities due to finance lease Total, including: 382, ,150 long-term (1 to 5 years) 263, ,940 short-term (up to 1 year) 118, ,210 In March 2016, the Issuer repaid PLN 36.5 million worth of debt due to borrowings received from the members of BEST s Management Board in The liabilities due to the issue of series G bonds with a nominal value of PLN 39 million was secured with series C investment certificates of BEST I NSFIZ, up to a maximum security amount of PLN 52.6 million. These certificates are assets of BEST Capital FIZAN and their fair value, as of 31 March 2016, was PLN 166 million. The liabilities due to the issue of series C bonds with a nominal value of PLN 30 million were secured with claims up to a maximum security amount of PLN 60 million. As of 31 March 2016, the fair value of claims securing those liabilities was PLN 90 million. 17

18 Details on the change in the value of liabilities due to bonds in the reporting period are presented in note Share capital and share premium Opening balance: 26,460 Share capital: 20,966 initial capital 20,854 hyperinflation adjustment 112 Share premium 5,494 Increase due to issue of series D shares 36,496 Share capital nominal value of shares issued 1,362 Share premium: 35,134 surplus of issue price over nominal price 35,138 costs of share capital increase (4) Closing balance, including: 62,956 Share capital 22,328 Share premium 40,628 In its decision of 30 March 2016, the District Court Gdańsk-North in Gdańsk, 8 th Commercial Department of the National Court Register, registered the increase of the share capital from PLN 20,853, to PLN 22,216, The share capital increase was due to the issue of 1,362,957 series D ordinary bearer shares with an issue price of PLN per share. All shares of that series were acquired by BEST s managers Operating revenue comparative Operating revenue from core business 55,592 33,665 Other operating revenue Total 56,533 33,712 18

19 Operating revenue from core business Revenue from investment in claims 50,853 29,054 Management of claims of securitisation funds 3,732 3,407 Commissioned collection (monitoring of claims) Management of investment funds Legal services Other Total 55,592 33,665 BEST Group operates only on the territory of Poland and does not generate revenue abroad Revenue from investment in claims Profit on share in the jointly controlled entity BEST III NSFIZ, including: 12,291 5,940 result on the repurchase of investment certificates 0 0 increase in the value of share in the reporting period 12,291 5,940 Revenue from the repayment and measurement of claims (BEST I NSIZ and BEST II NSFIZ), including: 38,562 23,114 revenue from the repayment of debt 29,468 20,597 revaluation 9,094 2,517 Total 50,853 29, Income tax Current income tax (2) 19 Deferred income tax 308 2,958 Total 306 2,977 19

20 Deferred income tax Tax on negative temporary differences: (129) (52) occurred in the period (568) (262) reversed in the period Tax on positive temporary differences: 437 3,740 occurred in the period 634 3,797 reversed in the period (197) (57) Total tax on temporary differences 308 3,688 Tax on temporary differences from tax loss: 0 (730) settled in the period 1 2 asset created 1 (732) Total deferred tax recognised in profit or loss 308 2,958 Total deferred tax recognised in reserve capital Reconciliation between the effective interest rate and the statutory tax rate applicable in Poland Gross profit (loss) before tax: 34,579 16,888 Tax on gross profit at the tax rate applicable in Poland (19%) 6,570 3,209 Tax effect of permanent differences, including due to: (6,264) (232) unrecognised and released provisions for differences on the measurement of the assets of subsidiaries and jointly (8,090) (262) controlled entities tax revenues and deductible costs not recognised in net result (14,756) 0 non-capitalised tax losses 16,578 0 other differences 4 30 Income tax recognised in profit or loss 306 2,977 Effective tax rate 1% 18% BEST Group s profits are generated mainly by investment funds which are exempted from the corporate income tax. 20

21 Earnings per share Earnings per share are obtained by dividing the net profit attributable to BEST s Shareholders by the weighted average number of shares in a given period Net profit attributable to BEST s Shareholders 34,088 13,838 Number of ordinary shares in thousands 21,003 20,853 Dilution effect in thousands Basic earnings per share (in PLN/share) Diluted earnings per share (in PLN/share) Movement in direct investments in claims Acquired claims (44,678) (5,280) Revaluation of claims (9,094) (2,517) Total (53,772) (7,797) 5.8. Transactions between related parties Information on remuneration for the members of Management Boards and Supervisory Boards of BEST Group companies BEST Investment Fund Company BEST Nieruchomości 9 9 Management Board Actinium Inwestycje 2 0 Actinium sp. z o.o. 2 1 Gamex 6 0 Gamex Inwestycje 0 0 Supervisory Board BEST Investment Fund Company 11 0 On 21 March 2016, the Issuer offered to each member of BEST s Management Board to acquire 36 thousand series A subscription warrants (108 thousand in total). The offers were accepted, and the warrants were issued and acquired free of charge as a private offering. Each series A subscription warrant is vested with the right to acquire one series C share of the Issuer for an issue price corresponding to the nominal value. The subscription warrants were issued and acquired as part of the invective programme. 21

22 Information on the value of outstanding advances, loans, borrowings, guarantees and sureties granted to and agreements concluded with related persons (in particular managers or supervisors) In September 2015, BEST concluded borrowing agreements with two Management Board members in the total amount of PLN 73 million and an annual interest rate of 3.50%. In February 2016, BEST concluded addenda to the borrowing agreements, allowing a part of the principal amount to be repaid earlier. In March 2016, BEST repaid PLN 36.5 million, which accounts for a half of the borrowings granted. Interest due and paid on these borrowings for the period from 1 January to 31 March 2016 amounted to PLN 588 thousand. As of 31 March 2016, outstanding borrowings amounted to PLN 36.5 million. On 22 March 2016, BEST, President of the Management Board and Vice-President of the Management Board of BEST concluded an agreement for the acquisition of series D shares. Presented below are the details of the shares acquisition by BEST s managers. BEST s managers: Number of series D shares acquired Issue price of series D shares (PLN/share) Total issue value of shares (PLN 000) Krzysztof Borusowski 1,269, ,000 Marek Kucner 93, ,500 In the reporting period, all members of the Issuer s Management Board accepted offers to acquire a total of 108 thousand series A subscription warrants as part of an incentive programme. Details on the acquisition of the warrants are presented in note Information on transactions with other related parties Transactions between BEST and its subsidiaries were eliminated during consolidation and have not been recognised in this note. Presented below are transactions between BEST Group and other related parties: Transaction value in the period Revenue from the sale of services: BEST (parent company) 3,733 3,407 - of which to the jointly controlled entity BEST III NSFIZ 3,733 3,407 other BEST Group entities of which to the jointly controlled entity BEST III NSFIZ Unsettled balances as of: Liabilities: BEST (parent company) of which to the jointly controlled entity BEST III NSFIZ 2 1 other BEST Group entities 0 0 Receivables: BEST (parent company) 0 0 other BEST Group entities 1,513 3,888 - of which from the jointly controlled entity BEST III NSFIZ 1,513 3,888 22

23 5.9. Information about the issue, redemption and repayment of debt securities and equity securities Debt securities New issues, including: 44,655 L2 series 40,000 P series 4,655 Redemptions, including: (25,000) M series (15,000) C series (10,000) Total 19,655 As of 31 March 2016, the nominal value of BEST Group s issued and outstanding bonds was PLN million. Series Nominal value of bonds (in PLN 000) Nominal interest rate Coupon payment frequency Issue date Maturity Issue type Listed at Catalyst G 39,000 WIBOR 3M % every quarter public* yes C** 30,000 WIBOR 6M % every six months private yes K1 45,000 WIBOR 3M % every quarter public yes K2 50,000 6,00% every quarter public yes K3 35,000 WIBOR 3M % every quarter public yes K4 20,000 WIBOR 3M % every quarter public yes L1 60,000 WIBOR 3M % every quarter public yes L2 40,000 WIBOR 3M % every quarter public yes N 17,000 WIBOR 3M % every quarter private no O 6,770 WIBOR 3M % every quarter private yes P 4,655 WIBOR 3M % every quarter private yes Total 347,425 * only for investors who acquired securities for at least PLN 210 thousand, which did not require preparing an issue prospectus. ** issued by BEST II NSFIZ In April 2016, BEST Group issued series L3 bonds with a nominal value of PLN 50 million, and by doing so it completed the public issue programme from 2014 with a total nominal value of PLN 300 million. Equity securities In its decision of 30 March 2016, the District Court Gdańsk-North in Gdańsk, 8 th Commercial Department of the National Court Register, registered amendments to the Issuer s statute in connection with the increase of the share capital from PLN 20,853, to PLN 22,216,177.00, i.e. by PLN 1,362, The share capital increase was due to the issue of 1,362,957 series D shares with a total nominal value of PLN 1,363 thousand and an issue value of PLN 36,500 thousand. 23

24 5.10. Information on paid (or declared) dividend In the period from 1 January to 31 March 2016, BEST did not pay or declare the payment of a dividend. In addition, in the terms of issue, BEST undertook that it would not pay any dividend by 10 March 2020 in the full amount and by 27 July 2020 in excess of 50% of BEST Group s consolidated net profit generated from 1 January 2018 to date Operating segments The purpose of IFRS 8 Operating Segments is to present segment information based on a reporting structured used for internal purposes. Considering that BEST s Management Board regularly analyses the consolidated results and, based on them, makes business decisions, BEST Group does not separate operating or reporting segments Events after the date of the financial statements which are not recognised in the financial statements and which may have a material influence on BEST Group s future financial results On 15 April 2016, series L3 bonds were allocated with a nominal value of PLN 50 million, issued by BEST during 4 years with an interest rate of WIBOR 3M plus 3.5 margin. The issue finalised BEST s two-year programme adopted in As part of the whole programme, bonds were issued with a total nominal value of PLN 300 million, of which PLN 90 million in Bond issues are an important source for financing the purchase of new claims portoflios Effects of changes in BEST Group s structure, including merger, acquisition or loss of control of subsidiaries and long-term investments, restructuring and discontinued operations On 21 March 2016, BEST acquired 28,467,154 series F investment certificates issued by BEST Capital FIZAN with a total nominal value of PLN 39 million. Prior to the acquisition, the Issuer held directly 99.53% of BEST Capital FIZAN s investment certificates, vested with 99.53% votes at the fund s investors meeting, and 0.47% certificates and voting rights indirectly through BEST TFI. After acquiring series F certificates, BEST holds directly 99.57% of the voting rights and 0.43% through the Investment Fund Company (TFI). On 22 April 2016, the merger between BEST (acquiring company) on the one hand, and Gamex, Gamex Inwestycje and Actinium Inwestycje on the other hand (acquired companies) was registered in the National Court Register. Presented below are BEST Group s current structure and percentage shares in jointly controlled entities and associates as of the date of these condensed consolidated financial statements. 24

25 *jointly controlled entity **associate Kancelaria Radcy Prawnego Rybszleger Sp.K. BEST Nieruchomości Sp. z o.o. BEST Capital (CY) Ltd. (w likwidacji) Źródło: Kancelaria Radcy Prawnego Rybszleger Sp.K. BEST Nieruchomości Sp. z o.o. BEST Capital (CY) Ltd. (in liquidation) Tłumaczenie: In the reporting period, BEST Group did not discontinue any operations Fair value of financial instruments In accordance with IFRS 13, fair value is defined as an amount which could be received from the sale of an asset or which could be paid for the transfer of a liability in a transaction between market participants as of the measurement date (a so called initial price). This note does not include any information on the measurement of BEST III NSFIZ s investment certificates or Kredyt Inkaso s shares. Investments in those entities are not classified as financial instruments under IAS 39 and they are measured with the equity method according to IAS Value of financial instruments measured at fair value BEST Group classifies financial instruments in accordance with the principles of measuring fair value, using the following hierarchy reflecting the use of different input data for measurement: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities, Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices), Level 3: inputs for the asset or liability which are not based on observable market data (unobservable inputs). As of 31 March 2016, BEST Group held only financial instruments measured at fair value classified as Level 3. 25

26 Level 3 In this level, BEST Group classifies claims acquired that are measured at fair value through the financial result. Level 3: As of As of Acquired claims 390, ,102 Claims acquired include mass claims whose nominal value differs significantly from the price paid. Claims acquired are grouped into portfolios. The fair value of claims portfolios is estimated based on recognised estimation methods, using the market discount rate of probable future recoverable cash inflows and expenditures necessary in order to generate the assumed inflows in the period of the planned portfolio management. The basic parameters (input data) used for the measurement of claims are: portfolio management period, estimated inflows in the portfolio management period, estimated costs of claims management and recovery activities, discount rate which is the sum of the risk-free rate and the risk premium. At the end of the reporting period, BEST Group verifies the assumptions adopted for claims measurement models. Each change of the risk-free rate by at least 0.5 pp causes a respective change of the discount rate used in the model. Where total nominal inflows from settlements anticipated after exceeding the basic servicing period exceed 5% of the fair value of the portfolio resulting from flows estimated in the basic servicing period, the term of the forecast of inflows and outflows is extended. The verification of the parameters of inflows and expenses for claims portfolios with a low fair value can be examined jointly. Where over the past 6 full months preceding the measurement the difference between the actual and planned amount of inflows exceeds 10% of the amount of inflows planned in that period, the reasons for the differences are analysed, in particular: external reasons: changing economic conditions, change in settlement repayment rate, changes in legislation, etc., internal reasons: phase of portfolio management, debt collection activities, availability of debtors, changes in the characteristics and size of the settlement portfolio, etc. Where over the past 6 full months preceding the measurement the difference between the actual and planned amount of outflows exceeds 10% of the amount of outflows planned in that period, the reasons for the differences are analysed, in particular: reasons for a change of claims-related outflows estimated in the future, resulting from a change in the strategy of referring claims to court and enforcement proceedings, an adjustment of the remuneration of the entity managing claims so that it reflects market conditions, the amount of court fees and advances on court enforcement proceedings. After verifying and adjusting initial parameters, the materiality of their impact on the amount of flows anticipated in the future is estimated, and recently estimated values are adjusted. The following assumptions have been adopted in the measurement of claims portfolios acquired by BEST Group: 26

27 As of As of portfolio management period April November 2031 January October 2028 nominal value of the estimated future cash flows, including: 601, ,089 Up to 1 year 67,110 68,565 Between 1 and 5 years 337, ,008 Over 5 years 196, ,516 discount rate, including: 7%-45% 7%-45% risk-free rate 1.6%-3.2% 1.6%-3.1% risk premium 4.2%-42.2% 4.2%-42.2% Sensitivity analysis of claims classified as Level 3 When measuring claims on each reporting day, BEST Group may in particular revise the following parameters based on which the fair value of claims is estimated: discount rate its increase results in a decrease in fair value, expected future flows its increase results in an increase in fair value, service period its extension may lead to an increase or a decrease in fair value. BEST Group analysed the sensitivity of the acquired claims portfolios to a change of base interest rates and planned recoveries. Analysis of sensitivity to changes of interest rates Effect on fair value, PLN 000 Carrying value Interest rate increase Interest rate decrease by 1 pp by 1 pp Acquired claims 390,874 (11,471) 12,811 Effect on fair value, PLN 000 Carrying value Interest rate increase Interest rate decrease by 1 pp by 1 pp Acquired claims 337,102 (9,967) 9,452 As of 31 March 2016, the fair value of purchased claims would have been lower by PLN 11,471 thousand or higher by PLN 12,811 thousand, if interest rates used to measure this value had been higher or lower by 1 pp respectively. 27

28 Analysis of sensitivity to changes of planned flows Effect on fair value, PLN 000 Carrying value Increase in net flows Decrease in net flows by 10% by 10% Acquired claims 390,874 39,087 (39,087) Effect on fair value, PLN 000 Carrying value Increase in net flows Decrease in net flows by 10% by 10% Acquired claims 337,102 33,710 (33,710) As of 31 March 2016, the fair value of purchased debts would have been respectively higher or lower by PLN 39,087 thousand if anticipated realisable net cash flows had increased or decreased by 10% Comparison of the fair value and the carrying value of financial instruments not measured at fair value As of As of Fair value Carrying value Fair value Carrying value Financial liabilities due to bonds issue 349, , , ,192 Financial liabilities due to bonds issue, for balance sheet purposes, were measured at amortised cost, taking into account the incurred expenses directly related to the issue and the effective interest rate. In order to compare the book value of liabilities to the fair value, the fair value of the bonds was calculated as a sum of outstanding bonds as of the balance sheet date multiplied by the transaction rate plus interest accrued. For bonds not listed on an active market, transaction rates for bonds with similar parameters were applied. The carrying values of other financial instruments do not differ materially from their fair values, and therefore they are not presented in this note Information on contingent liabilities or contingent assets and their changes after the end of the last financial year In 2015, BEST concluded an agreement for the lease of office space in Gdynia and a related bank guarantee agreement of up to PLN 541 thousand. Currently, the bank guarantee secures the payment of amounts due under the lease in connection with the transfer of the subject of lease to the Issuer in February On 25 March 2016, the Issuer, BEST Capital FIZAN, BEST I NSFIZ, BEST II NSFIZ, acting jointly as borrowers, concluded a revolving loan agreement of up to PLN 24 million with Bank Zachodni WBK S.A. The bank s claims under the loan are secured with the following: a registered pledge of up to 150% of the loan on series E investment certificates issued by BEST Capital FIZAN and acquired by the Issuer, blank bills of exchange issued by each borrower, and the blank bills issued by BEST Capital FIZAN, BEST I NSFIZ and BEST II NSFIZ are guaranteed by BEST, each borrower's statement of submission to enforcement proceedings. In addition, the bank s claims will be secured with registered pledges on claims portfolios purchased by the funds and financed by the loan. BEST Group s business model is based on purchasing portfolios of non-performing debt by securitisation funds and then enforcing their repayment, both in amicable and court proceedings. Due to the nature of its business, BEST Group is a party to numerous legal proceedings, which do not give rise to contingent liabilities as of the balance sheet date. The risk related to these cases was taken into account in the measurement of claims. 28