Net profit 18,7 8,3 5,5 2,5 2008/ / / /2012. REPORT FOR THE Warsaw/June 2014 FINANCIAL YEAR 2013/14

Transcription

1 Net profit 8 18, ,3 5,5 2,5 2008/ / / /2012 REPORT FOR THE Warsaw/June 2014 FINANCIAL YEAR 2013/14

2 Kredyt Inkaso Spółka Akcyjna in Warsaw STAND ALONE FINANCIAL REPORT OF KREDYT INKASO S.A. FOR THE FINANCIAL YEAR 2013/14 (period from to ) drawn up according to the International Financial Accounting Standards approved by the European Union Warsaw, June

3 CONTENTS STAND ALONE FINANCIAL REPORT OF KREDYT INKASO S.A SELECTED STAND ALONE FINANCIAL DATA... 8 BALANCE SHEET... 9 TOTAL INCOME STATEMENT CHANGES TO EQUITY STAND-ALONE CHANGES TO EQUITY FOR THE PERIOD FROM 1 APRIL 2013 TO 31 MARCH GENERAL ECONOMIC AND FINANCIAL RATIOS ADDITIONAL INFORMATION TO THE STAND ALONE FINANCIAL STATEMENTS GENERAL INFORMATION Information on Kredyt Inkaso S.A Composition of the Management Board and the Supervisory Board of the Dominant Entity BASIS OF DRAWING UP AND ACCOUNTING PRINCIPLES Basis of drawing up the Consolidated Financial Statements Changes to standards and interpretations of the IFRS Statement of compliance Obligatory changes to standards or interpretations observed by the Group since Application of standards and interpretations prior to their coming into effect Published standards and interpretations which did not come to effect for periods commencing on 1 January 2013 and their effect on the Kredyt Inkaso s stand-alone financial statements Significant elements of accounting policy Transactions in foreign currencies Intangible assets Tangible fixed assets Deferred income tax assets Short-term receivables Purchased receivables Cash and cash equivalents Short-term prepayments and accruals Share capital Cost of Bonds Issue and own shares Supplementary reserve (agio) Capital from revaluation, capital from revaluation of financial assets available for sale Reserve for deferred income tax Reserve for pensions and similar benefits Other reserves Liabilities Other accruals Revenues Overheads Other costs of the core business Income tax Cash flow statement Adjustments of errors and changes to accounting principles UTILISING INFLOWS FROM ISSUE OF SECURITIES STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ON COMPLIANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS WITH THE APPLICABLE ACCOUNTING PRINCIPLES STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ON APPOINTMENT OF THE ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENTS

4 6. INFORMATION ON OPERATING SEGMENTS MERGER OF BUSINESS ENTITIES BASIS OF DRAWING UP AND ACCOUNTING PRINCIPLES Basis of drawing up the Financial Statements Changes of standards and interpretations of IFRS Statement of compliance Status of standards approval Standards and interpretations approved by the European Union Standards and interpretations waiting to be approved by the European Union Earlier adoption of standards and interpretations Significant elements of accounting policy Transactions in foreign currencies Tangible fixed assets Deferred income tax assets Other long-term prepayments and accruals Short-term receivables Purchased debts Cash and cash equivalents Short-term prepayments and accruals Share capital Cost of Bonds Issue and own shares Supplementary reserve (agio) Revaluation reserve, reserve relative to revaluation of financial assets available for sale Reserve for deferred income tax Reserve for pensions and similar benefits Other reserves Liabilities Other accruals Revenues Own cost of revenues Overheads Other costs of the core business Income tax Cash flow statement APPROPRIATION OF PROCEEDS FROM THE ISSUE OF SECURITIES STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ABOUT THE CONSISTENCY OF THE FINANCIAL STATEMENTS WITH THE BINDING ACCOUNTING PRINCIPLES STATEMENT OF KREDYT INKASO S.A. MANAGEMENT BOARD ABOUT APPOINTMENT OF THE ENTITY AUTHORIZED TO AUDIT FINANCIAL STATEMENTS INFORMATION ON OPERATING SEGMENTS NOTES TO THE BALANCE SHEET TANGIBLE FIXED ASSETS AND GOODWILL Goodwill Intangible assets TANGIBLE FIXED ASSETS INVESTMENT REAL ESTATE LONG-TERM CAPITAL INVESTMENTS RECEIVABLES AND LOANS OTHER FINANCIAL ASSETS

5 12.1. Financial assets valued according to depreciated cost PREPAYMENTS AND ACCRUALS DEFERRED INCOME TAX ASSETS STOCK RECEIVABLES DUE TO INCOME TAX SHORT-TERM RECEIVABLES DUE TO AWARDED COSTS OF PROCEEDINGS FROM OTHER ENTITIES PURCHASED RECEIVABLES CASH AND CASH EQUIVALENTS EQUITY Share capital Own Shares Distribution of profit of the Dominant Company for the year 2012/ Number of shares and earnings per share (EPS) PAID DIVIDENDS AND DIVIDEND POLICY CREDITS, LOANS, OTHER DEBT INSTRUMENTS Credits and loans Issued Bonds LIABILITIES DUE TO LEASE RESERVE DUE TO DEFERRED INCOME TAX RESERVES TRADE LIABILITIES AND OTHER LIABILITIES LIABILITIES DUE TO INCOME TAX NOTES TO THE TOTAL INCOME STATEMENTS NET REVENUES COSTS OF BUSINESS ACTIVITIES OTHER REVENUES AND OPERATING COSTS REVENUES AND FINANCIAL COSTS INCOME TAX NOTES TO THE CASH FLOW STATEMENT ADDITIONAL INFORMATION TO THE CASH FLOW STATEMENT FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS Additional information on methods of valuation of financial instruments recognized in the consolidated financial statements in the fair value Reclassification Exclusion from the balance sheet Method of valuation of financial instruments FINANCIAL RISK MANAGEMENT Credit risk Liquidity risk Market risk: interest rate risk

6 35.4. Market risk: risk of change of statutory interest rates and the National Bank of Poland interest rates Market risk: foreign currency risk Market risk: price fluctuation risk COST OF CAPITAL OTHER DISCLOSURES NUMBER OF SHARES AND EARNINGS PER ONE SHARE (EPS) ENTERPRISE VALUE DIVIDENDS PAID AND DIVIDEND POLICY COMPANY S GOVERNING BODIES, KEY PERSONNEL Changes to the governing bodies of the Company Remuneration Remuneration of the Management Board Remuneration of the Supervisory Board Value of remunerations, awards and benefits paid out, due or potentially due to the managing and supervising persons Information on benefits for key management personel Loans granted to the key personnel and the persons related to them Transactions with the key personnel OPTIONS, EMPLOYEE SHARES PROGRAM TRANSACTIONS WITH RELATED ENTITIES Kancelaria prawnicza FORUM Radca Prawny Krzysztof Piluś i spółka spółka komandytowa Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty KI Nieruchomości Sp. z o.o Kancelaria Forum S.A Legal Process Administration Sp. z o.o Finsano Consumer Finance S.A Finsano Consumer Finance S.A. Spółka komandytowa REMUNERATION OF AUDITORS ISSUES, REDEMPTION AND REPAYMENT OF DEBT AND CAPITAL SECURITIES SIGNIFICANT EVENTS WHICH OCCURRED AFTER THE BALANCE SHEET DATE AND WERE NOT DISCLOSED IN THE FINANCIAL STATEMENTS FOR A GIVEN REPORTING PERIOD INFORMATION ON SIGNIFICANT EVENTS RELATED TO PREVIOUS YEARS DISCLOSED IN THE FINANCIAL STATEMENTS FOR THE CURRENT PERIOD CONTINGENT ASSETS AND LIABILITIES INFORMATION ON INCOME, COSTS AND RESULTS ON DISCONTINUED BUSINESS ACTIVITY INFORMATION ON GRANTED GUARANTEES AS WELL AS SECURITY INTERESTS ON THE COMPANY S ASSETS OTHER INFORMATION WHICH, ACCORDING TO THE COMPANY IS SUBSTANCIAL FOR ASSESSING ITS EMPLOYMENT, PROPERTY AND FINANCIAL SITUATION AS WELL AS FINANCIAL RESULT AND THEIR CHANGES AND THE INFORMATION SIGNIFICANT FOR ASSESSING THE ABILITY TO MEET OBLIGATIONS BY THE COMPANY COMMENTARY EXPLAINING THE SEASONAL OR CYCLICAL CHARACTER OF BUSINESS ACTIVITY IN THE REPORTING PERIOD FINANCIAL STATEMENTS DRAWN UP IN CONDITIONS OF HIGH INFLATION EMPLOYMENT IN THE COMPANY

7 54. APPROVAL FOR PUBLICATION

8 SELECTED STAND ALONE FINANCIAL DATA SELECTED FINANCIAL DATA WITH CONVERSION INTO EURO in PLN thousand in EUR thousand Profit and loss account Sales revenues Operating profit (loss) Profit (loss) before tax (1 633) (391) Net profit (loss) (2 299) (551) Net profit (loss) falling to the shareholders of the dominant entity (2 299) (551) Earnings per share (in PLN) 0,74 (0,18) 0,18 (0,04) Diluted earnings per share (in PLN) 0,77 (0,18) 0,18 (0,04) Average exchange rate PLN/EUR in the X X 4,2149 4,1733 period Cash flow statement Net operating cash flows Net investment cash flows Net financial cash flows (24 074) (35 372) (5 712) (8 476) Net change in cash and cash equivalents (17 723) 525 (4 247) Average exchange rate PLN/EUR in the period Balance sheet X X 4,2149 4, Assets Long-term liabilities Short-term liabilities Equity Equity falling to the shareholders of the dominant company Exchange rate PLN/EUR as of the end of the period X X 4,1713 4,1774 Conversion into EURO was calculated in the following way: 1. For items from I to X the average rate of exchange for a given period was applied, calculated as the arithmetic average of the National Bank of Poland rates of exchange (table A) binding as of the last day of each month in a given period. In the period from 01 April 2013 to 31 March 2014, the average amounts to PLN/EUR 4,2149 and in the period from 01 April 2012 to 31 March 2013 equals to PLN/EUR 4, For items from XI to XX the average rate of exchange of NBP (table A) as of the last day of the period, i.e. as of 31 March 2014, was applied, which was equal to PLN/EUR and as of 31 March 2013 the rate of exchange equal to PLN/EUR was applied. 8 8

9 BALANCE SHEET Assets Note Fixed assets Goodwill - - Intangible assets Tangible fixed assets Investments real estate Investment in subsidiaries Investments in affiliates Receivables and loans Derivatives Other long term financial assets Long term prepayments and accruals Assets due to deferred income tax Fixed assets Current assets Stock Receivebles due to construction service agreements Trade receivables and other receivables Receivables due to current income tax Receivables due to awarded costs of legal proceedings Purchased receivables Loans Other short-term financial assets Short-term prepayments and accruals Cash and cash equivalents Assets classified as designated for sale Current assets Total assets Liabilities Notes Equity 20 Share capital Own shares (-) (500) (382) - Capital from the sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit: (1 476) Net profit (loss) falling to she shareholders of the dominant company (2 299) Profits (loss) brought forward (14 053) (11 755) (5 605) - Supplementary reserve established out of profit Capital reserve established out of profit Equity

10 Liabilities Long-term liabilities Loans, credits and other debt instruments Financial leasing Derivatives Other liabilities Reserves due to deferred income tax Liabilities and reserves for employee benefits Other long term reserves Long term prepayments and accurals Long term liabilities Short-term liabilities Trade liabilities and other liabilities Liabilities due to the current income tax Credits, loans and other debt instruments Financial lasing Derivatives Liabilities and reseves for employee benefits Other short term reserves Short term prepayments and accruals Liabilities related to assets designated for sale Short term liabilities Liabilities Total liabilities

11 TOTAL INCOME STATEMENT Continued activity Note 4. quarters accumulatively quarters accumulatively (comparative) quarters accumulatively (comparative) Net revenues Gross sales profit (loss) Cost of sales Overheads Other costs of core activity Other operating revenues Other operating costs Profit (loss) from sales of subsidiaries (+/-) Profit (loss) from operating activity Financial revenues Financial costs Share in profit (loss) of entities valuated by the property rights method(+/-) Profit (loss) before tax (1 633) (177) Income tax 32 (1 867) 666 (396) Net profit (loss) from continued activity (2 299) 219 Discontinued activity Net profit (loss) from discontinued activity Net profit (loss) (2 299) 219 Other total income Revaluation of assets - - Financial assets available for sale: Revenues (losses) included in the period in other total income Amounts transferred to the financial result - - Cash flow hedges Revenues (losses) included in the period in other total income Amounts transferred to the financial result Amounts included in the initial value of secured items - - Currency exchange differences from valuation of entities operating abroad - - Currency exchange differences transferred to the financial result sale of foreign entities - - Share in other total income of entities valuated by the property rights method - - Income tax related to components of other total income Other total revenues after tax Total income (2 299) 219 Total income falling to - shareholders of the dominant company (2 299) non-controlling interest

12 CASH FLOW STATEMENT Cash flows from operational activity Note 4 quarters accumulatively quarters accumulatively (comparative) quarters accumulatively (comparative) Profit (loss) before tax (1 633) Adjustments: Depreciation and revaluation write-offs of tangible fixed assets Depreciation write-offs of intangible assets Change in the fair value of investment real estate - - (1 002) Profit (loss) from financial assets (liabilities) valued in the fair value through the profit and loss account Purchased receivables depreciation from the result account Purchased receivables purchases and outlays for portflolios (4 319) (18 430) Profit (loss) from sale of non-financial fixed assets Profit (loss) from sale of financial assets (other than derivatives) Profit (loss) due to exchange rate differences Cost of interest Income from interest and dividends (19 049) (25 046) 489 Cost of payments in the form of shares (incentive programs) Share in profit (loss) of associated entities Other adjustments (242) 304 (986) Total adjustments (1 313) Change to inventory Change to the state of receivables (54 870) 132 (637) Change to the state of liabilities (713) (2 664) Change to the state of reserves and accruals (1 796) Change to the state due to construction agreements Change to current capital (53 952) Inflows (expenditures) from settlement of derivatives Paid interest on operating activity Paid income tax (791) Net cash from operating activity

13 Cash flows from investment activity Expenditures for purchase of intangible assets (1 011) (2 273) (335) Inflows from sale of intangible assets Expenditures for purchase of fixed tangible assets (431) (332) (800) Inflows from sale of tangible fixed assets Expenditures for purchase of investment property Inflows from sale of investment property Net expenditures for purchase of subsidiaries (2 041) - 0 Net inflows from sale of subsidiaries Received repayment of granted loans Granted loans - (65) (70) Expenditures for purchase of remaining financial assets (7 830) (30 838) ( ) Inflows from sale of remaining financial assets Inflows from received government grants Received interest Received dividends Net cash from investment activity ( ) Net cash flow from financial activity Net Inflows due to issue of shares Purchase of own shares (117) - 0 Transactions with non-controlling interests without loosing control Inflows due to issue of debt securities Buyout of debt securities (69 000) (8 000) (32 727) Inflows due to incurred loans and credits Repayment of credits and loans - - (60) Repayment of liabilities related to financial leasing (642) (992) (848) Paid interest (22 530) (25 998) (7 584) Paid dividends - (382) (4 140) Net cash flows from financial activity (24 074) (35 372) Change to net cash flows and their equivalents (17 723) Cash flows and their equivalents as of the beginning of the period Change due to the exchange rate diferrences Cash flows and their equivalents as of the end of the period

14 CHANGES TO EQUITY Stand-alone changes to equity for the period from 1 April 2013 to 31 March 2014 EQUITY Note Share capital Own shares (-) Capital from sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit Total Balance as of (382) Changes to accounting principles (policy) and adjustment of the basic error (22 127) - (13 804) (35 931) Balance after adjustments (382) (1 476) Changes to equity in the period from to Issue of shares - (117) (117) Issue of shares due to realization of options (program of payment with shares) Valuation of options (program of payment with shares) Change to the structure of capital group (transactions with noncontrolling interests) Dividends Transfer of financial result to capital Total transactions with owners - (117) (117 Net profit for the period from to Other total income after tax for the period from to Total income Transfer to retained profit ( sale of revaluated fixed assets) Balance as of (500)

15 Stand-alone change to equity for the period from 1 April 2012 to 31 March 2013 EQUITY Note Share capital Own shares (-) Capital from sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit Total Balance as of Changes to accounting principles (policy) and adjustment of the basic error (32 515) - (11 755) (44 270) Balance after adjustments Changes to equity in the period from to Issue of shares - (382) (382) Issue of shares due to realization of options (program of payment with shares) Valuation of options (program of payment with shares) Change to the structure of capital group (transactions with noncontrolling interests) Dividends Transfer of financial result to capital Total transactions with owners - (382) (382) Net profit for the period from to (2 299) (2 299) Other total income after tax for the period from to Total income (2 299) ( 2 299) Transfer to retained profit ( sale of revaluated fixed assets) Balance as of (382) (1 476)

16 GENERAL ECONOMIC AND FINANCIAL RATIOS RATIO ANALYSIS ratio numerator denominator ratio value Profitability and efficiency ratios ROA (ROAMA) net profit average assets 2,6% -0,6% ROE net profit average equity 8,2% -1,9% efficiency ratios operating cost Net income 63,2% 90,5% efficiency ratios operating costs EBIT 170,4% 763,1% net profitability net profit Net income 30,5% -12,3% EBIT profitability EBIT Net income 37,1% 11,9% EBITDA profitability EBITDA Net income 43,7% 16,3% adjusted operating cash flows adjusted CFO Structure of capital CFO 1 (lno denominator) balance sheet structure ratios balance sheet structure ratios balance sheet structure ratios balance sheet structure ratios equity balance sheet total 32,7% 30,6% adjusted equity balance sheet total 32,7% 30,6% adjusted equity balance sheet overestimated on purchased portfolios 32,7% 30,6% purchased receivables equity 0,0% 39,7% Debt and liquidity ratios debt/assets debt balance sheet total 67,3% 69,4% debt/equity debt equity 205,4% 226,3% debt/adjusted equity debt adjusted equity 205,4% 226,3% share of interest bearing debt interest bearing debt balance sheet total 65,0% 66,4% share of interest bearing debt interest bearing debt equity 198,6% 216,8% share of interest bearing debt interest bearing debt adjusted equity 198,6% 216,8% share of short-term debt interest bearing STD interest bearing debt 8,0% 13,2% share of long-term debt interest bearing LTD interest bearing debt 92,0% 86,8% short-term debt/equity STD equity 21,4% 34,7% long-term debt/equity LTD equity 184,0% 191,6% Ratios of income (and cash) coverage of debt Ratios of income (and cash) coverage of debt) Ratios of income (and cash) coverage of debt) Average monthly income from receivables + cash average monthly income from receivables average monthly income from receivables debt 3,3% 2,8% STD 32,1% 18,0% debt 0,4% 0,8% EBITDA/debt EBITDA STD 52,8% 7,8% EBITDA/debt EBITDA debt 5,5% 1,2% EBITDA/debt EBITDA interest bearing debt 5,7% 1,2% coverage of interest gross profit + financial costs financial costs 133,8% 94,3%

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

18 ADDITIONAL INFORMATION TO THE STAND ALONE FINANCIAL STATEMENTS 1. General information 1.1. Information on Kredyt Inkaso S.A. Company name: Company s registered office: Registration Court: Date of registration: Entry No. KRS: Regon (statistical number): identification number NIP PKD: Objects of activity according to the Statutes: Kredyt Inkaso Spółka Akcyjna ( Company, Issuer ) Warszawa, 39A Domaniewska Str. District Court for the Capital City of Warsaw, XIII Commercial Division of the National Court Register 28 December in the present legal form (joint stock company) 19 April in the previous legal form (limited partnership) Z - other financial service activity, not classified elsewhere, except insurance and pension funds a. other financial service activity, not classified elsewhere, except insurance and pension funds in PKD Z; b. financial leasing in PKD Z; c. other forms of granting credits in PKD Z; d. other activity supporting finance services, except insurance and pension funds in PKD Z; e. execution of building projects related to buildings construction in PKD Z; f. purchase and disposal of immovable property on the company s own account in PKD Z; g. rental and management of own or leased immovable property in PKD Z; h. legal activity in PKD Z, i. other consultancy services in the fields of business activity and management - in PKD Z, j. photocopying, preparing documents and other specialized activity supporting handling office in PKD Z, k. activity performed by collection agencies and credit bureaus in PKD Z, l. operating call centres in PKD Z, m. other out of school forms of education, not classified elsewhere in PKD B; n. brokerage activity connected with securities and stock exchange products market - in PKD Z; o. activity connected with funds management - in PKD Z. p. accounting and bookkeeping activities; tax consulting in PKD Z. r. activities of financial holding companies in PKD Z. s. activities of head offices and holdings excluding financial holdings - in PKD Z. Term of the Company is indefinite

19 1.2. Composition of the Management Board and the Supervisory Board of the Dominant Entity In the period from 1 April 2013 until the balance sheet date the composition of the Company s Management Board was not subject to change. Composition of the Management Board as of the Date of the Consolidated Financial Statements Approval for Publication was: 1) President of the Management Board Mr Paweł Robert Szewczyk 2) Vice-President of the Management Board Mr Jan Paweł Lisicki As of the Approval Date, the composition of the Supervisory Board of the Dominant Company was as follows: 1) Chairman of the Supervisory Board Mr Ireneusz Andrzej Chadaj 2) Vice-Chairman of the Supervisory Board Mr Krzysztof Misiak 3) Secretary of the Supervisory Board Mr Marek Gabyjelski 4) Member of the Supervisory Board Mr Tomas Mazurczak 5) Member of the Supervisory Board Mr Robert Gajor 6) Member of the Supervisory Board Mr Andrzej Soczek 2. Basis of drawing up and accounting principles 2.1. Basis of drawing up the Consolidated Financial Statements The Stand-alone Financial Statements of Kredyt Inkaso S.A. ( financial statements ) were drawn up in accordance with the International Financial Reporting Standards (hereinafter referred to as IFRS ), approved by the European Union, binding as of 31 March 2014 and in to the extent required by the Ordinance of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities and the conditions for recognition as equivalent the information required by the laws of a nonmember state (Journal of Laws No. 33, item 259 as amended) and comprises period from 1 April 2013 to 31 March 2014 and a comparable period from 1 April 2012 to 31 March Functional currency of Kredyt Inkaso S.A. in which this financial statements were presented is Polish zloty PLN), and all amounts are expressed in PLN thousand (unless it was indicated otherwise). The present Financial Statements were drawn up assuming the going concern of the Company in the foreseeable future. As of the Date of Approval there are no circumstances posing a threat to the going concern of the Company. The Company named the statements on financial standing as balance sheet 2.2. Changes to standards and interpretations of the IFRS Statement of compliance The present Consolidated Financial Statements were drawn up in accordance with the IFRS as well as in accordance with interpretations announced in the form of ordinances of the European Commission, published and binding during drawing up of the present financial statements Obligatory changes to standards or interpretations observed by the Group since 2013 New or amended standards and interpretations, which have been in effect since 1 January 2013 and their impact on the Group s consolidated financial statements: New IFRS 13 Establishing the fair value

20 The new standard unifies the term of fair value in all IFRS and IAS and introduces common directions and principles, which up to now, were dispersed in different standards. The IFRS does not specify, which items are subject to valuation to the fair value. The IFRS 13 introduces numerous new findings related to the fair value. The Grup fulfilled the requirement of presenting these findings in notes specifying relevant assets and obligations. The IFRS is applied prospectively for annual periods commencing on 1 January 2013 or later. Amendment to the IAS 1 Presentation of financial statements The IASB changed the manner of presentation of total other icome. According to the amended IAS 1 the elements of total other income should be grouped in two sets: o elements which later will be reclassified to the financial result (e.g. effects of valuation of o hedges) and elements which will not be subject to reclassification to the result (e.g. valuation of assets to the fair value which is then included in retained profits, excluding the result). Amendments to the IAS 1 are in effect for annual periods commencing on 1 July 2012 or later. The Group adjusted the presentation of financial statements to the changes resulting from the IAS 1. Amended IAS 19 Employee benefits The document introduces a few changes, from which the most important ones relate to certain benefit programs: o Liquidation of the corridor method o Presentation of the effects of repeated valuation of a liability in other total income. Due to the fact that the Group does not have any programs of certain benefits, the changes did not affect the consolidated statements of the Group Additionally, the amended standard detailed the principles of including costs of benefits due to termination of employment.it affected neither the result nor the obligations shown in the consolidated financial statements. The amended IAS 19 is in effect for annual periods commencing on 1 January 2013 or later. The new IFRIC 20 Cost of removing outlays at the stage of production in surface mines The interpretation relates to accounting approach to cost born in surface mines in order to obtain access to deeper and deeper iron ore deposits. According to the interpretation this cost should be activated devided into stock in the part falling to extruded on the occasion rudę) and fixed assets (in the part falling to gaining access to deeper pokładów). It is in effect for annual periods commencing on 1 January 2013 or later. Coming into effect of IFRIC 20 does not affect the Kredyt Inkaso s financial statements. Amendments to the IFRS 7 financial instruments: disclosure of information Amendments to the standard foresee the necessity of disclosing information on financial assets and financial liabilities, which in the report on the financial standing are shown in net amounts. In the information, entities are obliged to disclose any additional net and gross amount of assets and liabilities that are subject to compensation as well as the terms and conditions of framework agreements related to the compensation. Amendments are in effect for annual periods commencing on 1 January 2013 or later. The Group presented appropriate findings in the note related to financial instruments. The change did not have a significant impact on the Kredyt Inkaso S.A.s financial statements. Amendment to the IFRS 1 Application of the IFRS for the first time Change to the IFRS 1 allows the entities applying the IRFS for the first time to include the existing as of the date of transfer, loans received from the government on preferential terms according to one of the methods chosen by the entity: o According to the value resulting from the used up to now accounting principles or o According to the value resulting from the retrospective application of relevant standards that require special allocation of the government assistance in the financial statements (IAS 20 and IFRS 9 or IAS 39) on condition of existing information enabling appropriate valuation as of the day of loan allocation The amendment is in effect for annual periods commencing on 1 January 2013 or later. The change did not have a significant impact on the stand-alone financial statements. Amendments to the IFRS1, IAS 1, IAS 16, IAS 32, IAS 34 resulting from the Annual adjustments project: cycle which become effective for annual periods commencing on 1 January 2013 or later. Adjustments to standards include: o IFRS 1 Applying the IFRS for the first time the course of actions in the case when the company applied the IFRS and then switched to different accounting principles and then again to the IFRS

21 o o o o o o was regulated. According to the change the repated switch to the IFRS may only take place based on the IFRS 1 or IAS 8. The amendment does not affect the Kredyt Inkaso s financial statements. IFRS 1 Applying the IFRS for the first time according to the change, when switching to the IFRS the company may assume, as for the day of the switch to the IFRS, the value of the activated cost of external financing by means of the agreed, according to the previously applied accounting policy IAS 1 Presentation of financial statements : the changes assume renouncing the requirement of presenting notes to the third report on financial standing, which is disclosed in the report in the case of changes to the accounting principles, presentation or adjustment of an error. Additionally, the third report on financial standing as of the day commencing the previous reporting period is required only when the entity performed the retrospective change of accounting principles or the retrospective transformation of the item of the report on financial standing or the reclassification of the item of the report on financial standing as of the day commencing the previous reporting period. Whe the entity presents more than 2 reporting periods, there is no need to disclose the report on financial standing as of the day commencing the earliest comparative period. The amendment to the IAS 1 did not affect the presentation of the Kredyt Inkaso S.A. s financial reports for the current period because the retrospective changes were not performed, however it may affect the reporst in the future. / An amendment to the IAS 1 affected the Kredyt Inkaso s financial statements in such way that it is not necessary to present the third report of financial standing together with the notes, despite introducing certaing changes to accounting principles described in the present note in section Adjustment of error and amendment to accounting principles IAS 1 Presentation of financial reports : it was specified that the entity may present additional periods or days (in addition to those required by the standard) in the financial reports but then it does not have to present them to all elements of the reports (e.g. it may only present supplementary report of financial standing without a supplementary report on the result) however it has to, in the supplementary information, present the notes to this supplementary element of the reports. The amendment did not affect the Kredyt Inkaso s financial statements. IAS 16 Tangible fixed assets the inconsistency causing some of the recipients of the IAS 16 feel that spare parts should be classified as inventory was removed. Pursuant to the amended standard they should be recognized as assets or inventory according to the general criteria defined for assets in the IAS 16. The amendment did not affect significantly the Kredyt Inkaso s financial statements. IAS 32 Financial Instruments: presentation : it was specified that the tax effect of payments to owners and the costs of capital transactions should be recognized according to the IAS 12. The amendment did not affect the Group s financial statements. IAS 34 Interim financial reporting : unifying requirements of disclosure of information on assets and liabilities of segments from the IFRS 8. The amendment did not affect the Kredyt Inkaso s financial statements drawn up for the whole year based on the IAS 1. Standards and interpretations obligatory in the version published by the International Accounting Standards Board but not approved by the European Union, are shown below in the section related to standards and interpretations that did not come to effect Application of standards and interpretations prior to their coming into effect In the present stand-alone financial statements the early voluntary application of standards or interpretations was not used Published standards and interpretations which did not come to effect for periods commencing on 1 January 2013 and their effect on the Kredyt Inkaso s stand-alone financial statements Up to the day of drawing up the present stand-alone financial statements the new or updated standards and interpretaions, effective for annual periods following the year 2013 were published:

22 New IFRS 9 Financial Instruments: classification and valuation The new standard is todocelowo replace the present IAS 39. The published up to now part of the IFRS 9 contains regulations related to classification and valuation of financial assets, classification and valuation of financial liabilities, removing from the assets balance sheet and financial liabilities as well as collateral accounting. The date of coming into effect has not been specified and the standard so far has not been approved by the European Commission, Kredyt Inkaso is in the process of assessing the effect of the standard on the stand-alone financial statements. New IFRS 10 Consolidated financial statements The new standard replaces the bigger part of the IAS 27 Consolidated and stand alone financial statements. The IFRS 10 introduces a new definition of control, however the principles and procedures of consolidation are not subject to change. In the opinion of the Group these changes may have effect in relation to entities for which, according to the up to now regulations the consolidation obligation was not jednoznaczny. The Group is in the process of assessing the effect of new regulations. The date of coming to effect specified by the IASB is 1 January 2013, however the European Commission introduced the obligation of applying the new standard to the annual periods commencing on 1 January 2014 or later. New IFRS 11 Common framework agreements The IFRS 11 replaces the IAS 31 Share in common ventures. In the new standard the accounting approach to common umowny agreement results from its economic contents i.e. rights and obligations of the parties. Additionally the IFRS 11 cancels the possibility of settlement of an investment into common ventures by means of proportional consolidation. Such investments are settled by means of the property right method, the manner currently applied to associated entities. In the opinion of Kredyt Inkaso the new standard may affect the consolidated financial statements. Kredyt Inkaso is in the process of valuation of the new regulations. The date of coming to effect specified by the IASB is 1 January 2013, however the European Commission introduced the obligation of applying the new standard to the annual periods commencing on 1 January 2014 or later. New IFRS 12 Disclosure of information on shares in other entities The IFRS 12 defines the requirements related to disclosure of information on consolidated and nonconsolidated entities, in which the entity drawing up the statements has significant engagement. It will allow investors to asses the risk to wchich narażony jest entity creating special purpose vehicles and other similar structures. In the opinion of Kredyt Inkaso the standard will influence extension of findings disclosed in the consolidated financial statements. The date of coming into effect specified by the IASB is 1 January 2013, however the European Commission introduced the obligation of applying the new standard to the annual periods commencing on 1 January 2014 or later. Amendment to IAS 27 Stand alone financial statements and to IAS 28 Investments in affiliates and common ventures Amendments to IAS 27 and 28 are the consequence of introducing the IFRS 10, IFRS 11 and IFRS 12. The IFRS 27 will only relate to stand alone financial statements and the IAS 28 includes in itc scope investments in common ventures. Kredyt Inkaso is in the process of valuation of the new regulations. The date of coming to effect specified by the IASB is 1 January 2013, however the European Commission introduced the obligation of applying the new standard to the annual periods commencing on 1 January 2014 or later. Amendment to IFRS 32 Financial instruments: presentation The amendment introduces detailed explanation of applying conditions of presenting assets and financial liabilities in net amounts. Kredyt Inkaso thinks that the change will not have a significant effect on the consolidated financial statements. The amendment in effective for annual periods commencing on 1 January 2014 or later. Amendment to the IFRS 10 Consolidated financial statements, the IFRS 11 "Common framework agreements and the IFRS 12 Disclosure of information on shares in other entities Amendments to the newly issued standards relating to consolidation introduce clearer than up to now temporary regulations and some releases as regards presentation of comparative data. Kredyt Inkaso is in the process of assessing of the effect of new regulations. The amendments are in effect for annual periods commencing on 1 January 2014 or later. Amendment to the IFRS 10 Consolidated financial statements, the IFRS 12 Disclosure of information on shares in other entities and the IAS 27 Stand alone financial statements The amendment relates to introduction of a relase from the consolidation obligation by investment entities. The investment entity is the entity complying with the following definition:

23 o Obtains funds from one or several investors for the purposes of providing these investors with services of investment management, o Declares to the investors that its business objective is investment of funds exclusively for the purposes of achieving returns on the increase of the value of investment and/or dividends o Evaluates effectiveness of investments on the basis of their fair value. Kredyt Inkaso is in the process of assessment of the effect of new regulations. The amendments are in effect for annual periodes commencing on 1 January 2014 or later. The new KIMSF 21 Public fees The new interpretation introduces principles definig the moment of recognizing liabilities due from fees and taxes imposed by the government bodies other than the income tax regulated in the IAS 12. The interpretation is a specification of the principles defined by the IAS 37 Reserves, contingent liabilities and contingent assets. In the opinion of Kredyt Inkaso the interpretation will not have an effect on the consolidated financial statements. The interpretation is in effect for annual periods commencing on 1 January 2014 or later. Amendment to the IAS 36 Loss of the assets value While introducing the new IFRS 13 Establishing the fair value the IASB established additional findings of information related to the loss of value. Their scope was defined too extensively, therefore another amendment was introduced that limits the obligation of disclosure of the value recovered to assets that lost their value. Kredyt Inkaso decided that it would cause the decrease in the number of findings in the consolidated statements. The amendments are in effect for annual periods commencing on 1 January 2014 or later. Amendments to the IAS 39 Financial instruments: recognizing and valuation The current IAS 39 regulations were causing a situation where, in the case that the entity defined the derivative as an collateral item and as a result of the change of regulations the other party to the pochodny contract was replaced with the so calle central supplier (e.g. settlement agency), the collateral relation had to be terminated. Thanks to introducing the amendment to the standard such situations will not result with the termination of collateral. Kredyt Inkaso decided that the amendment will not affects its consolidated statements. The amendments are in effect for annual periods commencing on 1 January 2014 or later. Amendment to the IAS 19 Employee benefits The amendments relate to specifying the principles of the course of actions in the case when the employees make payments to cover the cost of certain benefits program. The Group decided that the amdendment will not affects its consolidated statements. The amendments are in effect for annual periods commencing on 1 January 2014 or later. Amendments to IFRS 2, IFRS 3, IFRS 8, IAS 16, IAS 24, IAS 38 resulting from the Annual adjustments project: cycle which become effective for annual periods commencing on 1 July 2014 or later. Adjustments to standards include: o IFRS 2: The Board specified the standard by changing or introducing new definitions of the following terms: warunek rynkowy, warunek świadczenia usług, warunek nabycia uprawnień, warunek związany z dokonaniami. Kredyt Inkaso decided that the amendment will not affects its financial statements. o IFRS 3: The Board specified the principles of valuation of conditional payment following the day of take-over so that they are in compliance with other standards (mainly with the IFRS 9 / IFRS 39 and IAS 37). Kredyt Inkaso decided that the amendment will not affects its financial statements. o IFRS 8: the Board imposed on the entities performing mergers of operating segments the requirement of additional disclosures related to these joined segments and economic features due to which the merger was performed. Kredyt Inkaso is in the process of assessing the inmpact of this amendment on its consolidated financial statements. o IFRS 8: the standard after the amendment forsees that the requirement of disclosure of agreement on the sum of the assets of the segments with the assets indicated in the balance sheet is obligatory only when the asset values are disclosed devided into segments. Kredyt Inkaso decided that the amendment will not affect its financial statements. o IAS 16 and IAS 38: The Board introduced an adjustment to the principle of calculating the gross amount and the cumulated write-off of an asset (intangible asset) in the case of

24 applying the revaluated value model. Kredyt Inkaso decided that the amendment will not affect its financial statements. o IAS 24: Definition of the related entity was extended by the entities providing services of the key management personnel and relevant findings. The Group decided that the amendment will not affect its financial statements. Amendments to the IFRS 3, IFRS 13 and IAS 40 resulting from the Annual adjustments project: cycle which become effective for annual periods commencing on 1 July 2014 or later. Adjustments to standards include: o IFRS 3: it was specified that excluded from the standard are the transactions of creating common conventional agreements (joing agreements) in reports on these common conventional agreements. The Group decided that the amendment will not affect its financial statements. o IFRS 13: The Board specified the scope of application of release related to valuation of a portfolio of assets and financial liabilities in the net amount. Kredyt Inkaso decided that the amendment will not affect its financial statements. o IAS 40: The Board specified that in the case of the purchase of an investment property, one should also consider,whether it is a purchase of the group of assets or joining ventures according to the principles defined in the IFRS 3. Kredyt Inkaso is in the process of assessing of the effect of the amendment on the consolidated financial statements. The new IFRS 14 Regulatory Deferral Accounts The new standard relates exclusively to entities which are switching to the IFRS and pursue activities in industries, where the government regulates the applied prices such as supply of natural gas, electricity or water. The standard allows to continue the accounting policy related to recognizing revenues from such activity applied prior to switching to the IFRS both in the first statements drawn up according to the IFRS and later. The new regualtions will not affect the Kredyt Inkaso s standalone financial statements. The standard is in effect for annual periods commencing on 1 January 2016 and later. Kredyt Inkaso intends to implement the above mentioned regulations within the timelines forseen for application by the standards or interpretations Significant elements of accounting policy The financial year comprises the period from 1 April to 31 March od the following year Transactions in foreign currencies Transactions denominated in currencies other than Polish zloty are converted into PLN at the exchange rate binding on the date of transaction (spot exchange rate). Cash items denominated in foreign currencies are valuated according to the closing exchange rate (spot exchange rate) i.e. at the exchange rate of the leading bank ING Bank Śląski S.A. from the first quotation at the balance sheet date. Non-cash balance sheet items recorded according to the historical cost, denominated in foreign currency, are valuated at the exchange rate of the transaction date. Non-cash balance sheet items recorded according to the fair value, denominated in foreign currency are valuated at the exchange rate of the date of the fair value estimation Intangible assets Intangible assets are considered these components of assets which result from agreements or other legal titles regardless of the fact whether they are marketable or not. Initial valuation of intangible assets was calculated at the acquisition price resulting from a separate transaction. After the initial recognition, intangible assets valuation was calculated at the acquisition price after deduction of amortization; moreover the factor which as a rule decreases the valuation is the total amount of impairment write offs. The mentioned factor did not occur in the reporting period

25 The period and the method of amortization of the intangible assets with the defined period of usage were verified at the end of the reporting period. Verified period of intangible assets usage did not differ from the previous estimations. Amortization write offs for intangible assets are calculated according to a straight-line method during the period of anticipated period of usage, which is following for individual categories of intangible assets used in the presented periods: - for system software - 33%, 33% or 50% - for production software - 30% or 50% Depreciation rates applied for intangible assets in previous periods do not differ from those, which were verified and applied in the reporting period. Due to this fact, net values of intangible assets estimated according to the previous rules and those, which are valid at present, are the same. In the presented reporting periods no prerequisites for impairment of other components of intangible assets occurred. The component of intangible assets is removed from a balance sheet register when it is sold or if further benefits resulting from its usage or sale are not anticipated Tangible fixed assets The following fixed assets are classified as tangible fixed assets: 1) those maintained by the Company in order to be used in business activities, 2) those to be used for the time longer than one period, 3) those in relation to which there is the probability that they will generate economic benefits, 4) those the value of which can be estimated in a reliable manner. The following assets were classified as tangible fixed assets: improvements in third party fixed assets (buildings), machinery, technical equipment, other fixed assets, fixed assets under construction. As of the date of initial recognition, fixed assets were valuated at the purchase price. In the tangible fixed assets used by the Company, no significant parts of fixed assets (components) of which period of usage would differ from the period of usage of the whole tangible fixed asset were identified. In the presented periods straight-line method of tangible fixed assets depreciation was applied, resulting from the anticipated useful life of a tangible fixed asset, with the exception of notebooks depreciated according to a degressive method at the ratio equal 2. The basis of tangible fixed assets depreciation in the period of applying IFRS is the initial value decreased by residual value. Depreciation rates applied for tangible fixed assets in previous periods do not differ from those that were verified and applied in the reporting period. Depreciation was calculated applying rates resulting from anticipated periods of usage, which are following for already owned tangible fixed assets: Investments in third party fixed assets (buildings) - 10% Computers (work stations) - 30% Notebooks - 30% Servers - 30% Computer specialist equipment - 30% Photocopiers and high-output printers - 28% Telecommunications systems - 20% Cars - 20% Furniture - 20% Specialized office equipment (e.g. mailing equipment, high-output shredders) - 14%

26 Depreciation begins when a tangible fixed asset is available for usage and it ends for tangible fixed assets removed from the balance sheet register Deferred income tax assets Deferred income tax assets were estimated at the amount that is meant to be deducted from income tax in the future, in relation to negative temporary timing differences that will result in decrease of taxable base in the future, calculated in a conservative manner. When valuating deferred income tax assets, the tax rate equal to 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the mentioned item of assets will be effectuated Short-term receivables Trade receivables, receivables relative to income tax, receivables relative to awarded costs of proceedings and other receivables are classified as short-term receivables. Receivables are subject to valuation as of each balance sheet date due to the fact that the reasons for their impairment occurred. Receivables are revaluated taking into consideration the probability of their payment by means of establishing revaluation write offs at the end of the reporting period. They are mainly all receivables resulting from the Company s business activity consisting in trade and management of debts. The Book value of receivables corresponds to their fair value Purchased receivables The initial recognition of the purchased portfolio of receivables is performed based on the purchase price. The purchase price consists of the purchase price of the asset component (i.e. amount due to the seller reduced by taxes subject to the write-off: goods and services tax and the excise tax). Rabates, discounts granted by the seller as well as other similar reductions and recoveries decrease the purchase price of the asset component. According to the rule of caution for receivables from the bankrupt, liquidated or other entities from which the company is not anticipating to obtain positive cash flows the initial value is established at the zero value. Purchased receivables are classified as financial instruments valuated at the fair value. As of each balance sheet day the valuation of financial instruments to the fair value is performed.the result of the valuation is transferred to the profit and loss account. The fair value of each of the portfolios of receivables is established by Kredyt Inkaso S.A. by means of the estimation method, as the current value of anticipated, discounted with the internal return rate (IRR) net cash flows (planned cash flows reduced by the planned direct collection cost) generated by the portfolio of receivables Cash and cash equivalents Cash and cash equivalents include cash in hand and at bank as well as other cash equivalents, i.e. bank deposits with the maturity not exceeding three months. The mentioned cash was valuated at the nominal value, whereas bank deposits at the amount of due amount. Book value of those assets corresponds to their fair value Short-term prepayments and accruals Short-term prepayments and accruals comprise prepaid costs i.e. incurred expenditure related to future reporting periods and interest related to financial lease that is to be settled within 12 months of the reporting date Share capital Company s share capital is presented at the nominal value, in accordance with the Statutes of the Company and the entry in the National Court Register Cost of Bonds Issue and own shares External cost directly relating to Bonds issue decrease the value of equity from the issue of bonds over their nominal value. The remaining costs are charged to the profit and loss account at the time when they are borne

27 Should Kredyt Inkaso S.A. or its subsidiaries make a purchase of Company s capital instruments, the amont paid, including the cost related directly to the purchase, shall decrease equity assigned to the Company s shareholders and is presented separately in the balance sheet as Own shares up to the moment of shares redemption or re-issue. Own shares are recognized as of the date of the transaction settlement Supplementary reserve (agio) The reserve is established out of the surplus of the issue value of shares over their nominal value less costs of the issue Capital from revaluation, capital from revaluation of financial assets available for sale Capital from revaluation is established in connection with valuation of financial instruments available for sale in the fair value, revaluations both, increasing and decreasing the fair value are recognized here. As for the moment of exclusion of the component of financial assets from the balance sheet, the acumulated net profits or losses recognized in the capital from revaluation is transferred to the financial result of a given period Reserve for deferred income tax Reserve for deferred income tax was established in the amount that will result in increasing the liability relative to income tax in the future, due to the occurrence of positive temporary differences between balance sheet value of assets and liabilities and their tax value. While valuating the reserve for deferred income tax, the tax rate of 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the reserve will be released. The reserve for income tax on receivables due to the cost of proceedings was established Reserve for pensions and similar benefits Pursuant to regulations of the labour law, employees of the Company are entitled to receive retirement severance pay, which is paid once at the moment of retiring. The estimated amount of the reserve for retirement benefits turned out to be of no significance that is why it was decided not to recognize and present it Other reserves Other reserves are established when the existing obligation that results from the past events is incumbent on Company and it is probable that its fulfilment will cause the necessity of outflow of economic benefits and it is possible to estimate the mentioned obligation in a reliable way. The established reserves are classified respectively as other operating costs, financial costs depending on circumstances that are connected with the future liability Liabilities Liabilities are valuated at the end of the reporting period in the amount of due payment, with the exception of liabilities relative to bonds issue. Liabilities relative to bonds issue are valuated at the moment of initial recognition at the fair value less costs of transaction. As of the balance sheet date, the valuation was calculated according to the amortized cost applying the effective interest rate (adjusted acquisition price) and divided according to the term of generated cash flow into short-term and long-term part. Liabilities due to to legal persons income tax are presented in the due amount, applying the rate of 19 % Other accruals Accruals are calculated as of the reporting date, if it is necessary, in the amount of probable liabilities falling to the current reporting period

28 Grants are recognized only when there is sufficient certainty that the Company will meet conditions related to a given grant and that the given grant will in fact be received. Grants related to a given cost item is recognized as revenue in the manner corresponding to costs, which are to be compensated by the grant. Grants financing a component of assets is gradually recognized as income (in the item other income) over periods proportionally to amortization write offs established for this component of assets. Due to presentation reasons, in the consolidated balance sheet, the Capital Group does not deduct donations from the balance sheet value of assets but presents donations as income of future periods in the item Accruals Revenues Net revenues include - revenues from purchased receivables (collection of receivables on ones own account and at ones own risk) recognized at the moment of obtaining them in the amount obtained, reduced by depretiation of portfolios assigned to the current period and adjusted by the result of a portfolio valuation. - Other revenues recognized as of the maturity date and amount, reduced by corresponding other costs Overheads Overheads comprise all other costs incurred by the Company which were not classified as the own cost of income and other cost of core business and were also incurred in relation to Company s operational activity Other costs of the core business Other costs of core business comprise cost of contact centre maintenance, costs of handling the purchased debts in the pre-action stage and other costs connected with the purchased debts management, not recognized in the own cost of obtained revenue Income tax Obligatory burden of the result consists of: current and deferred tax. Current tax liability was calculated on the basis of tax result of a given period, based on the rate in effect in a given country. Deferred tax was calculated on the basis of the balance sheet method as the tax subject to the refund or payment in the future, basing on the differences between the balance sheet value and the tax value of assets and liabilities Cash flow statement The Company prepares the cash flow statement by means of the indirect method. In the operating activity, the cash flows relative to receivables considered by the Company as financial instruments valued at the fair value were disclosed. The result is transferred to the profit and loss account Adjustments of errors and changes to accounting principles In the annual stand-alone financial statements the following adjustments of the accounting principles, having effect on financial data presented for comparative periodsl were made: Adjustment 1) Adjustment resulting from the change of the principle of valuation of portfolios of receivables as well as the presentation adjustment interpreting all components of the purchased receivables in one balance sheet item. According to the old accounting policy the cost incurred due to collection of receivables until the time of repayment of the debt by debtors were activated on the remaining receivables, receivables from the awarded costs of proceedings as well as on prepayments and accruals. Adjustment 2 ) Adjustment of calculation of assets for the deferred income tax due to the issued bonds. Adjustment 3) Introduction of the reserve for vacation leave which up till now were not recognized. Adjustment 4) Adjustment of outlays settled in time, which according to IFRS should be charged to subsidiaries

29 Assets Before ( ) Adjustment 1 Adjustment 2 Adjustment 3 Adjustment 4 After ( ) Goodwill - - Intangible assets Tangible fixed assets Investments properties - - Investment in subsidiaries Receivables and loans - - Derivatives - - Other long term financial assets Long term prepayments and accruals - - Assets due to deferred income tax (1 605) Fixed assets (1 605) Current assets Stock - - Receivebles due from construction service agreements - - Trade receivables and other receivables Receivables due from to current income tax - - Purchased receivables (33 744) Receivables due from awarded costs of legal proceedings (4 662) - Loans - 64 Derivatives - - Other short-term financial assets Short-term prepayments and accruals (930) (1 565) Cash and cash equivalents Assets classified as designated for sale - - Current assets (32 900) Total assets (32 900) (1 605) Equity Equity falling to the shareholders of the dominant company - - Share capital Own shares (-) (382) (382) Capital from the sale of shares above their nominal value Other Capital (22 127) - Retained profit: (10 773) (2 828) (203) (1 476) - Net profit (loss) from current period (250) (623) (1 223) (203) (2 299) - Profits (losses) brought forward - (10 150) (1 605) (11 755) Supplementary reserve established out of profit Equity falling to the shareholders of the dominant company - Non-controlling interests - Equity (32 900) (2 828) (203)

30 Liabilities Long-term liabilities Loans, credits and other debt instruments Financial leasing Derivatives Other liabilities - - Reserves for deferred income tax Liabilities and reserves for employee benefits Other long term reserves Long term prepayments and accurals - - Long term liabilities Short-term liabilities Trade liabilities and other liabilities Liabilities due to the current income tax - - Credits, loans and other debt instruments Financial lasing Derivatives - Liabilities and reseves for employee - benefits Other short term reserves Short term prepayments and accruals Liabilities related to assets designated for sale - Short term liabilities Liabilities Total liabilities Adjustments: Revenues, recognized according to the old accounting policy were removed from the item Revenues from purchased debt and the item Payments from debtors - revenue being the payments from debtors in the was introduced. Item Revenue from awarded costs of legal preceedings, which was included on the accrual basis and the correspponding Process cost was removed from the profit and loss account. Item Other sales revenues was included in item Other revenues. Corresponding to them are Own cost of other revenues. Depreciation of portfolios calculated according to the old accounting policy was removed from Cost of debt purchase and item Depreciation of portfolios was suplemented by depreciation calculated according to the new accounting policy Adjustment 1) resulting from the change to the principles of valuation of portfolios of receivables and the presentational adjustment recognizing all components of purchased receivables in one balance sheet item. Accordng to the old accounting policy the cost incurred due to collection of receivables until the time of repayment of debt by debtors was activated against other receivables from awarded costs of proceedings and accruals

31 Assets Fixed assets Before ( ) Adjustment After ( ) Goodwill Intangible assets Tangible fixed assets Investments real estate Investments in subsidiaries Investments in affiliates Receivables and loans Derivatives Other long term financial assets Long term prepayments and accruals Assets due to deferred income tax Fixed assets Current assets Stock Receivebles due from construction service agreements Trade receivables and other receivables (1 606) Receivables due from to current income tax Receivables due to awarded cost of legal proceedings (4 849) - Purchased receivables (36 757) Loans Other short-term financial assets Short-term prepayments and accruals (1 058) Cash and cash equivalents Assets classified as designated for sale Current assets (44 270) Total assets (44 270) Equity Share capital Own shares (-) Capital from revaluation (32 515) Capital from sale of shares above their nominal value Capital from revaluation of financial assets available for sale Other capital Retained profit: (11 755) Net profit (loss) (6 150) Profit (loss) brought forward - (5 605) (5 605) - Supplementary capital established out of profit Supplementary reserve established out of profit Equity (44 270)

32 Liabilities Long-term liabilities Loans, credits and other debt instruments Financial leasing Derivatives Other liabilities Reserves for deferred income tax Liabilities and reserves for employee benefits Other long term reserves Long term prepayments and accurals Long term liabilities Short-term liabilities Trade liabilities and other liabilities Liabilities due to the current income tax Credits, loans and other debt instruments Financial lasing Derivatives Liabilities and reseves for employee benefits Other short term reserves Short term prepayments and accruals Liabilities related to assets designated for sale Short term liabilities Liabilities Total liabilities (44 270)

33 STAND ALONE PROFIT AND LOSS ACCOUNT FROM TO Continued acrivity Before Adjustments After Revenues from sales (8 818) Revenues from purchased debt (23 209) - Revenues from awarded cost of process 291 (291) - Revenues from legal services Other revenues from sales (4 146) - Payments from debtors Other revenues Own cost of revenues (8 376) - Cost of debt purchase (7 834) - Cost of process 332 (332) - Own cost of legal services Cost of revenues from bank deposits Own cost of other revenues 210 (210) - Depreciation of portfolios Revaluation of portfolios Gross profit (loss) from sales (622) Sales cost Overhead cost Other cost of basic activity Other operational revenues Other operational costs Profit (loss) from sales of subsidiaries (+/-) Profit (loss) from operational activity (826) Financial revenues Financial cost Profit (loss) share of the entities revaluated by the property rights method (+/-) Profit (loss) before taxes (807) (826) (1 633) Income tax (557) Net profit (loss) from continued activity (250) (2 049) (2 299) Discontinued activity Net profit (loss) from discontinued activity Net profit (loss) (250) (2 049) (2 299) Net profit (loss) falling to: - shareholders of the dominant entity (250) (2 049) (2 299) - non-controlling interests

34 STAND ALONE PROFIT AND LOSS ACCOUNT FROM TO Before Adjustments After Continued activity Revenues from sales Revenues from purchased receivables Revenues from awarded cost of process Revenues from legal services 0 - Other revenues from sales 324 Payments from debtors Other revenues 324 Own cost of revenues Cost of debt purchase (10 018) Cost of process (1 078) Own cost of legal services 0 Cost of revenues from bank deposits Own cost of other revenues 75 (75) 75 Depreciation of portfolios Revaluation of portfolios 6150 Gross profit (loss) from sales Sales cost 0 Overhead cost Other cost of basic activity Other operational revenues Other operational costs Profit (loss) from operational activity Financial revenues Financial cost Profit (loss) before taxes (177) Income tax (396) (396) Net profit (loss) from continued activity Discontinued activity Net profit (loss) from discontinued activity - - Net profit (loss)

35 3. Utilising inflows from issue of securities On 13 January 2014 we issued units of the W1 series ordinary bearer bonds of the nominal value of PLN 1 000,00 PLN each, of the total nominal value of PLN 53 mil and units of the W2 series ordinary bearer bonds of the nominal value of PLN 1 000,00 PLN each, of the total nominal value of PLN 17 mil. Funds obtained from the issue of the W1 and the W2 series bonds were allocated for the purposes of financing purchases of portfolios of receivables by entities from the Kredyt Inkaso Capital Group and for re-financing of Kredyt Inkaso debt, in the form of an early voluntary buyout of S02 series bonds on 13 January Statement of Kredyt Inkaso S.A. Management Board on compliance of the Consolidated Financial Statements with the applicable accounting principles We hereby state that to the best of our knowledge, the Stand Alone Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2013 to 31 March 2014, as well as comparative data were prepared in accordance with the binding accountancy principles and they reflect in a true, fair and clear manner the financial standing and result of Kredyt Inkaso S.A., and its financial result and that the report on operations contains reliable description of development, achievements and the situation of Kredyt Inkaso S.A., including the description of the main risks and hazards. The presented consolidated financial statements comply with all requirements of IFRS adopted by the European Union. 5. Statement of Kredyt Inkaso S.A. Management Board on appointment of the entity authorized to audit financial statements We hereby state that the entity authorized to audit the financial statements, which audited the Stand Alone Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2013 to 31 March 2014 was appointed in accordance with the binding legal provisions and that the mentioned entity as well as statutory auditors, who audited the consolidated financial statements, complied with the conditions of issuing independent and unbiased opinion on the annual financial statements audit, in accordance with binding professional standards. 6. Information on Operating segments The Company operates in the basic segment including trade in portfolios of receivables on the domestic market. This segment constitutes the core activity of the Company and the other activity cannot be trated as segments because the following criteria are not met: 1) One cannot distinguish, as a component of other activity from which revenues would be coming from and from which the cost would be generated because the entire activity of the Company is closely related to trade in receivables: 2) One cannot ascertain that any other activity could be regularly reviewed by the body authorized to make operational decisions in the Company and utilizing these results while making a decision on allocating resources to the segment and with evaluation of operational result of the segment. 3) There is no existing activity of the Company related to trade in receivables for which separate financial information is available. 4) All revenues are implemented on the territory of Poland

36 Operating segments - for the period from to OPERATING SEGMENTS Specification Segment of trade in receivables Segment of legal services Corporate functions Total Other information: Depretiation Loss of value of intangible fixed assets Assets of reporting segment Liabilities and capital of reporting segment Expenditures for fixed assets of operating segment Operating segments - for the comparative period from to OPERATING SEGMENTS Specification Segment of trade in receivables Segment of legal services Corporate functions Consolidation exclusions Total for the period from to External sale Sale between segments (8 803) - Total revenues (8 803) Total operating costs (8 803) Other operating revenues Other operating costs Segment s result (1 684) Financial revenues Financial costs Profit before tax Income tax Net profit Specification Segment of trade in receivables Segment of legal services Corporate functions Total Other information: Depretiation Loss of value of intangible fixed assets Assets of reporting segment Liabilities and capital of reporting segment Expenditures for fixed assets of operating segment

37 All assets are assigned to reporting segments. Goodwill was allocated to reporting segments. Assets utilized jointly by reporting segments are assigned on the grounds of revenues generated by individual reporting segments. All liabilities are assigned to reporting segments. Liabilities assigned to various reporting segments are allocated proportionally to the value of segments assets. INFORMATION ON GEOGRAPHICAL AREAS from to From to Revenues Fixed assets Revenues Fixed assets Poland Romania Other countries Total Merger of business entities On 10 July 2013 through the subsidiary Kredyt Inkaso Portfolio Investments (Luxembourg) S.A.with its registered office in Luxembourg we purchased 90% shares in the Russian company Mark Collect Limited Liability Company with its registered office in Nemchinovka, the Moscow region. The purchased Company having a form o a limited liability company is subject to the Russian law regulations.as of the day of drawing up the present report the company changed its name to Kredyt Inkaso RUS Limited Liability Company (LLC). The company pursues its activities within the segment of trade in receivables. Percentage of acquired capital instruments with voting rights Acquiring company Payment: Noncontrolling interests Net assets of the acquired entity (fair value) Goodwill (+) / profit (-) Retained profit (merger under joint control) Mark Collect Limited Liability Company (LLC) 90% Payment made by the dominant Company to the previous owners amounted to PLN thousand and included the shares purchase price paid in cash. Valuation of the fair value of the items of assets and liabilities of the acquired company identified by the Group was finalized in the first six months of the financial year 2013/2014 and appears as follows:

38 Fair value as of the day of take-over: Mark Collect Limited Liability Company (LLC) Assets Non-tangible assets 35 Tangible fixed assets 557 Assets on account of deferred tax Stock Receivables and loans 69 Other assets Cash 80 Total assets Liabilities Reserve due to deferred tax Reserves Credits, loans 14 Trade liabilities 1495 Other liabilities Total Liabilities Net fair value of assets Goodwill (+) / Profit (-) Payment for the acquired entity: The company s goodwill, established out of the aquisition of Mark Collect Limited Liability Company (LLC) is the effect of the projected synergy resulting from the merger of the company s activity with the dominant Company and presents the value of assets, which could not have been presented separately according to the requirements of IAS 38 (employess and their expertise) and obtaing a permit to operate in Russia. The Goodwill has been allocated to the centers generating cash flows and is assigned to the segment of trade in receivables. The Company s goodwill was valuated by means of the discounted cash flow method, commonly considered one of the best basis for assesing the true and fair market value, this being understood as the price the buyer is willing to pay for shares of an enterprice. Valuation by means of the DCF method (Discounted Cash Flow Discounted Cash Flows) is based on the principle that the goodwill is equal to the value of all future cash flows which the company is able to generate, discounted as of the time of valuation by means of the relevant interes rate, reflecting the risk of a given cash flow. For valuation of the Company we applied the CCF method (Capital Cash Flow) the sum of cash flows belonging to creditors of an enterprise and the company s cash flows to shareholders. The CCF method was applied to the period of the detailed forecast of cash flows. i.e. for the years 2013/ /2018 as well as for calculating the residual value. For calculations we applied the WACC (Weighted Average Cost of Capital), of the Kredyt Inkaso S.A. Capital Group The company s value resulting from settlement of the merger of business entities does not affect establishing the basis for income tax

39 The Management Board composition changed in the period from 1 April 2012 to the balance sheet date. On 26 September 2012, Mr Sławomir Ćwik performing the function of the Vice-President of the Management Board submitted resignation from performing the mentioned function. On 12 October 2012, Mr Artur Górnik resigned from performing the function of the President and Member of the Management Board as of 19 October On 19 October 2012, the Supervisory Board appointed Mr Paweł Szewczyk the President of the Management Board as of 20 October Pursuant to the decision of the Supervisory Board dated 19 October 2012, Mr Jan Paweł Lisicki became the Vice-President of the Management Board. Composition of the Management Board as of the Date of the Consolidated Financial Statements Approval for publication: 3) President of the Management Board Mr Paweł Robert Szewczyk 4) Vice-President of the Management Board Mr Jan Paweł Lisicki As of the Approval Date the composition of the Supervisory Board of the Dominating Undertaking was as follows: 1) Chairman of the Supervisory Board Mr Ireneusz Andrzej Chadaj 2) Vice-Chairman of the Supervisory Board Mr Krzysztof Misiak 3) Secretary of the Supervisory Board Mr Tomasz Filipiak 4) Member of the Supervisory Board Mr Marek Gabryjelski 5) Member of the Supervisory Board Mr Robert Gajor 6) Member of the Supervisory Board Mr Paweł Dłużniewski 2. Basis of drawing up and accounting principles 2.1. Basis of drawing up the Financial Statements The Annual Stand Alone Financial Statements of Kredyt Inkaso S.A. ( financial statements ) was drawn up in accordance with the International Financial Reporting Standards (hereinafter referred to as IFRS ), approved by the European Union, binding as of 31 March 2013 and in the scope required by the Ordinance of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities and the conditions for recognition as equivalent the information required by the laws of a non-member state (Journal of Laws No. 33, item 259 as amended) and comprises period from 1 April 2012 to 31 March 2013 and a comparable period from 1 April 2011 to 31 March Functional currency of Kredyt Inkaso S.A. as well as the currency in which these financial statements were presented is Polish zloty, and all amounts are expressed in PLN thousand (unless it was indicated otherwise). The present Financial Statements was drawn up assuming the going concern of the Company in the foreseeable future. As of the Date of Approval there are no circumstances posing a threat to the going concern of the Company. The Capital Group called the statement of the financial position the balance sheet

40 2.2. Changes of standards and interpretations of IFRS Statement of compliance The present Financial Statements were drawn up in accordance with the IFRS as well as in accordance with interpretations announced in the form of ordinances of the European Commission, published and binding during drawing up of the present financial statements Status of standards approval From 1 April 2012 to the Date of Approval for publication of these consolidated financial statements, amendments to standards and interpretations of IFRS that have come into effect have no impact on these consolidated financial statements. The Company intends to adopt the amendments to IFRS and changes in their interpretation published by the International Accounting Standards Board (IASB), but not binding until the date of approval for publication of these consolidated financial statements as of the date of their coming into effect Standards and interpretations approved by the European Union In the periods commencing after 1 April 2012 new standards have been in force, changes to the applicable standards as well as interpretations, which were adopted by the European Union are as follows: a. Amendments in IAS 1 Presentation of financial statements changes in presentation of other comprehensive income. Amendments published on 16 June 2011 and approved on 5 June 2012 introduce the requirement of separate presentation of components of other comprehensive income that may be transferred to the profit and loss account. Amendments also confirm that components of other comprehensive income and profit and loss account are presented in separate financial statements or two subsequent financial statements. Amendments relate to reporting periods starting on 1 January 2013 or later. b. Amendments in IAS 19 Employee benefits Amendments published on 16 June 2011 and approved by the European Union on 5 June 2012, contain numerous significant corrections: (1) elimination of gains and losses deferral option, known as the corridor method, contributing to improvement of comparability and reliability of presentation; (2) improvement of presentation of changes in assets and liabilities resulting from certain employee benefits, of which by introducing the requirement for presenting changes resulting from revaluation in other comprehensive income, at the same time distinguishing those changes from changes resulting from ordinary operations of an entity; (3) increase in the number of requirements related to disclosures concerning characteristics of certain employee benefits, at the same time improving quality of information about characteristics of certain employee benefits and about risks of the entity related to participation in those benefits. Amendments are binding in relation to reporting periods commencing on 1 January 2013 or later. c. IFRS 13 Fair value measurement New standard published on 12 May 2011 defines the fair value, contains instructions related to fair value measurement and requires disclosing information on the fair value measurement. However, IFRS 13 does not change requirements in relation to the issue what elements should be measured or disclosed in the fair value. Amendments are binding in relation to reporting periods commencing on 1 January 2013 or later. d. Amendments in IFRS 1 Hyperinflation and removal of fixed dates for entities adopting IFRS for the first time Amendments published on 20 December 2010 add exemption that may be applied as of the date of transition to IFRS by entities subject to hyperinflation that permits the entity to measure assets and liabilities owned prior to normalization of functional currency at the fair value and then use this fair value as deemed cost of those assets and liabilities for needs of preparation of the first statement of financial position according to IFRS. Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later

41 e. Amendment to IAS 12 Income taxes deferred income tax: recovery of underlying assets Amendments published on 20 December 2010 require from entities measurement of deferred income tax assets depending on the fact whether an entity plans to realise assets by their utilisation or sale. For assets measured in compliance with IAS 40 Investment property assessment whether those assets shall be realized by their utilization or sale may be difficult or subjective. Amendments resolve this problem by introducing assumption that the value of assets component is usually realized at the moment of its sale. Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later. f. Interpretation of IFRIC 20 Stripping costs in the production phase of surface mine Interpretation published on 19 October 2011 stipulates that costs connected with stripping in surface mine operations should be recognized as the additional element of existing assets component (or as its increase) and amortized in anticipated period of utilization of recognized resources available due to stripping (by using methods of production units, unless other method is more suitable). Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later. g. Amendments to IFRS 7 Financial instruments: disclosures Offsetting financial assets and liabilities Amendments published on 16 December 2011 contain new requirements in the scope of disclosures for financial assets and liabilities that are offset in the statement on financial position or are subject to framework agreements related to offsetting or similar agreements. Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later. h. Amendments to IAS 32 Financial instruments: presentation Offsetting financial assets and liabilities Amendments published on 16 December 2011 do not introduce new principles of offsetting financial assets and liabilities; however they explain criteria of offsetting which is aimed at removing inconsistency in applying them. Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later. i. Amendments to IFRS 1 government loans Amendments published on 13 March The aim of amendments is enabling to exempt entities adopting IFRS for the first time from full retrospective application of all IFRS in the case when such entities avail themselves of government loans bearing interest below market interest rates. Amendments apply in reference to the reporting periods commencing on 1 January 2013 or later. The following Standards and Interpretations have been issued by the International Accounting Standards Board and approved by the European Union, however they do not apply to the present report bu to the yearly periods commencing after 1 April 2012 (the Company intends to acquire them according to their date of coming into force): a) IFRS 10 Consolidated financial statements The new standard published on 12 May 2011 replacing instructions related to consolidation contained in IAS 27 Consolidated and separate financial statements and SIC-12 Consolidation special purpose entities through introduction of uniform model of consolidation for all entities based on control, irrespective of the character of investment. Pursuant to IFSR 10, control is based on the following criteria 1) investor s control over investment, 2) exposure or the right to variable returns generated from its involvement in investment and 3) ability to utilize its control over investment in order to have influence on return on investment. Amendments apply in reference to the reporting periods commencing on 1 January 2014 or later. b) IFRS 11 Joint arrangements New standard published on 12 May 2011 and approved by the EU on 11 December 2012, replacing IAS 31 Interests in joint ventures. Possibility to apply the method of proportional consolidation in relation to entities jointly controlled was removed. Moreover, IFRS 11 eliminates jointly controlled assets retaining distinguishing joint operations from joint venture. Joint operations are understood as joint contractual arrangement in which

42 parties perform joint control over rights to assets and liabilities. Joint venture means joint contractual arrangements in which parties are entitled to joint control over rights to net assets. Amendments apply in reference to the reporting periods commencing on 1 January 2014 or later. c) IFRS 12 Disclosure of interests in other entities New standard published on 12 May 2011 and approved by the EU on 11 December 2012, shall require disclosing increased information about both entities included into consolidation and entities not included into consolidation in which the entity is involved in. The aim of IFRS 12 is providing information in such a manner so as persons utilizing financial statements could assess basis of control, restrictions imposed on consolidated assets and liabilities, exposure to the risk resulting from involvement in structural entities not included in consolidation and involvement of non-controlling owner of shares in operations of consolidated entities. Amendments apply in reference to the reporting periods commencing on 1 January 2014 or later. d) IFRS 27 Separate financial statements Amendments published on 12 May Requirements related to separate financial statements did not change and are contained in amended IAS 27. Other parts of IAS 27 were replaced by IFRS 10. Amendments apply in reference to the reporting periods commencing on 1 January 2014 or later. e) IAS 28 Investment in associates and joint ventures Amendments were published on 12 May Amended as a result of publication of IFRS 10, IFRS 11 and IFRS Amendments apply in reference to the reporting periods commencing on 1 January 2014 or later Standards and interpretations waiting to be approved by the European Union The following Standards and Interpretations were issued by the International Accounting Standards Board but were not approved by the European Union: 1) IFSR 9 Financial Instruments Standard published on 12 November 2009 along with the amendment published on 28 September Amendments are binding in relation to reporting periods commencing on 1 January 2015 or after this date. The amendment introduces new requirements related to settlement of financial liabilities and transfers from IAS 39 requirements related to derecognition of financial assets and liabilities. The Standard establishes single approach aimed at determining if financial assets are valuated at amortized cost or the fair value, replacing numerous principles stipulated in IAS 39. Approach of IFRS 9 is based on the assessment of the manner in which an undertaking manages its financial instruments (i.e. based on evaluation of a business model) and assessment of contractual cash flow characteristics connected with financial assets. New standard requires also applying single method of impairment methodology, replacing numerous methods of impairment defined by IAS 39. New requirements related to financial liabilities settlement relate to the problem of changeability of financial result resulting from the issuer s decision on valuation of its own indebtedness at the fair value. IASB decided to maintain the present valuation at amortized cost in relation to the majority of liabilities, amending only regulations related to own credit risk. Within new requirements an undertaking that decides to valuate liabilities at the fair value, presents change in the fair value resulting from changes in its own credit risk in the total income not in the profit or loss. 2) Change in MSSF 10, MSSF 12, MSR 27 Investment Companies Amandement published on 31 October 2012 roku. Changes apply to the reporting periods commencing on 1 January 2014 or after this date. The series of amandements to MSSF, which will introduce new requirements as regards investment companies. According to the new requirements the ownership shares in entities controlled by the companies included in investement companies should be settled in the fair value, through the financial result according to IFRS 9 Financial Instruments (or IFRS 39 financial instruments: formulating and evaluation) and not to consolidate

43 We have not finished the detailed analysis of influence of new standards yet, amendements and interpretations on the Company s financial statements, so at present it is not possible to evaluate in a reliable manner the impact of the standards set forth hereinabove on amounts presented in the Company s financial statements Earlier adoption of standards and interpretations In the current reporting period we did not make decision about earlier adoption of IFRS standards and interpretations Significant elements of accounting policy The Company s financial year comprises the period from 1 April to 31 March of next year Transactions in foreign currencies Transactions denominated in currencies other than Polish zloty are converted into PLN at the exchange rate binding on the date of transaction (spot exchange rate). Cash items denominated in foreign currencies are valuated according to the closing exchange rate (spot exchange rate) i.e. at the exchange rate of the leading bank ING Bank Śląski S.A. from the first quotation at the balance sheet date. Non-cash balance sheet items recorded according to the historical cost, denominated in foreign currency, are valuated at the exchange rate of the transaction date. Non-cash balance sheet items recorded according to the fair value, denominated in foreign currency are valuated at the exchange rate of the date of the fair value estimation Intangible assets Intangible assets are considered those components of assets which result from agreements or other legal titles regardless of the fact whether they are marketable or not. Initial valuation of intangible assets was calculated at the acquisition price resulting from a separate transaction. After the initial recognition, intangible assets valuation was calculated at the acquisition price after deduction of amortization; moreover the factor which as a rule decreases the valuation is the total amount of impairment write offs. The mentioned factor did not occur in the reporting period. The period and the method of amortization of the intangible assets with the defined period of usage were verified at the end of the reporting period. Verified period of intangible assets usage did not differ from the previous estimations. Amortization write offs for intangible assets are calculated according to a straight-line method during the period of anticipated period of usage, which is following for individual categories of intangible assets used in the presented periods: - for system software - 30%, 33% or 50% - for production software - 30% or 50% Amortization rates applied for intangible assets in previous periods do not differ from those, which were verified and applied in the reporting period. Due to this fact, net values of intangible assets estimated according to the previous rules and those, which are valid at present, are the same. In the presented reporting periods no prerequisites for impairment of other components of intangible assets occurred. The component of intangible asset is removed from a balance sheet register when it is sold or if further benefits resulting from its usage or sale are not anticipated

44 Tangible fixed assets The following fixed assets are classified as tangible fixed assets: those which are maintained by the Company in order to be used for business activities, those which are to be used for the time longer than one period, in relation to which there is the probability that they will generate economic benefits, the value of which can be estimated in a reliable manner. The following assets were classified as tangible fixed assets: improvements in third party fixed assets (buildings), machinery, technical equipment, other fixed assets, fixed assets under construction. As of the date of initial recognition, fixed assets were valuated at the acquisition price. In the tangible fixed assets used by the Company, no significant parts of fixed assets (components) of which period of usage would differ from the period of usage of the whole tangible fixed asset were identified. In the presented periods straight-line method of tangible fixed assets depreciation was applied, resulting from the anticipated useful life of a tangible fixed asset, with the exception of notebooks depreciated according to a degressive method at the ratio equal 2. The basis of tangible fixed assets depreciation in the period of applying IFRS is the initial value decreased by residual value. Depreciation rates applied for tangible fixed assets in previous periods do not differ from those that were verified and applied in the reporting period. Depreciation was calculated applying rates resulting from anticipated periods of usage, which are following for already owned tangible fixed assets: Investments in third party fixed assets (buildings) - 10% Computers (work stations) - 30% Notebooks - 30% Servers - 30% Specialty Computer equipment - 30% Photocopiers and high-output printers - 28% Telecommunications systems - 20% Cars - 20% Furniture - 20% Specialty office equipment (e.g. mailing equipment, high-output shredders) - 14% Depreciation begins when a tangible fixed asset is available for usage and it ends for tangible fixed assets removed from the balance sheet register Deferred income tax assets Deferred income tax assets were estimated at the amount that is meant to be deducted from income tax in the future, in relation to negative temporary timing differences that will result in decrease of taxable base in the future, calculated in a conservative manner. Valuating deferred income tax assets, the tax rate equal to 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the mentioned item of assets will be effectuated Other long-term prepayments and accruals The Company classifies the interest on financial lease, anticipated to be settled in the period not longer than 12 months from the reporting date as long-term prepayments and accruals

45 Short-term receivables Trade receivables, receivables relative to income tax, receivables relative to awarded costs of proceedings and other receivables are classified as short-term receivables. Receivables are valuated as of each balance sheet date due to the fact that the reasons for their impairment occurred. Receivables are revaluated taking into consideration the probability of their payment by means of establishing revaluation write offs at the end of the reporting period. Those are first of all receivables resulting from the Company s business activity consisting in trade and management of debts. Book value of receivables corresponds to their fair value Purchased debts Purchased debts consist in the value of debts purchased on our own risk and account, which are classified as financial instruments available for sale. They are valuated at the fair value according to the estimation based on historical experiences (recalculation of the future cash flows allowing for the current value of the investment in debts as of the balance sheet date), which in our opinion ensures reliability of the estimated fair value of purchased debts. Temporary timing differences in income tax occurring at the moment of the initial recognition are not recognized since they comply with the condition under IAS 12 paragraph 22, paragraph 15c and paragraph 24. Temporary timing differences occurring due to the valuation at the amount of fair value as of each following reporting day are lower than not recognized difference from the initial recognition that is why they are not recognized either. Debts that are managed by the Company are characterized with the tendency for the decrease in the fair value as the time passes. Both positive and negative differences from the fair value estimation are recognized in the revaluation reserve Cash and cash equivalents Cash and cash equivalents include cash in hand and at bank as well as other cash equivalents, i.e. bank deposits with the maturity not exceeding three months. The mentioned cash was valuated at the nominal value, whereas bank deposits at the amount of due amount. Book value of those assets corresponds to their fair value Short-term prepayments and accruals Short-term prepayments and accruals comprise prepaid costs i.e. incurred expenditure related to future reporting periods and interest related to financial lease that is to be settled within 12 months of the reporting date Share capital Company s share capital is presented at the nominal value, in accordance with the Statutes of the Company and the entry in the National Court Register Cost of Bonds Issue and own shares External cost directly relating to Bonds issue decrease the value of equity from the issue of bonds over their nominal value. The remaining costs are charged to the profit and loss account at the time when they are borne. Should Kredyt Inkaso S.A. or its subsidiaries make a purchase of Company s capital instruments, the amont paid, including the cost related directly to the purchase, shall decrease equity assigned to the Company s shareholders and is presented separately in the balance sheet as Own shares up to the moment of shares redemption re-issue. Own shares are recognized as of the date of the transaction settlement Supplementary reserve (agio) The reserve is established out of the surplus of the issue value of shares over their nominal value less costs of the issue

46 Revaluation reserve, reserve relative to revaluation of financial assets available for sale Revaluation reserve is established in relation to the valuation of financial instruments available for sale at the fair values, revaluations both increasing and decreasing the fair value are recognized here. At the moment of exclusion of the financial assets component from the balance sheet, accumulated net profits and losses recognized in the revaluation reserve are recognized in the financial result of a given period Reserve for deferred income tax Reserve for deferred income tax was established in the amount that will result in increasing the liability relative to income tax in the future, due to the occurrence of positive temporary differences between balance sheet value of assets and liabilities and their tax value. Valuating the reserve for deferred income tax, the tax rate of 19% was taken into consideration, which to the best of our knowledge will be valid in the year in which the reserve will be released. The reserve for income tax on receivables relative to legal proceedings costs was established Reserve for pensions and similar benefits According to the amendments to the labour law, employees of the Company are entitled to receive retirement severance pay, which is paid once at the moment of retiring. The estimated amount of the reserve for retirement benefits turned out to be of no significance that is why we desisted from its recognizing and presentation Other reserves Other reserves are established when the existing obligation that results from the past events is incumbent on Company and it is probable that its fulfilment will cause the necessity of outflow of economic benefits and it is possible to estimate the mentioned obligation in a reliable way. The established reserves are classified respectively as other operating costs, financial costs depending on circumstances that are connected with the future liability Liabilities Liabilities are valuated at the end of the reporting period in the amount of due payment, with the exception of liabilities relative to bonds issue. Liabilities relative to bonds issue are valuated at the moment of initial recognition at the fair value less costs of transaction. As of the balance sheet date, the valuation was calculated according to the amortized cost applying the effective interest rate (adjusted acquisition price) and divided according to the term of generated cash flow into short-term and long-term part. Liabilities relative to legal persons income tax are presented in the due amount, applying 19% rate Other accruals Deferred costs are calculated as of the reporting date, if it is necessary, in the amount of probable liabilities in the current reporting period. Donations are recognized only when we are sufficiently certain that the Company will meet conditions related to a given donation and that a given donation will be received. Donation related to a given cost item is recognized as revenue in the manner corresponding to costs, which are to be compensated by the donation. Donation financing a component of assets is gradually recognized as income (in the item other income) over periods proportionally to amortization write offs established for this component of assets. Due to presentation reasons, in the consolidated balance sheet, the Company does not deduct donations from the balance sheet value of assets but presents donations as income of future periods in the item Accruals

47 Revenues Revenues from purchased debts (collection of debts on our own account and at our own risk) are recognized at the moment of obtaining it in the obtained amount. Revenues from awarded costs of proceedings are recognized as of the date of obtaining the enforcement title. Revenues from services are recognized as of the due date and in the due amount Own cost of revenues Own cost of revenues from purchased debts consists of purchase value, including the fee for the legal agent in the amount of revenue obtained in relation to reimbursement of awarded cost of representation in legal proceedings, whereas own cost of revenues from awarded cost of proceedings consists of costs of those proceedings corresponding with the revenues from awarded with valid judgments of proceedings costs excluding costs of representation in legal proceedings. Purchase value of debts comprises also the part of purchase value of debts i.e. the price plus transaction costs which in the reporting period was considered the part that would not generate financial befits in the future periods and at the same time it was not included into costs in the previous periods Overheads Overheads comprise all other costs incurred by the Company which were not classified as the own cost of income and other cost of core business and were also incurred in relation to Company s operating activity Other costs of the core business Other costs of core business comprise cost of contact centre maintenance, costs of handling the purchased debts in the pre-action stage and other costs connected with the purchased debts management, not recognized in the own cost of obtained revenue Income tax Obligatory burden of the result consists of: current and deferred tax. Current tax liability was calculated on the basis of tax result of a given period, according to the valid rate 19%. Deferred tax was calculated on the basis of the balance sheet method as the tax subject to refund or payment in the future, basing on the differences between balance sheet value and tax value of assets and liabilities Cash flow statement The Company prepares the cash flow statement according to the indirect method. In the operating activity, the cash flows relative to debts considered by the Company the financial instruments available for sale were disclosed. 3. Appropriation of proceeds from the issue of securities In the reporting period neither new shares nor bonds were issued. 4. Statement of Kredyt Inkaso S.A. Management Board about the consistency of the Financial Statements with the binding accounting principles We hereby state that to the best of our knowledge, the Annual Stand Alone Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2012 to 31 March 2013, as well as the comparable data were prepared in accordance with the binding accountancy principles and they reflect in a true, fair and clear manner the financial standing and result of the Capital Group, and that the report on the operations of the Capital Group contains reliable description of development, achievements and the situation of the Capital Group, including the description of the main risks and hazards. Presented consolidated financial statements comply with all requirements of IFRS adopted by the European Union

48 5. Statement of Kredyt Inkaso S.A. Management Board about appointment of the entity authorized to audit financial statements We hereby state that the entity authorized to audit the financial statements, which audited the Annual Stand Alone Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2012 to 31 March 2013 was appointed in accordance with the binding legal provisions and that the mentioned entity as well as statutory auditors, who audited this financial statements, complied with the conditions of issuing independent and unbiased opinion on the annual financial statements audit, in accordance with binding professional standards. 6. Information on Operating segments The Company operates in the general segment comprising trade in debt portfolios on the domestic market. This segment constitutes the core activity of the Company and the remaining activity cannot be considered as a segment because the following criteria are not met: 1) other activity, from which the Company could earn revenues and incur expenses may not be extracted as the component of this activity because the whole activity of the Company is closely related to trade in receivables; 2) it cannot be established whether the remaining activity may be reviewed regularly by the Company s operating decision making body and whether the results may be considered while making decisions on allocating the resources to the segment as well as while assessing its performance; 3) there is no Company activity, non related to trade in receivables for which separate financial information is available 4) all revenues are affected on the territory of Poland

49 NOTES TO THE BALANCE SHEET 7. Tangible fixed assets and goodwill 7.1. Goodwill Does not occur 7.2. Intangible assets Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total State as of Gross carrying value Cumulated write off and revaluation write-down (194) (2 435) - (147) - (2 776) Net carrying value State as of Gross carrying value Acumulated write-offs and revaluation write-downs (148) (1 877) - (1) - (2 026) Net carrying value Changes to intangible assets by generic groups for the period from to specification Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) (1 077) (1 077) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (45) (559) - (146) - (750) Revaluation write-downs due to loss of value (-) Inversion of revaluation write-downs Net exchange rate differences from conversion (+/-) Net carrying value as of

50 Changes to intangible assets by generic groups for the period from to (comparative data) specification Patents and licences Computer software Cost of reaserch and development Other nontangible assets Non-tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (27) - - (1 193) (1 220) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (28) (615) - (1) - (644) Revaluation write-downs due to loss of value (-) Inversion of revaluation write-downs Net exchange rate differences from conversion (+/-) Net carrying value as of Tangible fixed assets Tangible fixed assets Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total State as of Gross carrying value Cumulated write off and revaluation write-downs (477) (2 587) (208) (853) - (4 125) Net carrying value State as of Gross carrying value Acumulated write- offs and revaluation write-downs (332) (1 894) (116) (538) - (2 880) Net carrying value

51 Changes to tangible fixed assets by generic groups for the period from to CHANGE TO THE CARRYING VALUE OF TANGIBLE FIXED ASSETS Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (59) (101) (19) (444) (624) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (145) (693) (92) (315) - (1 245) Revaluation write-downs due to loss of value (-) Inversion of revaluation write-downs Net exchange rate differences from conversion (+/-) Net carrying value as of (0) Changes to tangible fixed assets by generic groups for the period from to (comparative data) Specification Buildings and structures Machines and equipment Means of transport Other fixed assets Fixed tangible assets during production Total For the period from to Net carrying value as of Acquisition by merger of business entities Increase (purchase, production, leasing) Sale of subsidiary (-) Decrease (sale, liquidation (-) - (6) (105) (9) (2482) (2 602) Other changes (reclassifications, relocations etc.) Revaluation of the fair value (+/-) Depreciation (-) (94) (645) (46) (222) - (1 007) Revaluation write-downs due to loss of value (-) Inversion of revaluation write-downs Net exchange rate differences from conversion (+/-) Net carrying value as of Assets recognized off-balance sheet used under rent, hire or other contract, including lease contract, of which: 0 0 Total tangible fixed assets recognized off-balance sheet

52 9. Investment real estate Item does not occur. 10. Long-term capital investments Investments in subsidiaries Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty FINSANO Consumer Finance Spółka Akcyjna Spółka Komandytowa FINSANO Consumer Finance S.A. Kancelaria Forum S.A. Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme (S.A.) Kredyt Inkaso Nieruchomości Sp. z o.o. Kredyt Inkaso Investments RO S.A. Subsidiary s registered office Poland, ul. Rodziny Hiszpańskich 1, Warsaw Poland, ul. Domaniewska 39A, Warsaw Poland, ul. Domaniewska 39A, Warsaw Poland, ul. Okrzei 32, Zamość Luksemburg, 47, Cote d Eich, L-1450 Luxembourg Poland, ul. Domaniewska 39A, Warsaw Rumunia, Sector 3, str. Invingatorilor, nr 24, etaj 6, Bukareszt Share in in share capital Purchase price Accumulate d loss of value Purchase price Accum ulated loss of value 100% % % % % % % Totasl Investment balance sheet value Apart from the Company s direct investment, KI Luxembourg also owns Kredyt Inkaso I NSFIZ investment certificates at the purchase price of PLN thousand, 2 KI Luxembourg owns Kredyt Inkaso I NSFIZ investment certificates at the purchase price of PLN thousand, 3 Kancelaria Forum S.A. has the 85% right to a share in profit at the purchase price of PLN 230 thousand, 4 Apart form the Company s direct investment Finsano Consumer Finance S.A. has a right to a share in profit, 5 Apart from the Company s direct investment, KI Luxembourg owns Kredyt Inkaso Investments RO bonds at the purchase price of PLN 333 thousand Shares in undertakings valuated by means of the equity method do not occur. Co-controlled companies consolidated in accordance with the pro-rata method do not occur. 11. Receivables and loans For the purposes of presentation in the balance sheet, the Company separates the class of receivables and loans (ISFR 7.6). In the long term part, receivables and lans are presented in the balance sheet in one item. In the short term part the Company, according the the requirements of ISFR 1, presents separately trade receivables and other receivables. The balance sheet items from the class of receivables and loans is shown in the belowe teble

53 RECEIVABLES AND LOANS Fixed assets: Receivables Loans - - Long term receivables and loans - - Current assets: Trade receivables and other receivables Pożyczki 64 Short-term receivables and loans Receivables and loans including: Receivables Loans - 64 TRADE RECEIVABLES AND OTHER RECEIVABLES Financial Assets (IAS 39): Trade receivables and other receivables Revaluation write-downs due to trade receivables (-) - - Net trade receivables Receivables from sale of fixed assets - - Retained cash (deposit) relative to construction services agreements - - Other deposits - - Other receivables - - Revaluation write-downs of other financial receivables (-) - - Other net financial receivables - - Financial receivables Non-financial assets (apart from IAS 39): Receivables relative to tax and other benefits - - Prepayments and advance payments - - Other non-financial receivables Revaluation write-downs of non-financial receivables (-) - - Non-financial receivables Total short term receivables The increase of receivables due to trade receivables is a result of the concluded with Kredyt Inkaso Portfolio Investments (Luxembourg) Societe Anonyme (S.A.), the subparticipation agreement of the portfolio of receivables of Kredyt Inkaso S.A

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

55 State as of Fixed assets: PiN Categories of financial instruments according to IAS 39 AWG- O AWG- W IUTW ADS IPZ Beyond IAS 39 TOTAL Receivables and loans Derivatives Other long-term financial assets Current assets: Trade receivables and other receivables Loans Purchased receivables Other short-term financial assets Cash and cash equivalents Total category of financial assets State as of Fixed assets: Receivables and loans Derivatives Other long-term financial assets Current assets: Trade receivables and other receivables Loans Purchased receivables Other short-term financial assets Cash and cash equivalents Total category of financial assets Financial assets valued according to depreciated cost a) Bonds issued by the subsidiary Legal Process Administration Sp. z o.o. CHARACTERISTICS OF FINANCIAL ASSETS DEBT SECURITIES Interest rate Date of issue: Maturity date Balance sheet value in PLN Long term Assets Short term State as of Legal Process Administration Sp. z o.o. A series Bonds Legal Process Administration Sp. z o.o. B series Bonds Variable, paid out every 6 months Variable; paid out every 6 months Total

56 b) Bonds issued by the subsidiary KI Nieruchomości Sp. z o.o. CHARACTERISTICS OF FINANCIAL ASSETS DEBT SECURITIES Interest rate Date of issue: Maturity date Balance sheet value in PLN Long term Assets Short term State as of Kredyt Inkaso Nieruchomości Sp. z o.o. D series bonds Kredyt Inkaso Nieruchomości Sp. z o.o. E1 series bonds Kredyt Inkaso Nieruchomości Sp. z o.o. G1 series bonds Variable, paid out every 6 months Variable; paid out every 6 months Variable; paid out every 6 months Total Interest rate is based on the variable interest rates.. Those are the WIBOR interest rates increased by margin. Margin reflects the risk connected with financing. Bonds are denominated in PLN. c) Bonds issued by subsidiary Kredyt Inkaso Luxembourg CHARACTERISTICS OF FINANCIAL ASSETS DEBT SECURITIES Interest rate Date of issue: Maturity date Balance sheet value in PLN Long term Assets Short term State as of KIL Securization Funds A01 series bonds KIL Securization Funds B series bonds KIL Securization Funds C series bonds KIL Securization Funds D series bonds KIL Securization Funds E series bonds KIL Securization Funds F series bonds KIL Securization Funds G series bonds KIL Securization Funds H series bonds KIL Securization Funds I series bonds KIL CEE Portfolio Investment P series bonds Variable, paid out every 6 months Variable; paid out every 6 months Variable, paid out every 6 months Variable; paid out every 6 months Variable; paid out every 6 months Variable, paid out every 6 months Variable; paid out every 6 months Variable, paid out every 6 months Variable; paid out every 6 months Variable, paid out every 6 months Razem Interest rate is based on the variable interest rates.. Those are the WIBOR interest rates increased by margin. Margin reflects the risk connected with financing. Bonds are denominated in PLN

57 13. Prepayments and accruals PREPAYMENTS AND ACCRUALS Short term settlements Long-term settlements Assets prepayments and accruals: Rent from lease Other active costs Assets total prepayments and accruals Liabilities prepayments and accruals: Received grants Revenues of future periods Other settlements Liabilities total prepayments and accruals Deferred income tax assets DEFERRED INCOME TAX Balance as of the beginning of the period: Assets due to the deferred income tax Reserve due to the deferred income tax Deferred income tax saldo as of the beginning of the period (2 591) (1 925) Change in the period affecting: Profit and loss account (+/-) (666) Other total income (+/-) Settlement of the merger of economic entities Other (including net exchange rate differences from revaluation) Deferred income tax per saldo as of the end of the period, including: (724) (2 591) Assets due to the deferred income tax Reserve due to the deferred income tax

58 ASSETS DUE TO DEFERRED INCOME TAX Titles of temporary differences State as of Assets: Intangible assets Tangible fixed assets Investment real estate Derivatives Stock Trade receivables Construction agreements Reserves and accruals Tax loss Valuation and settlement of financial instruments Other assets Liabilities: Liabilities for employee benefits Balance as of the beginning of the period Profit and loss account Change to: Other total income Settlement of merger Balance as of the end of the period Reserves for employee benefits Other reserves 52 (52) Derivatives Trade liabilities and other liabilities Credits, loans other debt instruments 363 (200) 163 Other liabilities Other: Unsettled tax losses 886 (511) 375 Total (579) State as of Assets: Other assets Liabilities Liabilities for employee benefits Reserves for employee benefits Other reserves Derivatives Trade liabilities and other liabilities Credits, loans other debt instruments 720 (357) Other liabilities Other: Unsettled tax losses Total Stock Item does not occur

59 16. Receivables due to income tax Receivables due to income tax State as of the beggining of the periodn na początek okresu Increases Decreases State as of the end of the period Short-term receivables due to awarded costs of proceedings from other entities Item does not occur. 18. Purchased receivables Receivables purchased from other entities financial assets available for sale Total debts purchased from other entities Change to the value of purchased receivables State as of the beginning of period Increase, including: due to purchase of portfolios of receivables due to valuation at the fair vale other - - Decrease, of which: (44 741) (19 626) - Due to revaluation to the fair value - (623) - Due to recognition in costs of the purchase of receivables (4 307) (8 167) - Due to subparticipation agreement (50 527) - - other - (6 836) State as of the end of period Cash and cash equivalents Cash and cash equivalents Cash in hand and at the bank in PLN Cash in hand and at bank in other currencies - - Cash 8 3 Short term deposits - - Other - 1 Total cash and cash equivalents

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

61 20.2. Own Shares OWN SHARES REMAINING THE PROPERTY OF ENTITY OR ITS RELATED ENTITIES Buyuer (name of entity) No. of shares (units) Purchase price value No. of shares (units) Purchase price value Kredyt Inkaso S.A Total as of the end of the period On 9 July 2012 the Ordinary General Assembly of the Shareholders of Kredyt Inkaso S.A. adopted a resolution authorising the Company to purchase units of own shares for the purpose of their redemption ( Program ). The Program shall be carried out until the moment when the total amount of funds used for implementation of the Program reaches ,72 PLN, however, not longer than 9 July On 27 November 2012 the Company s Management Board specified the detailed conditions of the Program. Whereby, the Oridnary Assembly, in order to finanse the implementation of the Program, created a special suplementary reserve Suplementary reserve for the purchase of own shares in the amount of PLN ,72. Creation of the Suplementary Reserve occured through the separation of the amount of PLN ,72 from the funds accumulated in the sumplementary reserve coming from profit generated by the Company, which could be designated to be devided i.e. from the amount of profit for the financial year 2011/2012. As for 31 March 2014 the Company purchased the total of own shares, constituting 0,2363% of the Company s share capital, for the total price of PLN 500 thousand PLN Distribution of profit of the Dominant Company for the year 2012/2013 On 24 July 2013, during the Shareholder s Ordinary General Assembly, the Financial Statements for the financial year 2012/2013 was approved. No resolution on payment of dividend was adopted. However, the resolution on covering the Company s net loss for the for the financial year commencing on 1 April 2012 and ending on 31 March 2013 amounting to PLN ,64 was adopted Number of shares and earnings per share (EPS) In the reporting period no issue of new shares series took place. As of the Approval Date, the Company s share capital amounts to PLN Net profit (loss) falling to one ordinary share is calculated the same way for each share. Shares do not differ between each other as far as the right to the net profit share. The basic earnings per share is caluculated by means of the formula net profit falling to shareholders of the dominant entity devided by the number of ordinary shares occurring in a given period. While calculating the diluted profit per share the effect of the purchase of own shares by the dominant company is considered. The calculation of the profit per share is presented in the below table:

62 PROFIT (LOSS) PER ONE SHARE Number of shares applied as a formula denominator Weighted average number of ordinary shares Diluting impact of options interchangeable into shares (500) (382) Weighted average number of ordinary shares Continued activity Net profit (loss) on continued activity (in thousands) (2 299) Basic profit (loss) per share (PLN) 0,74 (0,18) Net diluted profit (loss) per share (PLN) 0,77 (0,18) Discontinued activity Net profit (loss) on discontinued activity Basic profit (loss) per share (PLN) Diluted profit (loss) per share (PLN) - - Continued and discontinued activity Net profit (loss) (2 299) Basic profit (loss) per share (PLN 0,74 (0,18) Diluted profit (loss) per share (PLN) 0,77 (0,18) 21. Paid dividends and dividend policy Dividends paid out in the last 3 financial years Financial year Profit earned Allocated for payments Denominated per one share 2010/11 PLN thousand PLN 4 139,68 thousand PLN 0,32 - including cash dividend - PLN 4 139,68 thousand PLN 0,32 - including dividend in the form of shares - PLN 0 thousand PLN /12 PLN 6 368,76 thousand PLN 0 thousand PLN 0 - including cash dividend including dividend in the form of shares /13* PLN thousand PLN 0 thousand - - including cash dividend including dividend in the form of shares The Company s dividend policy is based invariably on the assumption that its amount should depend on gained financial results and capital needs connected with the purchase of further debt portfolios, implementation of Company s development strategy as well as other strategic investments

63 The Company s Management Board is of the opinion that in the next years it will be possible to pay out a cash dividend at least at the level of 1/5 part of the generated profit. The Management Board also allows the possibility of payout of dividend in the form of shares (subject to confirmation of formal and technical possibilities) granted to the current shareholders as, so called, bonus stocks including part of the profit allocated to be shared. In the situation when a decision on payment of a dividend in the form of shares is made, granting to the current sharehloders of bonus stocks will result in the increase of the Company s share capital. The increase of the Company s share capital will be carried out using funds accumulated in the Company s capital reserve established for the purposes of financing the issue of bonus stocks. If the shareholders were to be granted the fractional part of shares, then such parts will be attributable to the shareholders and the Company will pay the difference between the issue price and the nominal value of the fractional parts of shares attributable to them, but not assumed. These payments will be made using the capital reserve established for the purposes of financing the issue of bonus stocks. In the situation, when the issue price of bonus stocks exceedes their nominal value, the surplus will be covered using the capital reserve established for the purposes of financing the issue of bonus stocks by way of transferring the equivalent of the amount of the surplus to the Company s supplementary reserve. As a result of the above events, there will be amounts transferred from the capital reserve established for the purpose of financing the issue of bonus stocks into the Company s share capital and the supplementary reserve as well as for the payment of the equivalent for the non-attributable to the shareholdres fraction parts and possible costs related to the issue. Therefore the shareholders will pay neither nominal nor issue price for the shares because these payments will be made by the Company using the capital reserve, established for the purposes of financing the issue of bonus stocks. Bonus stocks attributable to the shareholders will not require to be assumed by them (record). The day when the list of shareholders entitled to profit sharing is made, will be the same day of payment of the dividend in cash and in the form of granting bonus stocks, making the circle of shareholders the same for both forms. Historical data do not effect or change the Company s dividend policy. 22. Credits, loans, other debt instruments The value of credits, loans and other debt instruments included in the financial statements is shown in the following table: Short- term liabilities Long-terrm liabilities Financial liabilities valued at the depreciated cost: Credits in credit bank Credits on current account Loans Debt securities Financial liabilities valued at depreciated cost: Financial liabilities set to be valued at the fair value by the profit and loss account Credits in credit bank Debt securities Other Financial liabilities set to be valued at the fair value by the profit and loss account Total credits, loans and other loan instruments

64 22.1. Credits and loans Item does not occur Issued Bonds Information on the character and the extent of thre risk the company is subject to due to incurred credits, loans and other debt instrument is shown in the below table. CHARACTERISTICS OF FINANCIAL LIABILITIES VALUED ACCORDING TO THE DEPRECIATED COST Interest rate Date of incurring liability Maturity date Balance shet value Long term Liability Short terrm State as of Series S03 bonds Series S04 bonds series S05 bonds Series U01 bonds Series U02 bonds Series U03 bonds Series W1 bonds Series W2 bonds Variable; paid out every 6 months; WIBOR 6M+6%; Variable; paid out every 6 months; WIBOR 6M+5%; Variable; paid out every 6 months; WIBOR 6M+6%; Variable; paid out every 6 months; WIBOR 6M+5,5%; Variable; paid out every 6 months; WIBOR 6M+5,4%; Variable; paid out every 6 months; WIBOR 6M+5,7%; Variable; paid out every 6 months; WIBOR 6M+4,2%; Variable; paid out every 6 months; WIBOR 6M+4,4%; Total as of All the above bonds were issued by the Dominant Company and are not subject to guarantees or security. The Company may make a decision about an early buyout in relation to series U01, U02 and U03 bonds. On 23 September 2013 we made the purchase of own shares i.e. total of 9 thousand units of S01 series unsecured bearer bonds of the total nominal value of PLN 9 mil, making the whole S01 series sold out. On 13 January 2014 we issued units of the W1 series ordinary bearer bonds of the nominal value of PLN 1 000,00 PLN each, of the total nominal value of PLN 53 mil and units of the W2 series ordinary bearer bonds of the nominal value of PLN 1 000,00 PLN each, of the total nominal value of PLN 17 mil. Interest on bonds shall be paid out in six month periods. The day of purchase of the W1 series bonds shall take place within 42 months from the date of bonds issue, and the day of purchase of the W2 series bonds within 48 months from the date of bonds issue. On 13 January 2014 we also made an early voluntary purchase of of the S02 series unsecured dematerialized ordinary bearer bonds. The early purchase of the S02 series bonds is related to obtaining funds as a result of issue of the W1 series and the W2 series bonds, issued, among others, for the purposes of bonds re-financing. In the reporting period we regularly paid interest to the owners of Series S01 S02, S03, S04, S05, U01, U02 and U03 bonds. The total amount of the paid out interest reached over PLN 22,5 mil

65 Series S03, S04, S05, U01, U02, U03, W1 and W2 bonds are listed on the maket of bonds Catalyst, mainained on the transaction platforms of the Stock Exchange in Warsaw and BondSpot. Until the Approval Date no cases of failure to pay the principal or interest on bonds or infringement of other terms of issue took place. 23. Liabilities due to lease BALANCE SHEET VALUE OF LIABILITIES DUE TO FINANCIAL LEASING Long term State as of Gross balance sheet value Revaluation write-downs - - Net balance sheet value Short term State as of Gross balance sheet value Revaluation write-down - - Net balance sheet value Liabilities due to office space lease agreements Liabilities relative to concluded agreements of offices lease up to 1 year for the period from 1 to 5 years from 5 to 10 years lease of the office in Warsaw - Company's registered office lease of the office in Zamość - Company's Operating Centre lease of the office in Lublin Company s Operating Centre Reserve due to deferred income tax RESERVE DUE TO DEFERRED INCOME TAX Titles of interim differences State as of Balance as of the beginning of the period Profit and loss account Change to: Other total income Settlement of merger Exchange rate differences from revaluation Balance as of the end of the period Assets: Intangible assets - Tangible fixed assets - Investment real estate - Derivatives - Trade Receivables - Construcdtion agreements - Other assets (2 060) 185 Liabilities: Derivatives - Trade liabilities - Credits, loans and other loan instruments (386) Other liabilities - Total (2 446)

66 State as of Assets: Intangible assets Tangible fixed assets Investment real estate Derivatives Trade Receivables Construcdtion agreements Other assets Liabilities: Derivatives Trade liabilities Credits, loans and other ldebt instruments Other liabilities Total Reserves The value of reserves included in the financial statements and their changes in individual periods are as follows: OTHER RESERVES Reserves for employee benefits (bonus, vacation leave) Reserve for audit Short-term reserves Long-term reserves Other reserves Total other reserves CHANGE TO THE STATE OF OTHER RESERVES Court cases Losses from construction agreements Reserves for: Cost of restructuring For the period from to State as of the beginning of the period Increase of reserves included as cost in the period Dissolution of reserves included as income in the period (-) - - Utilisation of reserves (-) - - Increase through merger of business entities - - Other changes (net currency exchange differences from conversion) - - State of reserves as of for the period from to State as of the beginning of the period Increase of reserves assumed as cost in the period Dissolution of reserves assumed as income in the period (-) (155) (155) Utilisation of reserves (-) - Increase through merger of business entities - Other changes (net currency exchange differences from conversion) - State of reserves as of other total

67 26. Trade liabilities and other liabilities TRADE LIABILITIES AND OTHER LIABILITIES Financial liabilities (IAS 39): Trade liabilities Liabilities due to the purchase of fixed assets - Other financial liabilities - Financial liabilities Non-financial liabilities (beyon IAS 39): - Liabilities due to taxes and other benefits - Prepayments and downpayments received for supplies - Liabilities due to construction service agreements - Downpayments received for constructions services - Other non-financial liabilities Non-financial liabilities Total short-term liabilities State as of Long term liabilities: *Categories of financial instruments as per IAS 39 Beyond ZWG-O ZWG-W ZZK IPZ MSR39 Credits, loans, other debt instruments Financial leasing Other liabilities Short-term liabilities Trade liabilities and other liabilities Credits, loans, other debt instruments Financial leasing Total financial liabilities category Stan na Long term liabilities: Credits, loans, other loan instruments Financial leasing Derivatives Other liabilities Short-term liabilities Trade liabilities and other liabilities Credits, loans, other loan instruments Financial leasing Total financial liabilities category Total 27. Liabilities due to income tax Liabilities due to income tax State as of the beginning of the period - - Increases - 88 Decreases - (88) Stated as of the end of the period

68 NOTES TO THE TOTAL INCOME STATEMENTS 28. Net revenues Net revenues Revenues Revenues Payments from debtors Depreciation of portfolios (4 307) (8 167) Revaluation of portfolios (623) Other revenues Cost of other revenues (76 031) (209) Total In other revenues and in cost of other revenues the subparticipation agreement of all portfolios being the property of Kredyt Inkaso S.A. with the related entity KI Luxembourg of the value of PLN thousand was included. Revaluation of portfolios has been carried on up to the values included in the subparticipation agreement. 30. Costs of business activities Costs by type Depreciation Consumption of materials and energy Outsourcing Taxes and charges Salaries Social insurance and other benefits Other costs by category Total costs by category Overheds Other cost of core activity Own cost of sales, sales cost and cost of overheads

69 30. Other revenues and operating costs Other operating revenues Profit on sale of intangible fixed assets 43 - Evaluation of investment real estate to the fair value - - Reverted revaluation write-offs due to the loss of the value of assets and intangible assets - - Reverted revaluation write-offs of the value of financial receivables - - Reverted revaluation write-offs of the value of non-financial receivables - - Reverted revaluation write-offs of the value of stock - - Dissolved unused reserves - - Received penalties and damages - - Received grants Other revenues Total other operating revenues Other operating costs Loss on sale of intangible fixed assets - - Evaluation of investment real estate to the fair value - - Write-offs due to the loss of the company value - - Write-offs due to the loss of the value of assets and intangible assets - - Revaluation write-offs of the value of financial receivables - - Revaluation write-offs of the value of non-financial receivables - - Revaluation write-offs of the value of stock - - Reverted revaluation write-offs of the value of stock (-) - - Creating reserves - - Paid penalties and damages - - Other costs Total other operating costs Revenues and financial costs FINANCIAL REVENUES Revenue due to interest related to financial instruments not valued in the fair value by the financial result: Cash and cash equivalents (deposits) Loans and receivables Debt securities maintained until maturity Revenue due to interest related to financial instruments not valued in the fair value by the financial result Profit on valuation and realization of financial instruments valued in the fair value by the profit and loss account: Derivative trade instruments Derivative collateral instruments

70 Shares of listed companies Debt securities Investment funds units Profit on valuation and realization of financial instruments valued in the fair value by the profit and loss account Profit (loss) (+/-) due to exchange rate differences Cash and cash equivalents Loans and receivables Financial liabilities valued by depreciated cost Profit (loss) (+/-) due to exchange rate differences - - Profit on assets available for sale, transferred from capital Dividends on financial assets available for sale Reverted revaluation write-offs of the value of receivables and loans Reverted revaluation write-offs of the value of investments maintained until maturity Interest on financial assets under a write-off Other financial revenues Total financial revenues FINANCIAL COST Cost of interest due to financial instruments not valued in the fair value by the financial result: Liabilities due to financial leasing Loans in credit account Loans in current account Loans Debt securities Trade liabilities and other liabilities Cost of interest due to financial instruments not valued in the fair value by the financial result Loss due to valuation and realization of financial instruments valued in the fair value by the profit and loss account: Derivative trade instruments - - Derivative collateral instruments - - Shares of listed companies - - Debt securities - - Investment funds units - - Loss due to valuation and realization of financial instruments valued in the fair value by the profit and loss account - - Profit (loss) (+/-) due to exchange rate differences Cash and cash equivalents Loans and receivables 2 1 Financial liabilities valued by depreciated cost Profit (loss) (+/-) due to exchange rate differences 2 1 Loss on assets available for sale, transferred from capital Revaluation write-offs of the value of receivables and loans Revaluation write-offs of the value of investments maintained until maturity Revaluation write-offs of the value of financial assets available for sale Other financial cost Total financial cost

71 32. Income tax Income tax Current income tax Settlement of tax for the reporting period Adjustments of tax burden for previous periodsd Current income tax Deferred income tax Occurence and reversal of temporary differences Settlement of unused tax losses Deferred income tax Total income tax (1 867) (1 867) 666 (1 867) Result before tax Tax rate applied by the Dominant Company Income tax as per the national rate of the Dominant Company Agreements on income tax due to: (1 633) 19% 19% (310) Revenues not subject to taxation (-) (1 790) (12 736) Tax effect of taxable revenues constituting revenues according to tax regulations not being accounting revenues (+) % of revenues Costs permanently not constituting tax deductible cost Using previously non-recognized tax losses (-) Non-recognized assets for deferred tax on negative temporary differences (+) Non-recognized assets for deffered tax on tax losses (+) (334) Current income tax Applied average tax rate 0 0 0,0% 0% TAX RATES APPLIED BY THE COMPANIES OF THE GROUP Poland 19% 19% Romania 16% 16% Bulgaria 10% 10% Luxembourg 28,8% 28,8% Russia 20% 20%

72 NOTES TO THE CASH FLOW STATEMENT 33. Additional information to the cash flow statement Structure of cash and cash equivalents in the cash flow statement Cash flow and cash equivalents disclosed in the balance sheet Adjustments: Exchange rate differences from the balance sheet valuation of cash in other currency Non-realized interest on cash (-) others Cash and cash equivalents disclosed in the cash flow statement

73 FINANCIAL INSTRUMENTS 34. Financial instruments Changes to the fair value of assets and financial liabilities Comparison of the balance sheet value of assets and financial liabilities to their fair value is as follows (the summary comprises all assets and financial liabilities regardless of whether in the consolidated financial statements they are recognized in the depreciated cost or in the fair value): Assets: Class of financial Instrument Fair value Balance sheet value Fair value Balance sheet value Loans Trade receivables and other receivables Derivative financial instruments Debt securities Shares of listed companies Shares of non-listed companies* Units of investment funds Purchased receivables Other classes of other financial assets Cash and cash equivalents Liabilities: Credits in kredit accounts Credits in current account Loansd Debt securities Financial leasing Derivative financial instruments Trade liabilities and other liabilities *This item does not include shares valued in the purchase price due to lack of possibility of credible establishing of the fair value Additional information on methods of valuation of financial instruments recognized in the consolidated financial statements in the fair value The below table illustrates assets and financial liabilities valuated by the Group in the fair value, qualified to a specific level in the fair value hierarchy: level 1 noted prices (without making adjustments) from active markets for identical assets and liabilities, level 2 entry data for valuation of assets and liabilities, other that noted prices, recognized to the extent of level 1, noticeable on the basis of variables coming from active markets, level 3 entry data for valuation of assets and liabilities, not established on the basis of variables coming from active markets

74 ASSETS AND FINANCIAL LIABILITIES VALUED IN THE FAIR VALUE ACCORDING TO THE VALUATION LEVEL Class of financial instrument Level 1 Level 2 Level 3 Total Fair value State as of Assets: Purchased receivables Other classes of other financial assets Total assets Liabilities Loans - - Loans valued in the fair value (-) - - Total Liabilities (-) Net fair value State as of Assets: Purchased receivables Other classes of other financial assets Total assets Liabilities: - - Loans - - Loans valued in the fair value (-) - - Total liabilities (-) Net fair value *This item does not include shares valued in the purchase price due to lack of possibility of credible establishing of the fair value In the reporting period no significant transfers between level 1 and level 2 of the instruments fair value took place Reclassification The Company did not reclassify the components of financial assets, which would cause the change to the principles of valuation of these assets between the fair value and the purchase price or the method of depreciated cost Exclusion from the balance sheet As of Kredyt Inkaso S.A. did not have financial assets, transfers of which are not not qualified to be excluded from the balance sheet Method of valuation of financial instruments Short-term trade receivables and other receivables are valuated at the fair value. Cash and cash equivalents include cash at hand, bank deposits payable on demand, other short-term investments with original maturity dates up to three months and high liquidity. They arevalued at the nominal value. Book value of cash corresponds to their fair value. Purchased receivables comprise receivables purchased at ones own risk and account, which are classified by the Company as financial instruments valued according to the fair value. As of each balance sheet day the valuation of financial instruments to the fair value is performed.the result of the valuation is transferred to the profit and loss account. The fair value of each of the portfolios of receivables is established by Kredyt Inkaso S.A. by means of the estimation method, as the current value of anticipated, discounted with the internal return rate (IRR) net cash

75 flows (planned cash flows reduced by the planned direct collection cost) generated by the portfolio of receivables. Liabilities due to bonds issue, credits and liabilities related to lease are measured as of the moment of initial recognition at the fair value decreased by transaction costs. As of the balance sheet date, the valuation was calculated according to amortized cost applying effective interest rate method (at the adjusted acquisition price) and divided according to the date of generated cash flow into short-term and long-term part. Short-term trade liabilities and other liabilities are measured at the fair value. Provided, it does not cause distortion of the information contained in the financial statements, the Group applies simplified methods of assets and liabilities valuation. Financial assets and liabilities in relation to which the Group applies simplifications are valuated at the moment of initial recognition in the later period, also at the end of reporting year respectively at the amount to be received or due to be paid. 35. Financial risk management Credit risk Kredyt Inkaso S.A. operations are related to taking over credit risk from debts sellers (original debtors). As of the balance sheet date the Company did not have any purchased receivables. The table below shows information on maximum exposure to the credit risk. Loans Trade receivables and other financial receivables Derivatives - - Debt seurities Units of investment funds - - Financial instruments valued in the fair value through financial result Other classes of other financial assets - - Cash and cash equivalents Contingent liabilities due to granted guarantees - - Total exposure to credit risk The presented information on credit risk relates to the state as for 31 March They are representative of the entire reporting period. We continue to work systematically on improving the model of valuation of receivables and evaluation of credit risk Liquidity risk Nominal values of the Group s liabilities as of 31 March 2014 divided according to maturity dates are presented below. liabilities due to up to 1 month from 1 month to 3 months amount as per due date from 3 months to 1 year from1 year to 2 years over 2 years bonds trade liabilities financial lease TOTAL Remark: the amounts of liabilities depending on the future interest rates are marked out with italics

76 In the reporting period (and in previous periods) we paid all our liabilities in due term. We obtain income from debts of a considerable number of debtors, which contributes to regular and constant inflow of cash. We manage liquidity through appropriate depositing cash in such a way so as the structure of deposits suits the structure of liabilities and in a way that enables the Company to take advantage of the opportunities of debts purchase that occur in the market. In order to increase efficiency of applying equity we also take advantage of external financing (mainly bonds issues). At present, the overall debt ratio equals 37.6% of assets, which is generally considered a safe level of debt and enables to increase it further. In the future periods we also intend to take advantage of the loan capital, which will facilitate further development of operations and payment of liabilities Market risk: interest rate risk Interest rate risk is related to the following financial instruments of the Group: purchased receivables cash and cash equivalents bonds issued liabilities relative to financial lease For cash and cash equivalents and liabilities relative to financial lease the impact of interest rates change on the financial result or the level of Company s equity is very slight. Bonds issued and purchased debts are exposed to the interest rate risk, which is of great significance for the Company. Below, we present the sensitivity to interest rate changes analysis for those two groups of financial instruments. The average nominal value of bonds in the reporting period amounts to PLN 241,5 thousand, the whole of which constitutes the nominal value of bonds with variable interest (depending on WIBOR 6 months). The possible change to interest rate will have a significant impact on the value of interest paid, and to some extent on the fair value of bonds recognized in the balance sheet, established by the amortized cost method. The balance sheet value of purchased debts is constituted by the discounted expected value of future cash flows generated by these debts. Change in market interest rates will change the discount rate (here we assume the weighted average cost of capital - WACC) and as a result the valuation of debts. For the purposes of the sensitivity analysis we have assumed that the maximal typical annual change in the level of market interest rates equals +/- 150 base points. We present the impact of such volume of changes on the financial result of the reporting period and the level of equity as of the balance sheet date, assuming the simultaneous and equal increase (decrease) of all market interest rates taking place at the beginning of the annual reporting period. Sensitivity analysis of financial instruments related to interest rate change actual value increase by 150 bp decrease by 150 bp new value change new value change BALANCE SHEET: LIABILITIES issued bonds PROFIT AND LOSS ACCOUNT financial cost related to interest on bonds financial revenues/costs settlement and valuation of financial instruments net profit (considering 19% tax) If in the last year, starting from 1 April 2013, the increase of interest rates by 150 base points had occurred, and it had remained at least over the whole 12-month reporting period, the net profit would have been lower by PLN thousand. Correspondingly, the drop in interest rates by 150 base points would have caused the increase in the net profit by PLN

77 35.4. Market risk: risk of change of statutory interest rates and the National Bank of Poland interest rates Apart from the risk of interest rate change, the level of statutory interest rates according to which the interest on overdue debts is calculated is also of great significance for the Companys (in case of bank receivables the level of the NBP interest rates may have the influence on the level of calculated interest). This is why the specific form of interest rate change risk relative to the changes of statutory interest rate changes determined by the ordinance of the Council of Ministers and interest rates determined by the central bank may also be noticed in Kredyt Inkaso S.A.business activity. For the Company, the increase in income and the balance sheet value of purchased debts (as a result of the increase in forecasted cash flows according to which we valuate debts) will be the result of the increase of statutory interest rate. Statutory interest rates decrease will have a reverse effect. At the same time one can notice that when the change of statutory interest rates corresponds to changes of interest rates shaped by financial market, changes in income are accompanied by relevant change of costs related to investment in debts purchase, so as a result the Company s financial result may change only slightly. Historical observations show that decisions of the Council of Ministers on changes of statutory interest rates often do not keep up with changes taking place on financial markets. Managing the risk of statutory interest, we try to influence actively the process of shaping them. In March 2008, when despite a significant increase in market interest rates the low level of statutory interest determined in 2005 was still valid (11.5%) we put forward a motion to include into the debate of the Council of Ministers the proposal to pass the new ordinance on the level of statutory interest (however it is difficult to estimate the actual influence of this motion on the decision of the Council of Ministers). On 15 December 2008, the increase of statutory interest rates to the level of 13% came into effect (Journal of Laws of 12 December 2008 No. 220, item 1434) Market risk: foreign currency risk The Company is not exposed to a foreign currency risk Market risk: price fluctuation risk The only financial instrument exposed to price fluctuation risk is the purchased debts portfolio. The current assessment of their value depends on forecasted future cash flows. The significant change of macroeconomic conditions or legal regulations can influence the level of debtors payments, and consequently the debts valuation. 36. Cost of capital The Company applies WACC ratio (weighted average cost of capital) as the measure of average cost of capital. We apply WACC as the discounting factor for the needs of purchased debts fair value calculation and as an element of the assessment of the quality of financing sources structure. WACC is calculated as the average annual, expressed in the percentage values, cost of individual categories of capital, with the weights equal to those capitals values. For loan capital, its actual cost for the Company is calculated deducting from the cost of interest paid the savings on income tax relative to the incurred financial cost (tax shield)

78 WACC calculation capital value paid by the Company capital cost after allowing for tax shield equity ,77% 11,77% bonds issued ,14% 7,41% debt from lease transactions 735 5,82% 4,71% interest-free debt ,00% 0,00% Total WACC 9,60% Kredyt Inkaso S.A. stock exchange capitalization value was assumed as equity. The rate of return on equity expected by investors was calculated according to the Sharpe s model as the sum of the risk-free rate of interest and the product of the market risk premium and beta. Risk-free rate for long-term investments was determined on the basis of data related to the profitability of 10-year bonds of the State Treasury. The methodology applied by us assumes determining this profitability basing on tenders of the Ministry of Finance. However, at the date nearest to the balance sheet date, no 10-year bonds were offered for sale, therefore as of 31 March 2013, in order to calculate it, we assumed profitability of series DS1023 treasury bonds with the maturity date falling in October 2023 resulting from quotations at the WSE on 26 March 2013, published by i.e. 4,23%. Market risk premium for the Polish capital market was assumed at the level of 6,28% (data published by A. Damodaran on the website: Beta for Kredyt Inkaso S.A. shares was determined as equal to 1,2. Cost of interest on bonds is the weighted average of current effective interest rates on bonds, applied while calculating their fair value. OTHER DISCLOSURES 37. Number of shares and earnings per one share (EPS) In the reporting period no issue of new shares series took place (see: pt.20, Equity). As of the Approval Date, the Company s share capital amounts to PLN Calculation of earnings per one share A. Net profit (loss) for the reporting period B. Net profit (loss) from continued activity C. Net profit (loss) falling to ordinary shareholders for the purposes of calculating the basic profit per one share (meter) D. Net profit (loss) falling to ordinary shareholders for the purposes of calculating the diluted profit per one share (meter) E. Number of issued shares F. Average weighted number of ordinary shares disclosed for the purposes of calculating the basic profit per one share (denominator ) (in thousands) G. Average weighted number of ordinary shares disclosed for the purposes calculating the diluted profit per one share (denominator ) (in thousands) H. Net profit (loss) on continued activity per one share basic (PLN) (and quotient B/F) Net profit (loss) on continued activity per one share diluted (PLN) (and quotient B/G) Net profit (loss) for the reporting period per one share basic (PLN) (and quotient C/F) Net profit (loss) for the reporting period per one share diluted (PLN) (and quotient D/G) ,74-0,18 0,77-0,18 0,74-0,18 0,77-0,

79 Net profit (loss) falling to one ordinary share is calculated the same way for each share. Shares do not differ between each other in the right to the net profit share. 38. Enterprise value Enterprise value is calculated in the following manner: enterprise value= Company s market value +net debt, where net debt is understood as the value of liabilities minus receivables and the market valuation of Kredyt Inkaso S.A. was assumed as the enterprise value. As of 31 March 2014, the value of the Capital Group s enterprise calculated in such a way amounted to PLN 456,7 million, and as of 31 March 2013, it amounted to PLN 410,9 million. 39. Dividends paid and dividend policy Dividends paid out in the last 3 financial years Financial year Profit earned Allocated for payments Converted per one share 2010/11 PLN thousand PLN 4 139,68 thousand PLN 0,32 - including cash dividend - PLN 4 139,68 thousand PLN 0,32 - including dividend in the form of shares - PLN 0 thousand PLN /12 PLN 6 368,76 thousand PLN 0 thousand PLN 0 - including cash dividend including dividend in the form of shares /13* PLN thousand PLN 0 thousand - - including cash dividend including dividend in the form of shares The Company s dividend policy is based invariably on the assumption that its amount should depend on gained financial results and capital needs connected with the purchase of further debt portfolios, implementation of Company s development strategy as well as other strategic investments. The Company s Management Board is of the opinion that in the next years it will be possible to pay out a cash dividend at least at the level of 1/5 part of the generated profit. The Management Board also allows the possibility of payout of dividend in the form of shares (subject to confirmation of formal and technical possibilities) granted to the current shareholders as, so called, bonus stocks including part of the profit allocated to be shared. In the situation when a decision on payment of a dividend in the form of shares is made, granting to the current sharehloders of bonus stocks will result in the increase of the Company s share capital. The increase of the Company s share capital will be carried out using funds accumulated in the Company s capital reserve established for the purposes of financing the issue of bonus stocks. If the shareholders were to be granted the fractional part of shares, then such parts will be attributable to the shareholders and the Company will pay the difference between the issue price and the nominal value of the fractional parts of shares attributable to

80 them, but not assumed. These payments will be made using the capital reserve established for the purposes of financing the issue of bonus stocks. In the situation, when the issue price of bonus stocks exceedes their nominal value, the surplus will be covered using the capital reserve established for the purposes of financing the issue of bonus stocks by way of transferring the equivalent of the amount of the surplus to the Company s supplementary reserve. As a result of the above events, there will be amounts transferred from the capital reserve established for the purpose of financing the issue of bonus stocks into the Company s share capital and the supplementary reserve as well as for the payment of the equivalent for the non-attributable to the shareholdres fraction parts and possible costs related to the issue. Therefore the shareholders will pay neither nominal nor issue price for the shares because these payments will be made by the Company using the capital reserve, established for the purposes of financing the issue of bonus stocks. Bonus stocks falling to the shareholders will not require to be assumed by them (record). The day when the list of shareholders entitled to profit sharing is made, will be the same day of payment of the dividend in cash and in the form of granting bonus stocks, making the circle of shareholders the same for both forms. Historical data do not effect or change the Company s dividend policy. 40. Company s governing bodies, key personnel Changes to the governing bodies of the Company On 24 June 2013 the Company s Supervisory Board appointed for the next term two current Members of the Management Board. Composition of the Management Board as of the Date of the Consolidated Financial Statements Approval for publication was: 1) President of the Management Board Mr Paweł Robert Szewczyk 2) Vice-President of the Management Board Mr Jan Paweł Lisicki As of the Approval Date the composition of the Supervisory Board of the Dominating Undertaking was as follows: 1) Chairman of the Supervisory Board Mr Ireneusz Andrzej Chadaj 2) Vice-Chairman of the Supervisory Board Mr Krzysztof Misiak 3) Secretary of the Supervisory Board Mr Marek Gabyjelski 4) Member of the Supervisory Board Mr Tomas Mazurczak 5) Member of the Supervisory Board Mr Robert Gajor 6) Member of the Supervisory Board Mr Andrzej Soczek

81 40.2. Remuneration Remuneration was presented divided into categories defined in MSR 24 Disclosure of information on related entities Remuneration of the Management Board Remuneration Remuneration for the period for the period First Name and Surname from from till till Paweł Szewczyk Jan Paweł Lisicki Artur Górnik Sławomir Ćwik Total Remuneration of the Supervisory Board Principles of remunerating Members of the Supervisory Board: Member of the Supervisory Board shall be entitled to the monthly remuneration in the amount of 1/3 of the average remuneration in enterprise sector excluding payments from profit for distribution (according to GUS (Central Statistical Office)). The Chairman of the Supervisory Board shall be entitled to position allowance in the amount of the average monthly remuneration in enterprise sector excluding payments from profit for distribution. Other members of the Supervisory Board shall be entitled to the following allowances: for participation in the audit committee, in the amount of 1/3 of the average monthly remuneration in enterprise sector excluding payments from profit for distribution for performance of function of the secretary of the Supervisory Board, in the amount of 1/3 of the average monthly remuneration in enterprise sector excluding payments from profit for distribution for performance of the function of the Vice-Chairman of the Supervisory Board, in the amount of 1/3 of the average remuneration in enterprise sector excluding payments from profit for distribution in the period in which the Chairman does not perform his function. Member of the Supervisory Board shall not be entitled to remuneration if he submits statement about his resignation from remuneration. In a given month, Member of the Supervisory Board shall be entitled to remuneration and due allowance for performing his function in the amount corresponding to the proportion of the number of meetings in which he participated to the total number of meetings of the Supervisory Board in a given month. In a given month, Member of the Audit Committee shall be entitled to the allowance for participation in the audit committee, in the amount corresponding to the proportion of the number of meetings in which he participated to the total number of meetings of the Audit Committee in a given month. If no meetings have been held in a given month, Members of the Supervisory Board shall also be entitled to remuneration and allowances. Short-term employment benefits for the Supervisory Board members Remuneration for the period from till Remuneration for the period from till Chadaj Ireneusz Dłużniewski Paweł 9 32 Filipiak Tomasz Gabryjelski Marek Gajor Robert Misiak Krzysztof Bogacki Sylwerster 14 0 Buchajska Agnieszka 8 0 Buchajski Adam

82 Value of remunerations, awards and benefits paid out, due or potentially due to the managing and supervising persons Did not occur, apart from the aforementioned remunerations Information on benefits for key management personel Did not occur, apart from the remuneration Contracts concluded between the Company and managing persons providing for compensation in case of their resignation or dismissal Managing persons working for the Company on the basis of an employment contract for the period ending on the date following the date of approval of the report of the Management Board on the company s operations and financial statements by the General Assembly. Potential compensation in case of their resignation or dismissal results from the provisions of the labour code. Additional rights of the parties not resulting directly from the provisions of the labour code have not been defined in the contracts Share in shareholding and in the number of votes at the General Assembly One of the Members of the Management Board is as at the same time the Company s shareholder. As of 31 March 2013 and as of the Approval Date the state is as follows: Shareholder State as of 31 March 2013 number of shares % votes at the GA State as of the Approval Date number of shares % of votes at the GA Management Board: Paweł Szewczyk Supervisory Board: Ireneusz Chadaj (through his spouse, Monika Chadaj) ,07% ,07% ,83% ,83% Other shareholders ,10% ,11% Loans granted to the key personnel and the persons related to them Did not occur Transactions with the key personnel Did not occur 41. Options, employee shares program The information on options and employee share programs was included in the Report of the Management Board on Operations in the item

83 42.Transactions with related entities Kancelaria prawnicza FORUM Radca Prawny Krzysztof Piluś i spółka spółka komandytowa Transactions with z Kancelaria Prawnicza FORUM Radca Prawny Krzysztof Piluś i S-ka spółka komandytowa in 2013/14 (in PLN thousands) Transactions in the current As of the balance sheet date period revenues costs receivables liabilities royalties for permanent legal services Court fees and costs royalties awarded by court and collected from debtors office space rental and settlements of service charges Office space lease and settlements of service charges Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme Transactions with Kredyt Inkaso Portfolio Investments (Luxembourg) Société Anonyme in 2013/14 (in PLN thousands) Transactions in the current As of the balance sheet date period take over of issued bonds Subparticipation agreement Sale of receivables revenues costs receivables liabilities Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Transactions with Kredyt Inkaso I Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty in 2013/14 (in PLN thousands) Transactions in the current As of the balance sheet date period revenues costs receivables liabilities Take over of issued bonds debt portfolio management Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty Transactions with Kredyt Inkaso II Niestandaryzowany Sekurytyzacyjny Fundusz Inwestycyjny Zamknięty in 2013/14 (in PLN thousand) Transactions in the current As of the balance sheet date period revenues costs receivables liabilities debt portfolio management

84 42.5. KI Nieruchomości Sp. z o.o. Transactions with KI Nieruchomości Sp. z o.o. in 2013/14 (in PLN thousands) Transactions in the current period Take over of issued bonds As of the balance sheet date revenues costs receivables liabilities Office space lease and settlements of service charges Other services Kancelaria Forum S.A. Transactions with Kancelaria Forum in 2013/14 (in PLN thousands) Transactions in the current period Office space lease and settlements of service charges As of the balance sheet date revenues costs receivables liabilities Other Services Legal Process Administration Sp. z o.o. Transactions with Legal Process Administration in 2013/14 (in PLN thousands) Transactions in the current period Take over of issued bonds As of the balance sheet date revenues costs receivables liabilities Office space lease and settlements of service charges Other Services IT Services Finsano Consumer Finance S.A. Transactions with Finsano Consumer Finance S.A. in 2013/14 (in PLN thousands) Transactions in the current period Office space lease and settlements of service charges As of the balance sheet date revenues costs receivables liabilities Other services

85 42.9. Finsano Consumer Finance S.A. Spółka komandytowa Transactions with Finsano Consumer Finance S.A. spółka komandytowa in 2013/14 (in PLN thousands) Office space lease and settlements of service charges Transactions in the current period As of the balance sheet date revenues costs receivables liabilities Other services Information on significant transactions made by the Company with related entities on terms other than arm s length In the period subject to the financial statements, in the Company no transactions with related entities on conditions other than the market ones occurred. 43. Remuneration of Auditors Appointed by the Supervisory Board, Grant Thornton Frąckowiak Sp. z ograniczoną odpowiedzialnością Sp. k. with its registered office in Poznan, is the entity authorized to review the Annual Financial Statements of Kredyt Inkaso S.A. and the Annual Financial Statements of Kredyt Inkaso S.A. for the period from 1 April 2013 to 31 March The relevant contract on the audit of our stand-alone financial statements was concluded on 9 September 2013 and its subject matter is the semi-annual review and the audit of the annual consolidated and the standalone financial statements of Kredyt Inkaso S.A. for the financial year from 1 April 2013 to 31 March Period ended on 31 March 2014 Grant Thornton Frąckowiak Period ended on 31 March 2013 Eurofin Sp. z o.o. Remuneration in relation to the Dominant Company due to: 47 36,8 - audit* 47 36,8 - attestation services relative to information prepared for needs of registration document 0,0 0,0 Remuneration for audit ** in relation to subsidiaries 66,0 78,0 * Remuneration for audit comprises net amounts due and paid to the entity authorized to audit financial statements for the audit of stand-alone and consolidated financial statements of the Dominating Undertaking and review of interim stand-alone and consolidated financial statements. ** Remuneration for audit comprises gross amounts due and paid to the entities authorized to audit financial statements for the audit of financial statements and the review of interim financial statements of the subsidiaries. We are not obliged to pay any other remuneration to the entity auditing consolidated and stand-alone financial statements and reviewing interim consolidated and stand-alone financial statements of the Dominating Undertaking and to entities auditing financial statements and reviewing financial statements of subsidiaries for the financial year ending on 31 March

86 44. Issues, redemption and repayment of debt and capital securities On 23 September 2013 we made a purchase of own bonds, i.e. total of 9 thousand units of S01 series unsecured bearer bonds of the total nominal value of PLN 9 mil, making the whole S01 series sold out. On 13 January 2014 we issued units of W1 series ordinary beared bonds of the nominal value of PLN 1 000,00 of the total nominal value of PLN 53 mil. and units of series W2 ordinary bearer bonds of the nominal value of PLN 17 mil. Interest on bonds will be paid out in semi-annual period. The day of purchase of W1 series bonds will take place within 42 months from the date of bonds issue and the day of purchase of the W2 series bonds will take place within 48 months from the date of bond s issue. On 13 January 2014 we also made an early voluntary purchase of of the S02 series unsecured dematerialized ordinary bearer bonds. The early purchase of the S02 series bonds is related to obtaining funds as a result of issue of the W1 series and the W2 series bonds, issued, among others, for the purposes of bonds re-financing. In the reporting period we regularly paid out intrest to the owners of I, S01 S02, S03, S04, S05, U01, U02 and U03 series bonds. The total amount of paid-out interest amounted to PLN 22,5 mil. 45. Significant events which occurred after the balance sheet date and were not disclosed in the financial statements for a given reporting period On 13 June 2014 Kredyt Inkaso S.A. took over the T series interest bonds issued by the subsidiary Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. The take-over of Bonds took place by means of deduction of mutual matured receivables of Kredyt Inkaso S.A. and the subsidiary, resulting from the obligation of Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. to purchase four series of interest bonds, acquired by Kredyt Inkaso S.A. on 9 December The T series bearer bonds of the total nominal value of PLN 62 mln are subject to the variable interest rate. The interest period of bonds is 4 years. The bonds are unsecured. Additionally on 13 June 2014 r. Kredyt Inkaso S.A. purchased the U series interest bonds issued by Kredyt Inkaso Portfolio Investments (Luxembourg) S.A. with its registered office in Luxembourg. Bonds interest rate is based on the variable interest rate. The Bonds are unsecured and issued for the period of 5 years, under private issue. The total nominal value of bonds amounts to PLN 71 mln. The purchase of assets took place by means of deduction of mutual matured receivables of Kredyt Inkaso S.A. and Kredyt Inkaso Portfolio Investments (Luxembourg) S.A., on the basis of the order to pay for the benefit of Kredyt Inkaso S.A. of the price resulting from the subparticipation agreement concluded on 30 September 2013, amount of which, corresponding to the valuation in the fair value of the subject matter of the subparticipation agreement, amounted to c.a. 71,5 mln PLN. 46. Information on significant events related to previous years disclosed in the financial statements for the current period Did not occur. 47. Contingent assets and liabilities As of the reporting date, the Company has the contingent liabilities due to conclusion of agrements:

87 Agreement on co-operation dated 19 March 2010 with TFI Allianz Polska Spółka Akcyjna with the registered office in Warsaw (Investment Funds), pursuant to which the Parties committed themselves to co-operate in the scope of searching for investment objectives for Kredyt Inkaso I NSFIZ and its investments. The Company and the Investment Funds agreed to the extent of an investments by Kredyt Inkaso I NSFIZ. We undertook to, among others, search for and analyse debt portfolios for the needs of purchasing them by Kredyt Inkaso I NSFIZ, ensure financing of Kredyt Inkaso I NSFIZ investments, ensure financing of the process of generating income from investments. The Investment Funds undertook to, among others, make investments recommended by us in the manner indicated in the recommendation and to meet procedural conditions necessary for making recommended investments. Agreement No UDA-RPLU /09 concluded on 22 April 2010 between the Company and Lubelski Voivodeship (Lubelska Agencja Wspierania Przedsiębiorczości with the registered office at ul. Graniczna 4, Lublin- Intermediate Body of 2nd degree) on carrying out the project: Creating a synergy effect as a result of the simultaneous implementation of three IT systems: IT Security, Document Content Recognition, Financial and Accounting. Pursuant to the concluded agreement, the Company should obtain cofinancing in the form of a development subsidy amounting to PL , which constitutes 60% of the total project value. In case of identifying breaching provisions of the Agreement by the Company, it will be obliged to return the total amount or the part of the amount of co-financing. Lubelska Agencja Wspierania Przedsiębiorczości may terminate the agreement, which may cause the necessity of returning by the Company the amount of co-financing along with the interest calculated in the manner that is the same as for tax arrears. In connection with the agreement we already should have obtained amounts of co-financing in the year 2012, after a positive result of inspection in December The final received amount of co-financing amounted to PLN Agreement No UDA-RPLU /10 concluded on 21 December 2010 between the Company and and Lubelski Voivodeship (Lubelska Agencja Wspierania Przedsiębiorczości with the registered office at ul. Graniczna 4, Lublin- Intermediate Body of 2nd degree) on carrying out the project: Improvement of competitiveness of Kredyt Inkaso Company by implementing the innovative system of performance management. Pursuant to the agreement, the Company should obtain co-financing amounting to PLN , which constitutes 50% of the total project value. In case of identifying breaching provisions of the Agreement by the Company, it will be obliged to return the total amount or the part of the amount of cofinancing. Lubelska Agencja Wspierania Przedsiębiorczości may terminate the agreement in cases provided in the agreement, which may cause the necessity of returning by the Company the amount of co-financing along with the interest calculated in the manner that is the same as for tax arrears. 48. Information on income, costs and results on discontinued business activity They did not occur. 49. Information on granted guarantees as well as security interests on the Company s assets As of 31 March 2014, no guarantees or security pledges on the Company s assets occurred. 50. Other information which, according to the Company is substancial for assessing its employment, property and financial situation as well as financial result and their changes and the information significant for assessing the ability to meet obligations by the Company Apart from the information disclosed in these financial statements, we do not possess any information significant for assessing the Capital Group s situation

88 51. Commentary explaining the seasonal or cyclical character of business activity in the reporting period Operations of Kredyt Inkaso S.A. are not seasonal; they consist in collecting debts, first of all in court. The presented model of business generates income in the relatively short period following the debts portfolio purchase, and then in a long-term perspective in the course of executing legal procedures of debt collecting (mainly enforcement proceedings), also as a result of their reopenings after the periods of adjournment. At the same time, costs are accumulated first of all in the initial stage of purchased debt portfolios collection (first of all related to court proceedings and instituting debt enforcement proceedings). 52. Financial statements drawn up in conditions of high inflation Accumulated interim inflation rate for the last 3 years for each of the periods included in the present financial statements did not exceed 100%; therefore, there was no necessity for adjusting the financial statements with the price index. 53. Employment in the Company Employment in the Company, in the individual reporting periods, divided into professional groups: employment No. of persons employment No. of persons Average employment for 12 months 178, Employment as of the balance sheet date, of which: 171, office workers 169, labourers 2,

89 54. Approval for publication The Management Board of Kredyt Inkaso S.A. approved for publication of the present Yearly Stand Alone Financial Statements drawn up for the period from 1 April 2012 to 31 March 2012, along with comparable data on 19 June 2013 ( Approval Date ). President of the Management Board Paweł Szewczyk Vice-President of the Management Board Jan Paweł Lisicki Signature of the person responsible for keeping accounting books Leader of the Capital Group Accountancy Team Agnieszka Chrzanowska