Half-Year Report for the period January 1st June 30th 2015 The KRUK Group

Transcription

1 for the period January 1st June 30th 2015

2 2 Table of contents TABLE OF CONTENTS... 2 I. FINANCIAL HIGHLIGHTS Consolidated financial data Separate financial data of KRUK S.A II. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD JANUARY 1ST JUNE 30TH 2015, PREPARED IN ACCORDANCE WITH THE IFRS AS ENDORSED BY THE EU Interim condensed consolidated statement of financial position Interim condensed consolidated statement of profit or loss Interim condensed consolidated statement of comprehensive income Interim condensed consolidated statement of changes in equity Interim condensed consolidated statement of cash flows...12 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Organisation of the KRUK Group Period covered by the financial statements Statement of compliance Significant accounting policies...17 Amendments to current standards and interpretations...17 Standards and interpretations that have been published, but have not yet been adopted Accounting estimates and judgements Financial risk management Reporting and geographical segments Seasonality and cyclicality of operations Type and amounts of changes in estimates presented in previous financial years, with a material effect on the current period...23

3 3 10. Type and amounts of items affecting the assets, equity and liabilities, net profit/loss or cash flows, which are material due to their type, size or effect Financial instruments Factors and events, in particular of non-recurring nature, with a material bearing on the Group s financial performance Issue, redemption and repayment of non-equity and equity securities Dividend paid (or declared) Events subsequent to the reporting date, not disclosed in these financial statements, but potentially having a material bearing on the Group s future performance Information on changes in contingent liabilities or contingent assets subsequent to the end of the previous financial year...41 III. INTERIM CONDENSED SEPARATE FINANCIAL STATEMENTS FOR THE PERIOD JANUARY 1ST JUNE 30TH 2015, PREPARED IN ACCORDANCE WITH THE IFRS AS ENDORSED BY THE EU Interim condensed separate statement of financial position...43 Interim condensed separate statement of profit or loss...44 Interim condensed separate statement of comprehensive income...45 Interim condensed separate statement of changes in equity...46 Interim condensed separate statement of cash flows...48 Notes to the interim separate consolidated financial statements Company details Period covered by the financial statements Statement of compliance Significant accounting policies Type and amounts of changes in estimates presented in previous financial years, with a material effect on the current period Type and amounts of items affecting the assets, equity and liabilities, net profit/loss or cash flows, which are material due to their type, size or effect Fair value Factors and events, in particular of non-recurring nature, with a material bearing on the Group s financial performance Issue, redemption and repayment of non-equity and equity securities...64

4 4 10. Dividend paid (or declared) Events subsequent to the reporting date, not disclosed in these financial statements, but potentially having a material bearing on the Group s future performance Information on changes in contingent liabilities or contingent assets subsequent to the end of the previous financial year...66 VI. REPORT ON THE GROUP S OPERATIONS Effects of changes in the structure of the Group, including through business combinations, acquisitions or divestments of Group entities, long-term investments, divisions, restructurings or discontinuation of operations Management Board s position on the feasibility of meeting previously published forecasts for a given year Members of the management or supervisory personnel holding Company shares or rights to Company shares as at the date of issue of this interim report, and changes in their holdings after the issue of the previous interim report Litigation, arbitration or administrative proceedings Sureties for repayment of loans and guarantees issued by KRUK S.A. or its subsidiary The Group s material achievements or failures in the reporting period, along with the most significant events related to such achievements or failures Other information relevant to the assessment of the staffing levels, assets, financial standing and financial performance, or changes in any of the foregoing, and information relevant to the assessment of the Company s ability to meet its obligations Factors with a potential bearing on the Group s results in the next quarter or in a longer term Representation by the Management Board...80

5 5 I. Financial highlights 1. Consolidated financial data Financial highlights PLN '000 EUR '000 For the period Jun Jun Jun Jun Revenue 286, ,728 69,371 63,116 Operating profit 126, ,612 30,499 30,780 Profit before tax 105,927 99,494 25,622 23,811 Net profit attributable to owners of the Parent 107, ,023 26,041 23,938 Net cash from operating activities 25,979 (77,209) 6,284 (18,478) Purchase of debt portfolios at prices as per agreement (222,210) (313,308) (53,750) (74,982) Cash recoveries 398, ,416 96,447 86,256 Net cash from investing activities (2,820) (4,601) (682) (1,101) Net cash from financing activities (21,554) 115,985 (5,214) 27,758 Change in net cash 1,605 34, ,179 Average number of shares ('000) 17,167 16,962 17,167 16,962 Earnings per share (PLN/EUR) Diluted earnings per share (PLN/EUR) Jun Dec Jun As at Dec Total assets 1,613,063 1,516, , ,828 Non-current liabilities 712, , , ,280 Current liabilities 221, ,040 52,782 49,279 Equity 679, , , ,269 Share capital 17,291 17,110 4,122 4,014 Book value per ordinary share (PLN/EUR) The financial highlights have been translated into the euro as follows: - items of or related to the statement of profit or loss and the statement of cash flows have been translated using the arithmetic mean of mid rates quoted by the National Bank of Poland for the last day of each month in the period; the exchange rates thus calculated are: for the current period for the comparative period items of or related to the statement of financial position have been translated using the mid rate quoted by the National Bank of Poland for the end of the reporting period; the exchange rates thus calculated are: for the current period for the comparative period

6 6 2. Separate financial data of KRUK S.A. Financial highlights PLN '000 EUR '000 For the period Jun Jun Jun Jun Revenue 51,546 51,318 12,468 12,282 Operating loss (28,844) (16,805) (6,977) (4,022) Profit/(loss) before tax (68,256) 140,155 (16,510) 33,542 Net profit/(loss) (66,139) 140,932 (15,998) 33,728 Net cash from operating activities 122,513 (11,014) 29,635 (2,636) Net cash from investing activities (179,058) (114,948) (43,312) (27,510) Net cash from financing activities 38, ,779 9,369 30,581 Change in net cash (17,812) 1,817 (4,309) 435 Average number of shares ('000) 17,072 16,962 17,072 16,962 Earnings per share (PLN/EUR) (3.90) 8.31 (0.94) 1.99 Diluted earnings per share (PLN/EUR) (3.86) 8.22 (0.93) 1.97 Jun Jun Dec As at Dec Total assets 1,293,955 1,287, , ,073 Non-current liabilities 709, , , ,903 Current liabilities 196,206 85,684 46,778 20,103 Equity 388, ,878 92, ,067 Share capital 17,292 17,110 4,123 4,014 Book value per ordinary share (PLN/EUR) The financial highlights have been translated into the euro as follows: - items of or related to the statement of profit or loss and the statement of cash flows have been translated using the arithmetic mean of mid rates quoted by the National Bank of Poland for the last day of each month in the period; the exchange rates thus calculated are: for the current period for the comparative period items of or related to the statement of financial position have been translated using the mid rate quoted by the National Bank of Poland for the end of the reporting period; the exchange rates thus calculated are: for the current period for the comparative period

7 7 II. Interim condensed consolidated financial statements for the period January 1st June 30th 2015, prepared in accordance with the IFRS as endorsed by the EU Interim condensed consolidated statement of financial position As at June 30th 2015 Note Jun Dec Jun Assets Cash and cash equivalents ,150 70,545 69,433 Trade receivables 8,739 10,949 22,122 Investments in debt portfolios and loans 9 1,469,013 1,380,179 1,262,319 Other receivables 22,753 16,534 18,846 Inventories Property, plant and equipment ,536 20,265 21,409 Other intangible assets ,885 11,018 11,313 Goodwill 1,024 1,024 1,024 Deferred tax asset 5,602 3,539 3,224 Other assets 1,913 2,070 1,647 Total assets 1,613,063 1,516,647 1,411,790 Equity and liabilities Liabilities Hedge derivatives 1,567 2,668 1,993 Trade and other payables 47,381 60,613 28,063 Employee benefit obligations 25,619 27,646 23,886 Current tax liability - 1,724 - Liabilities under borrowings and other debt instruments , , ,408 Liabilities Total liabilities 933, , ,614 Equity Share capital 17,291 17,110 17,023 Share premium 60,257 53,249 49,876 Cash flow hedging reserve - - (1,993) Translation reserve (6,640) (3,859) 1,586 Other capital reserves 64,130 55,624 51,462 Retained earnings 544, , ,180 Equity attributable to owners of the Parent 679, , ,134 Non-controlling interests Total equity 679, , ,176 Total equity and liabilities ,516,647 1,411,790

8 8 Interim condensed consolidated statement of profit or loss For the reporting period from January 1st to June 30th 2015 Note Jun Jun Revenue , ,728 Other income , Employee benefits expense 10.3 (82,540) (67,174) Depreciation and amortisation expense (6,013) (5,522) Services (19,959) (22,044) Other expenses 10.4 (53,212) (41,235) (161,724) (135,975) Operating profit 126, ,612 Finance income Finance costs 10.6 (21,073) (29,401) Net finance costs (20,161) (29,118) Profit before tax 105,927 99,494 Income tax , Net profit for the period 107, ,064 Net profit attributable to: Owners of the Parent 107, ,023 Non-controlling interests Net profit for the period 107, ,064 Earnings per share Basic (PLN) ,27 5,90 Diluted (PLN) ,02 5,74

9 9 Interim condensed consolidated statement of comprehensive income For the reporting period from January 1st to June 30th 2015 Jun Jun Net profit for the period 107, ,064 Other comprehensive income Items that may be reclassified to profit or loss Translation reserve 10.8 (2,781) 9,312 Cash flow hedges - (1993) Other comprehensive income, net, for the period (2,781) 7,319 Total comprehensive income for the period 104, ,383 Total comprehensive income attributable to: Owners of the Parent 104, Non-controlling interests Total comprehensive income for the period 104, ,383 Comprehensive income per share Basic (PLN) Diluted (PLN)

10 10 Interim condensed consolidated statement of changes in equity For the reporting period from January 1st to June 30th 2015 Note Share capital Share premium Cash flow hedging reserve Translation reserve Other capital reserves Retained earnings Equity attributable to owners of the Parent Non-controlling interests Total equity Equity as at Jan ,959 47,381 (634) (7,726) 48, , , ,555 Net profit for the period , , ,064 Other comprehensive income - Exchange differences on - - 9, ,312-9,312 translating foreign operations - Valuation of hedging (1,359) (1,359) (1,359) instruments Other comprehensive income - - (1,359) 9, ,953-7,953 Total comprehensive income - - (1,359) 9, , , ,017 for the period Contributions from and distributions to owners - Payment of dividend (128) (128) - Issue of shares ,495 2,559 2,559 - Share-based payments ,173-3,173-3,173 Total contributions from and 64 2, ,173-5,732 (128) 5,604 distributions to owners Total equity as at Jun ,023 49,876 (1,993) 1,586 51, , , ,176 Equity as at Jan ,959 47,381 (634) (7,726) 48, , , ,555 Net profit for the period , , ,802 Other comprehensive income - Exchange differences on , ,867-3,867 translating foreign operations - Valuation of hedging instruments Other comprehensive income , ,501-4,501 Total comprehensive income , , , ,303 for the period Contributions from and distributions to owners - Payment of dividend (129) (129)

11 11 - Issue of shares , ,019-6,019 - Share-based payments ,335-7,335-7,335 Total contributions from and 151 5, ,335-13,354 (129) 13,225 distributions to owners Total equity as at Dec 31 17,110 53,249 - (3,859) 55, , , , Equity as at Jan ,110 53,249 - (3,859) 55, , , ,083 Comprehensive income for the period Net profit for the period , , ,668 Other comprehensive income Exchange differences on (2,781) - - (2,781) - (2,781) translating foreign operations - Payment of dividend (25,938) (25,938) - (25,938) Other comprehensive income (2,781) - (25,938) (28,719) - (28,719) Total comprehensive income (2,781) - 81,718 78, ,949 for the period - Payment of dividend (65) (65) - Issue of shares , ,189-7,189 - Share-based payments ,506-8,506-8,506 Total contributions from and 181 7, ,506-15,695 (65) 15,630 distributions to owners Total equity as at Jun ,291 60,257 - (6,640) 64, , , ,662

12 12 Interim condensed consolidated statement of cash flows For the reporting period from January 1st to June 30th 2015 Jun Jun Cash flows from operating activities Net profit for the period 107, ,064 Adjustments Depreciation of property, plant and equipment 3,594 3,978 Amortisation of intangible assets 2,419 1,784 Change in debt portfolios purchased (86,040) (189,025) Change in other investments (5,605) (271) Net finance costs 18,495 24,366 (Gain)/loss on sale of property, plant and equipment (201) (237) Equity-settled share-based payment transactions 8,506 3,173 Income tax (1,741) (570) Change in inventories Change in receivables (4,009) (14,155) Change in prepayments and accrued income Change in current liabilities excluding financial liabilities (10,598) (6,150) Change in employee benefit obligations (4,695) (715) Income tax paid (2,047) (332) Net cash from operating activities 25,979 (77,209) Cash flows from investing activities Interest received Sale of intangible assets and property, plant and equipment Purchase of intangible assets and property, plant and equipment (4,505) (5,503) Net cash from investing activities (2,820) (4,601) Cash flows from financing activities: Proceeds from issue of shares floated on stock exchange 7,189 2,561 Proceeds from bond issue 113,360 - Increase in borrowings 453, ,434 Repayment of borrowings (542,634) (698,089) Payments under finance lease agreements (2,333) (1,536) Redemption of debt securities (29,000) (53,400) Interest paid (21,468) (23,985) Net cash from financing activities (21,554) 115,985 Total net cash flows 1,605 34,175 Cash and cash equivalents at beginning of period 70,545 35,258 Cash and cash equivalents at end of period 72,150 69,433 The notes on pages 13 to 41 are an integral part of these interim condensed consolidated financial statements.

13 13 Notes to the interim condensed consolidated financial statements 1. Organisation of the KRUK Group Parent Name: KRUK Spółka Akcyjna ( KRUK S.A. or Parent ) Registered office: ul. Wołowska Wrocław, Poland Registration in the National Court Register: District Court for Wrocław-Fabryczna in Wrocław, 6th Commercial Division of the National Court Register, ul. Poznańska 16-17, Wrocław, Poland Date of entry: September 7th 2005 Entry number: KRS Principal business activities of the Parent and subsidiaries The principal business activities of the Parent and most of its subsidiaries consist primarily in the restructuring and recovery of debts purchased by the Group companies and the provision of outsourced debt collection services to financial institutions and other clients. These interim condensed consolidated financial statements for the reporting period from January 1st to June 30th 2015 include the financial statements of the Parent and its subsidiaries (jointly the Group ). KRUK S.A. is the Parent of the Group. As at June 30th 2015, the Management Board of the Parent consisted of: Piotr Krupa Agnieszka Kułton Urszula Okarma Iwona Słomska Michał Zasępa President of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board. Since the Management Board s term of office expired on March 19th 2015, the Company s Supervisory Board appointed the Management Board members for another term of office by virtue of resolutions adopted on March 13th In H and by the date of issue of this interim report, the composition of the Management Board of KRUK S.A. did not change. In H and by the date of issue of this interim report, the composition of the Supervisory Board of KRUK S.A. did not change and was as follows: Piotr Stępniak Katarzyna Beuch Tomasz Bieske Arkadiusz Orlin Jastrzębski Krzysztof Kawalec Robert Koński Józef Wancer Chairman of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board.

14 14 As at the date of issue of this report, the Group comprised KRUK S.A. of Wrocław and 14 subsidiaries: Kancelaria Prawna RAVEN Krupa & Stańko sp.k. of Wrocław, a law firm providing comprehensive services to support litigation and enforcement, exclusively in connection with the debt collection process carried out by the KRUK Group and its partners; Rejestr Dłużników ERIF Biuro Informacji Gospodarczej S.A. of Warsaw, a credit reference agency serving as a platform for collection, processing and provision of information on natural persons and businesses, both delinquent debtors and timely payers; KRUK România s.r.l. of Bucharest, Romania, a company which operates on the market of credit management services and debt purchase; Secapital S.a.r.L. of Luxembourg, a special-purpose securitisation vehicle whose business consists chiefly in investing in debt or debt-backed assets; Prokura NS FIZ securitisation fund, which is a securitisation and investment vehicle employing professional risk assessment and credit management methodologies. All certificates issued by the securitisation fund are held by Secapital S.a.r.l.; Secapital Polska Sp. z o.o. of Wrocław, a company acting as a servicer of securitised debt; ERIF Business Solutions Sp. z o.o. of Wrocław, a company whose principal business activities consist in the provision of financial and agency services, and support for small and medium-sized enterprises; NOVUM FINANCE Sp. z o.o. w likwidacji of Wrocław, a company in liquidation; KRUK Česká a Slovenská republika s.r.o. of Hradec Kralove, Czech Republic, a company which operates on the market of credit management services and debt purchase; KRUK Towarzystwo Funduszy Inwestycyjnych S.A. of Wrocław, a fund management company; InvestCapital Malta Ltd. of Malta, an investment company whose business purpose is to invest in equity assets, including shares in KRUK Group companies; RoCapital IFN S.A. of Bucharest, Romania, an operating company, whose principal business activities consist in purchasing and servicing mortgage-backed debt portfolios; ProsperoCapital Sp. z o.o. of Wrocław, a debt collection company, whose principal business activities consist in other financial service activities n.e.c., including trade in receivables and debt collection, except insurance and pension funding; KRUK Deutschland GmbH of Berlin, a company whose principal business activities consist in credit management services, collection of debt portfolios purchased by the KRUK Group in Germany and other European countries, as well as debt trading. All the subsidiaries listed above are consolidated in these interim consolidated financial statements as at June 30th 2015 and for the period from January 1st to June 30th 2015.

15 15 The Company operates ten field offices across Poland, in Poznań, Warsaw, Kraków, Katowice, Bydgoszcz, Łódź, Elbląg, Szczecin, Stalowa Wola and Szczawno-Zdrój.

16 16 The ownership interests held by the Parent in the subsidiaries as at the date of issue of this report were as follows: Share capital held (%) Country Jun Dec Secapital S.a.r.l. ** Luxembourg 81% 84.4% ERIF Business Solutions Sp. z o.o. Poland 100% 100% Secapital Polska Sp. z o.o. Poland 100% 100% Rejestr Dłużników ERIF Biuro Informacji Gospodarczej S.A. Poland 100% 100% Novum Finance Sp. z o.o. Poland 100% 100% KRUK Romania S.r.l. Romania 100% 100% Kancelaria Prawna RAVEN Krupa & Stańko Spółka komandytowa Poland 98% 98% KRUK Towarzystwo Funduszy Inwestycyjnych S.A. Poland 100% 100% KRUK Česká a Slovenská republika s.r.o. Czech Republic 100% 100% Prokura NS FIZ* Poland 100% 100% Prokulus NS FIZ* Poland - 100% ProsperoCapital Sp.z.o.o. Poland 100% 100% KRUK International Z.r.t. (in liquidation) Hungary - 100% InvestCapital Malta Ltd ** Malta 99.5% 99.5% RoCapital IFN S.A. Romania 99.0% 99.0% Kruk Deustschland Gmbh Germany 100% 100.0% * Subsidiaries of Secapital S.a.r.l. ** Subsidiaries in which the Company indirectly holds 100% of the share capital. 2. Period covered by the financial statements The financial statements cover the period from January 1st to June 30th 2015, with the comparative data presented for the period from January 1st to June 30th The interim condensed consolidated statement of financial position was prepared as at June 30th 2015, while the comparative data was presented as at June 30th 2014 and December 31st The interim condensed consolidated statement of changes in equity was prepared for the period from January 1st to June 30th 2015, while the comparative periods were the six-month period from January 1st 2014 to June 30th 2014, and the twelvemonth period from January 1st 2014 to December 31st Statement of compliance These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting endorsed by the European Union. In the opinion of the Management Board, there are no facts or circumstances which could pose a significant threat to the Group s companies continuing as going concerns. Therefore, these financial statements have been prepared on a going concern basis, i.e. based on an assumption that the companies will continue their operations for the foreseeable future, i.e. for 12 months after the reporting date. These financial statements do not contain all the information required to prepare full-year financial statements and therefore should be read in conjunction with the Group s consolidated financial statements prepared as at and for the financial year ended December 31st These interim condensed financial statements were approved by the Management Board of the Parent (the Management Board ) on August 27th 2015.

17 17 The data contained in these interim condensed consolidated financial statements is presented in the Polish złoty (PLN), rounded to the nearest thousand. The Polish złoty is the functional currency of the Parent. 4. Significant accounting policies Except for the changes discussed below, the accounting policies applied to prepare these condensed interim financial statements are consistent with those applied to prepare the most recent full-year consolidated financial statements as at and for the year ended December 31st The Group prepares its statement of financial position using a liquidity criterion. With respect to all assets and liabilities, an entity discloses in the notes an amount which is expected to be paid or settled within 12 months following the end of the reporting period (current assets and liabilities), or after 12 months since the end of the reporting period (non-current assets and liabilities). Amendments to current standards and interpretations The following amendments to International Financial Reporting Standards and their interpretations, endorsed by the European Union (the EU IFRS ) apply to reporting periods beginning on January 1st 2015: Amendments to IFRS introduced as part of the improvements cycle: Amendments to IFRS 3 Business Combinations The amendments clarify that not only joint ventures but also joint arrangements fall outside the scope of IFRS 3. The exception applies solely to the preparation of financial statements of joint arrangements. The amendment is to be applied prospectively. These changes had no impact on the Group s financial position or results of operation. Amendments to IFRS 13 Fair Value Measurement The amendments clarify that the portfolio exception applies not only to financial assets and financial liabilities but also to other agreements that fall within the scope of IAS 39. The amendments are to be applied prospectively. These changes had no impact on the Group s financial position or results of operation. Amendments to IAS 40 Investment Property The description of ancillary services in IAS 40 differentiates between investment property and owneroccupied property (i.e. property, plant and equipment). The amendment is to be applied prospectively, and it clarifies that it is IFRS 3 rather than the definition of ancillary services contained in IAS 40 that should be used to determine whether a transaction is an asset or business acquisition. These changes had no impact on the Group s financial position or results of operation. IFRIC 21 Levies The interpretation clarifies that an entity recognises a levy liability on the occurrence of an obligating event, or, in other words, the activity that triggers the obligation to pay a levy in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognised before the specified minimum threshold is reached. IFRIC 21 is to be applied retrospectively.

18 18 These changes had no impact on the Group s financial position or results of operation. Standards and interpretations that have been published, but have not yet been adopted IFRS 9 Financial Instruments (published on July 24th 2014) effective for annual periods beginning on or after January 1st 2018; by the date of approval of these financial statements, the standard has not been adopted by the EU, IFRIC 21 Levies (published on May 20th 2013) effective for annual periods beginning on or after January 1st 2014; within the EU, effective at the latest for annual periods beginning on or after June 17th 2014, Amendments to IAS 19 Defined Benefit Plans: Employee Contributions (published on November 21st 2013) effective for annual periods beginning on or after July 1st 2014; within the EU, effective at the latest for annual periods beginning on or after February 1st 2015, Amendments to IFRS introduced as part of the improvements cycle (published on December 12th 2013) some of the amendments are effective for annual periods beginning on or after July 1st 2014, while some are effective prospectively for transactions entered into on or after July 1st 2014; within the EU, effective at the latest for annual periods beginning on or after February 1st 2015, Amendments to IFRS introduced as part of the improvements cycle (published on December 12th 2013) effective for annual periods beginning on or after July 1st 2014; within the EU, effective at the latest for annual periods beginning on or after January 1st 2015, IFRS 14 Regulatory Deferral Accounts (published on January 30th 2014) effective for annual periods beginning on or after January 1st 2016; no decision has been made as to when EFRAG will carry out the individual stages of work leading to the approval of this standard; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (published on May 6th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation (published on May 12th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU, IFRS 15 Revenue from Contracts with Customers (published on May 28th 2014) effective for annual periods beginning on or after January 1st 2018; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants (published on June 30th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 27 Equity Method in Separate Financial Statements (published on August 12th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (published on September 11th 2014) effective for annual periods beginning on or after January 1st 2016, with the effective date of the amendments provisionally postponed by the IASB; no decision has been made as to when EFRAG will carry out the individual stages of work leading to the approval of these amendments; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to the IFRS introduced as part of the improvements cycle (published on September 25th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU,

19 19 Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception (published on December 18th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU, Amendments to IAS 1 Disclosure Initiative (published on December 18th 2014) effective for annual periods beginning on or after January 1st 2016; by the date of approval of these financial statements, the amendments have not been adopted by the EU. 5. Accounting estimates and judgements In order to prepare interim consolidated financial statements, the Management Board is required to rely on judgements, estimates and assumptions which affect the application of accounting policies and the reported amounts of assets, liabilities, income and costs, whose actual values may differ from these estimates. The material assumptions underlying the estimates made by the Group and the applied accounting policies have been presented in the most recent full-year consolidated financial statements as at and for the financial year ended December 31st The estimates and the underlying assumptions are reviewed on an ongoing basis. Any changes in accounting estimates are introduced prospectively, starting from the reporting period in which the estimate is revised. 6. Financial risk management Policies of financial risk management have been presented in the most recent full-year consolidated financial statements as at and for the financial year ended December 31st In the period from January 1st to June 30th 2015, no material changes occurred in the methods of managing financial risk.

20 20 7. Reporting and geographical segments Reporting segments Below, the Group presents its reporting segments. The President of the Management Board reviews internal management reports relating to each business segment at least quarterly. The Group s reporting segments conduct the following activities: Debt purchase: collection of purchased debt; Credit management: fee-based collection of debt on client s behalf. Other: financial intermediation, lending. The performance of each reporting segment is discussed below. The key performance metric for each reporting segment is gross profit, which is disclosed in the internal management reports reviewed by the President of the Management Board. A segment s gross profit is used to measure its performance, as the management believes the gross profit to be the most appropriate metric for the assessment of the segment s results against other entities operating in the industry. The Group s operating activities concentrate in a few geographical segments: Poland, Romania, the Czech Republic and Slovakia. The Group s operations are divided into the following geographical segments: Poland Romania Other foreign markets

21 21 Reporting segments Jun Jun Revenue 286, ,728 Purchased debt portfolios 263, ,200 Credit management 14,965 16,295 Other products 8,696 6,233 Direct and indirect costs (110,219) (95,939) Purchased debt portfolios (96,199) (81,999) Credit management (10,032) (9,925) Other products (3,988) (4,015) Gross profit 176, ,789 Purchased debt portfolios 166, ,201 Credit management 4,933 6,370 Other products 4,708 2,218 Administrative expenses (43,338) (32,644) Depreciation and amortisation expense (6,013) (5,522) Other income 1, Other expenses (unallocated) (2,154) (1,870) Finance income/costs (20,161) (29,118) Profit before tax 105,927 99,494 Income tax 1, Net profit 107, ,064

22 22 Additional information on geographical segments Jun Jun Revenue 286, ,728 Poland 162, ,140 Romania 113,277 87,933 Other foreign markets 11,028 13,655 Non-financial assets Jun Dec Poland 30,121 23,561 Romania 6,378 8,006 Other foreign markets ,064 32,307

23 23 8. Seasonality and cyclicality of operations The Group s operations are not subject to seasonal or cyclical fluctuations. 9. Type and amounts of changes in estimates presented in previous financial years, with a material effect on the current period Purchased debt portfolios In the reporting period, the Group s expenditure on purchase of debt portfolios was PLN 225,402 thousand (H1 2014: PLN 313,303 thousand), while cash recoveries were PLN 398,726 thousand (H1 2014: PLN 360,416 thousand). For a description of changes in the estimates of the debt portfolios value see Note 10 to the interim condensed consolidated financial statements. Jun Investments Investments in debt portfolios measured at fair value Dec Jun , ,964 1,252,008 Investments in debt portfolios measured at amortised cost 676, ,573 - Loans advanced to other entities 19,086 13,642 10,311 1,469,013 1,380,179 1,262,319 Investments in debt portfolios measured at fair value Jun Dec Jun Current portion of investments in debt portfolios 329, , ,964 Non-current portion of investments in debt portfolios 443, , , , ,964 1,252,008 Investments in debt portfolios measured at amortised cost Jun Dec Jun Current portion of investments in debt portfolios 154,990 79,430 - Non-current portion of investments in debt portfolios 521, , , ,573 -

24 24 Purchased debt portfolios as at Jan ,053,913 Purchase of debt portfolios 575,105 Purchase price adjustment for discount (4,419) Cash recoveries (711,841) Increase/(decrease) in liabilities to debtors due to overpayments 574 Valuation of loyalty scheme 2,080 Revenue from debt purchase (interest and revaluation) Fair value translation differences (*) 8,751 Purchased debt portfolios as at Dec ,366,537 Purchased debt portfolios as at Jan ,366,537 Purchase of debt portfolios at prices as per agreement 222,210 Cash recoveries (398,726) Increase/(decrease) in liabilities to debtors due to overpayments 434 Valuation of loyalty scheme 1,889 Revenue from debt purchase (interest and revaluation) Fair value translation differences (*) (5,546) Purchased debt portfolios as at Jun ,449,927 (*) Applicable to portfolios held by the subsidiaries whose functional currencies are other than the złoty.

25 Type and amounts of items affecting the assets, equity and liabilities, net profit/loss or cash flows, which are material due to their type, size or effect 1. Revenue Jun Jun Revenue from debt purchase 263, ,200 Revenue from fee-based credit management services 14,965 16,295 Revenue from other products 8,696 6,233 Revenue from sale of merchandise and materials , ,728 Revenue from debt purchase Jun Jun Interest income adjusted for actual recoveries 252, ,792 Revaluation of debt portfolios 10,955 18,163 Cost of debts sold - (17,755) 263, ,200 (*) relates to the sale of a portion of the corporate debt portfolio Jun Jun Revision of recovery forecast 15,075 7,123 Change due to change in discount rate (4,120) 11,040 10,955 18,163

26 26 Revenue from debt purchase includes: Revenue from debt portfolios measured at fair value Jun Jun Interest income adjusted for actual recoveries 184, ,792 Revaluation of debt portfolios 30,409 18,163 Cost of debts sold - (17,755) 214, ,200 (*) relates to the sale of a portion of the corporate debt portfolio Revaluation of debt portfolios measured at fair value Jun Jun Revision of forecast 34,529 7,123 Change due to change in discount rate (4,120) 11,040 30,409 18,163 Re-measurement of purchased debt portfolios represents changes in fair value of financial assets measured at fair value through profit or loss which have been designated as such at the time of their initial recognition. Revenue forecast update is primarily based on the analysis of: - debtors behaviour patterns and effectiveness of the collection tools applied; - changes in currency exchange rates against PLN (for debt portfolios purchased abroad). Pursuant to the accounting policies applied by the Company, income and gains on financial instruments at fair value through profit or loss are presented as revenue from purchased debt portfolios under operating income. Revenue from debt portfolios measured at amortised cost Jun Jun Interest income adjusted for actual recoveries 67,747 - Revaluation of debt portfolios (19,454) - 48,293 -

27 27 Revaluation of debt portfolios measured at amortised cost Jun Jun Revision of recovery forecast (19,454) - (19,454) - Pursuant to the accounting policies applied by the Company, income and gains on financial instruments at amortised cost are presented as revenue from purchased debt portfolios under operating income. 2. Other income Jun Jun Related Reversal of impairment losses on receivables - 6 Return of compensation for damage caused by motor vehicles Gain on sale of property, plant and equipment Re-billed costs of services and court fees 98 - Other , Employee benefits expense Jun Jun Salaries and wages (59,033) (51,246) Other social security contributions (4,829) (4,758) Old-age and disability pension contributions (9,658) (7,420) Contribution to the State Fund for the Disabled (514) (577) Equity-settled cost of stock option plan (8,506) (3,173) (82,540) (67,174)

28 28 For details of the management stock option plan, see the Directors Report. 4. Other expenses Jan 1 Jun Jun Court fees (27,823) (17,241) Advertising (1,529) (2,886) Raw materials and energy used (4,299) (4,722) Taxes and charges (14,228) (12,256) Staff training (1,178) (828) Business trips (1,150) (824) Entertainment expenses (256) (75) Contribution to the State Fund for the Disabled 0 (549) Motor insurance (580) (495) Losses from damage caused by motor vehicles (292) (383) Property insurance (169) (196) Other (102) (780) (53,212) (41,235) 5. Finance income Jun Jun Interest income on bank deposits

29 29 6. Finance costs Jun Jun Interest expense on financial liabilities measured at amortised cost (20,475) (24,810) Settlement of discount - (4,522) Net foreign exchange gains/(losses) (598) (69) (21,073) (29,401) 7. Income tax Jun Jun Current income tax Current income tax expense Deferred income tax (1,984) (785) Origination/reversal of temporary differences (1,984) (785) Tax expense in profit/(loss) (1,741) (570)

30 30 Jun Jun Profit/(loss) before tax 105,927 99,494 Pre-tax profit for the period (assuming 19% tax rate) ,189 Pre-tax loss for the period (assuming 16% tax rate) (11573) (10,640) Pre-tax loss for the period (assuming 19% tax rate) (69347) (8,055) 105,927 99,494 Tax calculated at the tax rate applicable in Poland (19%) ,992 Tax calculated at the tax rate applicable in Romania (16%) (1852) (1,702) Tax calculated at the tax rate applicable in the Czech Republic (19%) (979) (1,386) 25,463 18,904 Non-tax-deductible expenses (27,204) 18,394 Tax-exempt income - (36,728) Income tax at effective tax rate (1,741) Differences from translation of foreign operations in statement of comprehensive income Jun Jun Translation reserve (2,781) 9,312 Attributable to: Owners of the Parent (2,781) 9,312 Finance income/(cost) recognised in other comprehensive income (2,781) 9, Acquisition and sale of property, plant and equipment In the reporting period, the Group did not acquire or sell any material items of property, plant and equipment or intangible assets. 10. Cash Jun Dec Jun Cash at banks and cash in hand 72,150 70,545 67,779 Short-term deposits - - 1,654 72,150 70,545 69,433

31 Borrowings, dividends and finance lease liabilities Jun Dec Jun Non-current liabilities Secured borrowings 227, , ,161 Liabilities under debt securities (unsecured) 475, , ,676 Finance lease liabilities 7,730 8,377 9, , , ,496 Current liabilities Current portion of secured borrowings 19,385 96,078 24,894 Liabilities under debt securities (unsecured) 97,350 18,859 83,754 Current portion of finance lease liabilities 5,453 4,856 4,264 Dividend payable 25, , , ,912 Currency Nominal interest rate Maturity year Jun Dec Jun Borrowings secured on the Group's assets Liabilities under debt securities (unsecured) Finance lease liabilities PLN PLN PLN EUR 1M WIBOR + margin of pp 3M WIBOR + margin pp 3M WIBOR or 1M EURIBOR + margin pp , , , , , ,430 13,183 13,233 13, , , ,408

32 Earnings per share '000 Note Jun Dec Jun Number of ordinary shares as at Jan 1 17,110 16,959 16,959 Effect of cancellation and issue of shares 57 (2) 3 Weighted average number of ordinary shares 17,167 16,957 16,962 PLN Basic earnings per share Note '000 Jun Dec Jun Weighted average number of ordinary shares 17,167 16,957 16,962 Effect of share option issue Weighted average number of ordinary shares (diluted) 17,887 17,407 17,411 PLN Earnings per share (diluted)

33 The statement of financial position is split into current and non-current items

34 34 As at June 30th 2015 Jun Dec Jun Assets Non-current assets Property, plant and equipment 19,536 20,265 21,409 Other intangible assets 11,885 11,018 11,313 Goodwill 1,024 1,024 1,024 Investments in debt portfolios 443, , ,044 Deferred tax asset 5,602 3,539 3,224 Total non-current assets 481, , ,014 Current assets Inventories Investments in debt portfolios and loans 1,025, , ,275 Trade receivables 8,739 10,949 22,122 Other receivables 22,753 16,534 18,846 Other assets 1,913 2,070 1,647 Cash and cash equivalents 72,150 70,545 69,433 Total current assets 1,131,328 1,049, ,776 Total assets 1,613,063 1,516,647 1,411,790 Equity and liabilities Equity Share capital 17,291 17,110 17,023 Share premium 60,257 53,249 49,876 Cash flow hedging reserve - - (1,993) Translation reserve (6,640) (3,859) 1,586 Other capital reserves 64,130 55,624 51,462 Retained earnings 544, , ,180 Equity attributable to owners of the Parent 679, , ,134 Non-controlling interests Total equity 679, , ,176 Non-current liabilities Non-current liabilities under borrowings and other debt instruments 710, , ,496 Hedge derivatives 1,567 2,668 1,993 Total non-current liabilities 712, , ,489 Current liabilities Current liabilities under borrowings and other debt instruments 148, , ,912 Trade and other payables 47,381 60,613 28,063 Current tax liability - 1,724 - Employee benefit obligations 25,619 27,646 23,886 Current provisions Total current liabilities 221, , ,125 Total liabilities 933, , ,614 Total equity and liabilities 1,613,063 1,516,647 1,411,790

35 Financial instruments Fair value Fair values and carrying amounts of financial assets and liabilities are presented below: Jun Dec Note Carrying amount Fair value Carrying amount Fair value Financial assets and liabilities measured at fair value Financial instruments at fair value through profit or loss 9 772, , , ,775 Hedge derivatives 1,567 1,567 2,668 2, , , , ,443 Financial assets and liabilities not measured at fair value Financial assets measured at amortised cost 9 676, , , ,753 Loans 9 19,086 19,086 13,642 13,642 Receivables 31,492 31,492 27,483 27,483 Cash and cash equivalents ,150 69,433 70,545 70,545 Secured bank borrowings (246,724) (246,724) (335,924) (335,924) Unsecured bonds in issue (572,725) (572,725) (489,492) (489,492) Finance lease liabilities (13,183) (13,183) (13,233) (13,233) Trade and other payables (47,381) (47,381) (60,613) (60,613) (80,355) (87,485) (282,830) (278,839) Hierarchy of financial instruments Jun Level 2 Total Hedge derivatives 1,567 1,567 Total 1,567 1,567

36 36 Dec Level 2 Total Hedge derivatives Total 2,668 2,668 The fair value of interest rate swap contracts is determined by reference to the future cash flows under the contracts calculated based on the difference between the projected 3M WIBOR and the actual 3M WIBOR as at the transaction date. In calculating the fair value, the Group uses 3M WIBOR projections provided by an external firm. Jun Level 3 Total Financial assets at fair value through profit or loss 772, ,997 Total 772, ,997 Dec Level 3 Total Financial assets at fair value through profit or loss 861, ,775 Total 861, ,775 Fair value of debt portfolios purchased is calculated based on the expected future cash flows related to the debt portfolios, discounted with a rate reflecting the credit risk associated with each portfolio. The rate used for discounting is calculated as an internal rate of return on an investment as at the date of acquisition of a portfolio and is verified so that it includes the present risk free rate and the present risk premium associated with the credit risk for each portfolio. There were no transfers between fair value hierarchy levels. Purchased debt portfolios Purchased debt portfolios comprise high-volume portfolios of overdue debt (such as debt under consumer loans, unpaid utility bills, etc.) purchased by the Group under claim assignment agreements. Prices paid by the Group for such debt portfolios are significantly lower than their nominal value. The Group classifies debt portfolios purchased prior to January 1st 2014 as financial assets at fair value through profit or loss because they were designated as such on initial recognition in accordance with IAS 39. Purchased debt portfolios are initially recognised at acquisition price, which is equal to their fair value. Costs and expenses relating to debt purchase transactions are recognised in profit or loss of the period. The Group measures debt portfolios purchased prior to January 1st 2014 at least four times in a given annual reporting period, not later than as at the end of each calendar quarter. The value of a purchased debt portfolio is determined, as at the measurement date, on the basis of reliably estimated fair value, calculated using an estimation model relying on expected discounted cash flows, including recoveries and collection costs at market rates.