Interim Condensed Consolidated Financial Statements for 9- and 3-month period ended on 30 September 2015 of InPost Capital Group

Transcription

1 Interim Condensed Consolidated Financial Statements for 9- and 3-month period ended on 30 September 2015 of InPost Capital Group -Kraków, 13 November 2015-

2 Interim condensed consolidated financial statements of InPost Capital Group CONTENTS: I. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS... 3 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME... 3 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION... 4 CONDENSED CONSOLIDATED CASH FLOW STATEMENT... 5 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Basic information on and history of InPost Capital Group General Information Identification details of the company Composition of InPost Capital Group The scope of information included in the Condensed Consolidated Financial Statements Functional currency and reporting currency Basis of preparation and statement of compliance of the financial statements Seasonality and cyclicality of activities Significant events in three quarters of Revenues and expenses Revenues from sales by product Revenues from sales by distribution channels Major customers Operating expenses Operating revenue and expenses Financial revenues and expenses Information on business segments Dividends paid and proposed for payment Goodwill Intangible assets and tangible fixed assets Investments in subsidiaries Long-term and short-term financial assets Deferred tax assets Trade and other receivables Ageing of receivables Assets arising from long-term contract Long- and short-term financial liabilities Long- and short-term liabilities under loans and bank credits Sureties, guarantees Lawsuits Information on related parties Entities related by capital Other related parties Remuneration of senior management of InPost Capital Group Earnings per share Events after the balance sheet date II. CONDENSED CONSOLIDATED SEPARATE FINANCIAL STATEMENTS SEPARATE STATEMENT OF COMPREHENSIVE INCOME SEPARATE STATEMENT OF FINANCIAL POSITION SEPARATE STATEMENT OF CASH FLOWS SEPARATE STATEMENT OF CHANGES IN EQUITY

3 I. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in PLN '000) Note 9-month period ended 30 September month period ended 30 September month period ended 30 September month period ended 30 September 2014 Revenues from sales Other operating revenues Amortisation and depreciation Materials and energy consumption External services Taxes and charges Payroll Social security contributions and other benefits Other expenses by type Cost of merchandise and raw materials Other operating expenses Total operating expenses Operating profit (3 524) Financial revenues Financial expenses Profit before tax (3 525) Income tax (593) Net profit from continuing operations (2 932) Net profit (2 932) Other comprehensive net income Total comprehensive income (2 932) Earnings per share Basic (0.26) Diluted (0.26) 3

4 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Condensed consolidated financial statements of InPost Capital Group ASSETS (in PLN '000) Note 30 September December September 2014 Fixed assets Goodwill Other intangible assets Tangible fixed assets Investments in subsidiaries Other long-term financial assets Deferred tax asset Other fixed assets Current assets Inventory Other financial assets Trade and other receivables Income tax receivables Other current assets Cash and cash equivalents Total assets EQUITY AND LIABILITIES (in PLN '000) Note 30 September December September 2014 Equity capital Share capital Supplementary capital Retained earnings Capital attributable to parent company shareholders Non-controlling shares Total equity Long-term bank credits and loans Other long-term provisions Government grants Deferred tax provision Long-term financial liabilities Total long-term liabilities Trade and other payables Short-term bank credits and loans Government grants Current tax liabilities Short-term provisions Short-term financial liabilities Total short-term liabilities Total liabilities Total equity and liabilities

5 CONDENSED CONSOLIDATED CASH FLOW STATEMENT (in PLN '000) Note 9-month period ended on 30 September month period ended on 30 September 2014 Cash flows from operating activities Profit for the financial year Adjustments for: Tax expense recognised in profit or loss Finance costs recognised in profit or loss Loss on disposal of tangible fixed assets - - Depreciation and amortisation of fixed assets Changes in working capital: (Increase)/decrease in trade and other receivables (47 839) (Increase)/decrease in inventory (1 039) 297 (Increase)/decrease in other assets (35 051) (Decrease)/increase in liabilities (excluding loans and borrowings) Increase/(decrease) in provisions, deferred income and grants (3 372) (286) Cash generated from operating activities (23 999) Interest paid (1 734) (688) Income tax paid (571) (3 111) Net cash from operating activities (27 798) Cash flows from investing activities Interest received Cash flows from loans granted (329) Payments for tangible fixed assets (5 958) (637) Payments for intangible assets (13 614) (644) Net cash (spent)/generated in connection with investing activities (16 021) (1 497) Cash flows from financing activities Cash flows from loans from related entities (54 579) Cash flows from bank loans (1 872) Cash flows from finance lease contracts (278) Net cash used in financing activities (53 016) Net increase in cash and cash equivalents (485) Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the period

6 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in PLN '000) Note Share capital Supplementary capital Foreign exchange differences arising from consolidation Profit/loss from previous years and the current year Attributable to the parent entity shareholders Attributable to noncontrolling interests Total equity As at 1 January Total income Issue of shares in connection with business combination Settlement of business combination by the share pooling method - ( ) - - ( ) - ( ) As at 30 September As at 1 January Total income Issue of shares in connection with business combination Settlement of business combination by the share pooling method - ( ) - - ( ) - ( ) Issue of shares in connection with the acquisition of PGP S.A As at 31 December As at 1 January Total income Issue of shares in connection with acquisition of shares in Inpost Finanse Sp. z o.o Settlement of the acquisition of minority interests of InPost Finanse Sp. z o.o. including: (9 734) (9 734) (1 066) (10 800) - Book value of minority interests on acquisition (1 066) - - Fair value of minority interests on acquisition (10 800) (10 800) - (10 800) As at 30 September

7 1. Basic information on and history of InPost Capital Group 1.1. General Information InPost Spółka Akcyjna (hereinafter also "Parent Company", "Company"), with its registered office in Cracow, was established under a contract on 27 November 2012 under the name of Nowoczesne Usługi Pocztowe Sp. z o.o. The Company was registered on 28 November 2012 in the Register of Entrepreneurs kept by the District Court for Kraków Śródmieście in Cracow, 11th Commercial Division of the National Court Register, under entry no The Company is an indirect subsidiary of Integer.pl S.A.. Since 13 October 2015, the company has been listed on the Warsaw Stock Exchange (hereinafter also "WSE") On 2 June 2014, the Company changed its name from Nowoczesne Usługi Pocztowe Sp. z o.o. to InPost Sp. z o.o., while the company InPost Sp. z o.o., functioning to that day, which remained after the separation of the postal operations, changed its name into InPost Paczkomaty Sp. z o.o. On 29 December 2014, along with the change of the KRS number (entry in the National Court Register), the Parent Company was transformed into a joint-stock company (spółka akcyjna). Since that date the Company has been operating as InPost SA. The share capital after the change of the legal form consisted of 10 million of series A shares of a nominal value of PLN 1 each. On 30 December 2014, the Extraordinary Meeting of Shareholders of the Company adopted a resolution on the increase in the share capital from PLN to PLN through the issue of shares of a nominal value of PLN 1 (one zloty) per share and the total nominal value of PLN , excluding the pre-emptive right of existing shareholders. The new shares have been acquired in the following manner: 916,122 series B shares were acquired by Integer.pl S.A. in exchange for a cash contribution in the amount of PLN ,878 series C shares were acquired by Badenhop Holdings Limited, based in Nicosia, Cyprus, in exchange for a cash contribution in the amount of PLN On 17 March 2015, series A shares contributed by the existing shareholders (Integer.pl S.A. and InPost Paczkomaty Sp. z o.o.) as an in-kind contribution to Integer Inwestycje Sp. z o.o. Consequently, on 17 March 2015, Integer.pl Inwestycje Sp. z o.o. acquired 100% of series A shares. On 23 March 2015, there was another increase in the share capital. The Extraordinary General Meeting of the Company adopted a resolution on the issue of of series D shares, with a nominal value of one zloty and the total nominal value of PLN 288 thousand. All series D shares (at a unit issue price of PLN 37.5 per share) were acquired by Integer.pl S.A. in exchange for a contribution in-kind of the value of PLN , in the form of 49.98% of shares in Inpost Finanse Sp. z o.o. On 20 May 2015 significant changes took place in the shareholding of the Company, which occurred through a share capital increase of Integer.pl Inwestycje Sp. z o.o. by PLN through the creation of indivisible shares with a nominal value of PLN 50 each, which were acquired as follows: shares with a nominal value of PLN were acquired by the existing shareholder - Integer.pl in exchange for a contribution in kind in the form of series B shares and series D shares in InPost SA, 7

8 shares with a nominal value of PLN were intended to be acquired by the company Badenhop Holdings Limited in exchange for a contribution in kind in the form of series C shares in InPost S.A. On 11 September 2015, the Polish Financial Supervision Authority approved the prospectus of InPost S.A., thereby allowing for the public offering of shares of InPost S.A. A detailed description of the public offering of InPost S.A. shares is provided in section 4. In connection with the Public Offering, the shareholding structure of the Company was changed and as of the date of this Condensed Consolidated Financial Statements was as follows: Share capital: Number of shares Nominal value of one share Total nominal value (in PLN) Share in capital share Integer.pl Inwestycje Sp. z o.o % European Bank for Reconstruction and Development (EBRD) % Other shareholders % % 1.2. Identification details of the company Business name: Registered office: Address: InPost SA (formerly: InPost Sp. z o.o.) Kraków ul. Malborska 130, Kraków Regon: NIP: KRS: Share capital (as at the date of statements): PLN Telephone number: Website: biuro@inpost.pl Auditor: Deloitte Polska Spółka z ograniczoną odpowiedzialnością Sp. k. Company's duration: Indefinite The composition of the Management Board of the Parent Company as at 30 September 2015 and as at the date of the preparation hereof was as follows: 8

9 President of the Management Board: Deputy President of the Management Board: Management Board Member: Sebastian Anioł Marcin Pulchny Krystian Szostak The supervisory body of the Company is the Supervisory Board, acting in the following composition: Chairperson of the Supervisory Board: Supervisory Board Member: Supervisory Board Member Supervisory Board Member: Supervisory Board Member: Rafał Brzoska Maciej Filipkowski Krzysztof Kaczmarczyk Grzegorz Pilch Wiesław Łatała 1.3. Composition of InPost Capital Group The Condensed Consolidated Financial Statements includes InPost S.A. as a parent company and entities composing InPost Capital Group (hereinafter also "Group"), according to the following list: No. Name of the entity Registered office Type of business Parent Company's share in the company's share capital 1. InPost S.A. ul. Malborska 130, Kraków 2. InPost Finanse Sp. z o.o. ul. Malborska 130, Kraków 3. Polska Grupa Pocztowa SA ul. Stanisława Augusta 75, lok , Warszawa 4. Bezpieczny List Sp. z o.o. al. Jana Pawła II 24, Radzymin Postal activities Financial activities Postal activities Postal activities 100% 100% 100% 9

10 1.4. The scope of information included in the Condensed Consolidated Financial Statements The Condensed Consolidated Financial Statements includes data for the period from 1 January 2015 to 30 September 2015 of the aforementioned entities composing the Group and comparative data covering the period from 1 January 2014 to 30 September 2014 of the following entities: - Letter Business until 30 May 2014 functioning within InPost Sp. z.o. o. - Sorting Activity until 30 May 2014 functioning as a separate unit within Integer.pl S.A. - Nowoczesne Usługi Pocztowe Sp. z o.o. (hereinafter also "NUP ) - InPost Finanse Sp. z o.o Functional currency and reporting currency These Condensed Consolidated Financial Statements are stated in Polish zloty (PLN). Polish zloty is the functional and reporting currency of the parent company and subsidiaries. Data in the financial statements are presented in thousands of PLN, except where greater accuracy is required. 2. Basis of preparation and statement of compliance of the financial statements Basis of preparation These Condensed Interim Consolidated Financial Statements were prepared in accordance with International Accounting Standard ("IAS") 34 - Financial Reporting ("IAS 34") and in accordance with the relevant accounting standards applicable to financial reporting endorsed by the European Union, issued and effective at the time of preparation of these Condensed Interim Consolidated Financial Statements. These Condensed Interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Integer.pl SA Capital Group for the year ended 31 December 2014, prepared in accordance with International Financial Reporting Standards ("IFRS"). Standards and interpretations applied for the first time in 2015 The following standards, amendments to the existing standards and interpretations published by the International Accounting Standards Board (IASB) enter into force for the first time in 2015: Amendments to IAS 19 "Employee Benefits" - Defined benefits plans: employee contributions (effective for annual periods beginning on or after 1 July 2014), Amendments to various standards "Improvements to IFRS ( cycle)" - amendments made as part of the annual IFRS improvements process (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38) and focusing primarily on the areas at inconsistency or clarification of wording (effective for annual periods beginning on or after 1 July 2014), 10

11 Amendments to various standards "Improvements to IFRS ( cycle)" - amendments made as part of the annual IFRS improvements process (IFRS 1, IFRS 3, IFRS 13 and IAS 40) and focusing primarily on the areas at inconsistency or clarification of wording (effective for annual periods beginning on or after 1 July 2014). The above standards, interpretations and amendments to standards did not have any material impact on the company's accounting policy. Standards and interpretations that have already been issued, but are not yet effective As at the date of preparation hereof, the following standards, amendments to the existing standards and interpretations were published by the IASB but were not yet effective: IFRS 9 "Financial Instruments" (effective for annual periods beginning on or after 1 January 2018), IFRS 14 "Deferred balance of regulated activity" (effective for annual periods beginning on or after 1 January 2016 or later), IFRS 15 "Revenue from Contracts with Customers" (effective for annual periods beginning on or after 1 January 2017), Amendments to IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sales or transfers of assets between the investor and the associate or joint venture (effective for annual periods beginning on or after 1 January 2016), Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 28 "Investments in Associates and Joint Ventures" - investment units: application of the exemption from consolidation (effective for annual periods beginning on or after 1 January 2016), Amendments to IFRS 11 "Joint Arrangements" - Accounting for the acquisition of shares in joint operations (effective for annual periods beginning on or after 1 January 2016), Amendments to IAS 1 "Presentation of Financial Statements" - Initiative in relation to disclosures (effective for annual periods beginning on or after 1 January 2016), Amendments to IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible Assets" - Explanations on acceptable methods of depreciation (effective for annual periods beginning on or after 1 January 2016), Amendments to IAS 16 "Property, Plant and Equipment" and IAS 41 "Agriculture" - Agriculture: vegetable crops (effective for annual periods beginning on or after 1 January 2016), Amendments to IAS 27 "Separate Financial Statements" - equity method in the separate financial statements (effective for annual periods beginning on or after 1 January 2016), Amendments to various standards "Improvements to IFRS ( cycle)" - amendments made as part of the annual IFRS improvements process (IFRS 5, IFRS 7, IAS 19 and IAS 34) and focusing primarily on the areas at inconsistency or clarification of wording (effective for annual periods beginning on or after 1 January 2016). The entity decided not to benefit from the possibility of applying the aforementioned standards, amendments to standards and interpretations. According to the reporting entity's estimates, the above standards, interpretations and amendments to standards would not have had any significant impact on the financial statements if applied as at the reporting date. Statement of compliance The statements were prepared in accordance with International Accounting Standard ("IAS") 34 - Financial Reporting ("IAS 34") and in 11

12 accordance with the relevant accounting standards applicable to financial reporting endorsed by the European Union, issued and effective at the time of preparation of these Consolidated Financial Statements. The accounting policies and methods of computation adopted in the preparation of these Financial Statements are consistent with those described in the Consolidated Financial Statements of InPost Capital Group for prepared in accordance with IFRS. The Condensed Interim Consolidated Financial Statements comprise the condensed consolidated statement of financial position, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows, and selected notes to the financial statements. Change of comparative data On 30 December 2014, the Company obtained control of PGP S.A. and this company has been included in the Consolidated Financial Statements of the Company since that date. As at the date of the preparation of the Consolidated Financial Statements for the period ended 31 December 2014 the Company did not have sufficient information that would allow it to complete the full settlement in accordance with IFRS 3. Therefore, in the Consolidated Financial Statements of the Company for the financial year ended on 31 December 2014 the Company took the opportunity provided for in IFRS 3.45 and 3.46 regarding the provisional settlement of the acquisition. In the first quarter of 2015, the Company performed the final valuation of assets and liabilities of the acquired business and the final settlement of the acquisition transaction. Therefore, in accordance with the provisions of IFRS 3.49, a retrospective adjustment with respect to the data as at 31 December 2014 was performed in the Condensed Consolidated Financial Statements. The table below specifies the effects of the recognition of the final valuation of assets and liabilities of the company Polska Grupa Pocztowa S.A. acquired on 30 December 2014 and their impact on the Financial Statements of the Company for the year ended on 31 December only items that had been changed were included. Assets (adjusted) Difference [%] Fixed assets % Goodwill % Other intangible assets % Current assets % Other current assets % Total assets % Equity and liabilities (adjusted) Difference [%] Deferred tax liability n/a Total liabilities % Total equity and liabilities % 12

13 The final settlement of the acquisition of PGP S.A. affected the change of the originally recognised goodwill arising in accordance with IFRS 3. Its value was reduced from the amount of PLN thousand to the amount of PLN thousand, i.e. by the amount of PLN thousand. The difference is mainly due to the valuation of the contract for servicing courts and prosecutor's offices in 2015 acquired within PGP S.A. As at the time of acquisition of PGP S.A. the contract was valued at PLN 9,791 thousand and recognised under intangible assets. The valuation amount reflects the estimated increase in gross profit in 2015 in connection with the acquisition of the contract by the Group. Goodwill was also adjusted (increased) by the tax effect of the contract, valued in the amount of PLN 1,860 thousand, which was calculated as 19% of the value of the contract. At the same time, an adjustment of accruals for the court and prosecutors' office contract was made in the amount of PLN thousand, recognised in the balance sheet of PGP S.A. as at 31 December Seasonality and cyclicality of activities Due to the diversification of customers, the activities of the Parent Company and its subsidiaries are characterized by little seasonality and its impact on the disruption of the Group's result in each quarter is marginal. 4. Significant events in three quarters of 2015 Launching of courier services In June 2015, within Integer.pl Capital Group, courier services were launched, where InPost S.A. became the logistic operator. The business premise for the above service is the provision of services for both retail and business customers, while the cooperation mechanism is based on a pattern verified for logistics use of Paczkomaty, i.e. Inpost Capital Group carries out the collection, transport and delivery of a parcel, in return for which it is paid based on the number of orders handled. With the launch of the courier business Integer.pl Capital Group and InPost Capital Group created the broadest offer for mass senders of registered mail, including four main supply channels (registered letter, Paczkomaty, courier, collecting point) on the Polish market. The strategic objective is to obtain a share of 7-8% on the market of courier services in Poland in courier activities carried out under the logo of InPost by the end of In connection with the commenced courier activities, after the first three quarters of 2015, InPost Capital Group recognised income in the amount of PLN thousand (income from InPost Express Sp. z o.o.). Costs related to courier operations amounted in that period to PLN thousand. Purchase of rights to trademarks On 8 May 2015, the companies InPost S.A. and Verbis Alfa Sp. o.o. and EasyPack Sp. z o.o. (related companies within Integer.pl Capital Group) signed a contract whereby the Parent Company acquired from Verbis Alfa Sp. z o.o. 10% of shares in the ownership of "Inpost" trademarks" for the price of PLN 6 million. In the same year, an agreement was signed terminating the license agreement with Verbis Alfa Sp. z o.o. dated 2 June 2014 to use the trademarks co-owned by InPost S.A. Under the signed contract, entities belonging to InPost S.A. Capital Group shall be entitled to use the trademarks only for the purposes of the business activity they conduct. Including in particular postal and courier activities, as well as those consisting in the activities pursued by InPost Finanse Sp. z o.o. within the scope of financial and insurance services provided by this company. 13

14 Under this contract it was agreed that in connection with the acquisition, InPost S.A. will not be charged with licence fees for the use of the trademarks for the period from 1 January 2015 until the date of the termination of the license agreement. In the absence of the purchase of rights to the trademarks, the costs of licence fees would amount to PLN 3.5 million per year. The adopted amortisation time for the purchased trademarks is 30 years. The agreement provides for sanctions in case of the violation by InPost S.A. of the conditions of use of the trademarks in the amount of PLN 20 million. The adoption of the incentive scheme for key employees and managers On 18 June 2015, the Extraordinary General Meeting of the Company adopted an incentive scheme for key employees and persons managing the Company. The incentive scheme was designed for a specific group of employees and will be conducted in the period until 31 December 2017, including the years 2015, 2016 and The Incentive Scheme will consist in granting entitled persons the right to subscribe for the total of no more than 345,000 series E Shares at the price corresponding to the selling price of the shares of the Company under a public offering conducted in the third quarter of In order to implement the Incentive Schedule, conditional share capital increase was adopted by the amount not higher than PLN 345,000. In order to implement the Incentive Scheme, the Company will issue series A, B and C subscription warrants in the number of 115 thousand each. The condition for acquiring rights by specific employees will be the compliance with a determined level of earnings from operating activities adjusted by amortisation (EBITDA index) in 2015, 2016 and Based on the evaluation of the management board, the Group failed to recognise the costs related to the incentive scheme as at 30 September Implementation of the Electronic Acknowledgement of Receipt across the country The Electronic Acknowledgement of Receipt (EAR) is a system dedicated to serve court and prosecutor's office units, prepared by the Ministry of Justice and implemented by InPost S.A. and PGP S.A. This system allows the recipient of the item - to confirm its receipt by signature on an electronic device (e.g. a tablet) that deliverers are equipped with. The receipt of the EAR shall be legally equivalent to the receipt of a paper version of the return acknowledgement of receipt. In mid-2015 the Group completed the process of the system implementation across Poland, which significantly accelerated the circulation of court correspondence. Due to the implementation of the EAR across the country, the Group is capable of quick and efficient servicing of each institution that requires confirmation of receipt; thus, significantly broadening and improving the range of its services. Acquisition of shares in a subsidiary On 23 March 2015, the Parent Company acquired 49.98% of shares in a subsidiary of InPost Finanse Sp. z o.o., so that its share in the capital of this company increased to 100%. This transaction is described in detail in Note 10. Company's development and growth in sales After three quarters of 2015, due to the marketing activities undertaken and due to signing new contracts, the Group continued to increase the volumes handled. This resulted in the increase in sales revenues and costs in relation to the comparative period - detailed data concerning the distribution of income into products and distribution channels are included in note 5. 14

15 Registration of changes in KRS (entry to the National Court Register) On 30 April 2015, the registration court entered changes to the KRS for InPost S.A. regarding: changes in the composition of the Management Board, the method of company representation, changes in the composition of the Supervisory Board, increase in share capital by issue of series B, C and D shares and other changes in the articles of association of InPost S.A. Contract termination with Ruch S.A. On 6 July 2015, the Parent Company and InPost Paczkomaty Sp. z o.o. made a statement to Ruch S.A. regarding the termination of the cooperation contract dated 31 October The reason for termination was gross, continuous violation by RUCH S.A. of the obligations under the contract, including the deliberate failure to perform activities necessary to ensure its proper execution. Pursuant to the content of the statement made, RUCH S.A. remains to be obliged to properly complete the provision of services covered with the contract subject, whose provision had already been started, i.e. the services in relation to postal items with letters of notice of delivery accepted by RUCH S.A. in its facilities before this moment. No new postal items have been transferred to the network of RUCH S.A. since the date of the statement submission. In addition, on 6 July 2015, the Company submitted a letter to RUCH S.A. and Alior Bank S.A. according to which, due to the fact that additional costs and liabilities on the part of the Company (in connection with the contract termination) constitute damage which results from the circumstances attributable to RUCH S.A., and the value of this damage is estimated by the Company to the total gross amount not lower than PLN 15 million. The Company urged RUCH S.A. to immediately pay the aforementioned amount. In the absence of the immediate payment of the above amount, the Company will hereby make deductions of the claims attributable to the Company for remedying of the aforementioned damage with claims of RUCH S.A. for payment resulting from the provisions of the Contract. At the same time, the Company will credit any possible receivables of RUCH S.A. towards covering the claims of the Company. Launching of a network of facilities with KAR-TEL Sp. z o.o. On 12 December 2014, InPost S.A. and KAR-TEL Sp. z o.o. (hereinafter KAR-TEL) concluded a contract intended to create a network of customer service points (CSP) to the order of InPost S.A. The flat-rate monthly remuneration for the provided service amounted to PLN 700 thousand (the total of PLN 2,100 thousand in the period until 31 March 2015). Additionally, on 4 May 2015, an agreement to the contract of 12 December 2014 was signed between InPost S.A. and KAR-TEL Sp. z o.o. In the agreement KAR-TEL undertook that until 5 May 2015 the network of customer service points based on CSPs and KAR- TEL, as well as on CSPs and InPost shall fully comply with the conditions of the Framework Contract. Since 1 July 2015, all postal items handled by Inpost Capital Group are handled by a network launched in cooperation with the company KAR-TEL. The Group did not record any significant, negative impacts on its activities in connection with the launch of a network of new facilities. Approval of the prospectus of the Company and debut on the Warsaw Stock Exchange. According to the communication of 11 September 2015, the Polish Financial Supervision Authority approved the prospectus of InPost S.A. (Prospectus) On the basis of the Prospectus, in a public offering, Integer.pl Inwestycje Sp. z o.o. offered 4,623,200 shares representing 40% of the share capital of the Company, while allowing the possibility for additional sales (in whole or in part) up to 1,155,799 shares - representing up to 10% of the share capital of the Company, minus one share. On 15 September 2015, 15

16 bookbuilding process was commenced among institutional investors, on the basis of which it was determined the final price of the sale for securities and the number of shares intended for sale to individual categories of investors. Under public offering, Integer.pl Inwestycje Sp. z o.o. eventually sold shares, including to individual investors (reduction rate amounted to 24.95%) and to institutional investors. The sale price of securities was set at PLN per share. After a period of subscription for shares of individual and institutional investors, on 30 September 2015, a sell order for shares offered to the investors was placed via the Warsaw Stock Exchange. The first quotation of the shares of the Company took place on 13 October Revenues and expenses Revenues from sales by product After three quarters of 2015 and 2014, the sales structure according to the classification by products was as follows: 9-month period ended 30 September month period ended on 30 September regular and express mail registered mail self-service parcel machine parcels other parcels including courier parcels sale of licences for software and technical documentation stamps other Total revenues from sales Under others, the sale of other logistics services is presented (serving money transfers, transport services, serving advertising postal items, distribution of leaflets, unregistered postal items, "Small Courier" service). Apart from other logistics services, under other sales revenues, revenues from the sales within own network of Customer Service Points, sales of goods from agents, revenues from rental are also included. In addition, other revenues from sales in 2015 include also the sales to InPost Express Sp. z o.o. in the amount of PLN 9,769 thousand. This sale concerned the reimbursement of the costs incurred until 31 May 2015 by InPost S.A. for the development of the courier infrastructure and was executed with a 5% margin. Other sales revenues include also settlements with Integer.pl Inwestycje Sp. z o.o. in the amount of PLN 3,545 thousand, regarding the costs incurred by InPost Capital Group related to the debut on the Warsaw Stock Exchange, re-invoiced also with a 5% margin Revenues from sales by distribution channels 9-month period ended 30 September month period ended on 30 September public administration large enterprises

17 - bailiffs small and medium enterprises e-commerce other distribution channels Total revenues from sales Major customers Customers representing revenues from sales that exceed 10% of the Group's total revenues within the reporting period are classified as major customers of the Capital Group of the Company. In 2014 and after three quarters of 2015 the sales value exceeded 10% of annual revenues of the Group with one partner. In 2014, the partner was company PGP S.A., which entered the Group on 30 December The sale to this company amounted to PLN 222,251 thousand in the entire 2014 and PLN 172,278 thousand after 3 quarters of In the period from January to 30 September 2015, courts and prosecutor's offices served under the court contract constituted a significant customer of the Group. The Sale to those entities amounted to PLN 149,305 thousand Operating expenses The largest item of operating costs in 2015 constituted the costs of external services and payroll costs. In relation to the comparative period, the costs increased by PLN thousand, which was related to the increase in volumes handled and the development of the courier network. The increase in depreciation costs in 2015 was mainly due to depreciation of the contract for servicing courts and prosecutor's offices, measured under the acquisition of PGP S.A. A detailed description of this transaction is provided in note Operating revenue and expenses Other operating revenues of the Capital Group of the Company include revenues and earnings not related directly to basic activities. Other operating revenues include primarily settled grants, as well as obtained contractual penalties and reversed revaluation write-offs for receivables. Other operating expenses include primarily costs of created write-downs, court fees and enforcement costs. Slight increase in other operating expenses in three quarters of 2015, compared to the similar period in 2014, was mainly affected by the creation of write-offs for receivables in the amount of PLN 377 thousand. In the similar period of 2014, the value of created writeoffs amounted to PLN 31 thousand Financial revenues and expenses The amount of financial revenues and expenses is composed mainly of the commissions on the bank credit guarantees granted mutually within Integer.pl Capital Group (described in detail in note 17) and interest and other costs related to loans and credits granted and received. In the period from 1 January to 30 September 2015, the Group received commission for guarantees in the amount of PLN 1,224 thousand and incurred costs in the amount of PLN 1,579. In the corresponding period of 2014, the Group earned revenues for guarantees in the amount of PLN 922 thousand and incurred the costs in the amount of PLN 1,116 thousand. 17

18 6. Information on business segments In accordance with IFRS 8, the Management Board undertakes strategic decisions by analysing the areas at its business. The activities of Inpost Capital Group are homogeneous and its operating segments demonstrate similar economic characteristics in each of the following aspects: - the type of products and services, - the type of production processes, - the type or groups of customers for the products and services, - the methods for the distribution of products and delivery of services. Therefore, the Management Board decides that it fully complies with the above principles and it may combine the operating segments into one reporting segment, as has been done in this report. All services offered by the Group are complementary; therefore, the Company's Management Board believes that the assessment of the Group's activities may be based only on the aggregate data for the entire Group, as it constitutes a uniform segment of postal services. 7. Dividends paid and proposed for payment In 2014 and 2015 the Company did not pay dividends. Future dividend payments will depend on the decision of the Annual General Meeting. 8. Goodwill On 30 December 2014, 100% of shares of Polska Grupa Pocztowa S.A. (hereinafter PGP) was purchased by InPost S.A. for the price of PLN 47,534 thousand. At the time of acquisition the company's goodwill was established because the cost of the merger included supervision bonus. Moreover, the remuneration for the acquisition of control exceeded the value of net assets of PGP SA. This surplus reflected the expected benefits of synergies, revenue growth, future market development and incorporation of PGP SA personnel. Thus, as at 31 December 2014, in connection with a makeshift settlement of the purchase price of the company Polska Grupa Pocztowa S.A., the Capital Group of the Company recognized goodwill in the amount of PLN 45,342 thousand. At the beginning of 2015, final valuation was made of the acquired assets and liabilities for the allocation of purchase price according to IFRS 3, resulting in the decrease of goodwill in relation to the end of the year by PLN thousand to the amount, as at 30 September 2015, of PLN 38,444 thousand. The change was related mainly to the recognition of intangible assets in the amount of PLN 9,791 thousand, as a result of the valuation of acquired contract to support the courts and prosecutors' offices. Goodwill was also adjusted (increased) by the tax effect of the contract, valued in the amount of PLN 1,860 thousand. At the same time, an adjustment of accruals for the court and prosecutors' office contract was made in the amount of PLN 1,033 thousand, recognised in the balance sheet of PGP S.A. as at 31 December Change in comparative data is described in detail in Note 2 hereof. 18

19 The final settlement of the acquisition of PGP is as follows: Analysis of the assets and liabilities recognised at the acquisition date Polska Grupa Pocztowa S.A. Fair value at the acquisition date Current assets: Short-term prepayments and accrued income 635 Cash and cash equivalents Trade and other receivables Inventory 12 Fixed assets: Total intangible assets Tangible fixed assets 330 Deferred tax assets 693 Current liabilities: Trade and other payables (31 691) Deferred (2 046) Long-term liabilities: Credits and loans (55 177) Provisions for liabilities (2 532) Total: Goodwill arising from acquisitions Polska Grupa Pocztowa S.A. Payment transferred Additional costs incurred for the acquisition of company 60 Less: fair value of identifiable net assets Goodwill arising from acquisitions At the date of this Condensed Consolidated Financial Statements, the Management Board did not conduct an impairment test of goodwill arising from the acquisition of PGP because there were no grounds for doing so. Such a test will be conducted at the end of the year. 19

20 9. Intangible assets and tangible fixed assets The increase in intangible assets compared to the end of the year is primarily due to the purchase of rights to trademarks which InPost S.A. acquired for the amount of PLN 6 million under the contract of 8 May 2015 from Verbis Alfa Sp. z o.o. (the above contract is described in greater detail in Note 4). In addition, in the first half of 2015, the final valuation of the assets acquired in connection with the acquisition of Polska Grupa Pocztowa S.A. was performed (as described in detail in Note 8). The recognised asset in the amount of PLN 9,791 thousand is depreciated at an annual rate in the amount of 100%. Adoption of the annual depreciation period for the asset is related to the length of the remaining term of the contract for servicing courts and prosecutor's offices. The depreciation value of this asset as at 30 September 2015 amounted to PLN 7,343 thousand, thus, affecting the significant increase in depreciation in this period. Moreover, the increase in the value of intangible assets was affected by the conducted IT development works related to the development of two main IT systems as well as the system of the Electronic Acknowledgement of Receipt (EAR). The increase in tangible fixed assets was mainly affected by the purchase of a new parcel sorting machine with a value of PLN 4,029 thousand, which was adopted in September 2015 and the beginning of the investment in the letter sorting machine. At the end of September 2015, the value of this investment amounted to PLN 1,159 thousand. Both investments are funded from the financial lease agreements. 10. Investments in subsidiaries In 2015 the Group composition did not change. However, the share of the Company in its subsidiaries did change. On 24 March 2015, a part of shares in subsidiary InPost Finanse Sp. z o.o. was acquired. Under the signed contract, InPost S.A. purchased from Integer.pl S.A. 2,140 shares with a nominal value of PLN 500 each (constituting 49.98% of shares in share capital of InPost Finanse Sp. z o.o.), for the amount of PLN 10,800,000. As a result, as at 30 September 2015, the Parent Company held 100% shares in InPost Finanse Sp. z o.o. In connection with the acquisition of minority interests, retained earnings in the Condensed Consolidated Financial Statements were adjusted by the amount of PLN 1,066 thousand. The adjustment was also connected with the surplus of fair value of acquired minority interests (PLN 10,800 thousand) over the book-value recognised as at 31 December Long-term and short-term financial assets Other financial assets, both short- and long-term, are primarily loans granted by companies composing the Group to external entities and related entities from Integer.pl capital group. As at 30 September 2015, the value of receivables from long-term loans amounted to PLN 2,837 thousand and from short-term loans of PLN 585 thousand. From the beginning of 2015, the Capital Group of the Company granted new loans amounting to PLN 407 thousand and received repayment of loans totalling to PLN 4,066 thousand. Among the loans granted by the Group, loans from the agents cooperating with InPost Capital Group accounted for the highest value. 20

21 12. Deferred tax assets The increase in deferred tax asset by PLN thousand was caused mainly by an increase in non-invoiced liabilities and a decrease in the asset from the valuation of the court contract. 13. Trade and other receivables Receivables of the Capital Group of the Company are composed mainly of trade receivables, which at the end of September 2015 amounted to PLN thousand. The decrease in the balance of receivables as compared to the end of the year was connected with the repayment of receivables from related entities and more effective collection of receivables in Ageing of receivables In connection with the mergers in 2014, the Group is unable to reliably present the age analysis of trade receivables as at 30 September Therefore, with respect to those disclosures, the inclusion of data as at that date was abandoned. The table below presents overdue receivables, in net values. Period ended 30 September 2015 Period ended 31 December overdue receivables, including: - up to 30 days days days days more than 360 days Total value of overdue receivables Assets arising from long-term contract Since 2014, the Group has been executing a long-term contract for the provision of postal services to the courts and prosecutors' offices. This contract results in recognizing an asset whose valuation is shown below. The purpose of the valuation of the long-term contract is to determine the costs to be recognized in connection with the execution of the work and the costs to be capitalized to be settled in subsequent periods of the contract's execution. Profit on contracts is determined by the stage of their completion, if it is possible to reliably determine the progress. In the event it is not possible to reliably estimate the outcome of the contract, a margin of zero is recognized for the period. The progress is measured based on the ratio expressed as a percentage of revenues invoiced until the balance sheet date to the total revenue from the contract. If it is probable that the total contract costs exceed total revenue, the expected loss is recognized immediately. In the assets column, the Group presents item "Other current assets" in the event that there is a surplus of costs incurred and recognized profits due to long-term contracts above the value of invoiced sales to customers, but only up to the values of profits on the contract expected in the next year. Otherwise, i.e. in the event that there is a surplus of invoiced sales to partners over the value of costs incurred and recognised profits due to long-term contracts, the Group presents item "Other liabilities" in the liabilities column. 21