Integer.pl Group - 2014 financial results

Integer.pl SA Group - the owner of an international network of innovative Paczkomaty® (under the InPost brand) parcel machines and a key private postal operator in Poland - generated consolidated sales revenues of PLN 604.07 million in 2014, an increase of 74% year-on-year. Consolidated EBITDA amounted to PLN 34.83 million.

"2014 was a very intensive year for Integer.pl Group in all areas of its business. We have tidied up the company's internal structure and are preparing InPost - or the postal business - for its IPO on the WSE. InPost is a mature and profitable company which, after the merger with PGP, has significantly increased its scale and is the undisputed leader among private postal operators in the country. Inpost, together with PGP, handled the correspondence of courts and prosecutor's offices in 2014, in addition to winning many other public tenders (e.g. CUW or KRUS), as well as significantly strengthening their position in the commercial sector, where they already serve almost 3,000 customers. The companies remain at the forefront of innovation in the postal sector, as evidenced, for example, by the project currently being finalised for the implementation of the Electronic Confirmation of Receipt (EPO). In turn, Paczkomaty® InPost in Poland handled almost 100% more parcels in 2014, and thanks to the strategic cooperation with Allegro and the significant increase in volumes, the network will be expanded by another 600 machines in 2015, in addition to increasing the capacity of those already in operation. Last year, we grew just as rapidly in overseas markets. In the Czech Republic and Slovakia, the company is already profitable, and in 2015 we assume profitability in the UK, Italy. We are finalising negotiations with a financial investor that will enable the development of the InPost® parcel machines in more countries. InPost Finance also recorded successes, which has entered into further insurance partnerships, is launching outlets at tax offices and finalised an agreement with PKO BP to provide 2,300 outlets" - Rafał Brzoska, CEO of Integer.pl SA Group, comments.

In 2014, the Integer.pl Group successfully raised funds for further development through a bond issue with a total value of PLN 120 million (INT1217, INT1219, INT0617, INT0918). All series of bonds have been marketed in CATALYST alternative trading system.

In addition, the capital of the subsidiary easyPack- responsible for the development of InPost's own network of Parcel Machines® in Europe-was increased twice in 2014. In Q3 2014, Integer.pl carried out a capital increase of €11.814 million, while the other shareholder PineBridge Investments, through its special purpose vehicle Asterina Investments S.a r.l., made a cash contribution of €10.186 million. The capital increase was registered on 14 October 2014.

Following the registration of the share capital increase, the capital structure of EasyPack sp. z o.o. is as follows:
- Integer.pl Group have 53,7% share in the share capital of EasyPack;
- PineBridge Investments, through its special purpose vehicle Asterina Investments S.a r.l., owns the 46,3% share in the share capital of easyPack.
On 23 May 2014 an increase in the capital of easyPack sp. z o.o. was registered. as follows:
- Integer.pl made a cash contribution of PLN 6.126 million and an in-kind contribution in the form of an organised part of the company worth EUR 11.45 million,
- Asterina Investments S.a r.l. made a cash contribution of EUR 16.968 million.

In 2014, the Integer.pl SA Group continued to grow on 3 key business fronts as an owner:
- revolutionary Parcel Machines® InPost
- the largest private post office InPost
- independent financial and insurance operator InPost Finance

InPost parcel machines

• There are already more than 1,100 Paczkomat® InPost machines operating in Poland, which will be systematically expanded in terms of capacity. Paczkomaty® InPost in 2014 once again have broken records for popularity among Polish e-commerce users. Number of parcels delivered through terminals increased by more than 9 0.5% against 2013 and by 440% compared to 2012. In the fourth quarter of 2014 InPost has reached an agreement with Allegro about strategic cooperation in the delivery of products ordered online. Now, in the shipping options, every e-tailer can add new possibilities: Allegro Paczkomaty® InPost (PLN 7.99) i Allegro Polecony InPost (3,94 zł). It is cheapest form of delivery available - for both registered mail and parcels. In each of these options, customers have from Guaranteed free return of purchased goods. In addition to Allegro, consumers buying from all online shops also have the opportunity to free replacement or return of goods through Parcel Machines® InPost and service szybkiezwroty.pl . All InPost parcel machines are equipped with payment card readers, Some also support contactless payments - eventually this functionality will be introduced on all devices. The Integer.pl Group plans to install a further 600 Paczkomat® InPost machines in Poland and to increase the capacity of the machines already in operation.
• Worldwide there is - in different business models - more than 4,000 Parcel Machines® InPost. Innovative terminals Integer.pl Group are available at 5 continents. The construction of InPost's own network of Parcel Machines® worldwide is being carried out by the company's easyPack in partnership with PineBridge Investments fund and includes the launch of 12 - 16,000 machines in Europe by the end of 2016. EasyPack continues dynamic expansion of Parcel Machines® InPost - network of terminals significantly increased its reach into key European e-commerce markets, Among others, in the UK and Italy. Integer.pl Group has also intensified its activities on other continents, starting to install equipment in: Asia, the Middle East and North America.

Key achievements in the international development of InPost's Parcel Machine® network by geography:

- UK - In 2014, the network grew to more than 1,000 Parcel Machines®:
o An agreement with TfL - London's public transport authority - has been finalised: InPost Parcel Machines® have been launched in the car park of Buckhurst Hill Underground station and at Victoria Station bus station, one of the busiest transport points in the UK (London),
o began working with VisualSoft, a UK-based provider of solutions for
e-commerce,
o an agreement has been signed with Morrisons Supermarket, a UK supermarket chain which owns 500 shops in the UK,
o a contract has been signed with P4D, a leading logistics player in the UK offering advanced courier services,
o a cooperation agreement has been signed with MetaPack Group, one of the most popular delivery management platforms in the local and international e-commerce market.
o an agreement has been signed with Virgin Wines (part of the Virgin Group), a leading UK e-retailer that stocks wines from around the world.
- ITALY - By the end of 2015, the company plans to have 800 Paczkomat® InPost machines in operation. The expansion will cover the northern and north-central regions of Italy and the surroundings of major cities such as Rome, Milan and Turin: Rome, Milan or Turin. Ultimately, the terminals will cover most of the country's provinces. To this end, the following have been signed:
o a cooperation agreement with TNT Express Italy, one of the global leaders in the courier industry.
for an agreement with Carrefour, one of the largest retail chains in Italy,
for agreements with Repsol Italy and TotalErg - operators of service stations operating, among others, in Italy,
- FRANCE - By the end of 2015, around 900 machines are planned. The development of the network will eventually cover most of the country. In France, the Integer.pl SA Group cooperates with, among others, the logistics operator Colis-Privé. In Q4 2014, the company also started cooperation with Mercialys, the company responsible for managing the most important French shopping centres. As a result, Parcelcells® will be available as part of the Village.Services offered at shopping malls (the first one was launched in the municipality of Clermont-Ferrand). The first phase of the project with Mercialys involves the installation of a total of 50 innovative terminals.

- CENTRAL AND EASTERN EUROPE
o UKRAINE - POST24 network currently operates only in Kyiv - development outside Kyiv suspended due to political situation
o CZECH REPUBLIC - the network includes 100 machines under the InPost brand
o SLOVAKIA - the network includes 50 machines under the InPost brand
o HUNGARY - the network includes 80 machines under the WeBox brand
o Other countries - the commercial launch of the Parcel Machines® network is underway and partnership agreements, including logistics, location and e-commerce, are being finalised.
- MIDDLE EAST -in the first half of 2014, a cooperation was launched with Aramex Group, a leading player in the logistics and transport services market in the Middle East. The cooperation will lead to the creation of the first cross-border terminal network in the Middle East, enabling the independent sending and receiving of shipments 24/7.
- NORTH AMERICA - In 2014, Inpost Canada was established to develop the InPost® Parcel Machine network in Canada. In 2014, the first machines were set up in the Greater Toronto Area (GTA).
- AUSTRALIA - InPost has signed an agreement with Australia Post for the service and delivery of Parcel Machines®. This is a continuation of the cooperation that has been ongoing for two years - from August 2014, services for the national operator will be provided directly by InPost Australia. Currently, there are already 195 Parcel Machines® delivered by Integer.pl Group operating under the Australia Post brand, and the network will be systematically expanded. Ultimately, Australian terminals will be able to be integrated with InPost's Parcel Machines® on other continents for cross-border deliveries.
- OTHER MARKETS where parcel machines are provided by Integer Group and operate under the brand of local partners. These include, among others: Australia Post, Saudi Post, Íslandspóstur, Cyprus Post, Eesti Post, "4-72" (the brand under which the Colombian national operator operates) and Nightline Couriers (Ireland).

InPost - postal services

The largest private postal operator in Poland - in 2014 implemented contracts to handle correspondence for almost 3,000 companies in Poland, both public institutions and private companies. This represents an increase of 20% since the beginning of the year.

In December 2014, InPost finalised the acquisition of 100% of the shares in Polska Grupa Pocztowa SA. The companies have integrated their operational structures and the formal acquisition of shares was the final step in the PGP acquisition process. This will increase InPost's potential for mail handling, including public contracts. However, PGP will remain a separate company and a brand dedicated to the business customer requiring advanced postal services.

In 2014, InPost won tenders to handle government correspondence Shared Service Centre h with a value of PLN 33 million and KRUS - valued at almost PLN 23 million. In addition, InPost, together with PGP, has been handling the correspondence of common courts and prosecutors' offices since January 1, 2014. The two-year contract is worth almost PLN 500 million and covers 100 million shipments.

Thanks to their operational effectiveness, InPost and PGP offer customers attractive prices for postal services and the highest delivery effectiveness in the market - as much as 75% of registered mail is delivered directly to the addressee (without an advice note). The companies also record a higher punctuality of registered mail delivery than the designated operator - 92% for D+3 letters and 97.5% for D+5 letters.

InPost has a network of more than 8,300 customer service points throughout Poland, of which 76% are also open on Saturdays and 8% on Sundays. Every day, more than 10,000 delivery men deliver mail to the doors of residents nationwide. Addressees and senders can track way of letters on the inpost.pl website. In 2013, the number of parcels handled by InPost was around 240 million pieces, while in 2014 it was 300 million pieces. Letters and parcels delivered by InPost are sequenced in a state-of-the-art 10,000 m2 sorting facility, which handles up to 1.2 million parcels per day thanks to ultra-modern sorters.

According to a consumer survey conducted in the outlets of Poland's largest private postal operator, As many as 96% of customers say that service at InPost S.A. outlets is good or very good. The statistics also confirm the attractiveness of the company's services in terms of price - As many as 83% of those surveyed consider them to be competitive or very competitive with the offerings of other companies in the market. The research also indicates customer satisfaction with the availability of InPost S.A. outlets. - As many as 76% of respondents say that stationary service points are close or very close to where they live or work.

In addition, research conducted by MillwardBrown indicate that as many as 61% of Poles are familiar with InPost. Detailed analysis shows that the company's popularity is even higher among younger, better educated people and those living in larger cities.

InPost Finance

InPost Finanse operates on the basis of a licence from the Financial Supervision Commission to operate as a national payment institution. The company has a wide range of products in the areas of insurance, money transfer delivery or mobile payments. The company handles more than 100,000 remittances a month, e.g. to the Agricultural Social Insurance Fund (KRUS), City Councils or MOPS. In addition, InPost Finanse is launching cash points at tax offices. They currently operate in, among others: The First and Second Tax Office in Gdańsk, the Second Tax Office in Gdynia, as well as at the tax offices in: Zielona Góra, Lubliniec and Myszków. Significantly, the launch of cash points of the Integer.pl Group company is being decided by no longer just tax offices, but also other public institutions, e.g. Zakład Gospodarowania Nieruchomościami w Dzielnicy Bielany m. st. Warszawy.

InPost Finance - in Q4 2014 - once again significantly expanded the remittance advice coverage. Thanks to a partnership agreement with PKO Bank Polski transfers delivered by the operator are advised to almost 2300 new points located in own branches and agencies of Poland's largest bank throughout the country.

In the first quarter of 2015, InPost Finance, together with InPost, introduced the following to its offering financial and logistical solution, whereby delivery of the contract and cash withdrawal, will be provided as a single service. "Contract Plus Cash" is an extension of the popular Smart Courier method, whereby the courier delivers the contract to the recipient and returns the signed version to the sender. The service has the potential to significantly expand the range of banks and financial institutions, enabling them to uniquely a convenient way to deliver, among other things, loans and cash loans.

In the insurance segment, InPost Finanse operates in partnership with leading market players, including: Generali T.U., LINK4, Liberty Ubezpieczenia, Towarzystwo Ubezpieczeń Wzajemnych, MTU/STU Ergo Hestia and Proama. The company - on a large scale - also provides outsourcing of billing and transaction processes. In this respect, I serve, among others. Poland's largest telecoms.

The company - on a large scale - also provides outsourcing of billing and transaction processes. In this respect, I serve, among others, the largest telecoms in Poland.

More information at: www.integer.pl