Management report on the operations of Integer.pl SA Group for the period from 1 January 2014 to 31 December 2014.

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Management report on the operations

of Integer.pl SA Group for the period

from 1 January 2014 to 31 December 2014.

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1 LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD TO THE

SHAREHOLDERS. ... 4

2 PRINCIPLES ADOPTED FOR THE PREPARATION OF THE CONSOLIDATED ANNUAL

REPORT. ... 6

3 RULES FOR THE PREPARATION OF THE ANNUAL FINANCIAL STATEMENTS AND

MANAGEMENT REPORT ON THE COMPANY'S OPERATIONS. ... 7

3.1 Rules for the preparation of the annual consolidated financial statements. ... 7

4 GENERAL INFORMATION ABOUT INTEGER.PL SA GROUP COMPANIES. ... 8

5 PRESENTATION OF SELECTED FINANCIAL DATA FROM THE COMPANY'S

OPERATIONS FOR THE LAST THREE YEARS. ... 15

6 DESCRIPTION OF KEY ECONOMIC AND FINANCIAL FIGURES DISCLOSED IN THE

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS. ... 15

6.1 Summary of key economic and financial figures disclosed in the annual consolidated financial

statements. ... 15

6.1 Description of factors and events of unusual nature having a significant impact on the Issuer's

operations and its gains or losses in the financial year. ... 17

6.2 Development prospects, important events having a significant impact on the Group's operations

and results of operations. ... 18

7 RISK FACTORS ASSOCIATED WITH THE GROUP'S ENVIRONMENT AND BUSINESS. .. 20

8 PROCEEDINGS

PENDING

BEFORE

COURT,

ARBITRATION

OR

PUBLIC

ADMINISTRATION AUTHORITY. ... 28

9 OPERATIONS OF INTEGER.PL SA GROUP ... 29

9.1 Information about key products, goods and services. ... 29

9.2 Seasonality of sales. ... 29

9.3 Markets. ... 29

10 AGREEMENTS SIGNIFICANT FOR THE GROUP'S ACTIVITIES AND OTHER SIGNIFICANT

EVENTS. ... 29

10.1 Information about agreements relevant for the operations of Integer.pl SA Group ... 29

10.2 Agreements between shareholders. ... 34

10.3 Cooperation agreements. ... 34

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11.1 Organisational and capital relations of the company with other entities and the role of the

company in the Group and changes in the structure of the Group. ... 35

11.2 Information about significant transactions entered into by the Group companies with related

parties on other than market terms. ... 36

12 LOANS, BORROWINGS, SURETIES AND GUARANTEES. ... 36

12.1 Loan agreements. ... 36

12.2 Granted loans, sureties and guarantees... 41

12.3 Information about lease agreements. ... 55

13 INFORMATION ABOUT THE PROCEEDS FROM THE ISSUANCE AND THEIR USE,

PERFORMANCE FORECASTS, FINANCIAL RESOURCES MANAGEMENT AND GROWTH

PROSPECTS. ... 55

13.1 Description of proceeds from the issuance of securities used until the date of the Management

Report. ... 55

13.2 Explanation of differences between financial results reported in the annual report and previously

published forecast results for a given year. ... 57

13.1 Description of significant off-balance sheet items in terms of subject, object and value. ... 57

13.2 Assessment and the reasons, concerning the management of financial resources, with particular

emphasis on the ability to meet the obligations incurred, and specification of any possible

threats and measures that the Issuer has taken or intends to take in order to address such

threats. ... 57

13.1 Description of major capital investments or major capital expenditures made within the Group in

the financial year. ... 58

13.2 Assessment of the feasibility of intended investments, including capital investments, compared

to the amount of resources available, taking into account changes, if any, in the financing

structure of such operation. ... 58

13.3 Assessment of factors and unusual events affecting the Issuer's result from operations for the

financial year, with the specification of the extent to which such factors or unusual events affect

the result achieved. ... 58

13.4 Characteristics of external and internal factors significant for the development of the Issuer's

enterprise and description of the development prospects for the Issuer's operations, at least until

the end of the financial year following the financial year for which the financial statements

included in the annual report were made, taking into account the market strategy elements

developed by the Issuer. ... 59

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13.5 Description of the policy related to the directions of development of the Integer.pl SA Group. .. 63

14 ADOPTED MANAGEMENT PRINCIPLES, ORGANISATION OF THE COMPANY,

SHAREHOLDERS AND OTHER IMPORTANT ISSUES. ... 63

14.1 Changes in basic principles of management of the Issuer's business and Group. ... 63

14.1 Issuer's personnel policy. ... 64

14.2 Agreements concluded between the Issuer and the managers providing for compensation upon

resignation or removal without good cause or where such removal is the result of the Issuer's

merger by acquisition. ... 65

14.3 Information on any agreements known to the Issuer (including agreements concluded after the

balance sheet date) which may result in the future change in the present structure of share

ownership in terms of shares held by current Shareholders and Bondholders. ... 65

14.4 The value of remuneration, bonuses or benefits, including those arising from Incentive

Programmes or bonus schemes based on the Issuer's equity, including schemes based on

pre-emptive or convertible bonds, subscription warrants (in cash, in-kind or in any other form), paid,

due or potentially due, separately for each managing and supervising person of the Issuer in the

Issuer's enterprise, irrespective of whether they were included in costs or resulted from profit

sharing in case when the Issuer is a parent company or a significant investor - separately

information on the value of remuneration and bonuses received for performing functions in the

bodies of subsidiaries. ... 65

14.5 Total number and nominal value of all shares of the Issuer and shares of the Issuer's related

entities held by members of the Issuer's Management and Supervisory Board (for each person

separately). ... 66

14.6 Total number and nominal value of all shares of the Issuer and shares of the Issuer's related

entities held by members of the Issuer's Management and Supervisory Board (for each person

separately). ... 66

14.7 Information on the control system of employee stock ownership plans. ... 67

14.8 Information about the conditions of cooperation with the entity authorised to audit financial

statements. ... 67

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Dear Sirs/Madams,

I have the honour and pleasure to present the annual report of Integer.pl SA Group which presents the achievements of our entities in the key business areas.

2014 was very busy for the Integer.pl SA Group; given our continuous dynamic development, the Company's internal structure was improved. The operations of Integer.pl SA Group were split into two areas: Since 1 June 2014, InPost Paczkomaty Sp. z o.o. has been involved in resale of parcel machines services purchased from other entities. Postal and courier services are now provided by InPost SA.

These changes are of formal and legal nature and they were an initial phase preparing InPost SA for its IPO on the Warsaw Stock Exchange. The planned introduction of the company's assets to the Principal Market has not changed significantly. As we announced earlier, we intend to do so in the first half of 2015.

We see a huge potential and dynamically growing importance of InPost SA in the Polish market of postal services. This was confirmed by tenders won in 2014; our experience and quality were recognised by other key public institutions. By acquiring all shares in Polska Grupa Pocztowa SA, in the next few years InPost SA will be able to handle correspondence, including in public contracts, even to a greater extent than ever before. In December 2014, InPost SA and PGP SA joined their operating structures, whereas the formal acquisition of shares was the final stage in the acquisition process. Polska Grupa Pocztowa SA, however, remained a separate company and a brand dedicated to business customers requiring advanced postal services.

During the year, we continued to expand Paczkomaty InPost. In 2014, we expanded the range of Paczkomaty InPost in the most important European markets: the UK, France and Italy. We realise that the success of our network depends largely on the success of the largest e-commerce markets, because our solution is especially dedicated to regular e-shoppers. In the UK, we deployed more than 1,000 Paczkomaty™, but the ultimate intended number is 2,000.

The popularity of self-service parcel machines does not depend on the region of the world - automated Paczkomaty™ are recognised by Customers in every country and on every continent.

This is also confirmed by a continuously growing interest in our terminals from national and private postal operators. Some of the customers who have already decided to purchase or rent our machines include Australia Post, Saudi Post, Íslandspóstur, Cyprus Post, Eesti Post, "4-72" (the brand name of Colombian national operator) and Nightline Couriers (Ireland).

So far, we have launched over 4000 Paczkomaty™. However, our strategic goal goes much further - thanks to the easyPack project implemented jointly with PineBridge Investments, we will ultimately install up as many as 12 to 16 thousand

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service parcel machines in Europe alone. But this is not the end of our offensive - we intend to intensify activities in all other continents and start to launch the machines in Asia, the Middle East and North America.

We are strengthening our position in the domestic market - in 2014 Paczkomaty InPost once again broke records of popularity among Polish e-shoppers.In the fourth quarter of 2014, InPost SA signed an agreement with Allegro on strategic cooperation in the supply of products ordered online. Now each e-retailer may add new features to their shipping options: Allegro Paczkomaty InPost (PLN 7.99) and Allegro Advice InPost (PLN 3.94). It is the cheapest form of delivery, both in relation to a registered letter and a package. Last year, Paczkomaty InPost deployed throughout the country were equipped with payment card readers and a large part of them also supports contactless payments; ultimately, we want to implement this functionality on all devices.

We realise that such a dynamic international expansion results in the increase in the costs incurred by Integer.pl SA Group in 2015 and subsequent years. However, the Management Board of Integer.pl SA Group believes that a dynamic growth in e-commerce throughout the world and, thus, rapidly increasing demand for postal and courier services, is an absolute justification for even more rapid growth of the Company both in the domestic and key foreign markets. Integer.pl SA Group has been consistently building its position also in the area of finance and insurance. In the Polish market InPost Finance Sp. z o.o. has been authorised by the Polish Financial Supervision Authority to act as a national institution payment.

A brave development strategy makes Integer.pl SA Group to continue to strengthen its position in the domestic market. In recent years, our solutions have been dynamically expanded into foreign markets; we are one of the few Polish companies that can be referred to as "global". This is a reason to be proud of, but we are aware that the strong position of the Group, increases its expectations for further action. I am sure that thanks to the cooperation of all the entities belonging to Integer.pl SA Capital Group, with the use of synergy effect and continual priority put on innovation, we will maintain our prestigious status while gaining further recognition among consumer groups.

On behalf of all employees and the Management Board of Integer.pl SA, I would like to thank the investors for their loyalty. I am also grateful for the fruitful cooperation with hundreds of independent experts, businesses and public institutions in Poland and abroad. At the same time, I would like to emphasize that we will use every effort to ensure that our services continue to develop at such rate as in 2014.

Rafał Brzoska

President of the Management Board of Integer.pl SA

2 PRINCIPLES ADOPTED FOR THE PREPARATION OF THE CONSOLIDATED ANNUAL REPORT.

The consolidated annual report is prepared and issued in accordance with the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information provided by issuers of securities and the conditions under which certain information required under the laws of a non-Member State may be considered equivalent (Journal of Laws No. 33, item 259, as amended, consolidated text: Journal of Laws of 2014, item 133).

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The consolidated annual report comprises:

1. Letter from Rafał Brzoska, the President of the Management Board, to Shareholders. 2. Selected financial data of the Group.

3. Annual consolidated financial statements of the Company. 4. Annual consolidated report on the operations of the Group.

5. Statements of the Management Board, signed by all members of the Management Board, concerning:

a. prepared annual consolidated financial statements and management report on the operations of the Group,

b. the entity authorised to audit financial statements and auditors.

6. Opinion and report of the entity authorised to audit financial statements on the audit of the annual consolidated financial statements.

In the reporting period the Group did not make any significant changes in the accounting policies in relation to those applied by the Group in the previous periods.

Consolidated financial statements are prepared on the basis of the consolidation documentation of the Group companies and the applicable provisions of law. The documentation is prepared on the basis of their books of account and the underlying documents based on which entries in the accounting records are made as well as any other necessary documents and information.

The accounting policies adopted in the preparation of the consolidated financial statements and separate financial statements are described in the notes to those statements.

3 RULES FOR THE PREPARATION OF THE ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT REPORT ON THE COMPANY'S OPERATIONS.

3.1 Rules for the preparation of the annual consolidated financial statements.

Consolidated financial statements are prepared at 31 December of each year. Annual consolidated financial statements comprise:

- consolidated statement of comprehensive income - consolidated statement of financial position - consolidated statement of changes in equity - the consolidated statement of cash flows

- notes to the annual consolidated financial statements

The annual consolidated financial statements are subject to audit by an auditor, so that the auditor may express his/her opinion in writing and prepare a report on whether the consolidated financial statements give a true and fair view of the assets and financial position of Integer.pl SA Capital Group as well as its financial performance.

The Supervisory Board is the body authorised to select an auditor to audit the annual separate and consolidated financial statements of the Company and the Group. Financial statements should be approved by the General Meeting not later than six months from the balance sheet date at the end of each financial year.

Having been approved by the General Meeting, the annual consolidated financial statements are filed with the relevant court register.

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4 GENERAL INFORMATION ABOUT INTEGER.PL SA GROUP COMPANIES.

The business profiles of the companies of Integer.pl SA Group focus on the following areas:

• provision of courier and postal services to institutional and retail customers,

• parcel services for the e-commerce sector on domestic and foreign markets,

• financial and insurance services,

• production of Paczkomaty™,

These business areas do not meet the definition of operating segments in accordance with IFRS which have been endorsed by the European Union and are in force at the date of the report for 2014.

Parent Company:

The core business of Integer.pl SA is the production and sale of Paczkomaty™ parcel machines and holding activities involving the management of the Integer.pl Group companies. Integer.pl SA has been operating as a joint-stock company since 19 March 2007, when the District Court for Kraków - Śródmieście, 11th Commercial Division of the National Court Register, registered the transformation of Integer.pl Sp. z o.o. into a joint-stock company under the Resolution of the Extraordinary Meeting of Shareholders of Integer.pl Sp. z o.o. dated 26 February 2007. Integer.pl SA has been listed on the Warsaw Stock Exchange since October 2007.

Corporate name: Integer.pl Spółka Akcyjna

Registered office: Kraków

Address: 30-624 Kraków, ul. Malborska 130

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Email: [email protected]

Website: www.integer.pl

Statistical Identification Number (REGON): 356590980

Tax Identification Number (NIP): 678-28-81-784

National Court Register (KRS): 0000276519

Share capital at 31.12.2014, fully paid-up: PLN 7,764,217.00

Company's duration: Unspecified

Auditor: Deloitte Polska Sp. z o. o. Sp. k.

Management Board:

President: Rafał Brzoska

Vice President: Krzysztof Kołpa

Member: Rossen Hadjiev

Supervisory Board:

Chair: Anna Izydorek - Brzoska

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Secretary: Krzysztof Setkowicz

Member : Zbigniew Popielski

Member : Arkadiusz Jastrzębski

Direct subsidiaries of the parent company, Integer.pl SA:

1. InPost Paczkomaty Spółka z ograniczoną odpowiedzialnością.

Corporate name: InPost Paczkomaty Spółka z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Parcel machine services and external courier services

Tax Identification Numbe (NIP): 6792895061

Shares: 99.99% Integer.pl SA

Auditor: Deloitte Polska Sp. z o.o. Sp. k.

InPost Paczkomaty Sp. z o.o. - a subsidiary of Integer.pl SA, in which Integer.pl SA holds 99.99% of shares.

Since 1 June 2014, the Company has been involved in a resale of parcel machines and courier services purchased from other entities. InPost Paczkomaty Sp. z o.o. has the following subsidiaries:

1) InPost SA – 89.93%

2) Verbis Alfa Sp. z o.o. – 100.00%

3) Verbis 2 Sp. z o.o. – 100.00% - Verbis 2 Sp. z o.o. S.K.A (the General Partner)

2. InSupport Center Spółka z ograniczoną odpowiedzialnością.

Corporate name: InSupport Center Sp. z o.o.

Registered office: Zabierzów

Address: 32-080 Zabierzów, ul. Krakowska 342

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Support services for the Group companies

Tax Identification Number (NIP): 6770009603

Shares: 100% Integer.pl SA

Share capital at 31.12.2014, fully paid-up: PLN 450,000.00

InSupport Center Sp. z o.o. - a subsidiary of Integer.pl SA Capital Group, in which Integer.pl SA holds 100% of shares.

InSupport Center Sp. z o.o. is a company ultimately intended to provide support services to the Group companies. It focuses on modernizing its headquarters in Zabierzów near Kraków and the organization of the Customer Service Centre. It offers

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retail leases to the parent company, Integer.pl SA, and to its subsidiary, InitTec Sp. z o.o. Integer.pl SA subleases spaces for production of parcel machines, while InitTec Sp. z o.o. subleases spaces for its Research and Development Department. The purpose of the Customer Service Centre (CSC) is to assist in obtaining any information on the parcel machine services provided abroad and in Poland. The Customer Service Centre is used by workers from the subsidiaries: messengers, postmen and customers of the parcel machines services. Since February 2014, CSC has been providing services to the subsidiaries of easyPack Group and to InPost SA.

3. Integer Group Services Spółka z ograniczoną odpowiedzialnością.

Corporate name: Integer Group Services Sp. z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Project management

Shares: 96% Integer.pl SA

Integer Group Services Sp. z o. o. - a subsidiary of Integer.pl SA Capital Group, in which Integer.pl SA holds 96.00% of

shares. Integer Group Services Sp. z o. o. is gradually changing its profile, adapting its activities to the immediate needs arising from the development of Integer.pl SA Capital Group. It focuses more and more attention on supporting the projects implemented by the Group, on evaluation and verification of development plans. Some employees of the leading departments in the Group's structure, such as controlling or legal department, were delegated to these tasks. The company also provides administrative services to the Group.

4. IntegerEU Limited

Corporate name: IntegerEU Ltd

Registered office: Nicosia, Cyprus

Address: 2 Sofouli Chanteclair Building, 8th floor, office/flat 801,

Business profile: Holding operations

Company registration number: HE237823

Tax Identification Number (NIP): 12237823R

Share capital at 31.12.2014, fully paid-up: EUR 82,488.00

Auditor: Nexia Poyiadjis - Head Office

IntegerEU Limited - a subsidiary of Integer.pl SA, in which Integer.pl SA holds 100% of shares.

The Company has the following subsidiaries: 1) E-Solutions LLC – 99.00%

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2) Integer Ukraine LLC – 90.00%

IntegerEU Limited holds a controlling stake in IntegerUkraine LLC incorporated under the laws of Ukraine (90% of shares),

and in E-Solutions LLC incorporated under the laws of Russia (99% of shares). IntegerEU Limited is a company incorporated in Cyprus, with its registered office in Nicosia. IntegerEU Limited is a holding company operating outside Poland. Integer Ukraine LLC provides services related to the distribution of mass advertising mail, intended mainly for business customers. The company's scope of operations encompasses 200 biggest cities and towns in Ukraine. E-Solutions LLC was established for the purpose of providing IT services related in particular to the software for servicing Paczkomaty™ parcel machines in the territory of the Russia.

5. InItTec Spółka z ograniczoną odpowiedzialnością.

Corporate name: InItTec Sp. z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Research and development

Auditor: Deloitte Polska Sp. z o. o. Sp. k.

InItTec Sp. z o.o. - a subsidiary of Integer.pl SA Group, in which Integer.pl SA holds 100% of shares. The activity of InItTec

Sp. z o.o., based on modern technologies and direct marketing solutions, primarily focuses on research and development which provides support, among others, to the businesses of subsidiaries of Integer.pl SA Capital Group. InItTec Sp. z o.o. provides maintenance and ensures good operation of the technological infrastructure (hardware/ software) of Integer.pl SA Capital Group and external entities. The company actively and successfully acquires at the same time - in order to maximise the economic benefits of their competence and copyrights, software licenses or other intangible assets - customers and business partners from outside Integer.pl SA Group. Based on a multi-levelled previous experience, the company provides full support to the extent necessary to ensure the development of InPost parcel machine network around the world.

6. easyPack Spółka z ograniczoną odpowiedzialnością.

Corporate name: easyPack Sp. z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Management of Paczkomaty™network

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easyPack Sp. z o.o. bases its international expansion on three major business assumptions. These include:

establishing new subsidiaries in cooperation with local business partners,

independent launch of Paczkomaty™ parcel machines on foreign markets through two approaches:

• open (end-to-end) approach - cooperation with local operators, courier companies and directly with the e-commerce industry (UK) delivering: higher profitability of services and thus a faster return on investment, and multi-channel access to millions of customers - a profitability guarantee,

• rental approach - rental of parcel machine lockers on an exclusive basis (Czech Republic, Slovakia) delivering: a guarantee of constant inflows and lack of risk associated with the costs of maintaining the network.

At 31 December 2014, the Company comprises the following subsidiaries forming the easyPack Group:

1) Granatana Limited, a company incorporated in Cyprus, which is an indirect shareholder (through Giverty Holding Limited) of easyPack Russia LLC, established to develop parcel services on the territory of the Russian Federation, 2) Postal Terminals s.r.o., a company incorporated in Slovakia to develop a network of parcel machines in the Slovak

Republic,

3) InPost UK LTD, a company incorporated in the UK, established to develop parcel services in the United Kingdom, 4) Postal Terminals CZ s.r.o., a company incorporated in the Czech Republic, established to provide parcel services

via Paczkomaty™ in the Czech Republic,

5) Postha 24 LLC, a company incorporated in the Ukraine, established to provide parcel services via Paczkomaty™ in Ukraine,

6) easyPack Far East Limited, a company operating in Hong Kong in the field of holding activities for companies in other countries in the Far East. The Company holds shares in InPost Malaysia SDN.BHD established to provide services to the Malaysian market.

7) InPost Hungary Kft, a company incorporated in Hungary, established to provide parcel services via Paczkomaty™ in Hungary,

8) E-commercial Innovations S.L., a company incorporated in Spain, established to provide parcel services via Paczkomaty™ in Spain,

9) InPost France SAS, a company incorporated in France, established to provide parcel services via Paczkomaty™ in France,

10) Locker InPost Italia S.r.l., a company incorporated in Italy, established to provide parcel services via Paczkomaty™ in Italy.

11) InPost Norway AS, based in Oslo, a company incorporated in Norway, established to provide parcel services via Paczkomaty™ in Norway.

7. AQ-Tech Spółka z ograniczoną odpowiedzialnością.

Corporate name: AQ-Tech Sp. z o.o.

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Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Research and development

National Court Register(KRS): 0000407763

Auditor: The Company was not audited in 2014.

AQ-Tech Sp. z o.o. - a subsidiary of the Integer.pl SA Group, in which Integer.pl SA holds 100% of shares. The Company is

the owner of unique know-how, non-patented expertise and experiences in technology and production process of components for Paczkomaty™ and Paczkomaty™and registered community designs issued by the Office for Harmonisation in the Internal Market.

8. InPost Australia Pty Limited

Corporate name: InPost Australia Pty Ltd.

Registered office: Melbourne Australia

Address: Level 30 Bourke Place, 600 Bourke Street, VIC 3000

Business profile: Development of Paczkomaty™ network

Company registration number: ACN: 168 059 710

Tax Identification Number (NIP): ABN:72168059710

Share capital at 31.12.2014, fully paid-up: AUD 100.00

InPost Australia Pty Ltd - a subsidiary of Integer.pl SA Capital Group, in which Integer.pl SA holds 100% of shares. InPost

Australia Pty Ltd. is an Australian company responsible for the project management and maintenance of PaczkomatY™.

9. InPost Canada Incorporation

Corporate name: InPost Canada Inc.

Registered office: Toronto, Canada

Address: 55 Browns Line, Toronto, ON M8W 3S2

Company registration number: 823302179

Tax Identification Number (NIP): 823302179 RC001

Share capital at 31.12.2014, fully paid-up: CAD 100,000.00

Inpost Canada Inc. - a subsidiary of the Integer.pl SA Group, in which Integer.pl SA holds 75% of shares. A company

incorporated in Canada responsible for the development of Paczkomaty™ network.

10. easyPack Plus Self Storage LLC

Corporate name: easyPack plus Self Storage LLC.

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Address: Real Estate Center, Al-Qouz, Dubai,

Company registration number: 114815

Share capital at 31.12.2014, fully paid-up: AED 300,000

easyPack Plus Self Storage LLC - a subsidiary of Integer.pl SA Capital Group, in which Integer.pl SA holds 50% of shares.

The company is responsible for the development of Paczkomaty™ network. Companies established after the end of the accounting period:

On 29 January 2015, a subsidiary of easyPack Sp. z o.o. was established. TISAK InPost limited liability company for services and trade in which easyPack Sp. z o.o. holds 50% of shares. It is incorporated in accordance with Croatian law. The company will be responsible for the development of Paczkomaty™ network.

On 10 February 2015, a new company of the Integer.pl SA Group was entered in the National Court Register: INTEGER

INWESTYCJE SPÓŁKA Z OGRANICZONA ODPOWIEDZIALNOŚCIĄ

Corporate name: Integer Inwestycje Sp. z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Holding operations

Share capital at the date of registration: 5 000.00

Management Board:

Member: Krzysztof Kołpa

On 13 February 2015, a new company of the Integer.pl SA Group was entered in the National Court Register: INTPOST

EXPRESS SPÓŁKA Z OGRANICZONA ODPOWIEDZIALNOŚCIĄ

Corporate name: InPost Express Sp. z o.o.

Telephone: +48 12 619 98 00

Fax: +48 12 619 98 01

Business profile: Postal and courier activities

Share capital at the date of registration: 5 000.00

Company's duration: Indefinite

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Member: Krzysztof Kołpa

5 PRESENTATION OF SELECTED FINANCIAL DATA FROM THE COMPANY'S OPERATIONS FOR THE LAST THREE YEARS.

2014 2013 2012

Net sales 604 068 347 324 281 925

Operating profit / loss + amortisation/depreciation (EBITDA) 34 832 49 536 74 855

Operating profit / loss (EBIT) (5 156) 24 232 56 174

Profit / loss before tax (18 999) 16 165 48 837

Net profit/loss (31 993) 8 627 47 194

Non-current assets 705 967 485 587 253 020

Current assets 503 225 369 653 304 395

Total equity 789 664 488 069 277 403

Total long-term liabilities 75 257 59 984 90 458

Total short-term liabilities 344 271 307 187 189 554

Number of shares --- --- ---

Weighted average number of shares 7 386 033 6 582 715 5 962 829

Book value per share 106.91 74.14 46.52

Earnings / loss per share (4.33) 1.31 8.91

In 2013 and 2014, due to changes in the share capital of Integer.pl SA, the table contains the weighted average number of shares for the period.

6 DESCRIPTION OF KEY ECONOMIC AND FINANCIAL FIGURES DISCLOSED IN THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS.

6.1 Summary of key economic and financial figures disclosed in the annual consolidated financial statements.

in thousands of PLN in

thousands of EUR

2014 2013 2014 2013

1. Net sales 604 068 347 324 144 193 82 480

2. Operating profit / loss + amortisation/depreciation (EBITDA) 34 832 49 536 8 315 11 763

3. Operating profit (EBIT) (5 156) 24 232 (1 231) 5 754

4. Profit / loss before tax (18 999) 16 165 (4 535) 3 839

5. Net profit/loss (31 993) 8 627 (7 637) 2 049

6. I. Net cash from operating activities (154 964) 2 341 (36 990) 556

7. Net cash from investing activities (202 034) (239 121) (48 226) (56 785)

8. Net cash from financing activities 353 599 221 180 84 405 52 524

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10. Total long-term liabilities 75 257 59 984 17 656 14 464

11. Total short-term liabilities 344 271 307 187 80 771 74 071

12. Total equity 789 664 488 069 185 267 117 686

13. Share capital 7 764 6 828 1 822 1 646

14. Weighted average number of shares 7 386 033 6 582 715 7 386 033 6 582 715

15. Earnings / loss per share (4.33) 1.31 (1.03) 0.31

16. Book value per share 106.91 74.14 25.08 17.88

The amounts stated in EUR for the reporting periods were translated as follows:

Items from the statements of comprehensive income and the statement of cash flows were translated at the exchange rate determined as the arithmetic mean of the exchange rates published by the National Bank of Poland as at the end of each month, i.e. 4.1893 for the period from 1 January to 31 December 2014 and 4.2120 from 1 January to 31 December 2013.

Items from the statements of financial position were translated at the exchange rate published by the National Bank of Poland at 31 December 2014, i.e. 4.2623, and at 31 December 2013, i.e. 4.1472.

Earnings/loss per share was calculated as follows: net profit for the period / number of shares / weighted average number of shares in the period. BVPS (book value per share) was calculated as follows: equity/number of shares/weighted average number of shares.

Consolidated statement of financial position: 01.01.2014 - 31.12.2014 01.01.2013 - 31.12.2013 in thousands of PLN in % Non-current assets 705 967 485 587 220 380 45.38 Current assets 503 225 369 653 133 572 36.13 Total assets 1 209 192 855 240 353 952 41.39 Total equity 789 664 488 069 301 595 61.79

Total long-term liabilities 75 257 59 984 15 273 25.46

Total short-term liabilities 344 271 307 187 37 084 12.07

Total liabilities 419 528 367 171 52 357 14.26

Total equity and liabilities 1 209 192 855 240 353 952 141,39

At the end of 2014, the structure of assets remained almost the same as at the end of 2013. Non-current assets accounted for approx. 58% of total assets (57% in 2013). An increase in non-current assets is primarily due to the development and inclusion of new countries, such as the United Kingdom, Italy, France, Canada, in the easyPack network. It was also impacted by the acquisition of PGP S.A. in 30 December 2014 and the recognition of the corresponding goodwill of PLN 50 million.

An increase in the Group's equity was attributable to the issue of 46 950 K series shares and 888 862 L series shares with a nominal value of PLN 1.00 each. The supplementary capital was significantly increased by PLN 225 million because of the way of taking up newly issued shares. Short- and long-term liabilities in 2013 and 2014 remained stable and their share in total liabilities at the end of 2014 was respectively 82.1% and 17.9% and 5.02%, compared to 83.6% and 16,4% at the end of 2013. As regards long-term liabilities, liabilities under long-term bonds increased from over PLN 16 million in 2013 to nearly PLN 30 million at the end of 2014, which is the result of the Group's policy to replace short-term with long-term debt. As regards short-term liabilities, liabilities under short-term bonds increased from over PLN 64 million at the end of 2013 to nearly PLN 137 million at the end of 2014. This item, however, includes certain bonds listed on ASO BondSpot with a value of PLN 119 million and maturity over 1 year, which are classified as short-term bonds due to net debt to EBITDA being exceeded, which entitles the bondholders to call upon the Issuer to purchase the bond. At present, Integer.pl SA is negotiating with the bondholders who are willing to amend the terms of issue of the relevant series of bonds and the

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resignation of determining the debt ratio at the end of 2014 and raise its level in the next semi-annual intervals, while achieving the desired level back to 30 June 2016. At the same time, proposed margin on bonds was increased. Formal changes to the terms of issue of each series of bonds must be approved by the Meeting of Bondholders of each series of bonds.

Consolidated statement of comprehensive income: Period ended: 31.12.2014

Period ended: 31.12.2013

in thousands

of PLN in %

Revenue from sales 604 068 347 324 256 744 73,92

Total operating expenses 618 615 331 920 286 695 86.37

Operating profit before depreciation and amortisation (EBITDA) 34 832 49 536 (14 704) 29.68

Amortisation and depreciation 39 988 25 304 14 684 58.03

Operating profit / loss (EBIT) (5 156) 24 232 (29 388)

Net profit/loss (31 993) 8 627 (40 620)

A significant increase in the Group's revenue is attributable to the performance of contracts for the courts and public prosecutors' offices. The results reflect the yearly growth rate and show that the Group is growing stronger in the segments of registered mail, parcel and express services and self-service parcel machines than in the segment of a simple and least profitable product, namely ordinary mail. The loss incurred by the Company is attributable, among others, to the fact that the consolidated results include a total loss incurred by easyPack for which break-even point is expected at the beginning of 2016 and to the fact that the Group has decided not to recognise deferred tax assets in the countries where the use of tax loss would be difficult in the near future.

Selected items from the statement of cash flow of Integer.pl SA at 31 December 2014 and 31 December 2013 (in thousands of PLN).

Consolidated cash flows Period ended: 31.12.2014

Period ended: 31.12.2013

in thousands

of PLN in %

Net cash flows from operating activities (154 964) 2 341 (76 850)

Net cash flows from investing activities (202 034) (239 121) 33 427 13.98

Net cash flows from financing activities 353 599 221 180 55 624 25.15

Cash flows characterise the present stage of development of the Group, especially the easyPack project. Major efforts focus on expanding the network, which explains high negative cash flows from investing activities. Since the development is financed with own funds and external debt, cash flows from financing activities show a positive balance. The increase in cash flows from financing activities is mainly attributable to new financing being raised in the form of long-term bonds. Net cash from operating activities decreased from PLN 2 million in 2013 to over PLN -74 million in 2014 primarily due to increased balance of receivables.

6.1 Description of factors and events of unusual nature having a significant impact on the Issuer's operations and its gains or losses in the financial year.

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In 2014, no extraordinary events occurred that would affect the results achieved throughout the year. The factors that affected them were taken into consideration by the Management Board, due to the nature of business, industry diversity and the challenges met by subsidiaries. This applies both to postal and courier market and foreign operations where companies enter new markets.

6.2 Development prospects, important events having a significant impact on the Group's operations and results of operations.

Key development plans for the expansion of InPost Paczkomaty assume:

o by the end of 2016, launch of 12 to 16 thousand of InPost Paczkomaty in almost all European countries, o launch of InPost Paczkomaty network in other countries outside Europe,

o development of Paczkomaty™ network in foreign markets under:

end-to-end model - cooperation with local operators, courier companies and directly with the e-commerce industry (among others in the UK):

Higher margins on services and thus a faster return on investment Multi-channel access to millions of customers - a guarantee of profitability rental model - rental of parcel lockers on an exclusive basis (e.g. in Slovakia)

Guarantee of constant inflows

No risk associated with the costs of maintaining the network o offer scope expansion, in particular the inclusion of cross-border deliveries, o establishment of new subsidiaries in cooperation with local partners,

o product offer development concerning the manner, type and return of parcels (www.szybkiezwroty.pl), o conclusion of new foreign contracts and continuation of the existing contracts,

o launch of Paczkomaty™ network in Asia and both Americas. InPost SA – postal services

At present, InPost SA is a leader among independent postal operators operating in Poland. By the end of 2014, the Integer.pl SA Group had 8,300 Customer Service Centres in each municipality across the country.

Based on the company's business and operating activities, we can assume good prospects in a long-term perspective with regard to the company's financial results. The results of Integer.pl SA will be affected by the following factors:

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o planned increase in the sale of high-margin services, i.e. registered and express letters as well as money transfers,

o developing and extending the portfolio of customers of the Power Post service /hybrid post service/, combining traditional postal services with the functionalities of electronic mail,

o establishing new subsidiaries in cooperation with local partners,

o performing the existing contracts for public institutions and local governments and continuing cooperation with such institutions,

o expanding the product portfolio of companies.

o increasing the sale of financial services by opening agency and franchise branches, o expanding the network of Customer Service Centres throughout Poland.

InPost Finanse Sp. z o.o. – financial and insurance services

In 2015, the Integer.pl SA Group intends to dynamically develop InPost Finanse Sp. z o.o. operating in the segment of financial and insurance services, including:

o to perform the existing contracts for public institutions and local governments and to conclude new contracts with such institutions, mainly for money orders,

o to expand networks of cash points and to provide cash services to other tax offices and public institutions, o to extend its product portfolio and the range of new services (including "Umowa Plus Gotówka"),

o to conclude new contracts with partners from the financial market,

o to increase the sales of insurance products and services and to enter into other forms of cooperation with new partners,

o to increase the sales of financial services in the Customer Service Centres of InPost SA, to open agencies and franchise branches in new locations in Poland,

o to implement and develop new innovative services offered by InPost Finanse Sp. z o.o., such as mobile payments and outsourcing of e-documents, assuming an increase in the number of customers,

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Thanks to the Group's business strategy, the innovative products and non-standard services offered by Integer.pl SA Group companies immediately meet a positive reaction and strong interest from individual and business customers, which is reflected in the corresponding increase in the Group's financial results.

7 RISK FACTORS ASSOCIATED WITH THE GROUP'S ENVIRONMENT AND BUSINESS.

Below are risk factors faced by the Group companies. The list of risk factors indicated below is not exhaustive. It include the events that may occur in connection with the environment, as well as with the economic situation, assets and financial standing of the companies, the occurrence of which may result in the risk for Investors and Shareholders.

Risk factors associated with the environment in which the companies operate.

1. The risk associated with the economic situation in the world, including Russia and Ukraine.

Due to the dynamic development of the companies and their expansion into newer and newer markets worldwide, including in the countries from different continents, there is a risk associated with the economic and political situation in the world. The

unstable situation

in the regions in which the companies invest may have a negative impact on their results. In particular, the current geopolitical and economic situation in Ukraine and Russia may have a negative impact on the business objectives of the Group's companies operating in these regions. To mitigate the risk, the Group's Management Board closely monitors developments on a regular basis to be able to react and adapt its strategic assumptions.

2. The risk associated with the scale of the Group's activities.

For several years, there has been a strong trend aimed at expanding services offered by the Group's companies to even newer parts of the world. There is a risk that the appropriate logistics and proper management of the new contracts will not be ensured. To reduce the risk, detailed analysis are carried out prior to the launch of the offer to new markets and processes related to the implementation of services are delegated to local, reliable partners or new local companies of the Group.

3. The risk associated with establishing and investing in foreign companies.

In accordance with the development strategy adopted, the Group's offer is addressed to a far wider range of both domestic and

foreign recipients. To ensure the best possible flow of information and improve the effectiveness of operation, the Group enters into cooperation with local business partners and establishes its own business entities related to the Group's companies by capital. There is a risk that the new entities may face problems related to the processes of acquiring and training appropriate personnel, location of the registered office, registration with the fiscal authorities and institutions. In order to mitigate that risk earlier analyses are carried out, and the implementation of projects is entrusted to an experienced team of managers and operational staff.

4. The risk associated with the launch of Paczkomaty™ abroad.

When establishing new foreign subsidiaries which are to form part of Paczkomaty™ network, it is necessary to examine the target market for the best locations for installing parcel machines. Based on previous experience related to the domestic market, it may be assumed that the locations will be adequate to allow Paczkomaty™ to be used in the most

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efficient manner. However, it cannot be expressly assumed that the locations that proved to be successful in Poland will be successful in Hungary, Ukraine, or Italy. Therefore, there is a risk that revenue generated from Paczkomaty™ will be lower than assumed.

5. The risk of a decline in economic growth in Poland.

Negative impact on the Group, its revenues and performance may result from an adverse trends of macroeconomic and economic factors, such as GDP level and growth, inflation, taxes or increase in interest rates. Through the diversification of customers' portfolio and through the continuous introduction of new services and products, the Group's companies minimise the potential impact of such risk on their operations.

6. The risk of decline in the growth of activity in which the Group' companies operate (domestic market).

The risk of adverse developments in the industries, where the Group's companies operate, is small, mainly due to the fact that the services provided are of a national nature, connected with everyday operation of businesses, the need to communicate. However, there is a risk that growth dynamics in sectors and business conditions in markets in which the Group's companies operate, will deteriorate, which can negatively affect its financial situation.

7. The risk of loss or depreciation of the Group's brand.

Over its many years of existence on the market, Integer.pl SA Group reached a secure and well-established position, whereas the individual companies and their services or products gained a high status in the minds of customers. This is related to a growing level of trust affecting the reputation of the Group. There is a risk of events that could affect the loss of reputation, and hence the decline in consumer confidence and even potential investors. Participation in the project of providing postal services to courts and prosecutors' offices caused, especially in the first months of 2014, a wide-ranging negative marketing campaign from the competition aimed at discrediting the contractor's professionalism in the eyes of the public. Reliable execution of the contract meant, however, that these attempts had little success. The Management Board takes care of the good name and image of the Group's companies through an open information policy concerning its activities and commitment not only to its business but also to social operations by offering support to foundations and other non-profit organizations. For several years, InPost has been sponsoring a team of spearmen, which won many valuable sporting awards.

8. The risk associated with legal regulations.

The threat to various activities of the Group's companies are changes in law or its different (heterogeneous) interpretations. These changes may have a negative impact on the operations of the Group's companies.

Since Poland joined the European Union, the Polish regulations have constantly changed. These changes may seriously affect the legal environment of business operations. Entry into force of a new, relevant for business transactions, regulation may be connected with interpretation problems, heterogeneous court decisions, unfavourable interpretations adopted by public administration bodies, etc. Due to the ranges of operations of the Group's companies, potential changes in regulations in postal law, competition and consumer law and Code of Commercial Companies may be of significant importance for their functioning.

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This is a very important risk factor. InPost SA has a well-established and secure leading position in the postal services segment. However, there is a risk of losing this position to potential competitors. The loss of the leading position may result in the lower sales dynamics and a slower pace of the company's development. The main competitor is the designated operator Poczta Polska SA, which, particularly after the acquisition by Polska Grupa Pocztowa SA of a contract for delivery of correspondence to courts and prosecutors' offices, implemented an aggressive marketing policy and introduced new services. In addition to Poczta Polska SA, there is a number of other smaller operators on the market, both postal and courier operators, who alone are not a significant threat, but their growing number may, however, result in increased competition in the market and thus in decreased revenues, profitability and liquidity of the Group. The advantage of the Group's companies is the experience, know-how and own organisational structures. Due to such barriers as: high cost of business start-up, expansion of the organisational structure of a nationwide coverage, recruitment and training of thousands of employees and operating workers, investments in IT systems and credibility and references, no national body is able in a short time to threaten the competitive position of the Group's companies in the postal and courier sector.

10. The risk associated with unstable tax policy.

The Polish tax system is characterised by frequent changes in laws, and many of them have not been formulated clearly enough or there is no unambiguous construction of the regulations. Interpretations of tax regulations are subject to frequent changes, and both the practice of tax authorities, and judicial decisions in taxation are not uniform. In case when tax authorities adopt an interpretation of tax laws different from the one which is the basis for the calculation of the tax liabilities by the Group, such a situation may have a material effect on the business, financial situation and prospects for the Group's development.

11. The risk associated with financial transactions.

In August 2008, Integer.pl SA concluded a long-term CIRS contract (Currency Interest Rate Swap). It is a contract between two parties, involving the exchange of the nominal value of the loan and its interest in one currency (for Integer.pl SA - PLN) into the nominal value of the loan and its interest in another currency (JPY). Current observations and detailed analyses of the market concerning the use of CIRS transactions performed by Integer.pl SA guarantee the safety and financial stability of the company. The liability for that derivative at 31.12.2014 amounted to PLN 1,577,000.00.

INTERNAL RISK FACTORS.

Risk factors related to the Parent Company and the Group's activities.

1. The risk associated with the implementation of strategic objectives.

Successful implementation of the strategy adopted by the Group's companies is based on well-planned investment activities and adopted development concept. There is no guarantee that no events occur associated with the decrease in interest in traditional correspondence for the benefit of electronic and on-line media, introduction of changes in legal regulations and changes in the general economic situation of the country that will have a negative impact on the Group's operations. There is a risk of failure in achieving the established strategy, which is related to the type of business conducted by postal and courier companies.

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Implementation of new projects by the Group's companies is associated with the risk of their non-execution, delayed execution, budget overspending and temporary suspension of execution. In particular, in the case of key projects, it may cause interference in the pursuit of business goals. In order to reduce the project risk, the implementation of each project is preceded by analysis of profitability, it is monitored on an ongoing basis and reported in accordance with established internal rules.

3. The risk of increase in operating expenses.

The increase in costs of services provided is highly affected by the increase in prices of, among others, fuel, products and components, or energy carriers, exchange rates, labour costs and taxes, which in turn may result in the decrease in the growth dynamics and generate results of the Group's companies below the assumed expectations.

Mitigating the risk of the increase in costs of service provision is performed, among others, through the conclusion of cooperation contracts that secure to the best possible extent the interests of the Group's companies and the introduction of innovations to offers.

4. The risk of increased competitiveness.

While operating in the market which is largely based on innovative solutions, there is a risk that competitors of the Group's companies will implement new technologies. This may result in a temporary reduction in the competitiveness of its market offer presented by the Group's companies. To counteract this risk, the Group not only carefully observes the actions of competitors, but it also monitors global trends in the implementation of state-of-the-art solutions by regular participation in fairs and other such technical events all over the world. Moreover, the Group employs and cooperates with high-class specialists working on the newer and newer solutions that ensure its leading position on the market also in this field.

5. The risk associated with the launch of Paczkomaty™ in Poland.

Part of revenue generated by the Group from handling parcels through Paczkomaty™ gaining more and more popularity is largely attributable to the appropriate locations. There is a risk that a failure in selecting appropriate locations for devices will result in the absence of expected revenue from the use of these devices. To mitigate the risk, the subsidiary easyPack Sp. z o.o. involved in the management of Paczkomaty™ network uses its effort to expand the network by finding attractive locations for new devices by signing agreements with, among others, fuel stations, retail chains, which include large-area stores that ensure high availability and relatively large flow of potential customers. Paczkomaty™ that are already in operation and do not yield the expected profits are relocated to strategically better locations.

6. The risk associated with storage of Paczkomaty™.

Due to the increased production of Paczkomaty™, the demand for space for their storage increases. If any disturbances in the receipt occur, there is a risk that the entire warehouse space will be used, which may result in significant increase in the cost of storage, temporary interruption in the production process and, consequently, in the disturbance of sale liquidity.

7. The risk of dependence on modern IT systems and technologies used.

Smooth functioning and operational activities of the Group's companies depend to a large extent on the quality of data processing and analysing by IT systems, as well as on the reliable communication inside and outside the Group with the use of modern media. There is a risk of disturbances in the operation of systems and/or software, on which Group's companies

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base, such as infection with viruses or technological failures which temporarily prevent access to data and information. In such situation, the operations may be interrupted or there may be a temporary decrease in their effectiveness, which consequently has a negative impact on the company's performance. In order to eliminate this risk the Group continues to invest in the highest quality of tools and technologies made available to employees, to achieve the maximum effectiveness and safety of work, as well as it ensures the supervision of a professional staff of technicians over IT systems and their constant technical support.

8. The risk of development of operational structures below the assumed expectations.

Significant elements of the Group's structure are operating field units, for the development of which the Group allocates specific funds systematically. Investment plans assume both the creation of new and the expansion of already operating branches, agencies and Customer Service Centres of InPost SA, searching for the most attractive strategic locations in Poland for this purpose. However, there is a risk of failure in the implementation of the development plans for the already existing operating structures, which may result in the loss of a part of funds allocated for this purpose if it is impossible to obtain a sufficient number of customers for services provided. To reduce the risk, Integer.pl SA and Group's companies carry out an intense marketing and promotional policy and introduce new innovative services to the offer, creating additional benefits for customers and contributing to the increase in the interest in the offer.

9. The risk of maintaining human resources at a sufficiently high level.

The Group is operating in the market where obtaining and maintaining highly qualified personnel in all areas of operation is a major challenge for employers. It applies in particular to the areas connected with sales and customer service, where there is a high turnover of staff, as well as with technological areas, where there is a need to employ highly-skilled workers. Personnel shortages in these areas may result in the slowdown in the implementation of basic processes in the Group, therefore, the Group has developed recruitment procedures aimed at obtaining qualified staff and maintaining human resources at a sufficiently high level.

10. The risk of losing key employees and their use of know-how as well as the inability to obtain new, appropriately skilled managers.

Steady increase in the market competition may result in the reduced costs of servicing mails without the concomitant increase in employee remuneration. Therefore, there is a risk that some of the employees will leave, which may result in the weakening of the organisational structure, on which the operations of the Group's companies are based, and it is also connected with the risk of the increase in costs associated with recruitment processes for new employees.

The introduction of the incentive system for the remuneration of work, depending on its results, is intended to reduce the risk of absence of remuneration increase in Integer.pl SA and its subsidiaries. This results in improved performance of operational staff and motivates them to take action. In many ways, Integer.pl SA and the Group's companies are precursors in conducting operating activities in individual markets, which requires taking complex decisions and building valuable, industry know-how.

The possible loss of key personnel would be connected with the use of the knowledge and specialist operating, organisational and commercial solutions by the competition. Such a situation would have a negative impact on the competitive advantage of the Group's companies.

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Due to their long-term loyalty or due to lack of confidence in private postal operators, there is a risk that customers of designated operator - Poczta Polska SA will not use services of the subsidiary InPost SA, or they will use them to a limited extent. Group's method to eliminate this risk is to address its commercial offer mostly to institutional customers, in the business of which a reliable economic calculation and access to latest technologies are the most important.

12. The risk of losing customers and their confidence as a result of the human factor.

The competitive advantage derives from multiple factors whose measure is the level of customer satisfaction. Comprehensive and easy availability of the offer of Group companies is a definite advantage for customers. However, there is a risk of improper performance of duties by the personnel of the Group companies or of reduction in the availability of services offered. This may cause the decrease in their quality and loss of customer confidence, and, consequently, their shift to the competition, which contributes to the decrease in sales revenues and lower financial liquidity.

To minimise this risk, the Group uses an incentive pay system in its companies, where the amount of the remuneration obtained depends on the quality and effectiveness of work of persons employed. Moreover, the Group companies have tools that allow them to control and to further motivate employees through the monitoring system of persons working in the field (GPS) and a training system. Another element contributing to the improvement of the quality of services is a specialised IT system for tracking parcel items and managing processes in the companies.

To a large extent, these tools make it possible to reduce the risk of human factor. Constant improvement of services provided can be observed - based on indicators.

13. The risk of reduced quality of services provided by the level of complaint handling.

In order to satisfy its customers, the Group makes it available for them call-centres operated by qualified personnel and well-functioning team of customer service and complaint processing. With the use of a customer-friendly approach, the Group reduces to a minimum the risk of losing customers as a result of dissatisfaction with service in the complaint process and obtaining any possible compensation. As a result of the project to provide correspondence to courts and prosecutors' offices, the number of shipments has increased significantly. Considering the possible increase in the number of complaints, a new Customer Service Centre in Toruń was opened, dedicated specifically to deal with complaints. With reliable, professional and fast service the risk of losing customers due to improper handling has been significantly reduced.

14. The risk of participation in any damage and insurance costs.

Acquiring new customers by the Group companies, particularly courts and public prosecutors' offices, means an increase in the volume of postal items that they deliver, which in turn may result in the increase in the number of compensation processes connected with the improper performance or failure to perform a service. In order to reduce the participation in damage, the Group concludes relevant insurance policies which include all risks associated with the operations of the companies. As the current loss ratio is maintained at the same - low - level, there is no risk of a significant increase in the insurance costs.

15. The risk of failure of the planned investments and projects.

In the first half of 2014, the Group continued its planned development policy through investments in other entities from direct marketing and e-commerce industries: postal, logistics and financial services. Therefore, there is a risk of failure of planned investments and projects and a risk that these types of investments may not generate the expected return of capital, which may result in the slowdown of the Group's growth and implementation of its strategy.

Management report on the operations of Integer.pl SA Group for the period from 1 January 2014 to 31 December 2014.