BEST : Comment by the Management Board of BEST S.A. – write-down on investment in Kredyt Inkaso S.A.

On 30 December 2016, the Management Board of BEST S.A. decided to increase the write-down on the investment in Kredyt Inkaso S.A. by an additional PLN 46.1 million.

"We realigned the valuation of the shareholding of Kredyt Inkaso S.A. so that it amounts to PLN 25 per share, i.e. making it equal to the transaction price of the block of shares of Kredyt Inkaso S.A. in August of the current year, purchased by Waterland Private Equity Investments," saysKrzysztof Borusowski, President of the Management Board of BEST S.A. "The Management Board's decision on the write-down arises from a failure to implement plans related to taking control of Kredyt Inkaso S.A. within the scheduled time frame, as a result of which the anticipated synergies were not achieved. The increase in the write-down does not exert an influence on the cash situation of BEST Group as it does not result in the outflow of cash,"he added.

"BEST Group is in a very good situation (operationally and financially) with payments on claims increasing, and we are increasingly investing in new portfolios. Moreover, in October we successfully issued bonds which were bought by nearly 500 investors for PLN 50 million, which we have earmarked for our development. In the fourth quarter of the current year, we also implemented a modern IT system, which provides us with many modern tools for managing claims as well as allowing us to build a strong competitive advantage," saysKrzysztof Borusowski.

"The last months of the year are very intense for BEST Group, as interesting claims portfolios appear on the market. We have the appropriate means and competences to make attractive allocations for our funds and to increase our market shares. Throughout 2016 we invested over a quarter of a billion zlotys in new portfolios," he added.

"If we reach an agreement on our shareholding and further developments in Kredyt Inkaso S.A., our estimates concerning the value of the investment will be subject to verification. Furthermore, we do not exclude the possibility of reversing the created write-downs on this investment," saysKrzysztof Borusowski in summary.

After the first three quarters of 2016, the revenues of BEST Group amounted to PLN 166.6 million (+64% year on year) and net profit amounted to PLN 68.7 million (+11% year on year). However, if the write-down on Kredyt Inkaso had not been created in the second quarter of 2016, the net profit would have amounted to PLN 95.8 million (+55% year on year). During this same period, return on sales amounted to 41%. This was the highest result among those companies managing claims.

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General information about BEST

BEST S.A. specialises in trading in and managing of non-performing debts, and has been listed on the Warsaw Stock Exchange since 1997. BEST Group actively invests in debt portfolios (especially in bank debts) using securitisation funds, and provides debt collection services to third parties: banks, telecommunication and power companies, as well as other providers of general services.

The combination of expertise in debt collection and in the establishment and management of investment funds has allowed BEST to concentrate all elements of its business model within a single capital group.

The total nominal value of own debts and third party debts managed by BEST exceeds PLN 11 billion (as of 30 June 2016). In 2015, BEST Group generated a net profit of PLN 82.2 million with an operating income of PLN 141.0 million.

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