Integer pl : Notes to the CONSOLIDATED QUARTERLY REPORT for Q1 2014

Consolidated report for Q1 2014 of Integer.pl SA Capital Group‌‌‌‌‌‌‌‌‌‌ Notes to the CONSOLIDATED QUARTERLY REPORT‌‌ - Kraków, 15 May 2014 -‌‌ CONTENTS:

1. Basic information about the Group companies 4

2. Principles adopted in the preparation of the condensed consolidated report for Q1 2014. 10

3. Material events affecting the operations of the Group companies and other relevant information relating to Q1 2014 and thereafter. 13

4. Selected financial data disclosed in the condensed consolidated quarterly financial statements and the condensed separate quarterly financial statements translated to EUR 24

5. A list of shareholders holding, directly or indirectly through the subsidiaries, 5% of the total number of voting rights at the General Meeting of Shareholders as at the date of submission of this report and changes in the shareholding structure with respect to qualifying shareholdings of the Issuer's since the date of submission of the previous quarterly report 27

6. Changes in the shareholdings in Q1 2014 and until the date of this report 28

7. The holding of the Issuer's shares or rights to shares by members of the Issuer's Management Board or Supervisory Board as at the date of submission of this quarterly report, including any changes thereof since the date of submission of the previous quarterly report, separately for each such shareholder. 30

8. Proceedings pending before a court, an arbitration body or a public authority, including information about single proceedings relating to the liabilities or receivables of the Issuer or its subsidiary, with a value of at least 10% of the Issuer's equity, or two or more proceedings related to the liabilities and receivables with an aggregate value of at least 10% of the Issuer's equity. 31

9. Information about guarantees or sureties for the repayment of borrowings granted by the Issuer or its subsidiaries to a single entity or a subsidiary of that entity, where a total value of the existing guarantees or sureties is equivalent to at least 10% of the Issuer's equity 31

10. Other information which, according to the Issuer, is essential for the assessment of the Issuer's human resources, assets, financial position, results of the operations and any changes thereof as well as any information relevant for the assessment of the Issuer's ability to perform obligations 31

11. Factors which, in the Issuer's opinion, will have an impact on the Issuer's and the Group's financial results, at least in the coming quarter 34

12. A brief description of the Issuer's achievements or failures in Q1 2014, including the associated most significant events 35

13. Notes on the seasonal or cyclical nature of the Group's activity in Q1 2014 37

14. Factors and events, notably of extraordinary nature, which have a significant impact on the recorded consolidated financial results. 37

1. Changes in contingent liabilities or assets since the end of the previous financial year. 37

2. Issue, redemption and repayment of equity and non-equity securities 38

3. Dividend paid (or declared), in total and per one share, broken down into ordinary and preference shares 38

4. Events after the reporting date of the quarterly condensed financial statements, which are not disclosed in the financial statements but could have a significant impact on the Issuer's financial results in the future 38

5. The Management Board's standpoint regarding the achievement of forecasts for the financial year previously issued, in the light of the results presented in the quarterly report 38

6. Basic information about the Group companies

7. The business of Integer.pl SA Capital Group focuses on the following areas:

   • provision of postal services to institutional and individual clients,

   • manufacture of self-service parcel machines,

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

   • financial and insurance services,

   • logistics and transport services,

   The overriding objective of the Group companies is to ensure their intensive development and competitiveness in domestic and foreign markets. The companies have extensive experience of know-how, their our own modern technical and logistics facilities and a proactive business strategy using innovative tools and solutions make them significantly competitive.

   The Group companies have many times been awarded as follows:

   • In January 2014, Integer.pl SA Group was chosen by the Internet users the winner of the Puls Biznesu ranking - "Wybierz Mistrza GPW".

   • In February 2014, InPost parcel machines won the UK title of "The Delivery Excellence Award 2014", in the

     "Best Carrier Contribution to Delivery Innovation" category.

   • In March 2014, Integer.pl SA Group won the title of the "2013 Reliable Employer" in an online voting conducted by "Rzeczpospolita", "Dziennik Gazeta Prawna" and "Monitor Gospodarczy".

   • In May 2014, InPost Sp. z o.o. and InPost parcel machines implemented by the same won the title of the "2014 Good Brand" in the "parcel delivery" category. The award was granted on the basis of opinions and recommendations of respondents, as well as of the "Good Brand - Quality, Trust, Reputation" Competition Jury.

   The parent company's activity primarily focuses on the manufacture of parcel machines, i.e. devices for sending and collecting parcels on a 24/7 basis. A key element of the strategy pursued by Integer.pl SA iis the development of a network of parcel machines on international markets and the implementation of new solutions and innovative projects that enhance the Company's market competitiveness worldwide.

   Integer.pl SA has been operating as a joint-stock company since 19 March 2007, when the District Court for Kraków - Śródmieście, XI 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.

   Business name: Integer.pl Spółka Akcyjna

   Registered office: Kraków

   Address: 30-624 Kraków, ul. Malborska 130

   Statistical Identification Number (REGON): 356590980

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

   National Court Register (KRS): 0000276519

   Share capital as at 31 March 2014: PLN 6 875 355

   Telephone number: [phone]

   Fax number: [phone]

8. mail: [e-mail]

   Website: www.integer.pl

   Company's duration: Indefinite

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

   Management Board of the Company:

   President of the Management Board: Rafał Brzoska

   Vice President of the Management Board: Krzysztof Kołpa

   Member of the Management Board: Rossen Hadjiev

   Supervisory Board:

   Chair: Anna Izydorek - Brzoska

   Vice Chair: Rafał Abratański

   Secretary: Krzysztof Setkowicz

   Member of the Supervisory Board: Zbigniew Popielski

   Member of the Supervisory Board: Arkadiusz Jastrzębski

   Under the Company's Articles of Association, the governing bodies of Integer.pl SA include:

   • General Meeting,

   • Supervisory Board,

   • Management Board.

In Q1 2014, the Management Board and the Supervisory Board of Integer.pl SA remained unchanged.

No Audit Committee was established within the Supervisory Board. The duties of the Audit Committee and the Remuneration Committee are performed by the Supervisory Board of Integer.pl SA.

Integer.pl SA has been listed on the Warsaw Stock Exchange since October 2007. For more information about the company, go to www.integer.pl

As at 31 March 2014, Integer.pl SA Capital Group comprises the following entities directly owned by the Issuer:

Item no.	Particulars of the Issuer's direct subsidiaries:	Shares in the parent company:	Members of the Management Board:	Business profile:
1.	Inpost Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS: 0000255841 REGON:120246484 NIP:6792895061	99.99%	Rafał Brzoska - President of the Management Board Krzysztof Kołpa - Member of the Management Board	Postal activities.
2.	InSupport Center Sp. z o.o. (the name of Inlogistyka Sp. z o.o. was changed on 13.01.2014) 32-080 Zabierzów, Ul. Krakowska 342 KRS:000046675 REGON:350506145 NIP:6770009603	100.00%	Krzysztof Kołpa - President of the Management Board	Logistics activities.
3.	Integer Group Services Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS:0000317743 REGON:120815500 NIP:6792994320	96.00%	Rafał Brzoska - President of the Management Board Krzysztof Kołpa - Member of the Management Board	Project management and servicing of parcel machines.
4.	Integer EU Limited Chanteclair Building 3rd floor, suite 303, 1096 Nicosia Cyprus Registered under number HE237823	100.00%	Rafał Brzoska Aristodemos Loizou David Savva (Board of Directors)	Holding activities.
5.	InPost Finanse Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS: 0000027731 REGON:356319415 NIP:6782832047	49.98%	Rafał Brzoska - President of the Management Board Krzysztof Kołpa - Member of the Management Board Jerzyk Grażyna - Member of the Management Board	Financial and insurance activities.
6.	InItTec Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS:0000288698 REGON:141088050 NIP:5272552265	100.00%	Rafał Brzoska - President of the Management Board	Research and Development.
7.	easyPack Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS:0000418380 REGON:122552587 NIP:6793081395	49.19%	Rafał Brzoska - President of the Management Board Łukasz Nowiński - Vice President of the Management Board	Management of the network of parcel machines.
8.	AQ-Tech Sp. z o.o. 30-624 Kraków, ul. Malborska 130 KRS: 0000407763 REGON:122487128 NIP:6762452212	100.00%	Rafał Brzoska - President of the Management Board	Research and Development.

9.	Nowoczesne Usługi Pocztowe Sp. z o.o. 30-624 Kraków, Ul. Malborska 130 KRS:0000442032 REGON:122726260 NIP:6793087624	99.43%	Rafał Brzoska - President of the Management Board Krzysztof Kołpa - Member of the Management Board	Postal services.
10.	Inpost Australia PTY Limited Hall&Wilcox Lawyers Level 30 Bourke Place 600 Bourke Street Melbourn Vic 3000	100.00%	Rafał Brzoska Wojciech Karol Foroncewicz Blagojce Petrowski	Development of the network of parcel machines.
11.	Inpost Canada INC 55 Browns Line Toronto ON M8W 3S2 Canada	75.00%	Tony Jasinski William Robertson Victor Boraks	Development of the network of parcel machines.

1)

InPost Sp. z o.o. is a subsidiary of Integer.pl SA Capital Group, the largest and independent

postal service provider. The company has been providing postal services on a national level since November 2006. Based on the innovative approach to business, a broad product range and the application of innovative technologies the company is consistently strengthening its position in the market of postal and courier services and in the rapidly developing e-commerce sector. InPost Sp. z o.o. has its own technical and logistics facilities, making it possible for the company to operate on a nationwide scale, and the company's services are available in over 7 700 Customer Service Centres. The company has won many prestigious awards for its achievements.

Subsidiaries of InPost Sp. z o.o. include:

1. Verbis 2 Sp. z o.o., with its registered office in Warsaw, at ul. Cybernetyki 21, being the sole general partner of Verbis 2 spółka z ograniczoną odpowiedzialnością S.K.A., with its registered office in Kraków, at ul. Malborska 130, and

2. Verbis Alfa sp. z o.o., with its registered office in Warsaw. at ul.Cybernetyki 21.

2)

The business of InSupport Center Sp. z o.o. involves logistics services provided to all companies of the Capital Group, as well as to other third-party entities operating in the e-commerce sector. The company is, among others, responsible for the operation of the Group's logistics centre (sorting department) in Wola Bykowska near Piotrków Trybunalski. Optimisation of costs of logistics processes related to day-to-day activities of Integer.pl SA Capital

Group companies, is an overriding objective of InSupport Center Sp. z o.o. strategy. On 13 January 2014, the company changed its business name from InLogistyka Sp. z o.o. to InSupport Center Sp. z o.o.

3)

Integer Group Services Sp. z o.o.is responsible for project management and support service of parcel machines being devices from which customers may collect their on-line purchases at any time, on a 24/7

basis, with no queues and in any location of their choice. For more information, go to www.paczkomaty.pl.

4)

Integer Eu Limited is a company incorporated in Cyprus, with its registered office in Nicosia. Integer Eu Limited is a holding company operating outside Poland. The company holds a controlling stake in IntegerUkraine LLC incorporated under the laws of Ukraine, and in E-Solutions LLC incorporated under the laws of Russia. 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 in November 2012 for the purpose of providing IT services related in particular to the software for servicing parcel machines in the territory of the Russian Federation.

5)

InPost Finanse Sp. z o.o. offers financial and insurance services to mass (business/institutional) and individual customers. The company operates based on the network of Customer Service Centres of InPost Sp. z o.o., the postal operator, the acquisition of existing customer service centres in small franchise networks and the use of existing cash desks (payment centres). Traditional financial services offered by the company include bill payments, domestic and foreign money orders, insurance and loans. Shares in Inpost Finanse Sp. z o.o. are held by a subsidiary Nowoczesne Usługi Pocztowe Sp. z o.o. - 50.02% and the parent company Integer.pl SA - 49.98%

6)

The activity of InItTec Sp. z o.o. based on modern technologies and direct marketing solutions primarily focuses on research and development activity which provides support, among others, to the businesses of subsidiaries of Integer.pl SA 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.

7)

easyPack Sp. z o.o. is a subsidiary established for the purpose of servicing and managing the network of parcel machines. As at 31 March 2014, the company comprises the following subsidiaries forming the Group:

1. Granatana Limited, a company incorporated in Cyprus, which is an indirect shareholder (via 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, created for the development of parcel services via parcel machines in the Czech Republic,

5. Postha 24 LLC, a company incorporated in the Ukraine, established for the development of parcel services via parcel machines in the Ukraine.

6. easyPack Far East Limited, a company designed to operate in Hong Kong in the field of holding activities for companies in other countries in the Far East. In Q1 2014, the company registered InPost Malaysia SDN.BHD, a company established to provide services to the Malaysian market,

7. Inpost Hungary Kft, a company incorporated in Hungary, established for the development of the provision of services via parcel machines in Hungary,

8. E-Commercial Innovations S.L., a company incorporated in Spain established for the development of the provision of services via parcel machines in Spain,

9. Inpost France SAS, a company incorporated in France, established for the development of parcel services via parcel machines in France,

10. Locker InPost Italia S.r.l., a company incorporated in Italy established for the development of the provision of services via parcel machines in Italy.

At the date of issue of Q1 2014 Report, a subsidiary easyPack z o.o. is in the course of establishing a special purpose vehicle in Norway, i.e. Inpost Norway AS, with its registered office in Oslo. The company will be established to provide services via parcel machines in Norway.

8)

AQ -Tech Sp. z o.o. is the owner of unique know-how, non-patented professional knowledge and a set of experiences in technology and production process of components for self-service parcel machines and parcel equipment and registered community designs issued by the Office for Harmonisation in the Internal Market with significant relevance for the implementation of investment plans of the Issuer.

9)

Nowoczesne Usługi Pocztowe Sp. z o.o. is intended to provide postal services. As at 31 March 2014, it is a subsidiary in which Integer.pl SA holds 99.43% of shares (the remaining 0.57% of shares is held by InPost Sp. z o.o.). The Company holds 50.02% of shares in InPost Finance Sp. z o.o., which in turn holds 24% of shares in InPost Finance s.a.r.l. (the company incorporated under the Luxembourg law), and 4.35% of shares in ProfesKasa SA.

(*) On 31 May 2014, InPost Sp. z o.o. will be contributed to the company. (CR 36/2014 and 60/2014)

2. Principles adopted in the preparation of the condensed consolidated report for Q1 2014.
1. Statement of compliance.

   The condensed consolidated financial statements and the condensed separate financial statements presented in this consolidated report have been prepared based on the accounting principles consistent with IAS 34 "Interim Financial Reporting", in accordance with IFRS endorsed by the European Union and to the extent required by the Regulation of the Minister of Finance of 19 February 2009 on the 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 of 2014, item 133), and they cover the period from 1 January to 31 March 2014 and the comparable period from 1 January to 31 March 2013.

   The condensed consolidated financial statements are consistent with all the requirements of IAS 34 "Interim Financial Reporting" and present a true and fair view of:

   the financial position of Integer.pl SA Group as at 31 March 2014 and 31 March 2013;

   profit or loss of Integer.pl SA Group for the period of three months ended 31 March 2014 and 31 March 2013; cash flows of Integer.pl SA Group for the period of three months ended 31 March 2014 and 31 March 2013;

   The condensed separate financial statements are consistent with all the requirements of IAS 34 "Interim Financial Reporting" and present a true and fair view of:

   the financial position of Integer.pl SA as at 31 March 2014 and 31 March 2013;

   profit or loss of Integer.pl SA for the period of three months ended 31 March 2014 and 31 March 2013; cash flows of Integer.pl SA for the period of three months ended 31 March 2014 and 31 March 2013;

   The consolidated and condensed separate financial statements have been prepared based on the assumption that Integer.pl SA Group will continue as a going concern in the foreseeable future. As at the date of approval of these financial statements there are no circumstances indicating any threat to the Group's ability to continue as a going concern.

2. Format and general principles for the preparation of the report for Q1 2014.

   the consolidated statement of comprehensive income

   the separate statement of comprehensive income the consolidated statement of financial position the separate statement of financial position

   the consolidated statement of changes in equity the separate statement of changes in equity

   the consolidated cash flow statement the separate cash flow statement

   Pursuant to § 83.1. of the aforementioned Regulation, an Issuer that is a parent company is not obliged to present a separate quarterly report if the consolidated quarterly report contains the Issuer's condensed quarterly financial statements, including:

   the separate statement of comprehensive income separate statement of financial position

   the separate statement of changes in equity the separate cash flow statements

   The consolidated quarterly report includes:

   Notes to the consolidated quarterly report.

   Condensed consolidated financial statements of Integer.pl SA Capital Group. Condensed separate financial statements of Integer.pl SA.

3. Adopted accounting principles.

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

   The quarterly consolidated financial statements are prepared on the basis of the documentation of the Capital Group companies subject to consolidation and the applicable provisions of law. The said documentation is prepared by the Capital Group companies on the basis of their books of account and the underlying records based on which entries are made as well as any other necessary documents and information.

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

4. Functional currency and presentation currency of the financial statements and the principles adopted for the conversion of financial data.
5. functional currency and presentation currency

   Polish zloty is the functional currency of the parent company and its subsidiaries and the presentation currency of the condensed consolidated financial statements.

6. principles adopted for the conversion of financial data

7. Items from the statements of comprehensive income and the cash flow statement were translated at the exchange rate calculated as the arithmetic mean of the exchange rates published by the National Bank of Poland as at the end of each month which in the period:

   from 1 January to 31 March 2014 amounted to 4.1894

   from 1 January to 31 March 2013 amounted to 4.1738

   Items from the statements of financial position were translated at the exchange rate published by the National Bank of Poland as at 31 March 2014, i.e. 4.1713, and as at 31 December 2013, i.e. 4.1472.

   Earnings/loss per share was calculated as follows: net profit/loss for the period / number of shares in the period / 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. All data presented in these "Notes to the consolidated quarterly report" are stated in thousands of PLN.

8. Organisation of Integer.pl SA Capital Group and its consolidated entities, as well as changes in the Group structure (if any).

9. Integer.pl SA Group comprises twelve entities. Ten out of these entities are consolidated. Inpost Australia PTY Limited and Inpost Canada INC (SPVs) have not been consolidated yet.

   The parent company approves the operation strategies of its subsidiaries and controls the strategies established. It has an influence on the organisation of the Capital Group in such areas as law, economy, finances and reporting. The established development strategy of companies is implemented on an ongoing basis through direct participation in the governing bodies of the subsidiaries of the management of the parent company.

   The Group companies have different business profiles and, therefore, the separate and consolidated financial results significantly differ. The consolidated financial statements take account of the turnover of numerous companies, the size of assets and equity.

   The condensed consolidated financial statements cover Integer.pl SA as the parent company and the following direct subsidiaries of the Issuerwithin Integer.pl SA Capital Group as at 31 March 2014. These include:

   Item no.	Direct subsidiaries of Integer.pl SA as at 31 March 2014	% share of the Issuer in the company:	Direct subsidiaries of Integer.pl SA as at 31 March 2013	% share of the Issuer in the company:
   1.	InPost Sp. z o.o.	99.99%	InPost Sp. z o.o.	99.99%
   2.	Integer Group Services Sp. z o.o.	100.00%	Inpost Paczkomaty Sp. z o.o.	76.00%
   3.	InSupport Center Sp. z o.o.	100.00%	InLogistyka Sp. z o.o.	100.00%
   4.	Integer Eu Limited	100.00%	Integer Eu Limited	100.00%
   5.	InPost Finanse Sp. z o.o.	49.98%	InPost Finanse Sp. z o.o.	94.28%