PLN 22m of net profit in Q3 2012 - up by 67% YoY. KRUK enhances its position in Slovakia.

• in the first three quarters of 2012 the KRUK Group reported in excess of PLN 245m in revenues and PLN 217m in cash EBITDA*, respectively up by 29% and by 41% on the corresponding period of last year cumulative net profit generated
• in the first three quarters of 2012 reached PLN 54m in the period from the beginning of the year to the end of
• September 2012, cash payments on debts purchased by KRUK reached PLN 332m, up by 42% year on year from January to September 2012 KRUK invested PLN 190m in debt purchases, including PLN 94m only
• in the third quarter of 2012 in August 2012 KRUK started the provision of third party debt collection services in Slovakia. Since 2011, KRUK has purchased debts with a total nominal value of around PLN 95m on the Slovak market, including around PLN 40m worth of debts purchased in October 2012.

The third quarter was a very successful period in terms of financial results as well as business development of the KRUK Group. We recorded an increase in investment in receivables purchases in comparison with the second quarter, while keeping our debt ratio at a safe level. Our cash flows are very stable. The share of cash payments from customers (debtors) has been growing and after three quarters of this year already constitutes 97% of payments made in the entire 2011. We also feel satisfaction about our developing business on the new foreign market. "In August we signed a contract for the servicing of bank receivables in Slovakia and in October we purchased two debt portfolios with a total nominal value of PLN 40m," says Piotr Krupa, KRUK SA CEO.

The Slovak market resembles the Czech market in many ways. KRUK's operations in Slovakia are managed from the Czech Republic, where the company has a subsidiary. KRUK's subsidiary in the Czech Republic also has Slovak employees. In accordance with KRUK Group estimates, investment outlay on the Slovak market stands at around PLN 50m. The size of the market is comparable to the Hungarian one. Prices of non-performing debts in Slovakia are lower than in the Czech Republic, mainly because the portfolios offered include more delinquent debts. "Growing its business in Slovakia is for KRUK a natural next step after the company has entered the Czech market. Our time-proven business model can be successfully implemented in Slovakia and additionally we do not have to set up any new offices because operations will be managed by our Czech subsidiary which includes a large share of Slovak employees. We hope that in time, the effectiveness of KRUK's original pro-settlement strategy will make us a leader of the receivables management market in Slovakia and the Czech Republic," says Piotr Krupa.

In the first three quarters of 2012, the KRUK Group purchased a total of 36 debt portfolios on the Polish, Romanian and Czech markets. The above deals included 23 retail debt portfolios and 5 corporate portfolios purchased from financial institutions and 8 retail portfolios acquired from other entities.

Total investment outlay of the KRUK Group reached PLN 190m, of which PLN 94m was spent only in the third quarter of 2012. The nominal value of debts purchased by the KRUK Group in the first three quarters of 2012 stands at PLN 2.5bn.

"Given the relatively high prices, our priority is to maximize return on investment. We currently have on our balance sheet portfolios with a total fair value of PLN 785m which we treat as a very solid base to achieve satisfactory financial results in the next years. Nevertheless, we have both financial and operational capacity to purchase new debt portfolios from banks and from other institutions and we are an active bidder in tendering processes," says Piotr Krupa.

Currently, the prices of debt portfolios offered for sale have stabilised, which is mainly caused by a lower quality of the debts sold. Competition between debt purchasers remains high, but it may become less severe as the access of smaller entities to financing becomes more difficult. Problems of other market players with access to financing may turn out to be an opportunity for KRUK to increase the scale of operations. The company's growth will also be implemented via expansion into new foreign markets. "We are now interested in large, developing markets where banks are selling their receivables on a large scale or are quickly growing their consumer lending. In time, the quality of the portfolios will naturally deteriorate creating room for receivables management companies. We are very interested in expanding into countries with various business cycles," says Piotr Krupa.

NOVUM Finance and RD ERIF BIG continue their growth and in the first three quarters of 2012 they reported PLN 4.7m in revenues, up by PLN 2m on the first three quarters of the previous year.

The cash loan product is currently offered to customers who have already paid their debt to KRUK and are making regular payments on their other liabilities. In the first three quarters of 2012 KRUK granted 5,250 loans, up by 61% on the corresponding period of 2011 and up by 12% on the entire 2011.

In Q3 2012, the credit information database operated by RD ERIF was extended by more than 100,000 records, reaching at the end of September 1.3 million records. RD ERIF has been developing sales to the business sector, to institutions with consumer debts and to the SME sector.

KRUK Group's educational and marketing activities

Since 2010 the KRUK Group has been conducting educational and marketing campaigns on TV, in the printed media and in the internet. The purpose of the campaigns is to offer financial education to people with debts and to reinforce the effects of the company's pro-settlement strategy.

KRUK's educational and marketing efforts have been appreciated by experts and the company has been awarded in the most prestigious competitions in Poland and in Romania:

• in Poland, KRUK received Effie Award 2012 for the best campaign in the Banking category (ex aequo with PKO BP), with the following companies short-listed: Polbank, ING Bank Śląski and Alior Bank
• in Romania, KRUK was awarded in three categories in the PR Romania Awards 2012 competition. The company came first in the "Corporate Communication" and "Communication of financial products and services" categories and second in the "PR for marketing – new products and new services" category (short-listed companies included Renault, Siemens and ING Bank Romania

KRUK is the originator of the "Our Debts" educational campaign under which every year on the 17th of November KRUK organises the National Day Without Debts. The purpose of the campaign is to educate the public in the management of household finances and to show possible ways out of debt. This year, the Day Without Debts will be celebrated for the first time in three countries simultaneously: in Poland (for the fourth time), Romania (for the second time) and in the Czech Republic (for the first time).

In November 2012 the ERIF Register of Debtors launched the infoPozytywni.pl site which is a web-based information platform aimed to promote positive credit history among Poles.