Consolidated income statement

Consolidated statement of financial position

Consolidated statement of cash flows

Consolidated statement of changes in equity

 

Changes in consolidated equity from 1 January  to  31 December 2015

 

Changes in consolidated equity from 1 January  to  31 December 2014

 

Consolidated statement of comprehensive income

Download pdf:

• Explanatory notes to the consolidated financial statements

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• Explanatory notes to the consolidated financial statements

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• mBank Analyzer

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Prudential consolidation

According to the Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on rudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (“CRR Regulation”), mBank (“the Bank”) is a significant subsidiary of EU parent institution, responsible for the preparation of the consolidated prudentially financial data to fulfil the requirement of disclosures described in IAS 1.135 Presentation of Financial Statements.

Financial information presented below does not represent IFRS measures as defined by the standards.

mBank S.A. Group (“the Group”) consists of entities defined in accordance with the rules of prudential consolidation, specified by the CRR Regulation.

Basis of the preparation of the consolidated financial data

mBank S.A. Group consolidated financial data based on the rules of prudential consolidation specified by the CRR Regulation (“Consolidated prudentially financial data”) have been prepared for the 12-month period ended December 31, 2015 and for the 12-month period ended December 31, 2014.

The consolidated profit presented in the consolidated prudentially financial data may be included in consolidated Common Equity Tier 1 for the purpose of the calculation of consolidated Common Equity Tier 1 capital ratio, consolidated Tier 1 capital ratio and consolidated total capital ratio with the prior permission of the Polish Financial Supervisory Authority or after approval by the General Meeting of shareholders.

The accounting policies applied for the preparation of the Group consolidated prudentially financial data are identical to those, which have been applied to the mBank S.A Group consolidated financial data for the year 2015, prepared in compliance with International Financial Reporting Standard (“IFRS”), except for the consolidation standards presented below.

 

Consolidation

The consolidated prudentially financial data includes the Bank and the following entities:

Entities included in the scope of prudential consolidation are defined in the Regulation CRR – institutions, financial institutions or ancillary services undertakings, which are subsidiaries or undertakings in which a participation is held, except for entities in which the total amount of assets and off-balance sheet items of the undertaking concerned is less than the smaller of the following two amounts:

• EUR 10 million;
• 1% of the total amount of assets and off-balance sheet items of the parent undertaking or the undertaking that holds the participation.

The consolidated financial data combine items of assets, liabilities, equity, income and expenses of the parent with those of its subsidiaries eliminating the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary. Thus arises goodwill. If goodwill has negative value, it is recognised directly in the income statement. The profit or loss and each component of other comprehensive income is attributed to the Group’s owners and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. If the Group loses control of a subsidiary, it shall account for all amounts previously recognised in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities

Intra-group transactions, balances and unrealised gains on transactions between companies of the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

In 2015 the income of the Group, calculated as the sum of net interest income, net fee and commission income, dividend income, net trading income, gains less losses from investment securities, investments in subsidiaries and associates, other operating income and other operating expenses, amounted to PLN 4,086,739 thousand (2014 – PLN 3,759,919 thousand). This income relates in whole to the activity conducted within the European Union.

In 2015, the rate of return on assets of the Group, calculated as net profit divided by the average total assets, amounted to 1.07%.

In 2015, the Group did not received any public subsidies, in particular on the basis of the Act on the Government support for the financial institutions dated February 12, 2009 (Journal of Laws of 2014, No 158).

As at December 31, 2015 the employment in the Group was 6,483 FTEs and 8,529 persons (December 31, 2014 respectively: 6,043 FTEs and 7,284 persons).

 

Consolidated prudentially income statement

Consolidated prudentially statement of financial position

 

INDEPENDENT AUDITORS’ OPINION

 
To the General Shareholders Meeting mBank S.A.

 

1. We have audited the attached consolidated financial statements of mBank S.A. Group (‘the Group’), for which the holding company is mBank S.A. (‘Bank’) located in Warsaw at Senatorska 18, for the year ended 31 December 2015 containing the consolidated income statement and the consolidated statement of comprehensive income for the period from 1 January 2015 to 31 December 2015, the consolidated statement of financial position as at 31 December 2015, the consolidated statement of changes in equity and the consolidated statement of cash flows for the period from 1 January 2015 to 31 December 2015 and explanatory notes to the financial statements (‘the attached consolidated financial statements’).
2. The truth and fairness¹ of the attached consolidated financial statements, the preparation of the 1 attached consolidated financial statements in accordance with the required applicable accounting policies and the proper maintenance of the consolidation documentation are the responsibility of the Bank’s Management Board. In addition, the Bank’s Management Board and Members of the Supervisory Board are required to ensure that the attached consolidated financial statements and the Directors’ Report meet the requirements of the Accounting Act dated 29 September 1994 (Journal of Laws 2013.330 with subsequent amendments – ‘the Accounting Act’). Our responsibility was to audit the attached consolidated financial statements and to express an opinion on whether, based on our audit, these financial statements comply, in all material respects, with the required applicable accounting policies and whether they truly and fairly² reflect, in all material respects, the financial position and results of the 2 operations of the Group.
3. We conducted our audit of the attached consolidated financial statements in accordance with:
   • chapter 7 of the Accounting Act;
   • National Auditing Standards issued by the National Council of Statutory Auditors;
   
   in order to obtain reasonable assurance whether these financial statements are free of material misstatement. In particular, the audit included examining, to a large extent on a test basis, documentation supporting the amounts and disclosures in the attached consolidated financial statements. The audit also included assessing the accounting principles adopted and used and significant estimates made by the Bank’s Management Board, as well as evaluating the overall presentation of the attached consolidated financial statements. We believe our audit has provided a reasonable basis to express our opinion on the attached consolidated financial statements treated as a whole.
4. In our opinion, the attached consolidated financial statements, in all material respects:
   • present truly and fairly all information material for the assessment of the results of the Group’s operations for the period from 1 January 2015 to 31 December 2015, as well as its financial position³ as at 31 December 2015; 3
   • have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
   • are in respect of the form and content, in accordance with the legal regulations governing the preparation of financial statements.
5. We have read the ‘Management Board Report on the Performance of the Group for the period from 1 January 2015 to 31 December 2015 and the rules of preparation of annual statements’ (‘the Management Board Report’) and concluded that the information derived from the attached consolidated financial statements reconciles with these financial statements. The information included in the Management Board Report corresponds with the relevant regulations of art. 49 para 2 of the Accounting Act, the Decree of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities, conditions for recognition as equivalent the information required by laws of non-EU member states (Journal of Laws 2014.133 with subsequent amendments) and art. 111a of Banking Law Act dated 29 August 1997 (Journal of Law 2015.128 with subsequent amendments).

on behalf of

Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k.

Rondo ONZ 1, 00-124 Warsaw

Registration Number 130

Key Certified Auditor

(-)

Dominik Januszewski

Certified Auditor

Number 9707

 

Warsaw, 25 February 2016

 

                          

¹Translation of the following expression in Polish: ‘rzetelność i jasność’
²Translation of the following expression in Polish: ‘rzetelne i jasne’
³Translation of the following expression in Polish: ‘sytuacja majątkowa i finansowa’

 

I. GENERAL NOTES

 

1. Background

The holding company of the mBank S.A. Group (hereinafter ‘the Group’ or ‘the Capital Group’) is mBank S.A. (‘the holding company’, ‘the Bank’).

The holding company was incorporated on the basis of a Notarial Deed dated 11 December 1986. The Bank’s registered office is located in Warsaw at Senatorska 18.

The holding company is an issuer of securities as referred to in art. 4 of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council of the European Union of 19 July 2002 on the application of international accounting standards (EC Official Journal L243 dated 11 September 2002, page 1, polish special edition chapter 13, title 29 page 609) and, based on the article 55.5 of the Accounting Act dated 29 September 1994 (Journal of Laws 2013.330 with subsequent amendments – ‘the Accounting Act’), prepares consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU.

The holding company was entered in the Register of Entrepreneurs of the National Court Register under no. KRS 0000025237 on 11 July 2001.

The Bank was issued with tax identification number (NIP) 5260215088 on 13 December 2013 and statistical number (REGON) 001254524 on 9 December 2013.

The holding is part of the Commerzbank AG capital group.

The principal activities of the holding company are as follows:

• accepting a-vista and term deposits and maintaining deposit accounts;
• maintaining other bank accounts;
• conducting bank monetary settlements;
• granting loans and cash advances;
• cheque and bill of exchange transactions and transactions in warrants;
• granting and confirming of suretyships;
• issuing and confirming bank guarantees and letters of credit;
• intermediary services in cash transfers and foreign currency settlements;
• issuing bank securities;
• performing commissioned activities relating to issue of securities;
• safekeeping of objects and securities and offering safety deposit box services to clients;
• forward financial transactions;
• purchasing and sale of debts;
• performing bank representative actions as provided for in the Bonds Act;
• purchasing and sale of foreign currencies;
• issuing payment cards and performing transactions with the use of cards;
• issuing e-money instruments.

The operations of the Group’s subsidiaries include the following activities:

• factoring services;
• leasing;
• administration of buildings;
• raising funds for the holding company;
• trading in securities;
• offering holding company’s product to third parties;
• provide comprehensive wealth management services;
• providing mortgage loans
• insurance activities;
• providing services in the field of data and document management;
• development and assessment of investment projects and their realization;
• realization of developer projects.

As at 31 December 2015, the Bank’s share capital amounted to 168 955 696 zlotys and was divisible into 42 238 924 shares.

As at 31 December 2015, the ownership structure of the Bank’s issued share capital was as follows:

As it was presented in Note 38 of explanatory notes to the consolidated financial statements of the Group for the year ended 31 December 2015, the following changes took place in the ownership structure of the holding company’s share capital during the period from 1 January 2015 to 31 December 2015 (‘the reporting period’) as well as during the period from the balance sheet date to the date of the opinion:

• On 20 March 2015 mBank was notified by ING Powszechne Towarzystwo Emerytalne SA about ING Otwarty Fundusz Emerytalny exceeding the threshold of 5% of total votes at the General Meeting of the Bank.
• Before the purchase of shares ING Otwarty Fundusz Emerytalny held 2 110 309 mBank S.A’s shares representing 4.99% of share capital. Effective 18 March 2015 ING Otwarty Fundusz Emerytalny held 2 130 699 mBank S.A. shares representing 5.05% of share capital. These share entitle to 2 130 699 votes at the General Meeting of mBank S.A. which represents 5.05% of total number of votes.

Movements in the share capital of the holding company in the financial year were as follows:

In 2015 the National Deposit for Securities has registered 28 867 shares of the Bank issued under the conditional share capital increase of the Bank by issuing shares with pre-emptive rights of the existing shareholders, in order to allow for the acquisition of the Bank shares to participants of incentive programs. Following registration of the shares of the Bank's share capital of the Bank increased in 2015 by 115 468 zlotys.

As at 25 February 2016, the holding company’s Management Board was composed of:

Cezary Stypułkowski - President

Lidia Jabłonowska-Luba - Vicepresident
Przemysław Gdański - Vicepresident
Jörg Hessenmüller - Vicepresident
Hans Dieter Kemler - Vicepresident
Cezary Kocik - Vicepresident
Jarosław Mastalerz - Vicepresident

There were no changes in the holding company’s Management Board during the reporting period as well as from the balance sheet date to the date of the opinion.

 

2. Group Structure

 

As at 31 December 2015, the mBank S.A. Group consisted of the following subsidiaries (direct or indirect):

Details of the type and impact of changes in entities included in the consolidation as compared to the prior year may be found in Note 1 of explanatory notes to the consolidated financial statements of the Group for the year ended 31 December 2015.

 

3. Consolidated Financial Statements

 

3.1 Auditors’ opinion and audit of consolidated financial statements

 

Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. with its registered office in Warsaw, at Rondo ONZ 1, is registered on the list of entities authorised to audit financial statements under no. 130.

Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. was appointed by General Shareholders' Meeting on 30 March 2015 to audit the Group’s financial statements.

Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. and the key certified auditor in charge of the audit meet the conditions required to express an impartial and independent opinion on the financial statements, as defined in Art. 56.3 and 56.4 of the Act on statutory auditors and their self-governance, audit firms authorized to audit financial statements and public oversight, dated 7 May 2009 (Journal of Laws 2009, No. 77, item 649 with subsequent amendments).

Under the contract executed on 30 May 2015 with the holding company’s Management Board, we have audited the consolidated financial statements for the year ended 31 December 2015.

Our responsibility was to express an opinion on the consolidated financial statements based on our audit. The auditing procedures applied to the consolidated financial statements were designed to enable us to express an opinion on the consolidated financial statements taken as a whole. Our procedures did not extend to supplementary information that does not have an impact on the consolidated financial statements taken as a whole.

Based on our audit, we issued an auditors’ unqualified opinion dated 25 February 2016, stating the following:

“To the General Shareholders Meeting mBank S.A.

1. We have audited the attached consolidated financial statements of mBank S.A. Group (‘the Group’), for which the holding company is mBank S.A. (“Bank”) located in Warsaw at Senatorska 18, for the year ended 31 December 2015 containing the consolidated income statement and the consolidated statement of comprehensive income for the period from 1 January 2015 to 31 December 2015, the consolidated statement of financial position as at 31 December 2015, the consolidated statement of changes in equity and the consolidated statement of cash flows for the period from 1 January 2015 to 31 December 2015 and explanatory notes to the financial statements (‘the attached consolidated financial statements’).

2. The truth and fairness1 of the attached consolidated financial statements, the preparation of the attached consolidated financial statements in accordance with the required applicable accounting policies and the proper maintenance of the consolidation documentation are the responsibility of the Bank’s Management Board. In addition, the Bank’s Management Board and Members of the Supervisory Board are required to ensure that the attached consolidated financial statements and the Directors’ Report meet the requirements of the Accounting Act dated 29 September 1994 (Journal of Laws 2013.330 with subsequent amendments – ‘the Accounting Act’). Our responsibility was to audit the attached consolidated financial statements and to express an opinion on whether, based on our audit, these financial statements comply, in all material respects, with the required applicable accounting policies and whether they truly and fairly2 reflect, in all material respects, the financial position and results of the operations of the Group.

3. We conducted our audit of the attached consolidated financial statements in accordance with:

• chapter 7 of the Accounting Act;
• National Auditing Standards issued by the National Council of Statutory Auditors;

in order to obtain reasonable assurance whether these financial statements are free of material misstatement. In particular, the audit included examining, to a large extent on a test basis, documentation supporting the amounts and disclosures in the attached consolidated financial statements. The audit also included assessing the accounting principles adopted and used and significant estimates made by the Bank’s Management Board, as well as evaluating the overall presentation of the attached consolidated financial statements. We believe our audit has provided a reasonable basis to express our opinion on the attached consolidated financial statements treated as a whole.

4. In our opinion, the attached consolidated financial statements, in all material respects:

• present truly and fairly all information material for the assessment of the results of the Group’s operations for the period from 1 January 2015 to 31 December 2015, as well as its financial position1 as at 31 December 2015;
• have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
• are in respect of the form and content, in accordance with the legal regulations governing the preparation of financial statements.

5. We have read the ‘Management Board Report on the Performance of the Group for the period from 1 January 2015 to 31 December 2015 and the rules of preparation of annual statements’ (‘the Management Board Report’) and concluded that the information derived from the attached consolidated financial statements reconciles with these financial statements. The information included in the Management Board Report corresponds with the relevant regulations of art. 49 para 2 of the Accounting Act, the Decree of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities, conditions for recognition as equivalent the information required by laws of non-EU member states (Journal of Laws 2014.133 with subsequent amendments) and art. 111a of Banking Law Act dated 29 August 1997 (Journal of Law 2015.128 with subsequent amendments).

We conducted the audit of the consolidated financial statements during the period from 1 September 2015 to 25 February 2016. We were present at the holding company’s head office from 1 October 2015 to 30 November 2015 and from 4 January 2016 to 25 February 2016.

 

3.2 Representations provided and data availability

 

The Management Board of the holding company confirmed its responsibility for fair presentation1 of the consolidated financial statements and the preparation of the financial statements in accordance with the required applicable accounting policies, and the correctness of consolidation documentation. The Board stated that it provided us with all financial statements of the Group companies included in the consolidated financial statements, consolidation documentation and other required documents as well as all necessary explanations. The Management Board also provided a letter of representations dated 25 February 2016, from the Management Board of the holding company confirming that:

• the information included in the consolidation documentation was complete;
• all contingent liabilities had been disclosed in the consolidated financial statements, and
• all material events from the balance sheet date to the date of the representation letter had been disclosed in the consolidated financial statements;

and confirmed that the information provided to us was true and fair to the best of the holding company Management Board’s knowledge and belief, and included all events that could have had an effect on the consolidated financial statements.
At the same time declare that during the audit of the financial statements, there were no limitations of scope.

 

3.3 Consolidated financial statements for prior financial year

 

The consolidated financial statements of the Group for the year ended 31 December 2014 were audited by Dominik Januszewski, key certified auditor no. 9707, acting on behalf of Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k. with its registered office in Warsaw, at Rondo ONZ 1, the company entered on the list of entities authorized to audit financial statements conducted by the National Council of Statutory Auditors with the number 130. The key certified auditor issued an unqualified opinion on the consolidated financial statements for the year ended 31 December 2014. The consolidated financial statements for the year ended 31 December 2014 were approved by the General Shareholders’ Meeting on 30 March 2015.
The consolidated financial statements of the Group for the financial year ended 31 December 2014, together with the auditors’ opinion, a copy of the resolution approving the consolidated financial statements and the Directors’ Report, were filed on 9 April 2015 with the National Court Register.

 

4. Analytical Review

 

4.1 Basic data and financial ratios

 

Presented below are selected financial ratios indicating the economic or financial performance of the Group for the years 2013 – 2015. The ratios were calculated on the basis of financial information included in the financial statements for the years ended 31 December 2014 and 31 December 2015.

Average shareholders’ equity is the average of opening and closing balance of total equity in the particular period.

 

4.2 Comments

 

The following trends may be observed based on the above financial ratios:

• Profitability ratio increased from 90.44% in 2013 to 93.34% in 2014 and decreased to 78.76% in 2015.
• Cost to income ratio decreased from 45.68% in 2013 to 44.95% in 2014 and increased to 50.18% in 2015.
• Return on equity decreased from 12.17% in 2013 to 12.09% in 2014 and decreased to 11.17% in 2015.
• Return on assets decreased from 1.17% in 2013 to 1.16% in 2014 and decreased to 1.08% in 2015.

As at 31 December 2015 total capital ratio of the Group accounted for 17.25% in comparison to 14.66% as at 31 December 2014 and 19.38% as at 31 December 2013.

 

4.3 Going concern

 

Nothing came to our attention during the audit that caused us to believe that the holding company is unable to continue as a going concern for at least twelve months subsequent to 31 December 2015 as a result of an intended or compulsory withdrawal from or a substantial limitation in its current operations.

In Note 2.1 of the explanatory notes to the audited consolidated financial statements for the year ended 31 December 2015, the Management Board of the holding company has stated that the financial statements of the Group entities included in the consolidated financial statements were prepared on the assumption that these entities will continue as a going concern for a period of at least twelve months subsequent to 31 December 2015 and that there are no circumstances that would indicate a threat to its continued activity.

 

4.4 Application of regulations mitigating banking risk

 

As at 31 December 2015, the regulations of the Banking Law, the Resolutions of the Management Board of the National Bank of Poland, Resolution of Polish Financial Supervisory Authority and the Regulation of the European Parliament and the Council (EU) No. 575/2013 from 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) Nr 648/2012 (CRR) and other regulations issued by the Commission (EU) pursuant to this Regulation, envisaged banking regulatory norms in relation, among others, to following items:

• concentration of credit risk,
• concentration of investments in shares,
• classification of loans and guarantees to risk groups and the creation of provisions for the risk associated with the activities of banks,
• liquidity measures,
• level of obligatory reserve,
• capital adequacy.

During the audit we have not identified significant facts indicating that during the period from 1 January 2015 to the day of issuance of this report the Bank did not comply with the above regulations. As it was disclosed in note 49 of explanatory notes to audited consolidated financial statements taking into account the “additional capital requirement as well as the conservation buffer of 1.25% enforced on 1 January 2016 on the basis of the Act on Macro-prudential Supervision over the Financial System and Crisis Management in the Financial System, starting from 1 January 2016 the Bank as well as mBank Group should maintain, on the stand alone and consolidated level respectively, the Common Equity Tier 1 ratio on the level not lower than 13.54% and the total capital ratio on the level not lower than 17.64%, which compares against 14.29% and 17.25% respectively reported by mBank Group as of 31 December 2015. As of 31 January 2016 on consolidated level the reported total capital ratio was below the afore-mentioned target ratio of 17.64%, whereas consolidated Common Equity Tier 1 ratio remained to well exceed the new target ratio, similar to the respective ratios on mBank stand alone level. The Management Board of mBank believes that with the decisions to be made by the upcoming mBank Ordinary General Meeting (planned on 24 March 2016) the Group will exceed the total capital ratio target level of 17.64%”. We have received a written representation from the Management Board that in the period from 1 January 2015 to the date of the opinion other regulatory norms have been complied with.

 

4.5 Correctness of calculation of total capital ratio

 

During our audit we found no significant irregularities in determining total capital ratio as at 31 December 2015 in accordance with the Regulation of the European Parliament and the Council (EU) No. 575/2013 from 26 June 2013 (CRR).

 

II. DETAILED REPORT

 

1. Completeness and accuracy of consolidation documentation

 

During the audit no material irregularities were noted in the consolidation documentation which could have a material effect on the audited consolidated financial statements, and which were not subsequently adjusted. These would include matters related to the requirements applicable to the consolidation documentation (and in particular eliminations relating to consolidation adjustments).

 

2. Accounting policies for the valuation of assets and liabilities

 

The Group’s accounting policies and rules for the presentation of data are detailed in 2 and note 25 of the explanatory notes to the Group’s audited consolidated financial statements for the year ended 31 December 2015.

 

3. Structure of assets, liabilities and equity

 

The structure of the Group’s assets and equity and liabilities is presented in the audited consolidated financial statements for the year ended 31 December 2015.

The data disclosed in the consolidated financial statements reconcile with the consolidation documentation.

 

3.1 Goodwill on consolidation and amortisation

 

The method of determining goodwill on consolidation, the method on determining impairment of goodwill, the impairment charged in the financial year and up to the balance sheet date were presented in note 2 and note 25 of the explanatory notes to the audited consolidated financial statements

 

3.2 Shareholders’ funds including non-controlling interest.

 

The amount of shareholders’ funds is consistent with the amount stated in the consolidation documentation and appropriate legal documentation. Non-controlling interest amounted to 32 618 thousand zlotys as at 31 December 2015. It was correctly calculated and is consistent with the consolidation documentation.

Information on shareholders’ funds has been presented in notes 38-42 of the explanatory notes to the audited consolidated financial statements for the year ended 31 December 2015.

 

3.3 Financial year

 

The financial statements of all Group companies forming the basis for the preparation of the audited consolidated financial statements were prepared as at 31 December 2015 and include the financial data for the period from 1 January 2015 to 31 December 2015.

 

4. Consolidation adjustments

 

4.1 Elimination of inter-company balances (receivables and liabilities) and inter-company transactions (revenues and expenses) of consolidated entities.

 

All eliminations of inter-company balances (receivables and liabilities) and inter-company transactions (revenues and expenses) of the consolidated companies reconcile with the consolidation documentation.

 

4.2 Elimination of unrealised gains/losses of the consolidated companies, included in the value of assets, as well as relating to dividends

 

All eliminations of unrealised gains/losses of the consolidated companies, included in the value of assets, as well as relating to dividends reconcile with the consolidation documentation.

 

5. Disposal of all or part of shares in a subordinated entity

 

Information regarding the disposal of shares in the subordinated entities have been disclosed in note
24 and note 46 of the explanatory notes to the audited consolidated financial statements for the year ended 31 December 2015.

 

6. Items which have an impact on the Group’s result for the year

 

Details of the items which have an impact on the Group’s result for the year have been included in the audited consolidated financial statements for the year ended 31 December 2015.

 

7. The appropriateness of the departures from the consolidation methods and application of the equity accounting as defined in International Financial Reporting Standards as adopted by the EU

 

During the process of preparation of the consolidated financial statements there were no departures from the consolidation methods or application of the equity accounting

 

8. Explanatory Notes to the Consolidated Financial Statements

 

The explanatory notes to the audited consolidated financial statements for the year ended 31 December 2015 were prepared, in all material respects, in accordance with International Financial Reporting Standards as adopted by the EU.

 

9. Management Board Report

 

We have read the ‘Management Board Report on the Performance of the Group for the period from 1 January 2015 to 31 December 2015 and the rules of preparation of annual statements’ (‘the Management Board Report’) and concluded that the information derived from the attached consolidated financial statements reconciles with these financial statements. The information included in the Management Board Report corresponds with the relevant regulations of art. 49 para 2 of the Accounting Act, the Decree of the Minister of Finance dated 19 February 2009 on current and periodic information published by issuers of securities, conditions for recognition as equivalent the information required by laws of non-EU member states (Journal of Laws 2014.133 with subsequent amendments) and art. 111a of Banking Law Act dated 29 August 1997 (Journal of Law 2015.128 with subsequent amendments).

 

10. Conformity with Law and Regulations

 

We have obtained a letter of representations from the Management Board of the holding company confirming that no laws, regulations or provisions of the Group entities’ Articles of Association were breached during the financial year.

 

11. Work of Experts

 

During our audit we have taken into account the results of the work of the independent property appraisers – in the calculation of the level of loan loss provisions the Group took into consideration the value of collateral established in valuations performed by property appraisers engaged by the Group.

 

on behalf of

Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp. k.

Rondo ONZ 1, 00-124 Warsaw

Registration Number 130

Key Certified Auditor

(-)

Dominik Januszewski

Certified Auditor

Number 9707

 

Warsaw, 25 February 2016