Kruk S.A. — Management Reports 2020

Apr 10, 2020

Current Report No. 9/2020

Date of the report: April 10th 2020

Subject: Expenditure on and recoveries from debt portfolios and theimpact of the epidemic on the KRUK Group's results

Legal basis: Art. 17(1) of MAR - Inside information

Text of the report:

In line with the adopted disclosure policy, KRUK S.A. announces theexpenditure on debt portfolios and recoveries from the management ofpurchased portfolios purchased by the KRUK Group (Group).

Q1 2020

The nominal value of debt purchased by the Group

Q1 2020 Q1 2019 change

PLN 505m PLN 1 390m - 64%

The expenditure on debt portfolios purchased by the Group

Q1 2020 Q1 2019 change

PLN 57m PLN 179m - 68%

The recoveries from the management of purchased portfolios purchased bythe Group

Q1 2020 Q1 2019 change

PLN 477m PLN 427m + 12%

Recoveries in Q1 2020 were 11,8% higher than in Q1 2019 and 0,4% higherthan in Q4 2019. At the same time, the KRUK Group recorded a negativevariance in actual recoveries relative to the operating targets in March2020. n Spain and Italy, and in the last days of March and early Aprilalso in Romania and Poland. The Company's Management Board expects thatthe epidemic and its implications will have an adverse impact onrecoveries from purchased debt portfolios in Poland and other countrieswhere the Group operates over the remainder of 2020. Therefore, theManagement Board expects a downward revaluation of its debt portfoliosin Q1 2020. The epidemic situation may also adversely affect theperformance of Wonga and Novum companies.

As at the date of issue of this report, the Management Board cannotdetermine the scale of the negative impact the coronavirus outbreak mayhave on the Group's financial results, including in particular therevaluation of the debt portfolios for Q1 2020. In view of the above, inCurrent Report No. 8/2020 of April 6th 2020, the Management Boardannounced that the release date of Q1 2020 results was changed from May7th 2020 to May 28th 2020 to give it more time to gather information,analyse it and accurately reflect it in the KRUK Group's results forthat period.

The Company also reports that the KRUK Group continues its operations oneach of its markets and in every line of business. The Group's liquidityat the end of Q1 2020 was stable. As at March 31st 3020, the KRUKGroup's cash and cash equivalents amounted to PLN 230m, up by PLN 80m onDecember 31st 2019. The available lines of credit reached PLN 712m as atMarch 31st 2020, having grown by PLN 156m compared with December 31st2019.

The Management Board is considering various scenarios and intends tomanage KRUK's operations in a way which will minimise any adverse effecton KRUK's assets and financial performance. Initiatives are being takento reduce costs in the second quarter.

At the same time the Management Board aims to prepare the Group forfull-scale investment activity when the pandemic threat ends.