Annual Report 2015 Contents 4 Foreword 10 PPF Group 11 — Group Profile 12 — Shareholders 13 — Selected Financial Highlights, PPF Group 13 — Description of the Company PPF Group N.V. 14 Governing Bodies 31 PPF Group Major Assets Overview 32 — PPF Group Major Assets Chart 36 Selected PPF Group Companies 37 — Home Credit B.V. 39 — Air Bank a.s. 42 — CETIN 44 — O2 Czech Republic a.s. 48 — PPF banka a.s. 50 — PPF Real Estate Holding B.V. 54 — O2 arena 55 — Eldorado 56 — PPF Life Insurance 57 — Polymetal 60 — RAV Agro 61 — SOTIO 63 Important Events at PPF Group 68 Social Responsibility 74 PPF Group and Culture 77 Twenty-Five Years of PPF Group 128 Financial Section 240 Contacts 4 Foreword PPF Group Annual Report 2015 5 Dear Friends, In India, we have hundreds of thousands of clients. Taken as a whole, the Asian arm of Home Credit The Annual Report for 2015 is quite special in one accounted for 56% of the total volume of all lending important respect: we are publishing it in the year last year and outperformed what used to be our when PPF celebrates its 25th anniversary. Our biggest market, Russia. Although our results in the traditional business review of the past year therefore Russian market remained subdued in 2015, we are sees us look back upon aspects from PPF’s entire confident that profitability here will soon bounce back. history. In fact, in a way our story is part of the history of the Czech Republic and its path towards capitalism. Home Credit’s expansion did not only head eastwards last year. For the first time in its history, it also Over the years, thousands – indeed, tens of looked west to the USA where we co‑operate with thousands – of people have been involved with PPF Sprint mobile operator. On home turf in the Czech and its companies. Together, we have experienced Republic, we did a lot of experimenting with fresh successes and major achievements, but also several approaches, concentrating in particular on the blows and setbacks. Looking back, besides a great various forms of online consumer lending and on deal of hard work and personal commitment, I can peer‑to‑peer loans. Needless to say, everywhere that see that, above all, we have always aspired to do things Home Credit operates it continues to spearhead our own way, to think for ourselves, and not to be awareness campaigns promoting financial literacy seduced by the fashions of the day. This is ingrained in and responsible lending practices. our DNA! And this is how PPF should remain in the future. We made a truly innovative move with our telecommunication assets last year by splitting – on Crunching the numbers, 2015 ranks among one of our own initiative – the biggest Czech operator into PPF Group’s more successful years: we reported a an infrastructure part (creating a new company similar operating profit as last year, while our assets called CETIN) and a telecommunications service are currently worth more than EUR 21 billion. This provider for end‑customers (O2 Czech Republic). was accompanied by a focus on diversifying our This decision is without precedent, at least in Europe. markets as well as on strengthening our principal CETIN is fully controlled by PPF Group, while the business activities, with the spotlight on Home publicly‑listed O2 remains a long‑term financial Credit’s Asian expansion and, in telecommunications, investment for PPF and we stand apart from its day‑ on the unique demerger of O2 into an infrastructure to‑day operations. The market has every confidence company and a telecommunications operator. in us, as exemplified by the increasing value of O2’s Home Credit Group, our biggest asset, skyrocketed shares on the Prague Stock Exchange. Guided by in China over the last year. One statistic in particular new management, the company is turning in a really speaks volumes: 41% of all Home Credit loans positive financial performance and has managed to worldwide were granted in China in 2015 (for reverse a long‑time trend of declining profits back to comparison, in 2014 the figure was 18%). In China, profitability. CETIN is also growing and its customers we served almost 15 million customers in 261 towns now even include O2’s competitors. We are currently and cities across 24 provinces, and these figures are planning a massive overhaul of CETIN’s transmission rising all the time. Home Credit’s expansion in Asia network, with plans to invest CZK 22 billion in the is not limited to China. We have long been achieving coming years. positive results in Vietnam, too, while in Indonesia and in Philippines our operations are growing apace as well. PPF Group Annual Report 2015 7 We also should not miss mentioning our two banks in In the countries in which we do business, we paid the Czech Republic: the Group’s treasury, PPF banka, taxes equal to billions of crowns last year. At home and the retail Air Bank, both of which reported in the Czech Republic, we were once again one their best‑ever results last year in a tightened EU of the largest tax payers. But that’s not all – THE regulatory environment. Then there is also SOTIO, KELLNER FAMILY FOUNDATION also disbursed our biotechnology company that last year progressed almost CZK 90 million to its projects last year. with its clinical studies involving new treatments Besides the traditional sponsorship we channel into for prostate, ovarian and lung cancer patients. The arts projects such as the annual Summer Shakespeare product that has advanced furthest here is designed Festival, last year we also purchased several first‑class to treat prostate cancer and has reached phase III musical instruments for the Czech Philharmonic clinical trials, i.e. the final stage prior to product Orchestra. approval and sale. Nevertheless, we remain cautious Looking back at this year’s work and the past 25 years of raising expectations too high, as we know that the as a whole, it seems natural to me to ask: what will road to success in the pharmacy can be very long and PPF look like in the next 25 years? I believe it will requires a healthy dose of fortune. stay true to its core values – like our ability to think One important retail asset in 2015 was Russia’s outside the box, to know that there are always several Eldorado chain of consumer electronics shops. paths to reaching our goals, and our ability to Responding to the country’s economic crisis, it opted marshal all our resources and energies in the right for well‑considered expansion and entry into smaller direction at the right time. Indeed, to understand that Russian towns, introducing the concept of a general nothing is forever. store offering not only electronics, but also a range of PPF will always be backed by loyal employees who are household supplies, DIY goods, gardening equipment proud of their work. and furniture. Online retail expansion has also been successful, with Eldorado now jockeying among the I would like to thank to all those who have built and Russian market leaders in this field. who continue to build PPF with me. Our Russian life insurance company also held its own in the past year. PPF Life Insurance, serving more than 100,000 clients at almost 80 branches across Russia, is reporting robust economic performance. The real estate business is another area where – Petr Kellner not only in Russia – we maintain mainly profitable projects, such as the South Gate logistics park just outside Moscow and the Yarmarka shopping centre in Astrakhan. Comcity, one of Moscow’s largest office parks, is now nearly at full occupancy. Major acquisitions worth mentioning from 2015 include a stake in office space at the Metropolis shopping centre in Moscow and the takeover of the Marriott Hotel building in the heart of Rotterdam. PPF Group Annual Report 2015 8 Petr Kellner Founder and Majority Shareholder, PPF Group N.V. PPF Group Annual Report 2015 10 PPF Group PPF Group Annual Report 2015 11 Group Profile PPF Group’s investments are diversified into various sectors, such as banking and financial services, telecommunications, biotechnology, insurance, real estate, precious metals mining, agriculture and retail. PPF has operations in Europe, Asia and North America. As at 31 December 2015, the aggregate value of PPF Group’s assets was EUR 21.6 billion. For 25 years now, the founder and majority shareholder of PPF Group N.V. and his team have been the driving force behind the professionalism and determination of PPF Group. PPF Group’s corporate ownership and management structure is based in the Netherlands: PPF Group N.V. with its registered office in Amsterdam, is the key holding company of PPF Group, where the strategic decisions governing the operations of the entire Group are made. PPF Group Annual Report 2015 12 Shareholders Petr Kellner Jean‑Pascal Duvieusart Founder and Majority Shareholder, PPF Group N.V. Shareholder, PPF Group N.V. (share of voting rights: 98.92%) (share of voting rights: 0.54%) Born in 1964; a graduate of the University of Born in 1966; a graduate of the University of Chicago Economics, Prague, Faculty of Industrial Economics (MBA) and the Catholic University of Louvain, in 1986. He is one of PPF Group’s founders and was Belgium (specialisation in Commercial Engineering). Chairman of the Board of Directors of PPF a.s. from He joined McKinsey in 1992 and worked in Brussels January 1998 till March 2007. He was a Member of and New York prior to moving to Central Europe. He the Board of Directors of Assicurazioni Generali from was Managing Partner at McKinsey Prague between April 2007 till March 2013.