ASSECO POLAND SPÓŁKA AKCYJNA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE ASSECO GROUP

Transcription

1 ASSECO POLAND SPÓŁKA AKCYJNA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 1 ST QUARTER OF 2007 PREPARED IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS

2 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 1 ST QUARTER OF 2007 Table of contents Page FINANCIAL HIGHLIGHTS... 3 MERGER WITH ASSECO POLAND SA AND ISSUANCE OF SHARES... 4 CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT THE ASSECO GROUP... 6 CONDENSED CONSOLIDATED BALANCE SHEET... 7 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY... 9 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS CONDENSED INFORMATION ON THE BUSINESS SEGMENTS FINANCIAL PERFORMANCE GENERAL INFORMATION KEY FINANCIAL DATA FROM THE NON-CONSOLIDATED FINANCIAL STATEMENTS OF ASSECO POLAND SA These financial statements comprise 63 pages numbered consecutively from 1 to 63. These condensed consolidated financial statements were approved by the Management Board of Asseco Poland SA on 10 May Management Board: Adam Góral Przemysław Borzestowski Piotr Jeleński Marek Panek Zbigniew Pomianek Adam Rusinek Przemysław Sęczkowski Robert Smułkowski President of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Person responsible for maintaining the accounting books: Danuta Stec Chief Accountant 2

3 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 1 ST QUARTER OF 2007 FINANCIAL HIGHLIGHTS PLN '000 EUR ' March March 2006 I. Sales revenues 209, ,739 53,698 26,716 II. Operating profit 36,732 9,755 9,403 2,537 III. Pre-tax profit 34,966 10,504 8,951 2,731 IV. Profit for the period reported 28,277 8,888 7,239 2,311 - profit attributable to the Shareholders of the Parent Company 24,436 8,638 6,255 2,246 V. Net cash provided by (used in) operating activities 42,512 ( 7,991) 10,883 ( 2,078) VI. Net cash provided by investing activities 137,114 5,689 35,100 1,479 VII. Net cash used in financing activities ( 5,057) ( 23,931) ( 1,295) ( 6,223) VIII. Cash and cash equivalents at the end of period 221,924 35,907 57,352 9,123 IX. X. Earnings per ordinary share attributable to the Shareholders of Asseco Poland SA (in PLN/EUR) basic Earnings per ordinary share attributable to the Shareholders of Asseco Poland SA (in PLN/EUR) diluted The financial highlights disclosed in these condensed financial statements were translated into Euro in the following way: the condensed consolidated profit and loss account and cash flow statement items were translated into Euro at the arithmetic average of mid exchange rates as published by the National Bank of Poland and in effect on the last day of each month in a given quarter. The rates were as follows: for the period from 1 January to : EUR 1 = PLN for the period from 1 January to 31 March 2006: EUR 1 = PLN the Group s cash and cash equivalents as at the end of period reported and the corresponding period of the prior year were translated into Euro at the mid exchange rates as published by the National Bank of Poland on and 31 March The rates were as follows: exchange rate effective on : EUR 1 = PLN exchange rate effective on 31 March 2006: EUR 1 = PLN

4 MERGER WITH ASSECO POLAND SA AND ISSUANCE OF SHARES Merger of Softbank SA with Asseco Poland SA On 4 January 2007 the District Court of the Capital City of Warsaw, XIII Commercial Department of the National Court Register entered in the register of entrepreneurs the Company's merger with Asseco Poland SA (the acquired company), seated in Rzeszów, entered in the register of entrepreneurs of the National Court Register under the number KRS The Merger was executed pursuant to article item 1 of the Polish Commercial Companies Code, this is by transferring all the assets of Asseco Poland SA (the acquired company) to the Company in exchange for the Company's shares, which were assigned to the then existing shareholders of Asseco Poland SA (merger by acquisition). Under this merger the previous shareholders of Asseco Poland SA (the acquired company) were assigned 17,735,815 of the Company's ordinary bearer shares of series C, with a par value of PLN 1 each, proportionally to the number of shares owned in the acquired company, applying the exchange parity of 5.9 shares for 1 share of Asseco Poland SA (the acquired company). The total value of the merger shares issued amounted to PLN 975,470 thousand. Asseco Poland SA (the acquired company) conducted business activities including development of software and provision of IT services for the banking sector and miscellaneous companies. The shares of Asseco Poland SA (the acquired company) were listed on the Warsaw Stock Exchange until 2 January Afterwards, since 3 January 2007, the quotations of the acquired company shares were suspended. The Company underwent a number of changes related to the merger; the most important ones were: Change of the Company's name from Softbank SA to Asseco Poland SA, Shifting the Company's headquarters from Warsaw, ul. 17 Stycznia 72a, to Rzeszów, Al. Armii Krajowej 80, Changes to the composition of the Management Board: o Mr. Krzysztof Korba was replaced by Mr. Adam Góral at the position of President of the Management Board, o the Management Board was supplemented with the following members: Mr. Marek Panek, Mr. Zbigniew Pomianek, Mr. Adam Rusinek. Changes to the composition of the Supervisory Board: o the following members were dismissed from the Supervisory Board: Mrs. Maria Zagrajek, Mr. Marek Jakubik. o the following persons were appointed as members of the Supervisory Board: Mr. Jacek Duch, Mr. Dariusz Górka, Mr. Grzegorz Maciąg, Mr. Adam Noga. Changes to the Company's Articles of Association, as presented in the current report no. 3/2007 of 4 January The new Group of Companies employs over 3,000 persons. 4

5 MERGER WITH ASSECO POLAND SA AND ISSUANCE OF SHARES (continued) Take-over of Asseco Czech Republic a.s. (former PVT a.s.) and the Building Automation Department from Prokom Software SA Concurrently to the merger-related increase of share capital, the Company increased its share capital by issuing Series B shares allocated in exchange for the non-cash contributions including 100% equity interest in Asseco Czech Republic a.s. (former PVT a.s.) based in Prague, Czech Republic, as well as an organized part of the Prokom Software SA enterprise operating as the Building Automation Department. In order to acquire the above-mentioned non-cash contributions, the Company issued 3,210,000 shares which were acquired entirely by Prokom Software SA (the parent company of Asseco Poland SA (former Softbank SA)). The issue price of 1 share equalled PLN 37.70, and the total value of issuance amounted to PLN 121,017 thousand. The 100% equity interest in Asseco Czech Republic a.s. (former PVT a.s.) was paid up with 2,140,000 shares, representing PLN 80,678 thousand in terms of the issuance value. For contribution of the organized part of the Prokom Software SA enterprise, namely the Building Automation Department ("DAB"), the Company assigned 1,070,000 shares, representing PLN 40,339 thousand of the issuance value. According to the Group's development strategy, in the first quarter of 2007 the Building Automation Department was shifted from Asseco Poland SA to Softbank Serwis Sp. z o.o. Subscription warrants Furthermore, concurrently with the merger, on 4 January 2007, there was also registered a conditional increase of the Company's share capital, excluding pre-emptive rights of the existing shareholders, by the amount of PLN 295,000 through issuance of 295,000 ordinary bearer shares of series D, with a par value of PLN 1 each and the issue price of PLN per share. The objective of such conditional increase of share capital was to vest the right to acquire series D shares of Asseco Poland SA (former Softbank SA) in the holders of registered subscription warrants of Asseco Poland SA (the acquired company). On 16 April 2007, Mr. Adam Góral, President of the Management Board of Asseco Poland SA, disposed 295,000 subscription warrants for the price of PLN each. The warrants were purchased by the financial institution indicated by the Company. The warrants entitle to acquire 295,000 shares of series D in the Company's conditionally increased share capital. To the best of Management Board knowledge, at the moment of merger the Company's major shareholders were as follows: Shareholders of Asseco Poland SA (former Softbank SA) as at 4 January 2007 Number of shares and votes at GMS % of share capital owned and voting interest at GMS Prokom Software SA 11,834, % Adam Góral 8,083, % ING TFI SA (investment funds) 4,154, % Other Shareholders 22,048, % Total 46,120, % 5

6 CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT THE ASSECO GROUP No. of Note 31 March 2006 in Supplementary Information PLN '000 PLN '000 Operating activities Sales revenues 1 209, ,739 Cost of sales 2 ( 140,159) ( 77,129) Gross profit on sales 69,602 25,610 Selling expenses (-) 2 ( 13,801) ( 4,956) General administrative expenses (-) 2 ( 19,818) ( 11,193) Net profit on sales 35,983 9,461 Other operating income 1, Other operating expenses (-) ( 476) ( 149) Operating profit 36,732 9,755 Other activities Financial income 3 11,908 11,815 Financial expenses (-) 3 ( 13,674) ( 12,594) Share in the profit of associated company 5 0 1,528 Pre-tax profit 34,966 10,504 Corporate income tax (current and deferred portions) ( 6,689) ( 969) Net profit on ordinary activities 28,277 9,535 Discontinued operations Profit (loss) on discontinued operations for the period reported 0 ( 647) Profit for the period reported 28,277 8,888 Attributable to: 28,277 8,888 Shareholders of the Parent Company 24,436 8,638 Minority Shareholders 3, Consolidated earnings per share attributable to Shareholders of Asseco Poland SA (in PLN) Basic earnings per share from consolidated net profit on continued operations for the period reported attributable to Shareholders of the Parent Company (in PLN) Diluted earnings per share from consolidated net profit on continued operations for the period reported attributable to Shareholders of the Parent Company (in PLN)

7 CONDENSED CONSOLIDATED BALANCE SHEET THE ASSECO GROUP No. of Note 31 December 2006 in Supplement Information PLN '000 PLN '000 ASSETS Fixed assets 1,372, ,510 Property, plant and equipment 59,185 29,315 Investment property Intangible assets 81,125 5,727 Consolidation goodwill 4 1,117,828 74,050 Investments in associated companies valued under the equity method 5 17,281 97,360 Financial assets valued at fair value through profit or loss Long-term receivables 67,165 54,932 Deferred income tax assets 28,032 25,975 Long-term deferred expenses 1,004 1,234 Current assets 628, ,607 Inventories 25,464 16,900 Deferred expenses 20,456 15,564 Trade accounts receivable 156, ,179 Corporate income tax recoverable 2, Receivables from the State budget 1, Other receivables 86,199 47,625 Financial assets held to maturity 6 45,693 34,313 Loans granted 3, Financial assets valued at fair value through profit or loss 7 65,519 84,080 Cash and short-term deposits 221,924 47,355 Assets classified as held for sale 3,450 3,450 TOTAL ASSETS 2,004, ,567 7

8 CONDENSED CONSOLIDATED BALANCE SHEET THE ASSECO GROUP (continued) No. of Note 31 December 2006 SHAREHOLDERS' EQUITY AND LIABILITIES in Supplement Information PLN '000 PLN '000 SHAREHOLDERS' EQUITY (ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY) 1,473, ,283 Share capital 46,121 25,175 Share premium 1,325, ,151 Capital securities issued due to payments in shares 6,106 2,498 Foreign currency translation differences on subsidiary and associated companies ( 1,143) ( 3,118) Retained earnings (deficit) and current net profit 96,753 62,577 MINORITY INTERESTS 78,849 3,391 TOTAL SHAREHOLDERS' EQUITY 1,552, ,674 Long-term liabilities 114, ,245 Interest-bearing bank credits, loans and debt securities 8 9,874 0 Deferred income tax reserves Long-term reserves Long-term financial liabilities 99, ,185 Long-term deferred income 2,129 3,415 Other long-term liabilities 1,735 0 Current liabilities 338, ,648 Interest-bearing bank credits, loans and debt securities 8 28,413 7,186 Trade accounts payable 62,350 61,235 Corporate income tax payable 10,745 5,207 Liabilities to the State budget 15,862 13,447 Financial liabilities 62,791 32,236 Other liabilities 102,206 81,037 Reserves 8,026 3,880 Accrued expenses 26,219 19,841 Deferred income 21,534 10,579 TOTAL LIABILITIES 452, ,893 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2,004, ,567 8

9 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY THE ASSECO GROUP for Share capital Share premium Capital from bonds convertible to shares, issued due to payments in shares Foreign currency translation differences on subsidiary and associated companies Retained earnings (deficit) and current net profit Total Minority interests Total Shareholde rs' Equity PLN '000 PLN '000 PLN '000 PLN '000 PLN '000 PLN '000 PLN '000 PLN '000 As at 1 January , ,151 2,498 ( 3,118) 62, ,283 3, ,674 Net profit for the period from 1 January to 24,436 24,436 3,841 28,277 Foreign currency translation differences on subsidiary companies 1,975 1,975 1,362 3,337 Merger with Asseco Poland SA 3,608 9,740 13,348 70,255 83,603 Issuance of shares due to the merger with Asseco Poland SA 17, , , ,470 Issuance of shares due to acquisition of non-cash contributions 3, , , ,017 Expenses related directly to issuance of shares ( 3,236) ( 3,236) ( 3,236) As at 46,121 1,325,456 6,106 ( 1,143) 96,753 1,473,293 78,849 1,552,142 As at 1 January , , , ,725 2, ,374 Net profit for the period from 1 January 2006 to 31 December ,565 74, ,307 Foreign currency translation differences on subsidiary companies ( 3,593) ( 3,593) ( 3,593) Cost of employee benefits in the form of own shares as recognized by the associated company 1,091 1,091 1,091 Cost of employee benefits in the form of own shares Dividend paid-out for the year 2005 ( 16,111) ( 16,111) ( 16,111) As at 31 December , ,151 2,498 ( 3,118) 62, ,283 3, ,674 and for 12 months ended 31 December 2006 On 4 January 2007 the Company merged with Asseco Poland SA (the acquired company), which is described in more detail in section "Merger with Asseco Poland SA and issuance of shares" of these interim condensed consolidated financial statements. 9

10 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS THE ASSECO GROUP 31 March 2006 PLN '000 PLN '000 Cash flows - operating activities Pre-tax profit 34,966 9,857 Total adjustments: 10,522 ( 14,795) Share in net profit of companies valued under the equity method 0 ( 1,528) Depreciation and amortisation 7,476 3,442 Change in inventories ( 1,968) ( 7,683) Change in receivables 77,337 70,089 Change in liabilities ( 82,305) ( 79,787) Change in deferred and accrued expenses 14,655 2,466 Change in reserves ( 9,033) ( 76) Interest income and expense 11 1,673 Gain (loss) on foreign exchange differences 6,031 ( 3,457) Gain (loss) on investing activities ( 1,275) ( 470) Other ( 407) 536 Net cash generated from operating activities 45,488 ( 4,938) Interest paid ( 619) ( 1,028) Income tax paid ( 2,357) ( 2,025) Net cash provided by (used in) operating activities 42,512 ( 7,991) Cash flows - investing activities Disposal of tangible fixed assets Disposal of investments in real estate 64 0 Proceeds from redemption of financial assets held to maturity 1,378 0 Acquisition of tangible fixed assets ( 3,467) ( 1,648) Acquisition of intangible assets ( 1,459) ( 296) Acquisition of financial assets held to maturity ( 12,369) ( 1,174) Acquisition of subsidiary companies less cash taken over ( 6,135) ( 82) Cash of companies contributed or acquired under the merger 154,051 0 Loans collected 1,842 0 Interest received Cash provided by forward transactions 2,362 8,214 Net cash provided by (used in) investing activities 137,114 5,689 Cash flows - financing activities Bank credits and loans contracted 0 1,175 Bank credits and loans paid back ( 4,647) ( 11,461) Redemption of debt securities issued 0 ( 13,668) Finance lease commitments paid ( 410) 0 Other 0 23 Net cash used in financing activities ( 5,057) ( 23,931) Net increase (decrease) in cash and cash equivalents 174,569 ( 26,233) Cash and cash equivalents as at 1 January 47,355 62,140 Cash and cash equivalents as at 31 March 221,924 35,907 10

11 CONDENSED INFORMATION ON THE BUSINESS SEGMENTS THE ASSECO GROUP For and as at Polish market operations Slovak market operations Czech market operations Total operations PLN '000 PLN '000 PLN '000 PLN '000 Sales revenues for External sales 138,943 37,815 33, ,761 Intersegment sales Total segment's revenue 138,943 37,815 33, ,761 Profit (loss) Segment's profit (loss) 28,469 5,686 1,828 35,983 Other net operating income (expenses) ( 155) 749 Net financial income (expenses) ( 1,847) 345 ( 264) ( 1,766) Pre-tax profit 34,966 Corporate income tax ( 6,689) Net profit (loss) for the financial year 28,277 Assets and liabilities as at Segment's assets 1,779, ,061 48,481 1,987,452 Investments in associated companies 17,281 17,281 Segment's liabilities 344,245 60,431 47, ,591 Other information on the segments for Capital expenditures ( 3,791) ( 7,152) ( 118) ( 11,061) Depreciation and amortisation ( 4,100) ( 1,900) ( 1,476) ( 7,476) 11

12 CONDENSED INFORMATION ON THE BUSINESS SEGMENTS THE ASSECO GROUP (continued) For 31 March 2006 and as at 31 December 2006 Polish market operations Media operations discontinued Total operations PLN '000 PLN '000 PLN '000 Sales revenues for 31 March 2006 External sales 106,254 1, ,612 Intersegment sales Total segment's revenue 106,254 1, ,612 Profit (loss) Segment's profit (loss) 9,461 ( 644) 8,817 Other net operating income (expenses) Net financial income (expenses) ( 779) ( 3) ( 782) Share in profits of associated companies 1, ,528 Pre-tax profit 9,857 Corporate income tax ( 969) Net profit (loss) for the financial year 8,888 Assets and liabilities as at 31 December 2006 Segment's assets 588, ,207 Investments in associated companies 97, ,360 Segment's liabilities 341, ,893 Other information on the segments for 31 March 2006 Capital expenditures ( 1,884) ( 142) ( 2,026) Depreciation and amortisation ( 3,442) ( 45) ( 3,487) 12

13 CONDENSED INFORMATION ON THE BUSINESS SEGMENTS THE ASSECO GROUP (continued) Until the end of 2006, the Asseco Group did not report separately any geographical segments, nor industrial segments. The only segment of continuing operations were "integration activities". Since the beginning of 2007, the scope of the Company's operations was extended as a result of merger with Asseco Poland SA and acquisition of the non-cash contribution of Asseco Czech Republic a.s. (former PVT a.s.). Hence, geographical regions became the main criterion of segmentation of the Company's operations. Geographic segments may be determined by the regions in which the Group conducts its business operations. The Asseco Group operations are divided by geographical area of performed activities; the following main regions have been determined: Operations in the Polish IT market, Operations in the Slovak IT market, Operations in the Czech IT market, Since 2007 the Group has abandoned to segment its operations by industry because it only runs information technology operations, which include own software, licences, and services as well as computer hardware. In 2006 the Group disposed its publishing operations. 13

14 FINANCIAL PERFORMANCE In Q the Asseco Group s sales revenues amounted too PLN 209,761 thousand and they increased by 104% as compared with the prior year's corresponding period. Such increase in sales resulted basically from the merger between the groups of Softbank and Asseco Poland. The largest portion of the Group's revenue was constituted by the sale of proprietary software and own services PLN 89,649 thousand, this is 43% of total turnover. Such phenomenon is in accordance with the adopted by the Management Board strategy to focus on the sale of proprietary software and own services, which generate the highest profit margins. Thereby, in Q the Group's operating profit margin increased to 17% from 10% achieved in the prior year. Sales revenues by sector 31 March 2006 PLN '000 PLN '000 Banking and finance 110,141 63,943 Enterprises 59,600 23,087 Public institutions 40,020 15,709 Total: 209, ,739 Sales revenues by sector (%) 31 March 2006 % % Banking and finance 52.5% 62.2% Enterprises 28.4% 22.5% Public institutions 19.1% 15.3% Total: 100.0% 100.0% In Q1 2007, the banking and finance sector was the Group's key revenue driver. The Group revenues to the banking sector increased by 72% year on year and the sector accounted for 52% of total sales. Within the banking sector the largest contracts of Asseco Poland SA included those executed for Bank PKO BP: implementation of the Integrated IT System (ZSI), implementation and modification work on other systems being implemented, such as Zorba, Cezar, and the Central Support System. Furthermore, in Q Asseco Poland SA generated revenues from implementation of proprietary products and provision of services for: Bank BISE (e-banking system), Noble Bank (def3000 implementation), DB Consumer Finance (implementation of a system for management of consumer credits), co-operative banks (implementation of the centralized IT systems at 3 banks), Euro Bank (def3000 modifications), Gospodarczy Bank Wielkopolski (implementation MultiComp and Set-BS), and Getin Bank (def3000 implementation). Also other companies of the Group provided their products and services to the banking sector clients. Those companies and their respective sales were as follows: Novum Sp. z o.o. PLN 3.7 million, Gladstone Consulting Ltd. PLN 6.5 million, Softbank Serwis Sp. z o.o. PLN 5.2 million, and Asseco Slovakia PLN 4.8 million. In Q1 2007, in the public administration sector the Asseco Group recorded a turnover of PLN 40,020 thousand, i.e. an increase by 155% year on year. The largest contracts of Asseco Poland SA which made up sales to the public administration sector in Q were: implementation work under the CEPiK contract, deliveries of software to ZUS (Social Insurance Institution) and ARMiR (Agency for Restructuring and Modernisation of Agriculture). The Group subsidiaries also generated revenues from the public administration sector, the highest of which in the amount of PLN 3.7 million were reported by Softbank Serwis Sp. z o.o. 14

15 FINANCIAL PERFORMANCE (continued) Consolidated financial results of the Asseco (former Softbank) Group 31 March 2006 PLN '000 PLN '000 Sales revenues 209, ,739 Gross profit on sales 69,602 25,610 Operating profit 36,732 9,755 Net profit attributable to Shareholders of the Parent Company 24,436 8,638 Key profitability ratios of the Asseco Group [%] 31 March 2006 % % Gross margin on sales 33.2% 24.9% Operating profit margin 17.5% 9.5% Net profit margin 11.6% 8.4% In Q the Asseco Group recorded a 172% increase in the gross profit on sales. It has to be admitted that such favourable result was achieved basically due to the merger between the groups of Softbank and Asseco Poland; however, execution of highly profitable contracts in the banking and enterprises sectors played a substantial role too. Sales of own software and services rose considerably and resulted in a gross profit on sales of PLN 69,602 thousand, with a high gross margin of 33%. The gross margin increased by 9 percentage points as compared with Q In the period reported selling expenses and general administrative costs aggregated at PLN 33,619 thousand, yet despite their sizeable growth (by 108% y/y) the Group managed to increase its operating profit by 277% as those costs were offset by higher revenues and margins achieved. In Q1 2007, the Asseco Group net profit attributable to Shareholders of the Parent Company amounted to PLN 24,436 thousand and it increased by 183% from the last-year's level. Strong net earnings were posted both by the Parent Company and the Group subsidiaries. The financial results of subsidiary companies for Q have been presented in Note 13 to the financial statements. 15

16 FINANCIAL PERFORMANCE (continued) Key factors with impact on the Group s performance in Q additional allowances for accounts receivable decreased the profit on ordinary activities by the amount of PLN 847 thousand, income from execution of forward contracts for purchase/sale of EUR and USD increased the result on financing activities by PLN 3,428 thousand, gains/(losses) on change in fair value of the concluded forward contracts for purchase/sale of EUR and USD amounting to PLN 5,932 thousand decreased the result on financing activities, gains/(losses) on change in the fair value of the embedded financial derivatives in the amount of PLN 3,757 thousand increased the result on financing activities, excess of foreign exchange negative differences over positive ones decreased the result on financing activities by PLN 5,101 thousand. 16

17 GENERAL INFORMATION The parent company of the Asseco Group is Asseco Poland SA (the "Company", "Issuer") with the registered seat at Al. Armii Krajowej 80, Rzeszów, Poland. The Company was established on 18 January 1989 as a limited liability company, and subsequently under notary deed of 31 August 1993 it was transformed into, and since than has been operating as, a joint-stock company with registered office at ul. 17 Stycznia 72a, Warsaw, Poland. The Company is entered in the Register of Entrepreneurs of the National Court Register under the number KRS (previously the Company had been entered into the Commercial Register maintained by the District Court of the Capital City of Warsaw, Commercial Court, XVI Commercial and Registration Department, under the number RHB 17220). On 4 January 2007 the Issuer changed its name from Softbank SA to Asseco Poland SA, and moved its headquarters from ul. 17 Stycznia 72a, Warsaw to Al. Armii Krajowej 80, Rzeszów. Since 1998, the Company shares have been listed on the main market of the Warsaw Stock Exchange SA. The Company has been assigned the statistical number REGON The period of the Company's operations is indefinite. Asseco Poland SA is the parent company of the Asseco Group. Prokom Software SA is the parent company of Asseco Poland SA; this results from exercising control over the Issuer's operating activities. As at, Prokom Software SA held 25.66% of Asseco Poland SA shares which entitled them to the proportional voting interest at the General Meeting of Shareholders. The business profile of Asseco Poland SA includes software and hardware consultancy, production of software as well as supply of software and hardware. According to the Polish Classification of Business Activities, the Parent Company s core business is "software consultancy and supply" (PKD-7222Z). This category includes analysing, developing, and programming ready-to-use IT systems. According to the classification adopted by the Warsaw Stock Exchange, the Parent Company s business activity is classified as "information technology". Other undertakings of the Group conduct similar operations. In addition to comprehensive IT services, the Group also sells goods including mainly computer hardware. The conducted sale of goods is to a large extent connected with the provision of software implementation services. These condensed consolidated financial statements provide a description of the Asseco Group s core business broken down by relevant segments. These condensed consolidated financial statements cover the interim period ended and contain comparable data for the interim period ended 31 March 2006 in case of the profit and loss account and cash flow statement, and as at 31 December 2006 in case of the balance sheet. The Company draws up its financial statements in accordance with the International Financial Reporting Standards ("IFRS") for the current and comparable period. Asseco Poland SA has begun to apply the IFRS since the year In 2006 the Company paid out to its shareholders a dividend for By the decision of the Ordinary General Meeting of Shareholders, 30% of net profit for the year 2005 was distributed as payment of the dividend of PLN 0.64 per share. The remaining part of net profit for the year 2005 appropriated for increasing the Company's reserve capital. This year the Management Board of Asseco Poland SA shall recommend to the General Meeting of Shareholders to allocate 30% of net profit for the year 2006 to payment of a dividend in the amount of PLN 0.40 per share. 17

18 GENERAL INFORMATION (continued) Basis for Preparation of Condensed Consolidated Financial Statements The condensed consolidated financial statements were prepared in accordance with the historical cost principle, except for derivative financial instruments and financial assets available for sale valued at their fair value. The currency of the condensed consolidated financial statements is zloty (PLN), and all the figures are presented in thousands of zlotys (PLN 000), unless stated otherwise. These condensed consolidated financial statements were prepared on the going-concern basis. It was assumed that the Parent Company as well as its subsidiary companies will continue their business activities in the foreseeable future. Till the date of approving these financial statements, there have been observed no circumstances indicating a threat to continuing business activities by the Group. Compliance Statement These condensed consolidated financial statements were prepared in compliance with the International Financial Reporting Standards ("IFRS") adopted by the European Union, and in particular in accordance with the International Accounting Standard ("IAS") 34. IFRS include standards and interpretations accepted by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC"). The Group is reporting under IFRS applicable to financial statements for the fiscal years started after 1 January As at the date of approving publication of these financial statements, given the ongoing process of implementing the IFRS standards in the EU as well as the Group's operations, there is no difference between the IFRS applied by the Group and the IFRS adopted by the European Union. Some of the Group's companies maintain their accounting books in accordance with the accounting policies (principles) set forth in the Polish Accounting Act of 29 September 1994 and the provisions issued thereunder ("Polish Accounting Standards"). The condensed consolidated financial statements include adjustments not disclosed in the accounting books of the Group's companies, which were introduced to adjust the financial statements of those companies to the IFRS. The accounting policy (principles) applied in preparing these condensed consolidated financial statements are presented in the full annual consolidated financial statements for the period of 12 months ended 31 December 2006, which was published on 13 April These condensed consolidated financial statements should be read together with the said full annual consolidated financial statements of the Asseco (former Softbank) Group for the period of 12 months ended 31 December Estimates Preparing condensed consolidated financial statements in accordance with IFRS requires making estimates and assumptions which impact the data disclosed in such financial statements. Despite the estimates and assumptions have been adopted based on the Group's management best knowledge on the current activities and occurrences, the actual results may differ from those anticipated. Below are presented the main areas, which in the process of applying the accounting principles (policy) were subject to accounting estimates and the management's professional judgement, and whose estimates, if changed, could significantly affect the Group's future results. 18

19 GENERAL INFORMATION (continued) Operating cash flows assumed for valuation of IT contracts as well as measurement of their advancement The Group executes a number of contracts for construction and implementation of information technology systems. Additionally, some of those contracts are denominated in foreign currencies. Valuation of IT contracts requires that future operating cash flows are determined in order to arrive at the fair value of sales revenues and costs, as well as to provide the fair value of the embedded currency derivatives. The assumed operating cash flows are not always consistent with the agreements with customers or suppliers due to modifications of the implementation schedules of IT projects involved. The progress of contract execution shall be measured as a percentage of the total estimated contract execution costs incurred from the date of agreement till the day when the related revenues are being determined (to a degree such execution costs correspond to the progress of work) or as a portion of completed work out of the total work-effort required. Rates of depreciation and amortisation The level of depreciation and amortisation rates is determined on the basis of anticipated period of useful economic life of the components of tangible and intangible assets. The Group verifies the adopted periods of useful life on an annual basis, taking into account the current estimates. Deferred income tax assets (net of deferred income tax reserve) In Q the Group did not recognise the entire balance of deferred income tax assets (net of reserves). This resulted from the verification of estimates of the planned taxable income to be achieved in the future. Goodwill impairment test At the end of 2006, the Management Board of the Parent Company performed an impairment test on goodwill that resulted from acquisition of subsidiary companies. This required an estimate of the value in use of the cash generating centres, to which such goodwill is attributed. Such estimation requires determining the future cash flows provided by the cash generating centre and the discount rate to be applied for computation of the net present value of these cash flows. As at, no impairment on goodwill was detected. Professional judgement The Group concluded a number of contracts for leasing of transportation vehicles, classified as operating leasing contracts. The lessor keeps all the material risks and benefits resulting from ownership of those assets. The embedded derivatives, which are strictly related to the principal agreements, are accounted for separately as other derivatives, not classified as securing instruments. Gains/losses on changes in fair value of derivatives are reflected in the profit and loss account for the period in which they actually occurred. For some types of transactions, embedded derivatives are not detached from the principal agreement and are not accounted for separately, especially if the transaction is carried out in the currency deemed as applied customarily in such type of transactions in the given economic environment. This type of transactions comprises (among others) real estate lease agreements and, as from 1 January 2005, also IT services contracts because applying Euro rates becomes more and more common. Combinations of business entities under common control are accounted for using the purchase method in accordance IFRS 3, provided such transaction is economically justified. 19

20 GENERAL INFORMATION (continued) Changes in the data for Q In 2007 the Group's management decided to change the method for presentation of sales revenues. Until the end of 2006, sales revenues were classified as sales of products or merchandise. From the beginning of 2007, sales revenues will no longer be categorized this way. Such modification resulted from the changing the Group's business profile into an enterprise providing comprehensive information technology solutions based on proprietary products. Composition of the Management Board and Supervisory Board of the Parent Company As at publication of these financial statements, i.e. on 10 May 2007, the Company's Management Board was composed of the following persons: First name and surname Adam Góral Przemysław Borzestowski Piotr Jeleński Marek Panek Zbigniew Pomianek Adam Rusinek Przemysław Sęczkowski Robert Smułkowski Position President of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board Member of the Management Board As at publication of these financial statements, i.e. on 10 May 2007, the Company's Supervisory Board was composed of the following persons: First name and surname Ryszard Krauze Jacek Duch Dariusz Górka Stanisław Janiszewski Grzegorz Maciąg Piotr Mondalski Adam Noga Position Chairman of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Major Shareholders and Changes in the Ownership of Significant Stakes of Shares According to the best knowledge of the Management Board of Asseco Poland SA the Shareholders who, directly or through their subsidiary companies, hold at least a 5% voting interest at the Company's General Meeting of Shareholders are as follows. Major Shareholders in Asseco Poland SA according to information available as at Name of Shareholder 20 Number of shares and votes at GMS % of share capital owned and voting interest at GMS Prokom Software SA 11,834, % Adam Góral 8,083, % ING TFI SA (investment funds) 3,668, % Pioneer Pekao Investment Management SA 2,358, % Other Shareholders 20,176, % Total 46,120, % As at, the share capital of Asseco Poland SA amounted to PLN 46,120,528 and was divided into 46,120,528 ordinary shares with a par value of PLN 1 each.

21 GENERAL INFORMATION (continued) Sale of warrants by the President of the Board On 16 April 2007, Mr. Adam Góral, President of the Management Board of Asseco Poland SA, disposed 295,000 subscription warrants for the price of PLN each. The warrants were purchased by the financial institution indicated by the Company. The warrants entitle to acquire 295,000 shares of series D in the Company's conditionally increased share capital. /Asseco Poland SA current report no. 28/2007 of 20 March 2007/ Registration of shares due to conversion of convertible bonds On 19 April 2007, the District Court in Rzeszów, XII Commercial Department of the National Court Register, registered the increase of the Company's share capital by 30,276 shares issued under the procedure of conversion of the series D convertible bonds issued according to the Resolution no. 4 of the Company's General Meeting of Shareholders held on 9 August /Asseco Poland SA current report no. 34/2007 of 27 April 2007/ After the above-mentioned changes the Company's share capital will amount to PLN 46,445,804, and it shall be divided into 46,445,804 ordinary shares with a par value of PLN 1 each, entitling to the same number of votes at the General Meeting of Shareholders of Asseco Poland SA. Major Shareholders in Asseco Poland SA according to information available as at 31 December 2006 Name of Shareholder Number of shares and votes at GMS % of share capital owned and voting interest at GMS Prokom Software SA 8,624, % ING TFI SA (investment funds) 1,570, % Pioneer Pekao Investment Management SA 1,324, % Other Shareholders 13,655, % Total 25,174, % As at 31 December 2006, the share capital of Softbank SA amounted to PLN 25,174,713 and was divided into 25,174,713 ordinary shares with a par value of PLN 1 each. 21

22 GENERAL INFORMATION (continued) Changes in the numbers of Asseco Poland SA shares held by the Company's managing and supervisory staff Supervisory Board Members Number of shares as at 10 May 2007 as at as at 31 December 2006 Ryszard Krauze Jacek Duch 0 0 n/a Dariusz Górka 0 0 n/a Marek Jakubik n/a n/a 0 Stanisław Janiszewski 1,600 1,600 1,600 Grzegorz Maciąg 0 0 n/a Piotr Mondalski Adam Noga 0 0 n/a Maria Zagrajek n/a n/a 0 Management Board Members Number of shares as at 10 May 2007 as at as at 31 December 2006 Adam Góral 8,083,000 8,083,000 n/a Krzysztof Korba n/a n/a 0 Przemysław Borzestowski Piotr Jeleński Marek Panek 0 0 n/a Zbigniew Pomianek 0 0 n/a Adam Rusinek 0 0 n/a Przemysław Sęczkowski Robert Smułkowski 1,500 1,500 1,500 Current business operations of Asseco Poland SA Asseco Poland SA all the time conducts very intensive activities related to the execution of projects within the Company's business profile. Agreements entered into On 31 January 2007, Asseco Poland SA signed an agreement with Gospodarczy Bank Wielkopolski SA for supply of the main information technology system def3000 for the Co-operative Banking Group. Furthermore, the project will include development of electronic access channels as well as implementation of reporting and accounting systems. In the period reported Asseco Poland SA also signed: - an agreement with the Ministry of Internal Affairs and Administration for modification of the Central Register of Vehicles and Drivers (CEPiK) in order to meet the needs resulting from the applied Business Processes Model, and to upgrade the Enveloping and Printing Line, - an agreement with the Polish Security Printing Works for integration of its systems Driver and Vehicle with the CEPiK system, - an agreement with Bank Gospodarstwa Krajowego for supply and maintenance of hardware, and provision of software upgrades and trainings, - an agreement with PKO BP SA for modification of the ZORBA system, - an agreement with PKO BP SA for execution of the central application Self-Service Terminals, - an agreement with PKO BP SA for implementation of the financial reporting system according to MSR39. Moreover, the Company concluded 11 agreements with co-operative banks for delivery of the centralized IT systems, and 8 contracts for use of the Internet Services Centre. 22

23 GENERAL INFORMATION (continued) Projects completed In the period reported the Company completed the following projects: - BISE implementation of the e-banking system, - Noble Bank completion of the agreement for implementation of the comprehensive def3000 system and the annex for the transfer of data from Comnet system to def3000, - DB Consumer Finance implementation of FAST system for handling of consumer credits, - BP SA implementation of an Interface to the scoring system. Asseco Poland SA completed implementation of the central IT systems at 3 co-operative banks and carried out installation of the Internet Services Centre at 9 co-operative banks. Ongoing projects During Q1 2007, Asseco Poland SA achieved much progress in execution of the following several major projects: - the agreement for implementation of the Integrated Information System for PKO BP SA, - the agreements with PKO BP SA for maintenance of ZORBA system along with the annex for the Central Support System, - Eurobank implementation of def3000 new version inclusive of customization, - execution of the agreement for implementation of the comprehensive def3000 system for the Co-operative Banking Group of Gospodarczy Bank Wielkopolski, - Gospodarczy Bank Wielkopolski SA execution of the agreement for implementation of the Multicomp and SET-BS systems, - DETAL IT ongoing execution of Stages II and III of the project, - DB PBC the agreement for implementation of the comprehensive def3000 system, - Dominet ongoing execution of the agreement for creation of the API interface to the defbank Pro system, - Getin Bank SA ongoing execution of the agreement for implementation of the comprehensive def3000 system, - Volkswagen Bank Poland SA ongoing implementation of the Internet Banking System and modification of the utilized banking system (replacement of the old system with a new e-direct one). Extraordinary General Meetings of Shareholders On 20 February 2007, the Extraordinary General Meeting of Shareholders of Asseco Poland SA gave its consent to sale of an organized part of the Asseco Poland SA enterprise, which operates as the Building Automation Department, to the company Softbank Serwis Sp. z o.o., pursuant to art. 393 of the Polish Commercial Companies Code, to be paid up with new shares in the increased share capital of Softbank Serwis Sp. z o.o., with the value of at least PLN 40.3 million. /Current report no. 16/2007 of 21 February 2007/ On 20 March 2007, the Company's Extraordinary General Meeting of Shareholders passed a resolution on changing the Company's Articles of Association in the scope of the Company representation manner. At present, the Company may be represented by two members of the Management Board acting together. /Current report no. 22/2007 of 20 March 2007/ 23

24 1. Breakdown of sales revenues 31 March 2006 PLN '000 PLN '000 Proprietary software and services 89,649 38,812 Third-party software and services 39,600 36,142 Computer hardware and infrastructure 30,572 19,781 Outsourcing 32,485 8,004 IT telecommunications 16,232 0 Other sales 1,223 0 Total 209, ,739 In Q1 2007, the Group observed positive changes in the structure of its sales revenues. Percentage of total turnover generated from sale of proprietary software and services increased do 43% from 38% in the year-ago corresponding period. This favourable change resulted from the merger between the groups of Softbank and Asseco. Thanks to the merger the Group sells more IT solutions and services of its own. In Q these sales amounted to PLN 89,649 thousand. Whereas, sales of third-party software and related services increased only by 10% in Q1 2007, and accounted for approx. 19% of total revenues. In the period reported, sales of IT hardware constituted 15% of total turnover, down from 19% in As a result of the merger of the groups of Softbank and Asseco, a new sector (IT telecommunications) was included in the structure of sales, and revenues from outsourcing services increased substantially. IT telecommunication services are provided by the company Slovanet, a.s. of Slovakia, an indirect subsidiary of Asseco Poland SA. In 2007 the Group's management decided to change the method for presentation of sales revenues. Until the end of 2006, sales revenues were classified as sales of products or merchandise. From the beginning of 2007, sales revenues will no longer be categorized this way. Such modification resulted from the changing the Group's business profile into an enterprise providing comprehensive information technology solutions based on proprietary products. 24

25 2. Breakdown of operating expenses 31 March 2006 PLN '000 PLN '000 Materials and energy used (-) ( 4,801) ( 2,667) Third party work (-) ( 70,295) ( 27,918) Salaries (-) ( 53,344) ( 25,318) Employee benefits (-) ( 7,986) ( 4,434) Depreciation and amortisation (-) ( 7,476) ( 3,442) Taxes and charges (-) ( 447) ( 372) Business trips (-) ( 1,527) ( 745) Other (-) 1,276 1,941 Cost of computer hardware purchased for implementation of IT systems (-) ( 30,686) ( 31,444) Total ( 175,286) ( 94,399) Changes in inventories, products and deferred expenses ( 1,508) ( 1,121) Selling expenses (-) ( 12,802) ( 4,956) General administrative expenses (-) ( 21,960) ( 11,193) Cost of products, merchandise and materials sold (-) ( 139,016) ( 77,129) In Q1 2007, the Group made additional allowances for accounts receivable in the amount of PLN 847 thousand, thereby increasing the cost of products. 25

26 3. Financial income and expenses Financial income 31 March 2006 PLN '000 PLN '000 Interest income on loans granted, debt securities and bank deposits 2, Other interest income 1,826 1,288 Gain on foreign exchange differences Other financial income 2 5 Total financial income (at historical value) 4,723 2,173 Gain on change in fair value of embedded currency derivatives 3, Gain on exercise of currency derivatives - forward contracts 3,428 8,214 Change in valuation of the stock option for purchase of shares in Asseco Poland SA Total financial income 11,908 11,815 Financial expenses 31 March 2006 PLN '000 PLN '000 Interest expense on bank credits and current account credits (-) ( 713) ( 171) Other interest expenses (-) ( 1,277) ( 1,196) Interest on short-term commercial papers (-) 0 ( 255) Loss on foreign exchange differences (-) ( 5,745) ( 5,057) Other financial expenses (-) ( 7) ( 812) Total financial expenses (at historical cost) ( 7,742) ( 7,491) Loss on change in fair value of embedded currency derivatives (-) 0 ( 2,424) Loss on change in fair value of currency derivatives - forward contracts (-) ( 5,932) ( 2,679) Total financial expenses ( 13,674) ( 12,594) In Q1 2007, just as in the analogous period of 2006, the Group held a number of concluded forward contracts for purchase or sale of EUR and USD. In Q the valuation of forward contracts increased the Group s financial expenses by the amount of PLN 5,932 thousand. Whereas, in Q the valuation of forward contracts increased the financial expenses by the amount of PLN 2,679 thousand. As in the corresponding period of prior year, also in Q the Group held a number of embedded derivatives under the concluded trade agreements denominated in EUR or USD. In the period reported, the valuation of embedded derivatives increased the Group s financial income by the amount of PLN 3,757 thousand. In Q the valuation of embedded derivatives increased the Group s financial income by the amount of PLN 527 thousand, and concurrently it increased the financial expenses by PLN 2,424 thousand. 26