Management Board Report on the activities of. Open Finance S.A.

Transcription

1 Management Board Report on the activities of Open Finance S.A. for the year ended on 31 December 2011

2 1. Company s Details Open Finance S.A. ( Open Finance, Company ), a public company with its registered office in Warsaw, Poland, at the address of ul. Domaniewska 39, was incorporated on 30 January 2004 for an indefinite period of time. On 25 February 2004, it was registered under number with the National Court Register. The Company is registered for statistical purposes under (REGON) number Events materially affecting the company s activities and occurring in the financial year and after the end of the financial year until the date of approval of the financial statements. On 5 April 2011, the Company made a successful debut on the Warsaw Stock Exchange. In 2011, the Company began the process of building its capital group. On 31 January 2011, Link4 Towarzystwo Ubezpieczeń S.A., a company with its registered office in Warsaw and INTOUCH INSURANCE GROUP B.V., a company with its registered office in Amsterdam, the Netherlands (as the seller), Leszek Czarnecki, PhD, Getin Noble Bank S.A., a company with its registered office in Warsaw, and Open Finance S.A., a company with its registered office in Warsaw (as the buyer) entered into a preliminary agreement to purchase shares in Open Life Towarzystwo Ubezpieczeń na Życie S.A. ( Open Life, formerly MyLife Towarzystwo Ubezpieczeń na Życie S.A.). Under the above agreement, after satisfaction of the conditions precedent set out therein, Open Finance acquired 49% of the shares in Open Life. The final agreement for the purchase, by the Company of the 49% stake in Open Life was executed on 22 July Under conditional agreements to purchase 100% of shares in Home Broker Nieruchomości S.A. ( HBN, Home Broker, formerly Home Broker S.A.) and after the satisfaction, on 21 October 2011, of all the conditions precedent set out in the agreements for the purchase of shares in Home Broker Nieruchomości S.A. (formerly Home Broker S.A.), Home Broker Nieruchomości S.A. (formerly Home Broker S.A.) became a subsidiary of the Company. In addition to Home Broker Nieruchomości S.A. (formerly Home Broker S.A.), all of the companies forming the Home Broker Nieruchomości S.A. capital group ( Home Broker Group ), namely Home Broker Nieruchomości S.A., HB Doradcy Finansowi Sp. z o.o. Sp. k. and HB Doradcy Finansowi Sp. z o.o, became part of Open Finance Capital Group (Open Finance Group). On 22 February 2012, a new subsidiary of Open Finance S.A., namely Open Finance TFI S.A., was registered. The share capital of Open Finance TFI S.A. is PLN 5,000 and is divided into 5,000,000 series A ordinary registered shares with the nominal value of PLN 1.00 each. Open Finance S.A. acquired 100% of the shares in the new company for a contribution in cash. On 22 February 2012, an Extraordinary General Meeting of Open Life TUnŻ S.A. adopted a resolution to increase its share capital by PLN 30,000 thousand. On 24 February 2012, the Management Board of Open Finance S.A. signed an agreement to acquire shares in the increased share capital of Open Life TUnŻ S.A. The value of the shares acquired was PLN 14,700 thousand. Until the date of approval of these financial statements, the above increase was not registered with the National Court Register. 3. Anticipated development of the company The Company intends to continue increasing its share in sales of loan products and investment products. Therefore, the Company intends to continue expanding its sales network by opening new branches and employing new advisers. Page 2 of 17

3 The Company expects to develop also by expanding its capital group. The Company is expected to benefit, through a number of synergies, from cooperation within its capital group. The Management Board expects benefits, inter alia, in the following areas: greater opportunities for negotiations with business partners, diversification of the range of services and of the revenue stream, better conversion of the potential customers to products, the ability to market investment products directly to a new group of customers, more effective channel marketing (cooperation with developers), lower costs of attracting new customers, extended period of the direct contact with clients doubling in the distribution potential for life insurance and property insurance products (Open Life), cost synergies. 4. Major achievements in the area of research and development. The Company is not involved in any research and development activity. 5. Current and anticipated financial standing. In 2011, the Company s net profit amounted to PLN 85,768 thousand and increased by 19% as compared to The increase in profit was mainly the result of a considerable increase in revenue from loan intermediation services (up by 22%) and commission on the distribution of investment products (up by 24%). The fast growth of sales revenue in 2011 is mainly the result of launching innovative investment products. In respect to loan products, in 2011 an increase in both the volumes of loans granted as well as the commission rates for intermediation services received from banks was observed. In the period under analysis, operating costs rose by 27%. This rise was attributable mainly to higher commission fees paid to financial advisers (as a consequence of higher sales revenue), an increase in marketing costs and as a result of higher maintenance costs in connection with expanding the Company s distribution network. It is expected that opening new branches, taking advantage of the synergies resulting from the Company s ownership of companies as part of capital group, and having access to new innovative products (including products offered by Open Finance Capital Group companies) will have a positive impact on continued growth of sales and the Company s financial results. 6. Purchase of own shares. During the financial year of 2011, the Company did not purchase its own shares. As at 31 December 2011 and the date of approval of these financial statements, the Company did not hold any of its own shares. 7. Branches As at 31 December 2011, the Company had 64 regular branches and 50 mobile branches (Open Direct). Page 3 of 17

4 8. Description of significant risk factors and threats, including the degree to which the issuer is exposed to such factors and threats. Financial instruments, including the price risk, credit risk, cash flow risk and liquidity risk that the company is exposed to. The financial risk management objectives and methods adopted by the company, including the methods for securing significant planned transactions for which hedge accounting is applied. The main financial instruments used by the Company include cash and short-term deposits. The Company also has other financial instruments, such as trade receivables and trade liabilities arising directly in the course of the Company s business operations. In addition, as at 31 December 2011, the Company recognised financial liabilities arising from contingent payments in connection with the purchase of shares in Home Broker Nieruchomości S.A. (formerly Home Broker S.A.). (formerly Home Broker S.A.) The main types of risks related to the Company s financial instruments include interest rate risk, liquidity risk, currency risk and credit risk. The Management Board reviews and approves the principles of managing each of the above types of risks. A brief description of the principles is given below. In the reporting period, no changes were made to the Company s financial risk management principles. One principle applied by the Company since the beginning of its operation is not to trade in financial instruments. Interest rate risk The Company s exposure to interest rate risk is related to, above all, the fact that the Company s assets and liabilities may be adversely affected by changes to market interest rates. As the Company does not have significant financial assets or liabilities with fixed interest rates (except for finance lease liabilities), the Company is not significantly exposed to fair value risk resulting from interest rates. As the Company does not have significant financial assets or liabilities with variable interest rates, the Company is not significantly exposed to cash flow risk. The Company s exposure to interest rate risk is related mainly to long-term balances, which are discounted for the purpose of including the time value of money in measuring the value of such balances. The table below presents the sensitivity of the Company s net profit (loss) to reasonably possible changes to the interest rates used in discounting long-term balances, with other factors unchanged. The effect on the Company s equity or its comprehensive income is not presented. Scenarios Discount rate: 8% balance increase / decrease PLN'000 effect on net profit (loss) PLN'000 Trade receivables (162) (132) Other (short- and long-term) receivables (67) (55) Other non-financial (short- and long-term) liabilities (364) 294 Financial liabilities measured at fair value through profit or loss (3 032) Total (3 625) In addition, the Company monitors and reviews, on an ongoing basis, the structure of its assets and liabilities that are sensitive to interest rate changes. This activity has a positive impact on risk optimisation. Currency risk Currency risk results from sales and/or purchases, by the operating entity, in currencies other than the measurement currency. The Company is exposed to insignificant currency risk, as the value of the Company s transactions in foreign currencies is lower than 1% of the Company s total revenue or costs. Page 4 of 17

5 In the opinion of the Company s Management Board, there was no concentration of currency risk as at 31 December 2011 and 31 December Liquidity risk The Company monitors the risk of shortage of funds through periodic liquidity planning. This method takes into account the maturity dates of both investments and financial assets (e.g. accounts receivable, other financial assets) and the forecasted cash flows from operating activities. It is the Company s intention to maintain a balance between the continuity and flexibility of financing through the use of external financing, such as finance lease. The table below presents an analysis of the maturity of financial liabilities: Analysis of the maturities of financial liabilities according to contractual periods remaining until maturity, as the sum of undiscounted cash flows 31 Dec Dec.2010 PLN'000 PLN'000 Trade liabilities up to 3 months from 3 to 6 months from 6 to 12 months from 1 year to 5 years over 5 years - - Finance lease liabilities up to 3 months from 3 to 6 months from 6 to 12 months from 1 year to 5 years over 5 years - - Financial liabilities measured at fair value through profit or loss up to 3 months from 3 to 6 months from 6 to 12 months from 1 year to 5 years over 5 years - - Total Credit risk The Company is exposed to minimum credit risk related to its financial assets. The Company does business mainly with reputable and reliable financial institutions, and trade receivables arising from the services provided are mainly short-term receivables. The Company s cash is deposited with Getin Noble Bank S.A. and ING Bank Śląski S.A. The maximum amount exposed to credit risk is equal to the amount presented in the statement of financial position. In addition, the Company posseses long-term receivables in a form of deposits paid as security for future payments under its rental agreements. The Company rents offices from reliable business partners, and the maximum amount exposed to credit risk is equal to the undiscounted value of deposits. As at 31 December 2011, the Company presented receivables from deposits with 99 entities. In the case of five of the entities, the receivables accounted for 5%-8.7% of the total balance of such receivables. In the case of the other entities, the receivables accounted for less than 4.7% of the total balance of such receivables. In the periods covered by the financial statements, the terms and conditions of the Company s financial assets were not renegotiated. Page 5 of 17

6 Maximum exposure to credit risk Financial assets 31 Dec.2011 PLN' Dec.2010 PLN'000 Trade receivables Other non-financial (short- and long-term) receivables Cash and cash equivalents (except cash on hand) Total exposure to credit risk Total off-balance sheet liabilities - - Total exposure to credit risk Concentration risk In relation to concentration risk, as at 31 December 2011, there were receivables and accrued revenue balances from individual business partners, whose value exceeded 10% of the total balance of trade receivables and accrued revenue from unsettled applications. These balances were due from Open Life Towarzystwo Ubezpieczeń na Życie S.A. and Getin Noble Bank S.A. As at 31 December 2010, the amounts due from Towarzystwo Ubezpieczeń na Życie Europa S.A. and Getin Noble Bank S.A. exceeded 10% of the total balance of receivables and accrued revenue. The Company does not apply hedge accounting. 9. Description of the key economic and financial figures disclosed in the company s annual financial statements. Description of factors and events, including atypical factors and events, significantly affecting the issuer s activities and the issuer s profits in the financial year. Description of the prospects for growth in the following financial year. In 2011, the Company s net profit amounted to PLN 85,768 thousand and increased by 19% as compared to The increase in profit was mainly the result of a considerable increase in revenue from loan intermediation services (up by 22%) and commission on the distribution of investment products (up by 24%). The fast growth of sales revenue in 2011 is mainly the result of launching innovative investment products. In respect to credit products, in 2011 an increase in both the volumes of loans granted as well as the commission rates for intermediation services received from banks was observed. In the period under analysis, operating costs rose by 27%. This rise was attributable mainly to higher commission fees paid to financial advisers (as a consequence of higher sales revenues), an increase in marketing costs and as a result of higher maintenance costs in connection with expanding the Company s distribution network. In the financial year under analysis, there were no factors and events, including atypical factors and events, significantly affecting the issuer s activities and the issuer s results, except for those described in section 2 of this Report. The Company intends to continue increasing its share in sales of credit/lending and investment products. Therefore, the Company intends to continue expanding its sales network by opening new branches and employing new advisers. The Company plans to develop also through a number of synergies from cooperation within its capital group. Page 6 of 17

7 10. Lawsuits pending before courts of law, arbitration proceedings and public administration procedures pending. There is no individual lawsuit or procedure pending in relation to the Company s liabilities or receivables whose value is at least 10% of Open Finance s equity. There are no two or more lawsuits or procedures pending in relation to the Company s liabilities or receivables whose value is at least 10% of Open Finance s equity. The total value of lawsuits and procedures on the liabilities side amounts to PLN 30 thousand and PLN 0.00 on the receivables side. 11. Information on major products and services. The Company is a distributor of financial products offered by financial institutions. The Company does not sell its own products. The products distributed by the Company as an intermediary include loan products and investment products (including term deposits, bonds and regular saving products). The Company s revenue from the sale of loan products account for 58% of its total sales in 2011 and revenue from the sale of investment products represents 42% of the Company s total 2011 sales. In 2011, compared to the previous year, revenue from the sale of loan products increased by 22% and revenue from the sale of investment products increased by 24%. 12. Information on the company s markets. The Company acts as an intermediary in the sale of financial products only on the territority of Poland. It preforms its services through 64 regular branches and 50 mobile branches (Open Direct). In 2011, 28% of the Company s total revenue resulted from sale of products offered by Getin Noble Bank S.A. Towarzystwo Ubezpieczeń na Życie Europa S.A, the life insurance company, was another significant supplier of financial products in The sale of products offered by Towarzystwo Ubezpieczeń na Życie Europa S.A. accounted for 13% of the Company s total revenue in Information on agreements significantly affecting the issuer s activities On 31 January 2011, Link4 Towarzystwo Ubezpieczeń S.A., a company with its registered office in Warsaw and INTOUCH INSURANCE GROUP B.V., a company with its registered office in Amsterdam, the Netherlands (as the seller), Leszek Czarnecki, PhD, Getin Noble Bank S.A., a company with its registered office in Warsaw, and Open Finance S.A., a company with its registered office in Warsaw (as the buyer) entered into a preliminary agreement to purchase shares in Open Life Towarzystwo Ubezpieczeń na Życie S.A. ( Open Life, formerly MyLife Towarzystwo Ubezpieczeń na Życie S.A.). Under the above agreement, after satisfaction of the conditions precedent set out therein, Open Finance acquired 49% of the shares in Open Life. The final agreement for the purchase, by the Company of the 49% stake in Open Life was executed on 22 July Under conditional agreements to purchase 100% of shares in Home Broker Nieruchomości S.A. ( HBN, Home Broker, formerly Home Broker S.A.) and after the satisfaction, on 21 October 2011, of all the conditions precedent set out in the agreements for the purchase of shares in Home Broker Nieruchomości S.A. (formerly Home Broker S.A.), Home Broker Nieruchomości S.A. (formerly Home Broker S.A.) became a subsidiary of the Company. In addition to Home Broker Nieruchomości S.A. (formerly Home Broker S.A.), all of the companies forming the Home Broker Nieruchomości S.A. capital group ( Home Broker Group ), namely Page 7 of 17

8 Home Broker Nieruchomości S.A., HB Doradcy Finansowi Sp. z o.o. Sp. k. and HB Doradcy Finansowi Sp. z o.o, became part of Open Finance Capital Group (Open Finance Group). 14. Information on the issuer s organisational or capital links with other entities The Open Finance S.A. Group is controlled by Leszek Czarnecki, PhD, holding, as at 31 December 2011 and as at the date of approval of the financial statements, directly and indirectly through subsidiaries (i.e. Getin Noble Bank S.A. and LC Corp B.V), 54.38% of the total number of shares in Open Finance. Open Finance S.A. was directly controlled by Getin Noble Bank S.A. till the day when the Company was floated on the Warsaw Stock Exchange (5 April 2011) and the day of registrartion of an increase in the Company s share capital (7 April 2011). As at 31 December 2011, the Company held the following equity investments: Company Name Open Life TUnŻ S.A. Home Broker Nieruchomości S.A. (dawniej Home Broker S.A.) Status associate subsidiary Registered Office Warszawa, Domaniewska 39 Warszawa, Domaniewska 39A Core Business Percentage Share of Company's Capital insurance 49% - real estate agency services 100% - - shares held through Home Broker Nieruchomości S.A. (formerly Home Broker S.A.): Home Broker Nieruchomości S.A. HB Doradcy Finansowi Sp. z o.o. Sp. k HB Doradcy Finansowi Sp. z o.o. subsidiary subsidiary subsidiary Warszawa, Domaniewska 39A Warszawa, Domaniewska 39A Warszawa, Domaniewska 39A real estate agency services 100% - financial intermediation 100% - management consulting 100% - As at 31 December 2011, the Company s share in the total number of voting rights in each of the companies was equal to the Company s share in the capital of each of the companies. Expenditure on equity investments in 2011 was financed with money raised through initial public offering and utilising the Company s profits for 2010 and 2011 retained within the entity. 15. Information on significant transactions made by the issuer or its subsidiary with related parties other than on an arm s length basis. Neither the Company nor any of its subsidiaries or associates made any transactions with related parties other than on an arm s length basis. 16. Information on loan / credit agreements signed and terminated during the financial year. In 2011, the Company was not party to any loan / credit agreements. 17. Information on loans granted during the financial year. In 2011, the Company did not grant any loans. 18. Information on guarantees and sureties granted and received during the financial year. During the financial year ended on 31 December 2011, the Company did not grant or receive any guarantees or sureties. 19. Description of the issuer s use of the proceeds from its share issue until the date of preparation of this report. Page 8 of 17

9 Open Finance S.A. used its proceeds from share issue in 2011 to purchase shares in Open Life Towarzystwo Ubezpieczeń na Życie S.A. and in Home Broker Nieruchomości S.A. (formerly Home Broker S.A.) 20. Explanation of the differences between the financial results presented in the annual report and the previously published forecasts for the year covered by the report. The Company did not publish any forecasts in Assessment of financial resource management. The Company s financial resources were used during the financial year ended on 31 December 2011 in accordance with the relevant approved budgets. Significant expenditure was subject to approval by the Company s Supervisory Board every time it was required under the Company s Articles of Association. In 2011, the Company had no cash flow problems and paid its liabilities on time. 22. Assessment of factors and atypical events affecting the Company s profit (loss) for the financial year. No significant atypical factors or events affecting the Company s results in 2011 were identified. 23. Description of external and internal factors significantly affecting the issuer s development, and a description of the issuer s development prospects in A slowdown of economic growth or no economic growth at all, as well as interest rate rises and, in consequence, consumers being less willing to take out mortgage loans may result in lower sales of loan products. In addition, the Company s sale of loan products may be adversely affected by potential further recommendations by the Polish Financial Supervision Authority, resulting in reduced creditworthiness of customers, as well as recommendations as to the currency structure of loans granted by banks, and recommendations regarding banks cross-selling practices, or government regulations resulting in gradual withdrawal form providing subsidised loans. As public awareness of the need to save money regularly rises and tax reliefs for regular savers are introduced, sales of investment products may increase in An important internal factor affecting the Company s future development is the ability to retain qualified managers and well-trained, experienced financial advisers who are able to effectively sell the financial products offered by the Company and to train new personnel in sale techniques. In 2012, the Company plans to further increase its sales through opening new branches and employing new financial advisers, improving the effectiveness of its sales force, and by taking advantage of the synergy effects created within its capital group. 24. Changes to the main management principles applied by the issuer and its group of companies. In 2011, no significant changes to the main management principles were made. 25. Agreements concluded between the issuer and managers under which compensation is to be paid to a manager in the event of the manager s resignation or removal from his position without a valid reason or if the removal or dismissal is the result of a merger involving the issuer through acquisition. As at 31 December 2011, there are no agreements made between the issuer and managers under which compensation is to be paid to a manager in the event of the manager s resignation or removal from his position without an important reason or if the removal or dismissal is the result of a merger involving the issuer through acquisition. Page 9 of 17

10 26. Value of salaries, rewards and benefits, including these resulting from incentive and/or bonus schemes based on the issuer s equity. The value of remuneration paid to the members of the Management Board under incentive scheme based on the issuer s equity is presented in Note XIII of Open Finance S.A. s financial statements for the year ended on 31 December Specification of the number and nominal value of shares in the issuer and in the issuer s related parties, held by members of the issuer s management and supervisory bodies. As of 31 December 2011, Mr Remigiusz Baliński, Chairman of the Supervisory Board, held 3,219 shares in Open Finance S.A. with the nominal value of PLN 0.01 each and 79,254 shares in Getin Noble Bank S.A. with the nominal value of PLN 1.00 each. As at 31 December 2011, Mr Jarosław Augustyniak, Member of the Supervisory Board, held 9,250,000 shares in Getin Noble Bank S.A. with the nominal value of PLN 1.00 each. As at 31 December 2011, Mr Krzysztof Tymoszyk, Member of the Supervisory Board, held 15,800 shares in Getin Noble Bank S.A. with the nominal value of PLN 1.00 each. As at 31 December 2011, Mr Krzysztof Sokalski, Member of the Management Board, held 100 shares in Open Finance S.A. with the nominal value of PLN 0.01 each. Additionally, as at 31 December 2011, Mr Krzysztof Sokalski held 19,991 shares in Getin Noble Bank S.A. with the nominal value of PLN 1.00 each. As at 31 December 2011, Mr Krzysztof Spyra, President of the Management Board, held, through its subsidiaries 9,209,947 shares in Getin Noble Bank S.A. with the nominal value of PLN 1.00 each. As at 31 December 2011, none of the Members of the Management Board or the Supervisory Board of Open Finance held any shares in any of Open Finance S.A. s subsidiaries or associates. 28. Information on agreements known to the issuer that may, in the future, result in changes to the proportion of shares held by the issuer s existing shareholders. The issuer is not aware of any agreements that may, in the future, result in changes to the proportion of shares held by the issuer s existing shareholders, except for the effects of implementing Open Finance s incentive scheme, as described in Note X.29 of the Company s annual financial statements for the financial year ended on 31 December Information on employee share scheme control No employee share schemes are in place at the Company. 30. Information on agreements with entities authorised to audit financial statements relating to a review and audit of the issuer s financial statements. On 20 July 2011, the Company signed a one-year agreement to review the Company s interim financial statements and to audit its annual financial statements. On 27 January 2012, the Company signed a one-year agreement to audit the annual consolidated financial statements of the Open Finance Capital Group. On 17 November 2010, the Company signed a one-year agreement to audit the annual separate and consolidated financial statements of Open Finance S.A. / the Open Finance Capital Group. The costs of the services provided by Ernst & Young Audit sp. z o.o. in 2011 and 2010 were as follows: Page 10 of 17

11 Type of service 1 Jan Dec.2011 PLN'000 1 Jan Dec.2010 PLN'000 Statutory audit of the annual financial statements Other certification services Total (*) (*) - services provided by Ernst&Young Audit Sp. z o.o. 31. Statement on the application of the principles of corporate governance in The set of corporate governance principles applicable to the issuer. Open Finance S.A. applies the principles of corporate governance contained in the Good Practices of Companies Listed on the Warsaw Stock Exchange, as adopted by way of Resolution 20/1287/2011 of the Supervisory Board of the Warsaw Stock Exchange on 19 October The text of the document is available on the official website of the Warsaw Stock Exchange ( In 2011, Open Finance S.A. applied the above set of corporate governance principles, except for the following principles: I. RECOMMENDATIONS FOR BEST PRACTICE FOR LISTED COMPANIES 9. The WSE recommends to public companies and their shareholders that they ensure a balanced proportion of women and men in management and supervisory functions in companies, thus reinforcing the creativity and innovation of the companies economic business. In the opinion of the Company s Management Board, the basic criterion in selecting candidates for managerial and supervisory functions should be the candidate s professionalism and suitability for the function concerned, and other factors such as gender should not determine the selection of such candidates. Therefore, the Company considers it illegitimate to introduce regulations based on pre-defined proportions, and the selection of candidates for managerial and supervisory functions is at the discretion of the authorised bodies of the Company. III.BEST PRACTICE FOR SUPERVISORY BOARD MEMBERS 6. At least two members of the Supervisory Board should meet the criteria of being independent from the company and entities with significant connections with the company. The independence criteria should be applied under Annex II to the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board. Irrespective of the provisions of point (b) of the said Annex, a person who is an employee of the company or an associated company cannot be deemed to meet the independence criteria described in the Annex. In addition, a relationship with a shareholder precluding the independence of a member of the Supervisory Board as understood in this rule is an actual and significant relationship with any shareholder who has the right to exercise at least 5% of all votes at the General Meeting. The Company s governing bodies are of the opinion that, in accordance with the general majority-rule principle and the minority shareholder rights protection principle, a shareholder that has contributed a greater amount of capital to the Company bears a higher economic risk and, therefore, it is legitimate for that shareholder s interests to be taken into account in proportion to his capital contribution, i.e. that shareholder should also have the right to put forward candidates to sit on the Supervisory Board to ensure the achievement of the Page 11 of 17

12 Company s strategy. This, in the Company s opinion, allows for implementing the Company s strategy appropriately and effectively and provides sufficient protection of the rights vested in all groups of shareholders and other groups related to the Company. Given the Company s present shareholding structure, the above principle is an excessive limitation of the majority shareholder s corporate rights and against the principle of majority rule at a public company. The General Meeting select candidates to sit as members on the Supervisory Board from among individuals with relevant qualifications, professional experience and life experience, representing high moral standards and having enough time to perform their duties on the Supervisory Board properly. In the Company s opinion, the above criteria can guarantee that the members of the Supervisory Board work effectively for the Company s interests and, in consequence, for the benefit of all of the Company s shareholders Shareholders holding directly or indirectly significant stakes as at the date of approval of the financial statements. Shareholder Number Percentage Number of Number of of Shares of Share Votes at the Votes at the Capital (%) General General Meeting Meeting in Proportion to Total Number of Votes Leszek Czarnecki, PhD, and his subsidiaries: Getin Noble Bank S.A. 26,500, % 26,500, % LC Corp B.V. 2,000, % 2,000, % directly 1,000, % 1,000, % ING TFI S.A. 3,432, % 3,432, % Amplico PTE S.A. 3,216, % 3,216, % Special rights and limitations relating to the issuer s securities. All shares in Open Finance S.A. are ordinary bearer shares and do not carry any special control rights. The Company s Articles of Association do not provide for any limitations on the exercise of voting rights, such as limitation on the exercise of voting rights by holders of part of the total number of votes, time limitations on the exercise of voting rights, nor does it contain any provisions separating equity rights related to shares in the Company from the holders of the shares. Also, no limitations apply as to the transfer of ownership of shares issued by the Company Issuer s managing and supervisory bodies. Rules of procedure and powers of the General Meeting General Meetings are held as either ordinary (annual) or extraordinary meetings, in accordance with the applicable provisions of law, the Company s Articles of Association and the General Meeting Rules of Procedure. The Company s corporate documents are available on its website. Page 12 of 17

13 In addition to other powers as set out in the Company s Articles of Association and the applicable provisions of law, the General Meeting s powers include: considering and approving (a) the Management Board s report on the Company s activities and (b) the Company s financial statements for the previous financial year; adopting a resolution on the distribution of the Company s profit or the method for covering the Company s loss; granting a discharge to the members of the Management Board and of the Supervisory Board in respect of the performance of their duties; adopting resolutions on matters relating to the disposal or lease-out of the Company s business or its organised part and/or on the creation of restricted property rights in respect of the same; setting the rules for the payment of remuneration and amounts of remuneration payable to members of the Supervisory Board; adopting a resolution on dissolving the Company; issuing convertible bonds or bonds with priority rights; adopting resolutions on any claims for compensation for loss or damage caused by establishing, managing or supervising the Company; setting the methods and conditions for the redemption of shares. The Issuer s shareholders exercise their powers in accordance with the generally applicable provisions of law, the Company s Articles of Association and the General Meeting Rules of Procedure. Procedure for amending the Issuer s Articles of Association The Issuer s Articles of Association may only be amended by the Company s General Meeting, in accordance with the Polish Code of Commercial Partnerships and Companies (Kodeks spółek handlowych), which means that any amendment to the Company s Articles of Association requires a resolution of the General Meeting and registration with the National Court Register. Composition and rules of procedure of the Supervisory Board The Supervisory Board supervises, on an ongoing basis, the activity of the Company and consists of at least five (5) members appointed by the General Meeting. The Supervisory Board elects, from among its members, its Chairperson and Deputy Chairperson. Each member of the Supervisory Board is appointed for a term of three years. Each member of the Supervisory Board is appointed for a separate term and may be re-elected for subsequent terms. The Supervisory Board acts in accordance with the generally applicable provisions of law, the Issuer s Articles of Association and the Supervisory Board Rules of Procedure. As at 31 December 2011, the Issuer s Supervisory Board consists of the following individuals: Function Chairman of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Name Remigiusz Baliński Dariusz Niedośpiał Jarosław Augustyniak Page 13 of 17

14 Function Member of the Supervisory Board Member of the Supervisory Board Name Marek Kaczałko Krzysztof Tymoszyk In 2011, the following change was made to the composition of the Issuer s Supervisory Board: On 9 February 2011, Mr Krzysztof Rosiński resigned as a member of the Company s Supervisory Board. No other changes were made to the composition of the Issuer s Supervisory Board in 2011 and until the date of approval of the financial statements. In addition to other powers as set out in the Issuer s Articles of Association and the applicable provisions of law, the Supervisory Board s powers include: determining the maximum amount of financial obligations assumed by the Management Board without the Supervisory Board s consent; appointing and removing members of the Company s Management Board; suspending, for valid reasons, any of or all the members of the Company s Management Board; determining the rules of payment of remuneration to the members of the Management Board; giving permission to members of the Management Board to undertake or otherwise become involved in any activity competitive with that of the Issuer; approving changes to the Company s accounting standards and principles; appointing an auditor to examine the Company s financial statements; approving the Company s annual budgets, business plan and strategic plan; giving permission with respect of payment of interim dividend; giving an opinion on a motion for liquidation of the Company before it is put forward to the General Meeting; giving opinions on proposed changes to the Company s Articles of Association before they are put forward to the General Meeting; preparing and putting forward, to the General Meeting, (a) a concise assessment of the Company s situation, including an assessment of the Company s internal control system and the system for managing significant risks for the Company and (b) an annual report on the activity of the Supervisory Board; approving the limits of the Company s debt and making decisions on increasing such debt; approving the limit of encumbrances on the Company s assets (pledges, mortgages or other encumbrances) and making decisions on increasing such limits; giving permission for the Company to assume any financial obligations in excess of the limits approved by the Supervisory Board; giving permission for the Company to create any encumbrance on any of its assets, if the value of such an encumbrance is in excess of the limits approved by the Supervisory Board; giving permission for the Company to acquire, dispose of, lease out or otherwise deal with any of the Company s assets as part of a transaction other than transactions made as part of the Company s ordinary course of business or a transaction not related to the Company s core business, if the value of the transaction is in excess of PLN 1,000,000 (one million zlotys); giving permission for the Company to acquire and/or dispose of shares or to form any company or to participate in any joint venture; giving permission for the Company to grant a guarantee; signing, on behalf of the Company, a promissory note as security for the repayment of any amounts due to any third party; and doing anything that may be Page 14 of 17

15 necessary to secure the liabilities of any individual or entity, if the value of such liabilities is in excess of PLN 1,000,000 (one million zlotys); giving permission for any collective bargaining agreement or any other collective agreement with the Company s employees to be signed; considering other matters put forward by the Management Board for consideration by the Supervisory Board. Audit Committee The duties of the Company s audit committee are performed by the Supervisory Board. The purpose of the Supervisory Board s performance of the duties of the audit committee is to perform supervisory functions with respect to financial reporting processes, risk management, the Company s internal control system and audits. The duties of the Audit Committee include, inter alia, the following: monitoring the Company s financial reporting processes, monitoring the effectiveness of the Company s internal control system and risk management processes; monitoring internal audit work; monitoring auditing works at the Company and monitoring the independence of the auditor and the entity authorised to audit the Company s financial statements. The Issuer s Supervisory Board appointed Mr Paweł Podgórski as Permanent Adviser to the Supervisory Board. The Permanent Adviser to the Supervisory Board is responsible for supporting the Issuer s Supervisory Board with respect to matters related to the Supervisory Board s performance of the duties of the Audit Committee, particularly for the following: advising the Supervisory Board with respect to monitoring auditing work at the Company and to monitoring the independence of the auditor and the entity authorised to audit the Company s financial statements; putting forward, the Supervisory Board, the draft versions of annual task plans related to the Supervisory Board s performance of the duties of the Audit Committee; preparing documents and materials for Supervisory Board meetings during which matters related to the Supervisory Board s performance of the duties of the Audit Committee are to be discussed; ensuring regular subject-matter support with respect to the Supervisory Board s performance of the duties of the Audit Committee. Composition, rules of procedure, appointment, removal and powers of the Management Board The Management Board acts in accordance with the Polish Code of Commercial Companies and Partnerships (Kodeks spółek handlowych) Act of 15 September 2000 and with the Issuer s Articles of Association, which contain detailed provisions relating to the organisation and rules of procedure of the Management Board, including the procedure for adopting resolutions. The Management Board is responsible for managing the dayto-day activity of the Issuer and representing the Issuer externally. The members of the Management Board perform their duties personally. Meetings of the Management Board are held at the Issuer s registered office or in any other location as agreed upon by all the members of the Management Board and are convened by the President of the Management Board on his own initiative or at the request of any member of the Management Board. If the President of the Management Board is absent and/or if he is unable to perform his duties, he is replaced by a member of the Management Board designated by the President. Meetings of the Management Board are convened on an as-needed basis. The Management Board issues internal rules and regulations by way of resolutions. A meeting of the Management Board is valid and may adopt binding Page 15 of 17

16 resolutions if all the members of the Management Board have been notified of the meeting. Resolutions of the Management Board require a simple majority of the votes cast, and each member of the Management Board may cast only one vote. In the event of a tied vote on a resolution, the President of the Management Board has a casting vote After satisfaction of the conditions set out in the Management Board Rules of Procedure, the Management Board may adopt resolutions in accordance with a special procedure without convening and holding a meeting of the Management Board: by circulation, using means of direct remote communication, especially by voting by electronic mail or fax and, subsequently, signing the resolution according to the vote cast, by voting in writing, i.e. each member of the Management Board is signing the draft version of the resolution concerned, indicating whether the member is for, against or abstains from voting on the resolution and, subsequently, delivering the resolution so signed to the President of the Management Board. As at 31 December 2011 and as at the date of approval of the financial statements, the Management Board of Open Finance consisted of the following individuals: Function President of the Management Board Member of the Management Board Member of the Management Board Name Krzysztof Spyra Wojciech Gradowski Krzysztof Sokalski The Issuer s Management Board consists of between one (1) and five (5) members. Members of the Management Board are appointed and removed by the Supervisory Board. Each member of the Management Board is appointed for a term of three (3) years. Each member of the Management Board is appointed for a separate term and may be re-elected for subsequent terms. The term of a member of the Management Board may expire as a result of the member s resignation, death and removal. Each member of the Management Board may be removed at any time. The Management Board manages the Issuer s affairs and represents the Issuer. The Management Board has the power to deal with all matters not reserved for the General Meeting or the Supervisory Board. The Management Board manages the day-to-day activities of the Issuer by, in particular: doing anything that is necessary or desirable to ensure the Issuer s compliance with all the applicable provisions of law and/or to implement resolutions adopted by the General Meeting and the Supervisory Board in accordance with the Issuer s Articles of Association and the applicable provisions of law; performing acts in law and signing documents on behalf of the Issuer in accordance with the powers of sign documents as granted to it in the Issuer s Articles of Association; managing the Issuer s affairs. The Issuer s Management Board is not authorised to decide to issue or redeem shares Internal control and risk management systems with respect to financial statements. The risks related to financial statements are controlled and managed by the Company s Management Board, the Director of Accounting Department, and the Director of Reporting and Controlling Department. The individuals involved in the preparation of financial statements have the right qualifications and attend periodic training courses in the preparation of financial statements in accordance with the accounting standards applied by the Company. Page 16 of 17

17 Signatures of all the members of the Management Board of Open Finance S.A. Krzysztof Spyra President of the Management Board SIGNED ON THE POLISH ORIGINAL VERSION Wojciech Gradowski Member of the Management Board SIGNED ON THE POLISH ORIGINAL VERSION Krzysztof Sokalski Member of the Management Board SIGNED ON THE POLISH ORIGINAL VERSION Warsaw, Fabruary 28, 2012 Page 17 of 17