POLISH FINANCIAL SUPERVISION AUTHORITY

Transcription

1 POLISH FINANCIAL SUPERVISION AUTHORITY Consolidated Annual Report RS 2009 (According to 82 item 2 of the Finance Ministry Decree as of 19 th February 2009 Journal of Law No.33, item 259) (For issuers of securities who are dealing with manufacturing, building, trading and servicing activity) For the current year comprising the period from to That includes consolidated financial statement in accordance to IFRS In currency: PLN ZUK ELZAB S.A. Date (date of delivery) Zakłady Urządzeń Komputerowych ELZAB S.A. (full name of an issuer) computering and telecommunication (short name of an issuer) (sector according to qualification of GPW Warsaw ) ZABRZE (postal code) (town) Kruczkowskiego 39 Street number main@elzab.com.pl (phone) (fax) ( ) (NIP) (REGON) (www) Kancelaria Porad Finansowo-Księgowych dr Piotr Rojek (no. 1695) (A company entitled to audit the financial statements) PLN thousand EUR thousand SELECTED ELZAB GROUP FINANCIAL DATA Net revenues on sales of products, goods and supplies Profit/loss on operating activity Gross profit/loss Net profit/loss attributed to shareholders in the parent company Net cash flows on operating activity Net cash flows on investments Net cash flows on financial activity Total net cash flows Annualized profit/loss per one ordinary share(pln / EUR) 0,27-0,01 0,06 0,00 PLN thousand EUR thousand ELZAB GROUP SELECTED FINANCIAL DATA Total assets Long-term liabilities and provisions Short-term liabilities and provisions Equity Share capital Number of shares Book value per share (PLN / EUR) 2,55 2,35 0,62 0,57 The report includes: 1. Opinion of Auditor to ELZAB CAPITAL GROUP financial statements 2. Report on audit of ELZAB CAPITAL GROUP financial statements 3. Declaration of Management Board about regularity of preparing the financial statements 4. Declaration of Management Board about election of the auditor 5. Letter of President of Management Board 6. Introduction to consolidated financial statement 7. Consolidated financial statement the tables 8. Management Board s commentary about activity 9. Financial statement of ELZAB SOFT Sp. z o.o. and ORHMET Sp. z o.o. companies excluded from consolidation

2 THE CAPITAL GROUP ZAKŁADY URZĄDZEŃ KOMPUTEROWYCH ELZAB SPÓŁKA AKCYJNA BASED IN ZABRZE THE AUDITOR S OPINION THE REPORT ON RESULTS OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDIT THE CONSOLIDATED FINANCIAL STATEMENTS THE CAPITAL GROUP MANAGEMENT BOARD REPORT This translation was drawn up in accordance with the documents, which had been prepared in Polish. The contents of these documents are decisive in case of dispute. KATOWICE, APRIL 2010

3 THE INDEPENDENT AUDITOR S OPINION FOR THE SHAREHOLDERS AND THE SUPERVISORY BOARD OF ZAKŁADY URZĄDZEŃ KOMPUTEROWYCH ELZAB S.A. BASED IN ZABRZE We have audited the attached consolidated financial statements of the Capital Group Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze comprising: 1/ the consolidated statement of financial position prepared as of 31 December 2009 with total assets and liabilities amounting to PLN thousand, 2/ the consolidated statement of comprehensive income for the period from 1 January to 31 December 2009 disclosing total comprehensive income of PLN thousand, 3/ the consolidated statement of changes in equity for the period from 1 January to 31 December 2009 showing an increase in equity of PLN thousand, 4/ the consolidated statement of cash flow for the financial year from 1 January to 31 December 2009 showing an increase in net cash flow position of PLN 356 thousand, 5/ notes on applied accounting policies and additional explanatory notes to the financial statements. The dominant entity s management is responsible for preparing the consolidated financial statements. Our task was to perform the audit of the consolidated financial statements and to express an opinion about their reliability, correctness and clearness and about the correctness of accounting books being basis for preparing these statements. We have carried out the audit of consolidated financial statements in accordance with: 1/ regulations of chapter no. 7 of the Accounting Act of 29 September 1994 (Journal of Laws from 2009 No. 152, entry 1223 as amended), 2/ knowledge and experience resulting from professional standards of statutory auditors issued by National Chamber of Statutory Auditors in the period of their application. 3/ regulations of the Ordinance of the Minister of Finance dated 19 February 2009 on current and periodical information provided by issuers of securities and conditions of regarding as equivalent information required by regulations of a state not being a member state (Journal of Laws from 2009 No. 33, entry 259). 1

4 We have planned the audit of consolidated financial statements in such a manner to achieve a rational assurance which allows expressing an opinion about these consolidated statements. In particular, the audit procedures have included assessing the correctness of accounting rules (policy) applied by the related entities and examining mostly by means of random methods evidences and book entries supporting the amounts and information disclosed in the consolidated financial statements, evaluating the overall consolidated financial statements presentation. We believe that the audit has brought basis for expressing a reliable opinion. In our opinion, the audited consolidated financial statements, comprising financial data and written explanations: a) reflect truly and fairly all material information for evaluation of property and financial position of the audited Capital Group as of 31 December 2009 as well as its financial result for the financial year from 1 January to 31 December 2009, b) has been prepared in all essential aspects in accordance with the accounting rules resulting from the International Accounting Standards, International Financial Reporting Standards and the related interpretations as adopted and proclaimed by European Committee regulations, and in all other aspects not covered by the Standards according to the Accounting Act and its rules and on the basis of properly maintained accounting records, c) are consistent with the law regulations binding for the Group, which influence on consolidated financial statements. Without raising qualifications concerning correctness and reliability of the audited consolidated financial statements, we pay attention to the existence of the circumstances indicating the threat of going concern of the subsidiary entity Konsorcjum Handlowe Geneza System S.A. based in Tarnowskie Góry, concerning among others the negative value of equity in the amount of PLN thousand and unfavourable level of liabilities exceeding twice current assets of subsidiary company. 2

5 The Capital Group Management Report is complete according to art. 49 entry 2 of the Accounting Act and information included in it, originated from the audited consolidated financial statements, are in agreement with them. The statutory auditor:... Bernarda Wanat entered in the register of Statutory Auditors with no Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Spółka z ograniczoną odpowiedzialnością Katowice, ul. Floriana 15 The company is registered on the published list of companies entitled to audit the financial statements with no Katowice, dated 14 April

6 THE REPORT OF THE STATUTORY AUDITOR ON RESULTS OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDIT OF THE CAPITAL GROUP ZAKŁADY URZĄDZEŃ KOMPUTEROWYCH ELZAB S.A. BASED IN ZABRZE PREPARED FOR THE FINANCIAL YEAR FROM 1 JANUARY TO 31 DECEMBER 2009

7 The independent auditor s report for the Shareholders and the Supervisory Board of Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze The report has been prepared in relation to the audit of consolidated financial statements of the Capital Group Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze for the period from 1 January to 31 December This report should be read together with the auditor s opinion concerning consolidated financial statements mentioned above. The report includes 25 numbered pages and the following: Page I. General information 2 II. Financial position 11 III. Specific information 13 1

8 I. GENERAL INFORMATION 1. INITIAL INFORMATION The dominant Entity Zakłady Urządzeń Komputerowych ELZAB Spółka Akcyjna was set up according to the Notary Act (Rep. A 12245) dated 16 November 1992 prepared before a notary Paweł Błaszczyk in Notary Office in Warszawa. The company is registered in the National Court Register kept by the Regional Court in Gliwice, X Economic Department of National Court Register under the number KRS Premises of the dominant Entity are located in Zabrze, Kruczkowskiego Street no. 39. The dominant Entity Zakłady Urządzeń Komputerowych ELZAB is a joint stock company. According to a valid certificate dated 8 May 2008 the dominant Entity owns the statistical identification number REGON and acts using the tax identification number NIP given on 25 May According to the statute the economic activities of the dominant entity until 17 June 2009 were as follows: Z Z Z Z Z Z Z Z Z Z Z B Z Z production of computers and peripherals, production of common user electronics, installation of factory machines, appliances and equipment, other service activity in the scope of IT and computer technology, machines repair and maintenance, computers and peripherals repair and maintenance, scientific research and development work in the field of other natural and technical science, activity of advertising agencies, activity connected with software, activity connected with consultancy in the scope of IT, other activity supporting financial services, excluding insurances and pension funds, other non-school education forms, nowhere else classified, other accommodation, other financial service activity, nowhere else classified, excluding insurances and pension funds, 2

9 46.51.Z wholesale trade of computers, peripherals and software, Z wholesale trade of other machines and office equipment, Z renting and managing of own and holding real estate. On 17 June 2009 according to the Resolution no. 20 of the Ordinary General Meeting the economic activities of the dominant Entity was extended and included: Z activity of agents dealing with sales of industrial machinery and equipment, ships and aeroplanes, Z activity of agents specialized in sales of other specified goods, Z activity of agents dealing with sales of goods of different types, Z wholesale of electronic and telecommunications equipment and parts, Z retail sale of computers, peripheral and software provided in highly specialized stores, Z data processing, website management (hosting) and the like, Z internet portals activity, Z hire and lease of machinery and office equipment including computers, Z hire and lease of other machines, equipment and tangible assets nowhere else classified, Z lease of intellectual property and similar products, except of copyright-protected works, Z call center activity. By Court decision dated 6 October 2009 the above change of economic activities was entered in the National Court Register. The actual field of the activity does not differ from one presented in the statute and the National Court Register. As of 31 December 2009 the equity share capital totalled PLN thousand and consisted of shares with a nominal value of PLN 1,36 per share, of which: ordinary bearer s A shares, registered preference shares and ordinary bearer s B shares, ordinary bearer s C shares, ordinary bearer s D shares. 3

10 Preference B shares are preference shares in relation to votes in such a way that each share entitles to 5 votes on a General Shareholders Meeting. As of 31 December 2009 the Shareholders structure owning directly at least 5,0% of total number of votes on a General Shareholders Meeting was as follows: Shareholders Number of shares Share in the equity share capital (%) Number of votes on General Shareholders Meeting (%) Relpol 2 Sp. z o.o ,04 25,55 POLSIN Private Limited ,62 19,54 Jarek Astramowicz ,92 7,60 Exorigo Sp. z o.o ,44 6,78 Agencja Rozwoju Przemysłu S.A ,95 6,33 ELZAB S.A. (own shares acquired to be redeemed, resale or other purpose related to realization of the Company s strategy) ,16 X State Treasury ,52 2,30 Other Shareholders ,35 29,01 Total ,00 100,00 Exorigo Sp. z o.o. as a dominant Entity (owning 58,13% of shares) for Relpol 2 Sp. z o.o. controls indirectly shares of Zakłady Urządzeń Komputerowych ELZAB S.A. The rest of 41,87% of Relpol 2 Sp. z o.o. shares is in possession of UPOS System Sp. z o.o. based in Knurów. Jonitaco Holding Limited based in Nicosia (Cyprus) is a dominant Entity for Exorigo Sp. z o.o., however from information provided by that company it appears that it does not own directly shares of Zakłady Urządzeń Komputerowych ELZAB S.A. In connection with the above facts total direct and indirect (through Exorigo Sp. z o.o.) share of Jonitaco Holding Limited totals 35,48% in the equity of Zakłady Urządzeń Komputerowych ELZAB S.A., what is equal to 32,33% of votes on a General Shareholders Meeting. 4

11 After the consolidated financial statements date, on 16 March 2010 the Management Board of dominant Entity took knowledge that Minister of the Treasury in the period from 9 December 2009 to 11 March 2010 sold by Warsaw Stock Exchange own ordinary bearer s shares of Zakłady Urządzeń Komputerowych ELZAB S.A. Thus, as of the date of issuing the opinion State Treasury does not own shares in equity share capital of the dominant Entity. In result privatization process has been finished. As of 31 December 2009 the dominant entity s equity share capital totalled PLN thousand and in comparison to the end of the previous financial year it increased by the amount of PLN thousand. The Capital Group Zakłady Urządzeń Komputerowych ELZAB S.A. consists of the following subsidiary entities: Micra Metripond KFT based in Hungary, Konsorcjum Handlowe Geneza System S.A. based in Tarnowskie Góry, Elzab Soft Sp. z o.o. based in Zabrze, Przedsiębiorstwo Informatyczne Orhmet Sp. z o.o. based in Warszawa. In comparison to the end of the previous year there were changes in the Capital Group subsidiary entities. According to the Resolution no. 1 dated 29 April 2009 the Extraordinary General Meeting of Shareholders of the dominant Entity agreed on merger of the dominant Entity Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze as acquiring company and MEDESA Sp. z o.o. based in Warsaw. Merger took place by transferring all of the assets of MEDESA Sp. z o.o. to dominant Entity Zakłady Urządzeń Komputerowych ELZAB S.A. By Court decision dated 31 July 2009 the merger of Zakłady Urządzeń Komputerowych ELZAB S.A. and MEDESA Sp. z o.o. was entered in the National Court Register. As of 31 December 2009 the dominant entity s Management Board members were as follows: Chairman of the Management Board Vice-chairman of the Management Board Director General Member of the Management Board - Mr. Eugeniusz Pajączek, - Mr. Jerzy Biernat, - Mr. Jerzy Malok. 5

12 During the audited period there were changes in the dominant entity s Management Board. On 19 December 2008 Mr. Jan Chadam submitted a resignation from a function of the Board Member of the dominant Entity. By Court decision dated 16 February 2009 the above change was entered in the National Court Register. On 23 March 2009 Mr. Paweł Dudziuk submitted a resignation from a function of the Management Board Chairman of dominant Enitity. By Court decision dated 8 May 2009 the above change was entered in the National Court Register. On 27 March 2009 by the Resolution no. 68/VI/2009 of the Supervisory Board, Mr. Eugeniusz Pajączek was appointed to perform the function of the Management Board Chairman of the dominant Entity. By Court decision dated 8 May 2009 the above change was entered in the National Court Register. As of 31 December 2009 the dominant entity s Supervisory Board members were as follows: Chairman of the Supervisory Board - Mr. Paweł Dudziuk, Deputy-chairman of the Supervisory Board - Mr. Dawid Marek Sukacz, Secretary of the Supervisory Board - Mr. Jerzy Ciesielski, Member of the Supervisory Board - Mr. Jarosław Kopański, Member of the Supervisory Board - Mr. Andrzej Dudziuk, Member of the Supervisory Board - Mr. Jarek Astramowicz, Member of the Supervisory Board - Mr. Marcin Dobrzański. During the audited period there were changes in the dominant entity s Supervisory Board. On 19 February 2009 by the Resolution no. 4 of the Extraordinary General Meeting, Mr. Artur Olszewski, Mr. Piotr Karmelita and Mr. Krzysztof Wiatr were recalled from the Supervisory Board. On 19 February 2009 Mr. Jarosław Kopański was appointed to the Supervisory Board by the Resolution no. 5 of the Extraordinary General Meeting and Mr. Andrzej Dudziuk was appointed to the Supervisory Board by the Resolution no. 6 of the Extraordinary General Meeting. On 19 February 2009 Mr. Jarek Astramowicz was appointed to the Supervisory Board by the Resolution no. 7 of the Extraordinary General Meeting. By Court decision dated 6 May 2009 the above changes in the Supervisory Board were entered in the National Court Register. 6

13 On 17 June 2009 by the Resolution no. 17 of the Ordinary General Meeting Mr. Paweł Dudziuk was appointed to the dominant Entity s Supervisory Board. By Court decision dated 6 October 2009 the above change in the Supervisory Board was entered in the National Court Register. 7

14 2. CONSOLIDATED FINANCIAL STATEMENTS 2.1. Audited consolidated financial statements The consolidated financial statements prepared for the financial year from 1 January to 31 December 2009 consist of the following: the consolidated statement of financial position prepared as of 31 December 2009 with total assets and liabilities amounting to PLN thousand, the consolidated statement of comprehensive income for the period from 1 January to 31 December 2009 disclosing total comprehensive income of PLN thousand, the consolidated statement of changes in equity for the period from 1 January to 31 December 2009 showing an increase in equity of PLN thousand, the consolidated statement of cash flow for the period from 1 January to 31 December 2009 showing an increase in net cash flow position of PLN 356 thousand, notes on applied accounting policies and additional explanatory notes to the financial statements Information on the audit company and the statutory auditor The agreement signed on 18 May 2009 by Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Spółka z ograniczoną odpowiedzialnością based in Katowice, Floriana Street no. 15 and Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze, Kruczkowskiego Street no. 39 was the basis for conducting the audit. Kancelaria was chosen to be the auditor by the Resolution no. 71/VI/2009 of the Supervisory Board dated 27 March Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Sp. z.o.o based in Katowice is involved in doing financial statements audits under the regulations of the Act of 7 May 2009 on Certified Auditors and their Self-Governing Body, Audit Firms and Public Oversight (Journal of Laws, No.77 item 649) and it was registered on the published list of companies entitled to audit financial statements with no In order to perform the agreement Kancelaria is represented by the statutory auditor: Bernarda Wanat - entered in the register of Statutory Auditors with no Co-operators in the audit were: Maria Mirta assistant, Marta Kurzak assistant, Marta Baran assistant. 8

15 The audit was conducted in April Both the auditing company and the statutory auditors representing the company confirm that they are independent from the audited entity according to art. 56 on Certified Auditors and their Self-Governing Body, Audit Firms and Public Oversight Received statements and accessibility to data There were no material audit scope limitations. The dominant Entity s Management Board provided the auditor with all financial statements, accounting books and evidences covered by consolidation; provided also with information and presented explanations required for issuing the opinion. We have also been provided with the dominant Entity s Management Board statement signed by all the Board members (performing as of 14 April 2010) on completeness of data presented in the books of accounts and disclosure of all contingent liabilities as well as on essential events which have taken place between the balance sheet date and the date of preparing the statement Information on the consolidated financial statements for the previous accounting year The consolidated financial statements for the previous financial year were audited by Kancelaria Porad Finansowo-Księgowych dr Piotr Rojek Spółka z ograniczoną odpowiedzialnością based in Katowice and the opinion issued on 28 April 2009 was with explanation concerning planned merger of Zakłady Urządzeń Komputerowych ELZAB S.A based in Zabrze and Medesa Sp. z o.o. based in Warsaw. The financial statements were approved by the Resolution no. 2 of the Ordinary General Meeting dated 17 June The consolidated financial statements for the previous financial year were submitted to the National Court Register and were published in Monitor Polski B no on 30 September Information on the capital group in the audited period As of 31 December 2009 the Capital Group Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze consisted of: the dominant Entity: - Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze; subsidiary entities: - Micra Metripond KFK based in Hungary, - Konsorcjum Handlowe Geneza System S.A. based in Tarnowskie Góry. 9

16 The financial statements of the dominant Entity Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze prepared as of 31 December 2009 were audited by Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Sp. z o.o. based in Katowice. The financial statements of the subsidiary entity Micra Metripond KFK based in Hungary, prepared as of 31 December 2009 were audited by Moore Stephens Hezicomp KFT in Budapest. The financial statements of the subsidiary entity Konsorcjum Handlowe Geneza System S.A. based in Tarnowskie Góry, prepared as of 31 December 2009 were audited by Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Sp. z o.o. based in Katowice and the opinion issued on 18 February 2010 was with explanation informing about negative value of equity in the amount of PLN thousand and unfavourable level of liabilities exceeding current assets. The subsidiary entities were covered by consolidation and included in the consolidated financial statements prepared for the period from 1 January to 31 December 2009 by the full consolidation method. ELZAB Soft Sp. z o.o. and Przedsiębiorstwo Informatyczne Orhmet Sp. z o.o. were excluded from consolidation due to immateriality as omission of those information will not affect the investors decisions made on base of the consolidated financial statements. 10

17 II. FINANCIAL SITUATION 1. The Capital Group s economic activity, its financial result as well as financial and property standing for the financial year ended on 31 December 2009 and previous years are characterised by mentioned below balances and chosen ratios: (PLN 000) 2009 r r r. Balance sheet sum Fixed assets Equity capital including: financial result (268) EBITDA net result on operating activities + depreciation Profitability of gross sale (%) EBITDA/ operating incomes Profitability/deficiency of net sale (%) net financial result / operating incomes Profitability of equity (%) net financial result / equity Profitability of assets (%) net financial result / balance sheet sum Liquidity ratio I (current) current assets / short-term liabilities Liquidity ratio II (quick) current assets inventories / short-term liabilities Receivables turnover ratio (days) short-term trade receivables x number of days in a period / operating incomes Inventories turnover ratio (days) inventories x number of days in a period / operating costs Payables turnover ratio (days) short-term trade creditors x number of days in a period / operating costs Global indebtedness structure ratio (%) balance sheet sum equity / balance sheet sum ,21 11,96 18,05 6,46 (0,39) 10,86 10,51 (0,71) 17,99 7,42 (0,48) 12,27 2,99 2,53 2,42 1,85 1,54 1, ,44 32,34 31,79 11

18 2. Comment: Comparing to the previous year the balance sheet sum, fixed assets as well as equity capital including financial result increased. The financial result, net profit of the Capital Group for the audited year in the amount of PLN thousand includes: profit on sales in the amount of PLN thousand, loss on other operating activities in the amount of PLN 119 thousand, loss on financial activities in the amount of PLN 570 thousand, financial result burden in virtue of current income tax in the amount of PLN thousand, changes in value of assets and deferred tax liability in the amount of PLN (5) thousand. Liquidity ratios (current and quick) increased comparing to the previous year and reached a favourable level. The net result on operating activity adjusted by depreciation (EBITDA) increased by PLN 655 thousand in comparison with the previous year and amounts in the audited period to PLN thousand. Comparing to 2008 the cycles of inventories and payables turnovers shortened and as of 31 December 2009 they were as follows: inventories turnover ratio amounts to 72 days, payables turnover ratio amounts to 30 days. The cycle of receivables have extended and in the audited year it amounts to 57 days. The global indebtedness structure reached the level of 29,44% of total assets and in comparison to the previous year it lowered by 2,90 of percentage point. 12

19 III. SPECIFIC INFORMATION 1. Evaluation of the documentation for accepted accounting policy, manner of preparing documentary evidence for transactions and bookkeeping maintenance The worked out by the dominant Entity documentation for accepted accounting policy complies with the regulation of the Accounting Act. Rules of assets and liabilities evaluation as well as the financial result measurement for the period ending on 31 December 2009 are consistent with International Accounting Standards, International Financial Reporting Standards and interpretations related to them announced in the form of executive orders of the European Commission. The statements of subsidiary companies covered by consolidation which are not conducted according to International Accounting Standards and International Financial Reporting Standards were converted for requirements of the consolidated statements. The consolidated documentary kept by the dominant Entity is complete. 2. Rules and methods of assets and liabilities valuation applied during preparing the consolidated financial statements as well as determining the financial result a) Valuation of assets and liabilities in foreign currency As at the balance sheet date assets and liabilities components presented in foreign currencies are valued using average exchange rate for stated currency published by the Polish National Bank at that day. Exchange rate losses or gains concerning assets and liabilities presented in foreign currencies appearing at the date of revaluation and payment date of receivables as well as liabilities in foreign currencies are treated as financial incomes and costs. Non-financial assets and liabilities calculated at a historical cost presented in a foreign currency are valued using exchange rate obligatory on a day of concluding a transaction. Non-financial assets and liabilities calculated at the fair value presented in a foreign currency are valued to the fair value using exchange rate obligatory on a day of valuation. b) Tangible fixed assets The tangible fixed assets include the fixed assets and tangible assets under construction. Assets components are classified as fixed assets if they are purchased and kept in the purpose of using them in production process, in goods deliveries or services providing, giving for usufruct to other entities on the basis of contracts of rental or for administrative purposes and which useful life is predicted to be longer than one period. 13

20 Fixed assets are valued at purchase price or manufacture cost corrected by the depreciation charges as well as by impairment write-offs. Tangible assets under construction are presented at the value of total expenses directly related to their purchase or manufacture. c) Goodwill Goodwill includes: goodwill of subsidiaries. Goodwill of subsidiaries is surplus of taking over costs over goodwill of the dominant Entity s share in net assets of a taken over subsidiary company possible to identify as at the day of take over. The goodwill is subject to testing in terms of impairment. In the consolidated statements of financial position the goodwill is presented according to cost adjusted by accumulated impairment write-offs that are included in the consolidated statements of comprehensive income. d) Intangible fixed assets The intangible assets refer to non-financial assets components not having physical form possible to identify, being under the entity s control, from which the entity will achieve some economical benefits in the future. Intangible assets include: research and development costs carried out in own scope, software. Research and development in progress are also presented as intangible assets. The intangible assets are valuated at the purchase cost or manufacture cost corrected by depreciation charges. e) Financial assets The financial assets include shares in related entities and others. Shares in entities are valued at the purchase cost corrected by impairment write-offs. f) Deferred income tax assets The deferred income tax assets were calculated as amounts to be deductible from income tax in the future in relation to negative temporary differences, which will result in declining the tax base considering prudence principle. Changes in values of these assets decrease or increase income tax charges. 14

21 g) Inventories The inventories comprise of materials, semi-finished products, work in progress, finished products and goods. The stock components are valued at the purchase price or at the manufactory cost not higher than their net selling price as at the financial statements date. h) Short-term receivables and prepayments The short-term receivables include: all trade debtors irrespective of the stated payback date, other receivables, which actual agreed payback date of last payment is shorter than 12 months as at the balance sheet date. Receivables are valued at the amount due reduced by valuation allowances. The prepayments include incurred or accrued expenses relating to future reporting periods. i) Cash and other money assets The cash and other money assets include cash in hand and on bank accounts and they are valued at the nominal value. j) Equity capital The equity capital is presented at the nominal value and it is divided by types and according to principles defined by law regulations, the dominant Entity statute decisions as well as agreements on creating subsidiaries. The capital group s initial capital is the share capital of the dominant Entity presented at the value consistent with the Company s statute and registered in the court register at the nominal value. Particular components of subsidiaries equity equal to the dominant Entity s share in ownership of subsidiaries as at the consolidated financial statements date are added to particular components of the dominant Entity s equity except for its initial capital. The equity capitals include capitals of minority shareholders. 15

22 The net financial result for the accounting period is the net profit presented in the consolidated statements of comprehensive income. k) Provisions The provisions for liabilities are created for resulted from past events sure or very probable future liabilities, which can be estimated in a reliable way. Provisions include mainly: provisions for jubilee rewards, provisions for retirement and pension payments, provisions for unused holiday leaves, provisions for other employee benefits, provisions for guarantee repairs, provisions for promotional-advertising fund, provisions for licence charge, provisions for deferred tax. According to the Company s remuneration system employees are entitled to retirement and pension payments. The entities of the Capital Group recognize costs of that kind on the memorial basis. Valuation of these benefits is made using the actuarial method as at the end of each accounting year. l) Financial liabilities The financial liabilities include liabilities related to credits and lease agreements. Bank credits are valued at the fair value of obtained cash decreased by costs directly related to their acquisition. In the following periods bank credits are valued at amortized cost using effective interest rate. Insignificant discount amounts are not included in the books of accounts and financial statement. The liabilities related to financial lease agreements are valued as of the first day of lease at a lower value from the two following: fair value of an item being the subject of lease or current value of minimal lease charges. m) Short-term liabilities and accruals The short-term liabilities comprise all trade payables irrespective of the stated payback date and other liabilities required to be paid within 12 months from the balance sheet date. 16

23 The short-term liabilities are presented at the amount due. The accruals comprise provision for non-invoiced services. n) Revenues from sale of products, goods and materials Revenues from sale of products, goods, materials and services are the recurring revenues related directly to the entity's basic activity. These revenues are presented at the net value excluding VAT and comprising donations, discounts, bonuses, etc. o) Expenses of sold products, goods and materials, selling expenses and general and administrative costs Expenses of sold products, goods and materials, selling expenses and general and administrative costs include all expenses related to basic activities, except for other expenses and financial costs. p) Other operating revenues and expenses Other operating revenues and expenses consist of revenues and expenses not related directly to basic production activities but influencing on financial result. r) Financial revenues and expenses The financial revenues and expenses consist of revenues and expenses related to financial activities influencing on financial result. s) Corporate income tax The corporate income tax is the income tax being the current tax liability adjusted by changes in balance of deferred income tax provision and deferred income tax assets. The deferred income tax provision is created at the amount of income tax due in the future in relation to existing positive temporary differences. The deferred income tax assets were calculated at the amount expected to be deductible from tax charge in the future in relation to existing negative temporary differences, which were determined in relation to prudence principle. 17

24 3. Deriving the subsidiary company goodwill Consolidation goodwill being the difference between purchase cost of subsidiaries and the value of subsidiaries net assets falling on the dominant Entity was settled on the basis of net assets fair value of subsidiaries as at the day of taking over. 4. Consolidation of capitals and determining capitals of minority Shares in subsidiaries equity capital belonging to persons or entities other than covered by consolidation are presented in the separated position of liabilities in the consolidated statements of financial position separately from the dominant Entity s capital within the equity capital position as Capitals of minority. Shares of minority are that part of net results achieved on activity and net assets of a subsidiary that can be assigned to shares not belonging (directly or indirectly through subsidiaries) to the dominant Entity. Profits or losses falling on other persons or entities covered by consolidation are presented in the consolidated statement of comprehensive income. 5. Exclusions of mutual settlements and internal turnovers of entities covered by consolidation Mutual receivables and payables of entities covered by consolidation that require exclusion include all settlements between these entities. Exclusion of income and costs related to operations between entities covered by consolidation was also performed during preparing the consolidated financial statements. 6. Exclusion of results not realized by entities covered by consolidation, included in assets value Not realized results from operations performed between entities covered by consolidation included in assets value presented in the financial statements as of 31 December 2009 were excluded correctly. 7. Consequences of sale of all or part of shares in a subsidiary entity In the period from 1 January to 31 December 2009 the dominant Entity did not sell shares in subsidiaries covered by consolidation. 18

25 8. Characterization of particular statement of financial position and statement of comprehensive income a) Tangible fixed assets Changes in value of fixed assets of capital group in the audited period were as follows: (PLN 000) Value at the end of the year Gross value Accumulated depreciation Value at the beginning of the year Gross value Gross value fixed assets, including: building and premises tangible assets under costruction Net value of tangible assets comparing to the end of the previous year increased by thousand. As of 31 December 2009 the tangible fixed assets value was equal to 20,98% of the capital group s assets. As at the balance sheet date the consumption level of tangible fixed assets was equal to 62,05%. b) Goodwill Goodwill presented as assets components was subject to analysis in terms of impairment. As of 31 December 2009 share of goodwill in the capital group assets amounted to 4,16%. c) Intangible assets As at the consolidated statements date of financial position the net value of intangible assets was equal to 5,12% of the capital group assets and included trademarks, purchased licences for software and costs of research and development. d) Financial assets The value of financial assets presented in the consolidated financial statements is in agreement with the books of accounts. As of 31 December 2009 the long-term financial assets value was equal to 0,69% of the capital group s assets. 19

26 e) Deferred income tax assets As of 31 December 2009 deferred income tax assets amounted to 1,42% of the capital group s assets. f) Inventories The inventories values as at the beginning and the end of the accounting year were as follows: (PLN 000) Value at the beginning of the year % Value at the end of the year materials , ,68 semi-finished and work in progress 828 6, ,38 finished products , ,44 goods , ,50 Gross value of inventories , ,00 Allowance 808 6, ,36 Net value of inventories , ,64 % As of 31 December 2009 the greatest share in the inventories structure in gross value related to materials which share totalled 42,68% of that position. The capital group s inventories value was equal to 20,60% of its assets. g) Receivables and prepayments Receivables and prepayments included: (PLN 000) Value at the beginning of the year % Value at the end of the year Trade receivables , ,18 short-term , ,18 advance payments 138 0, ,72 short-term 138 0, ,72 other receivables , ,06 long-term 118 0, ,20 short-term , ,86 % 20

27 prepayments 159 1, ,04 short-term 159 1, ,04 Gross receivables and prepayments , ,00 Allowances , ,18 Net receivables and prepayments , ,82 As of 31 December 2009 the share of trade receivables in the structure of gross receivables and prepayments was equal to 78,15%. Receivables of doubtful payment were covered by allowances. The value of prepayments position in the presented structure at the end of the period were equal to 7,08%. As of 31 December 2009 receivables and short-term prepayments values in the capital group were equal to 22,47% of assets. h) Cash and other money assets The cash and other money assets presented in the consolidated financial statements include cash in hand and on bank accounts. As of 31 December 2009 the cash and other money assets value was equal to 10,32% of total amount of the capital group assets. i) Initial capital The share capital of the dominant Entity is the initial capital in the consolidated financial statements and as of 31 December 2009 it amounted to PLN thousand. j) Financial result The financial result of the capital group for 2009 was a net profit amounting to PLN thousand, of which PLN thousand concerned the dominant Entity and PLN (45) thousand concerned minority shareholders. 21

28 k) Provisions for liabilities The value of provisions presented in the consolidated financial statements included: (PLN 000) provisions for deferred income tax 379 provisions for retirement and similar benefits long-term short-term other provisions 442 short-term 442 Total: As of 31 December 2009 that position in liabilities of the consolidated statement of financial position was equal to 7,78% of the value. l) Financial liabilities Financial liabilities presented in equity and liabilities of the consolidated statement of financial position include liabilities related to incurred credits and lease agreements divided into liabilities with payback date longer than 1 year and those which payback date is equal or shorter than 1 year from the balance sheet date. Total value of liabilities amounts to PLN thousand and is equal to 10,85% of the capital group s equity and liabilities. m) Liabilities and accruals Liabilities value presented in the consolidated statements of financial position concerns both long- and short-term liabilities and accruals, of which 69,05% relates to trade payables. Accruals include mainly government subsidy. As at the end of 2009 the value of liabilities and accruals decreased by 18,68% comparing to the beginning of the year. As of 31 December 2009 liabilities and accruals value was equal to 10,81% of total amount of the group s equity and liabilities. 22

29 n) Revenues and expenses of sold products, goods and materials as well as other revenues and expenses The main position of revenues from sale in the capital group relates to income from sale of products which share in revenues structure was equal to 57,56% and revenues from goods sale which amounted to 31,69%. Comparing to the previous year the value of revenues from sale decreased by PLN thousand and that was a decrease by 2,21%. In the structure of cost value, the manufacture costs of sold products was equal to 38,90%, whereas the value of sold materials and goods was equal to 30,76%. Among other revenues of the capital group, renting tangible property in the amount of PLN 657 thousand was the main position. Main positions of other expenses included borne costs of E shares issue that did not take place, in the amount of PLN 242 thousand as well as provisions for licence costs in the amount of PLN 230 thousand. The capital group realized a profit on operating activity in the amount of PLN thousand. o) Financial revenues and expenses The main position of financial revenues and expenses consisted of interest revenue in the amount of PLN 342 thousand. The main position of financial expenses included paid interests in the amount of PLN 427 thousand. The capital group bore a loss on financial activity in the amount of PLN 570 thousand. p) Goodwill write-down and negative goodwill write-down Financial result burdened with goodwill write-down amounts to PLN 698 thousand, whereas negative goodwill write-down for financial result amounts to PLN 698 thousand. 9. Contingent liabilities and risks 9.1. Property securities for third parties As of 31 December 2009 property securities for third parties comprise: (PLN 000) real estate mortgage securing an existing or future claim ordinary real estate mortgage security on automobiles X 23

30 9.2. Other contingent liabilities As of 31 December 2009 other contingent liabilities comprise: security on receivables financed by credit advance payment in the amount of PLN 819 thousand, security on receivables related to real estate rental agreements average monthly rent in the amount of PLN 35 thousand, bill of exchange security related to the lease agreements in the amount of PLN thousand. 10. Events occurring after statements of financial position date After the consolidated financial statements date, on 16 March 2010 the Management Board of dominant Entity took knowledge that Minister of the Treasury in the period from 9 December 2009 to 11 March 2010 sold by Warsaw Stock Exchange own ordinary bearer shares of Zakłady Urządzeń Komputerowych ELZAB S.A. Thus, as of the date of issuing the opinion State Treasury does not own shares in equity share capital of the dominant Entity. In result privatization process has been finished. After the statements of financial position date there were no other than mentioned above significant events influencing on financial and property standing of the capital group. 11. Consolidated statement of changes in equity Data included in the consolidated statement of changes in equity are complete and in agreement with information presented in the consolidated statement of financial position. 12. Consolidated statement of cash flow Consolidated statement of cash flow for the period from 1 January to 31 December 2009 is properly related to consolidated statement of financial position, consolidated statement of comprehensive income and entries in the books of accounts. During the audit no material incorrectness in drawing up the statement were noticed. 13. Additional notes attached as explanatory notes to the consolidated financial statements Data included in the additional notes attached as explanatory notes to the consolidated financial statements result from values presented in other parts of the statements. We did not state any material mistakes and irregularities which could influence negatively on the reliability of the consolidated financial statements 24

31 14. Evaluation of the dominant Entity s Management Report The financial data included in the capital group s Report for the period from 1 January to 31 December 2009 regarding particular components of the financial statements are presented properly. The statutory auditor:... Bernarda Wanat entered in the register of Statutory Auditors with no Kancelaria Porad Finansowo - Księgowych dr Piotr Rojek Spółka z ograniczoną odpowiedzialnością Katowice, ul. Floriana 15 The company is registered on the published list of companies entitled to audit the financial statements with no Katowice, 14 April

32 MANAGEMENT BOARD DECLARATION OF ELZAB S.A. COMPUTER WORKS Ul. KRUCZKOWSKIEGO 39, ZABRZE Pursuant to 92 par.1 section 5 of Minister s of Finance Decree of 19 th February, 2009 on current and periodic information provided by issuers of securities, we hereby declare that to our best knowledge, the consolidated financial statement of ELZAB Group for 2009 and the comparable data contained therein have been made according to the accounting principles applicable at the Company and the International Accounting Standards respecting significance and it reflects the property, financial standing and the profit/loss of ELZAB Group in a true, reliable and clear way. We further declare that the financial statement of ELZAB Group contains the true image of ELZAB Group achievements and standing, as well as the true description of the basic risks and dangers... Eugeniusz Pajączek Chairman of the Management Board.. Jerzy Biernat Deputy Chairman of the Management Board - CEO. Jerzy Malok Member of the Management Board, Deputy Chairman for Commerce

33 DECLARATION OF ELZAB S.A. MANAGEMENT BOARD UL. KRUCZKOWSKIEGO 39, ZABRZE Pursuant to 92 par.1 section 6 of Minister s of Finance Decree of 19 th February, 2009 on current and periodic information provided by issuers of securities, we declare that based on 21 par. 2 section 9 of the Company Statute, the selection of the entity to audit the financial statements of ELZAB Group, auditing the financial statements of ELZAB Group and consolidated financial statement of ELZAB Group for 2009 was made by ELZAB S.A. Supervisory Board. In our opinion, Kancelaria Porad Finansowo-Księgowych dr Piotr Rojek Sp. z o.o., ul. Floriana 15, Katowice and the certified auditors carrying out the audit meet the conditions for the issuance of an impartial and independent audit report, pursuant to the applicable regulations and professional standards... Eugeniusz Pajączek Chairman of the Management Board.. Jerzy Biernat Deputy Chairman of the Management Board - CEO. Jerzy Malok Member of the Management Board, Deputy Chairman for Commerce

34 ELZAB Group CHAIRMAN S LETTER TO THE SHAREHOLDERS Ladies and Gentlemen! On behalf of the Management Board of ELZAB S.A. Computer Works 2009, I hereby present to you information on ELZAB Capital Group activity and its results in Last year, ELZAB S.A. as the parent company, like in the previous years, produced and sold various models of cash registers and fiscal printers, electronic scales, price controllers, non-fiscal printers and label printers, cash modems and multiplexers. In 2009 the production and sales developed of ELZAB Mera, ELZAB Mera F fiscal printers, the latter in the version for pharmacies and ELZAB Prima K calculating scales. The Company worked on new cash register and fiscal printer models, introducing simultaneously state-of-the-art hardware and software platform for newly developed equipment. Together with a partner from a EU member state we were developing a fiscal equipment item for its market. From 2010 on the effects of the work shall become visible in the form of new product sales in Poland and overseas. Within the actions aimed at the increase of overseas market share, the sales of three cash register models were continued: Micra Eco Plus, Micra Eco Prof and Micra Eco Max on the Hungarian market through subsidiary MICRA METRIPOND KFT. The trading offer of ELZAB S.A. in 2009 was enriched with new electronic products for guitar players sold under the brand name G LAB Guitar Laboratory, mainly on overseas markets. The sales of ELZAB GAMMA cash drawers to Cash Bases, UK and demanding customers in Poland were developed. In 2009 ELZAB S.A. included in its offer a new form of availing computers, fiscal equipment, scales and other point of sale equipment, and software to the customers. Through the Trading Partners, the Company offers the store owners a long-term rental of hardware and software. The aim of the implementation of this new form of sales, called ELZAB for a good start is the assistance at the performance of projects of furnishing stores with hardware and software related to sales and warehouse management. We continued to put a lot of stress on improvement of quality of our products and continuous availability of equipment to our clients. We are convinced that another report of the Electronic Market Institute will confirm that the Company has maintained its existing high market share. The sales performance was supported by permanent advertisement in commercial press and mainly concerned support of sale of ELZAB Mera fiscal printers and electronic scales. During the year two new promotion campaigns were started for the trading partners. The best distributors and dealers were supported at local marketing actions, such as regional meetings, billboards, city transport vehicles and press advertising. The offer of ELZAB S.A. was presented at fairs and commercial conferences of Polish retail networks. The Company also supported marketing procedures performed by MICRA METRIPOND KFT aimed at the increase of ELZAB S.A. product sales on the Hungarian market as well as the marketing actions of GENEZA SYSTEM S.A., main distributor of ELZAB S.A. Thanks to the consistent credit policy performance towards the customers for its products, the Company maintained a good liquidity, timely paid the investment credit and the liabilities towards customers without the necessity to increase debt related thereto. 1

35 ELZAB Group CHAIRMAN S LETTER TO THE SHAREHOLDERS In 2009 the actions were continued in order to further improve the efficiency of subsidiaries and ELZAB Group. The ELZAB Group s results were affected by the negative consequences of the Hungarian economic crisis, mainly in the form of lower revenues on sales of MICRA METRIPOND KFT. Despite the modernization at the end of 2008 and adaptation to new fiscal regulations of two cash register models for the Hungarian market: MICRA Eco Plus, MICRA Eco Prof and launching a new model of MICRA Eco Max cash register, the register sales were lower than in The drop of sales of labeling, industrial and truck scales was also recorded. In order to prevent the impact of the crisis on the Company profit/loss, the Management Board of ELZAB S.A. decided to dismiss the CEO of MICRA METRIPOND KFT, restructure the costs and change the sales organization. The positive restructuring effects were noticeable in the second half of 2009 already. We assume that 2010 shall bring further positive effects of restructuring at MICRA METRIPOND KFT. It should be remembered, however, that the elections to the Hungarian Parliament will take place in the second quarter of 2010, which might affect the Hungarian policies and economy, both before and after the elections. In the third quarter of 2009 the merger between ELZAB S.A. and subsidiary MEDESA Sp. z o.o. was accomplished. The object of MEDESA Sp. z o.o. business was the production and distribution of commercial scales, platform scales and commercial personal scales plus service repairs of the scales. As a result of the merger, the offer of ELZAB S.A. was expanded, relationships with customers improved, sales increased, while the costs of business decreased. As part of the second stage of new ELZAB S.A. strategy, approved in January, 2008 by the Supervisory Board for the years , in 2009 ELZAB S.A. share capital increase was planned through issue of shares to be taken over by shareholders in Exorigo Sp. z o.o. and UPOS System Sp. z o.o. in exchange for all the shares held in Exorigo Sp. z o.o. and UPOS System Sp. z o.o. However, the Extraordinary General Meeting of 19th February, 2009 rejected by votes of two shareholders the resolution on ELZAB S.A. share capital increase and offering the shareholders in Exorigo Sp. z o.o. and UPOS System Sp. z o.o. taking over shares in the increased capital in exchange for contribution of 100% shares in Exorigo Sp. z o.o. and UPOS System Sp. z o.o. and deprivation of the existing shareholders of the priority rights. Thus the procedure of capital merger was stopped. The Management Board and Major Shareholders, however, have not given up the project of building a strong Group and are still searching for an optimum solution that will be approved by most Shareholders. Therefore, the strategy for ELZAB S.A. and ELZAB Group announced in January, 2008 and concerning the creation of comprehensive solutions for widely defined retail market, particularly for defined market segments, including the retail segment, HoReCa and filling stations. In 2009 the Management Board of the Company performed the "Program of ELZAB S.A. Computer Works with registered office in Zabrze, ul. Kruczkowskiego 39 own shares buyout for resale or other purposes related to the Company Strategy Performance. The buyout program was 2

36 ELZAB Group CHAIRMAN S LETTER TO THE SHAREHOLDERS carried out from 3rd July, 2009 to 15th December, Within the buyout the Company purchased own shares for the total amount PLN 252 thousand. At present the Company holds own shares for the total amount PLN thousand. On behalf of the Management Board I would like to thank our faithful shareholders for their support and assure that we will take all the effort in order to consolidate our market position in 2010 and the subsequent years, improve the financial results and enhance the trust of the shareholders and the investors. 3

37 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) Introduction to the Consolidated Financial Statement ELZAB Capital Group Companies The ELZAB Group, as of the end of 2009 included the following companies: ELZAB S.A. the Parent Company Subsidiaries: - GENEZA SYSTEM S.A. - MICRA METRIPOND KFT - ELZAB SOFT Sp. z o.o. - ORHMET Sp. z o.o. IT enterprise The ELZAB Group composition has changed since On ELZAB S.A. (the taking over company) and MEDESA Sp. z o.o. (the taken over company) merged. The merger was carried out under art section 1 in relation to art ; 5 and 6 of Commercial Companies Code through taking over all MEDESA Sp. z o.o. assets by ELZAB S.A. The merger of the companies took place, according to art of Commercial Companies Code, without the increase of ELZAB S.A. share capital, the latter held 100% shares in MEDESA Sp. z o.o. The object of MEDESA Sp. z o.o. business was the manufacture and distribution of commercial scales, weighing bridges and commercial personal scales, as well as scales repair services. As a result of the merger ELZAB S.A. offer was expanded, the relationships with customers improved, sales increased and the costs of business reduced. The Parent Company The Company name: ELZAB S.A. Computer Works, ul. Kruczkowskiego 39, Zabrze. The Company also has 2 branches: in Warsaw, ul. Taborowa 14 and in Wrocław, ul. Słubicka 22. National Court Register Register of Entrepreneurs- KRS Object of business, according to PAC Z - "Manufacture of Computers and Peripherals". According to the entry in the Company Statute, the object of the Issuer s business includes: 1. Manufacture of computers and peripherals PAC Z 2. Manufacture of commonly used electronic equipment PAC Z 3. Installing industrial machines, equipment and fittings PAC Z 4. Other services in the scope of IT and computer technologies PAC Z 5. Repairs and maintenance of machines PAC Z 6. Repairs and maintenance of computers and peripherals PAC Z 7. Research and development in the area of other sciences and engineering PAC Z 8. Activity of advertising agencies PAC Z 9. Software related activity PAC Z 1

38 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) 10. Activity related to IT consulting PAC Z 11. Other activity supporting financial services, excluding insurance and pension funds PAC Z 12. Other off-school forms of education, elsewhere not classified PAC B 13. Other accommodation PAC Z 14. Other financial services not classified elsewhere, excluding insurance and pension funds PAC Z 15. Wholesale of computers, peripherals and software PAC Z 16. Wholesale of other machines and office equipment PAC Z 17. Rental and management of own or leased property PAC Z. 18. Activity of agents dealing in sales of machines, industrial equipment, ships and aircraft PAC Z 19. Activity of agents dealing in sales of other specific goods PAC Z 20. Activity of agents dealing in sales of various goods PAC Z 21. Wholesale of electronic and telecommunication equipment and related parts PAC Z 22. Retail of computers, peripherals and software run in specialized stores PAC Z 23. Data processing; website hosting and similar activity PAC Z 24. Activity of web portals PAC Z 25. Rental and lease of office machines and equipment, including computers PAC Z 26. Rental and lease of other machines, equipment and material goods, not classified elsewhere PAC Z 27. Lease of intellectual property and other similar products, excluding works protected by copyright PAC Z 28. Activity of call centers PAC Z In comparison to the level as of the end of 2008, ELZAB S.A. scope of activity has been expanded, which was listed in sections of its activity objects. The Capital Group GENEZA SYSTEM S.A. National Court Register Register of Entrepreneurs - KRS PKD Activity object according to PAC Z - "Wholesale of other office machines and equipment. According to the entry in the Company Statute, the object of the Company business includes: Wholesale of other office machines and equipment, Other specialized wholesale, Other financial brokerage, Financial lease, Auxiliary financial activity, not classified elsewhere, Off-school forms of education, not classified elsewhere. GENEZA SYSTEM S.A. is a distributor of ELZAB S.A. products in the area of Katowice, Bielsko- Biała, Kraków, Kielce, Częstochowa and Sieradz. 2

39 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) MICRA METRIPOND KFT Court: Registry Court of Csongrảd county Registration No: Main areas of activity: 3320 Manufacture of weighing equipment, Trading in scales and related goods, Repairs of scales. ELZAB SOFT Sp. z o.o. National Court Register Register of Entrepreneurs - KRS Activity object according to PAC Z Activity related to software. According to the entry in the Company Statute, the object of the Company business includes: Manufacture and distribution of software and accessories and fiscal equipment, Manufacture and sales of electronic equipment, Provision of implementation, training, installation and repair services of electronic equipment, IT and Internet services, Advertising, marketing, printing and trading activity as well as related imports and exports, Freight and forwarding services, Agency in the said scope. ELZAB SOFT Sp. z o.o. provides IT services to ELZAB S.A. and is a supplier of software to fiscal equipment. ORHMET Sp. z o.o. IT Enterprise National Court Register Register of Entrepreneurs - KRS Activity object according to PAC Z- Manufacture of computers and peripherals. The object of the Company activity is the sales and service repairs of cash registers to register selfservice fuel sales. Under IAS 27 the consolidated financial statement should include all the subsidiaries. ELZAB S.A. excluded ELZAB SOFT Sp. z o.o. and ORHMET Sp. z o.o., from consolidation, because in view of one of the qualitative characteristics of a financial statement made according to IAS, i.e. significance, the omission of the information shall not affect the investor s decisions made in virtue of the consolidated financial statement omitting the Companies. The following basic figures of the financial statements of the companies excluded from consolidation (PLN thousand): ELZAB SOFT Sp. z o.o. Balance-sheet sum as of Sales revenues Profit/loss for

40 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) ORHMET Sp. z o.o. Balance-sheet sum as of Sales revenues Profit/loss for The brief financial statements of the said companies represent attachment to the consolidated financial statement for Indication of the issuer s and subsidiaries duration, if determined, ELZAB S.A. and Capital Group companies were established for time undetermined. Indication of periods the consolidated financial statement and comparable consolidated financial data are presented for The presented consolidated financial statement made as of 31 st December, 2009 includes: Financial statement as of and as of Statement of total income for the period from to and for the comparable period from to Cash-flow statement for the period from to and for the comparable period from to Report on changes in equity for the period from to and for the period from to The financial year of the Capital Group and the subsidiaries is a calendar year. All the ELZAB Group entities make financial statements for the same balance-sheet day. On the Management Board of ELZAB S.A. adopted resolution on approval of the extended consolidated financial statement for publishing. Indication whether the consolidated financial statement was made with the going concern assumption by the issuer and the capital group entities in the foreseeable future and whether there are any circumstances threatening the going concern, The consolidated financial statement for 2009 has been made with the going concern assumption by all the Capital Group entities. As of financial statement day there are no circumstances indicating any danger to the going concern. As for GENEZA SYSTEM S.A. the circumstances indicated in art.397 of Commercial Companies Code occurred, because the balance-sheet made as of 31st December, 2009 shows a loss exceeding the total of reserve capital and capital reserves and one third of the share capital. In this situation, the Company Management Board is obliged to convene the General Meeting immediately, in order to adopt a resolution on the Company going concern. The last decision whether the Company should continue its business activity under art. 397 of Commercial Companies Code was made by the shareholders in virtue of resolution No 13 of the 4

41 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) General Meeting on 27 th April, Indication whether the presented consolidated financial statement or comparable consolidated financial data have been adjusted due to qualifications in the opinions of entities authorized to audit the consolidated financial statements or the financial statements for the years the consolidated financial statements and comparable financial data are presented, The opinions given by independent certified auditors on the audit of the financial statements of ELZAB Group entities included no qualifications. Specification and explanation of differences between data disclosed in the financial statement and comparable financial data and previously prepared and published financial statements. No differences occurred between currently published consolidated financial statement and the quarterly report for the 4 th quarter of 2009 published on Conversion of the consolidated financial statement The consolidated financial statement was not subject to conversion and no changes were introduced therein as a result of adjustments due to changes in the accounting principles. Description of the assumed accounting principles (policy), including the asset / liability and revenue / cost evaluation methods, profit/loss settlement and the method of making the consolidated financial statement and consolidated comparable data, 1. Introductory information The Group prepares its consolidated financial statement in virtue of the historical cost principle. PLN is the functional currency and the currency of presentation of all the financial statement items. Data shown in the consolidated financial statement are in PLN thousand. In some cases they may be presented with higher accuracy. The consolidated financial statement for 2009 and the comparable period of 2008 have been prepared under the IFRS that include the standards and interpretations accepted by the Council of International Accounting Standards and Permanent Committee for Interpretations. The financial statement considers the requirements of Minister s of Finance Decree of 19th February, 2009 on current and periodic information provided by the issuers of securities and conditions of acknowledging as equivalent the information required by the regulations of a nonmember state (Dz. U. No 33, item 259). No changes of the accounting principles occurred and the statements are comparable. The consolidated financial statement for 2008 included MEDESA Sp. z o.o. 5

42 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) On the merger of ELZAB S.A. (the taking over company) and MEDESA Sp. z o.o. (the taken over company) took place. ELZAB S.A. as the parent company and GENEZA SYSTEM S.A. apply the rules defined in IAS/IFRS to keep their accounts and prepare the company financial statements. MICRA METRIPOND KFT, despite the resolution adopted by the General Meeting, about keeping the accounts and preparing the financial statement under the IAS/IFRS principles, due to the regulations applicable in Hungary, keeps its accounts and prepares the financial statement under the Hungarian accounting standards and converts them to the IAS/IFRS principles. 2. Fixed (long-term) assets 2.1. Tangible fixed assets include fixed assets and expenses on fixed assets under construction maintained by ELZAB Group companies in order to use them in the production process, for goods deliveries and service provision, in order to commission them to other entities, under tenancy agreement or for administrative purposes with a foreseeable period of use exceeding 1 year that should most probably bring economic benefits to ELZAB Group in the future. For recording, fixing the balance-sheet value and depreciation write-offs on impairment of fixed assets, the provisions of IAS 16 (Tangible fixed assets) and IAS 36 (Impairment of assets) are applied. The tangible fixed assets include: Buildings, plant, Machines and equipment, Means of transport, Other fixed assets, Land, Machines and equipment under construction, requiring assembly and fixed assets under construction. Fixed assets and fixed assets under construction when entered as an asset item are valued at purchase price or production cost. The purchase price is the price from the supplier s invoice plus costs related to the purchase borne by date of handing such asset over for use (e.g. costs of transport, loading/unloading, freight insurance, assembly, installation and start-up, notarial fees, financial costs, duties and taxes). The production cost is considered to be the value, at purchase price, used for the production of a fixed asset of tangible assets, third party services, remuneration, interest and commission costs and other costs attributable to the value of a fixed asset production, incurred by date of handing such asset over for use. The initial value also includes the justifiable part of external funding costs. The modernization costs are included in the balance-sheet value of fixed assets when it is probable that the Company should gain some economic profits thereon and the costs incurred for the modernization are measurable with reliability. Any other expenses incurred on the repair and 6

43 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) maintenance of fixed assets are charged on the profit and loss account in the reporting periods of such expense. Land is not depreciated Fixed assets are depreciated throughout their economic usability period. The depreciation is calculated by the straight line method. As of the balance-sheet day the fixed assets are presented at purchase price or production cost minus revaluation write-offs and the possible write-offs due to impairment. The following usability periods for particular fixed asset groups have been assumed: buildings, plant from 10 to 40 years, machines and equipment - from 2 to 20 years, means of transport from 2,5 to 8 years, other fixed assets - from 2 to 10 years. At MICRA METRIPOND KFT the depreciation period of buildings is 100 years. Due to insignificance, the fixed assets with the usability period exceeding one year: are depreciated in 100% at the moment of being handed over for use if their initial value is above PLN and below PLN 3 500, are in 100% carried over into consumption costs of materials at the moment of being handed over for use if their initial value does not exceed PLN The quantitative record of such fixed assets is kept on the off-balance account. At MICRA METRIPOND KFT fixed assets worth below HUF are depreciated on one-time basis at the moment of being handed over for use. The depreciation of fixed assets is carried over into the core activity costs, except the depreciation of the space rented, the latter carried over into other operating costs. At the moment of selling fixed assets the initial value and depreciation by date are written off and the sale result is charged on other operating revenues or costs. The profit/loss on sale of fixed assets is presented by balance as a profit or loss on sale, respectively. Leasing A lease agreement under which the whole risk and all the gains on use are on the lessee, are classified as financial lease. The financial risk object is classified under assets on the day of starting the lease at the lower of two following amounts: the equitable value of the lease object or the current value of the minimum lease installments. Each lease installment is divided into the amount reducing the liability balance and the financial cost amount. The interest element is booked under assets throughout the period of lease. The depreciable assets acquired under financial lease are depreciated throughout the usability period of the Company s own assets, considering the final value. The lease in which a significant part of the risk and gains on ownership remains on the part of the lessor (funder) is the operating lease. The lease installments paid under the operating lease (upon reduction by the possible bargains obtained from the lessor (funder) are put under costs by the straight-line method throughout the lease period. Lease occurs at ELZAB S.A. All the lease agreements concluded are operating lease agreements, for 7

44 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) tax purposes. Significant agreements only are subject to transformation for balance-sheet purposes Goodwill Goodwill is the result of surplus of the acquisition price of the subsidiaries over the acquisition price of assets and liabilities of such entity. Goodwill is presented as a long-term asset item and as of the end of the year is assessed by impairment. Impairment is presented in the profit and loss account and is converted in the subsequent periods Intangible assets include assets that have no physical form, are identifiable, remain under ELZAB Group s control as a result of events that occurred in the past and on which ELZAB GROUP should gain economic profits in the future. An intangible asset item is booked only when it is probable that ELZAB Group should gain future economic profits that attributable to a specific asset item and the purchase price or production cost of such asset item can be reliably fixed. The provisions of IAS 38 (Intangible Assets) and IAS 36 (Impairment of Assets) apply to recording, fixing the value as of the initial entry, fixing the depreciation and revaluation write-offs. The intangible assets include: - intangible assets created as a result of own research and development work carried out by ELZAB S.A. upon meeting the following conditions: - it is possible to finish a development work so that it will be usable or saleable, - there are prerequisites possible to be evidenced that there is an intention to finish such development work and use or sell it, - it is possible that the development work will be used or sold, - the method such development work should create the probable future economic profits is known (existing on the market for the products built on such development work or for the development work itself), - the technical and financial means, necessary for finishing such development work and its use or sale are available, - it is possible to fix expenses on the development work in a reliable way. The above criteria are applied to the initial expenses and costs incurred later. - Other intangible assets proprietary property titles and related to property titles, titles to inventions, patents, trademarks, utility models and licenses, know-how, - Development work in progress. The expenses that do not meet the above conditions are presented in the profit and loss account as the current period costs. The basic amount of intangible assets occurs at ELZAB S.A. The intangible assets at the moment of being entered as asset items are valued at production cost or purchase price. The production cost is considered to include all the expenses that can be directly subordinated to the procedures of creating, production and adaptation of an asset item to use in a method intended by 8

45 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) the management. The intangible asset production costs include: supplies and services used or consumed during the production of an intangible asset item, employee benefit costs, justified costs of external funding and other costs directly related to preparation of an asset item to use according to its intended purpose. The acquisition price is the purchase price including import duty, non-deductible taxes and other expenses related to preparation of an intangible asset item to use according to its intended purpose. As of the balance-sheet day the intangible assets are presented at production cost or purchase price minus depreciation write-offs and the possible write-offs due to impairment. The intangible assets are depreciated by the straight-line method. The depreciation periods reflect the periods of economic usability of intangible assets and are as follows: - development work costs 3-5 years - other intangible assets 2 years. The depreciation of intangible assets is carried over into core activity costs. The intangible assets of value below PLN 3.500, due to insignificance, may be charged on the current period costs or amortized on one-time basis Long-term financial assets. The long-term financial assets include the shares and stock held in other entities, maintained by the Group in order to gain profits due to change or their values or other benefits, including those on dividend or sale thereof. These are shares not listed in the Stock Exchange. The stock and shares are booked at purchase price minus revaluation write-offs. For each balance-sheet day the evaluation is made whether there is any impartial evidence that the financial asset items underwent impairment, through the comparison of net assets or parts of the net assets of the entities to the value of stock or shares held. The possible revaluation write-off is included in the financial costs. If it is found with sufficient certainty that the reasons for revaluation write-off have ceased, such revaluation write-off shall be converted in part or in whole, through acknowledgement of financial assets to the amount not exceeding the purchase price of such assets Assets on deferred income tax. Assets on deferred income tax are calculated in the amount to be deducted from the future income tax, due to negative temporary differences that will cause reduction of income tax base in the future. The negative temporary differences occur when the book value of the assets is lower than their tax value and the book value of the liabilities is higher than their tax value. Assets on deferred income tax are included if it is probable that taxable income shall be gained in the future, which should enable the use of temporary differences Long-term receivables Receivables (excluding trade receivables) with maturity exceeding 12 months from the balancesheet day are classified within fixed assets. Such receivables were not discounted, due to insignificance 3. Current (short-term) assets 9

46 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) 3.1. Inventories According to IAS 2 Inventories, inventories are assets to be offered for sale within ordinary business, being the object of production for sale or supplies and raw materials used in the production process or service provision. Inventories are presented at net value minus revaluation write offs made so far. Inventories are valued at purchase prices or at production cost. As of the balance-sheet day inventories intended for sale are presented in value not exceeding the possible net prices. The purchase price is the price of an asset item including the amount payable to the seller excluding the deductible VAT and in case of import increased by public-legal charges and reduced by discounts, rebates and other similar decreases and expenses recovered. The revaluation write-offs on inventories are created due to their impairment, in order to bring the inventory value to the level of recoverable net value. The write-offs are charged on other operating costs, while release of inventory revaluation write-off is recorded as reduction of other operating costs. The presentation of inventory revaluation write-offs in the profit and loss account is made on balance within the costs of production sold and the value of goods and supplies sold, respectively. The revaluation write-off value reduces the balance-sheet value of current tangible assets covered by the revaluation write-off. The incoming and outgoing supplies and goods are performed at actual purchase prices under the FIFO principle. The costs of purchase are carried over into the costs of period at the moment of being incurred, as they are not significant and do not deform the reliable profit/loss of the Company. Finished products are valued at standard prices based on the planned technical production cost. The outgoing finished products are performed under the FIFO principle. The production in progress is valued at the technical production cost including the costs of supplies, workmanship, third party processing and overheads. The stock inventories do not include office supplies, toiletries, liquid fuels and oils used directly for transport, etc. Such supplies are carried over directly into consumption costs by respective cost items. Fixed assets of low value (minor equipment, tools, etc.) are treated as supplies, writing off their value on one-time basis within consumption costs and are entered for checking purposes in the quantitative records into off-balance accounts, by persons materially liable. At the end of each month the analysis of the level of inventories by usability is made. The evaluation of the usability of inventories is the main criterion considered when settling the revaluation write-offs Short-term receivables Receivables are acknowledged in the amount payable minus revaluation write-offs on receivables. Settling the revaluation write-offs on receivables takes place when there is some objective evidence that the Company will not be able to receive all the amount receivable resulting from the original conditions of such receivable and the overdue period exceeds 180 days. At MICRA METRIPOND KFT and GENEZA SYSTEM S.A. this principle is waived in justified cases. The Companies create revaluation write offs on receivables for specific customers upon prior 10

47 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) analysis of them, considering the prerequisites for the repayment s probability. The Company may also create revaluation write-offs collectively for numerous, though low amounts receivable. The decisions on covering receivables by revaluation write-offs are made by the Management Board. The revaluation write-off on receivables is carried over into other operating costs. The revaluation write-off release increases other operating costs. The presentation of revaluation write-offs in the profit and loss account is made on balance within core activity costs of sales, respectively. The Company, considering significance, makes discount of the receivables whose repayment was divided into installments. At the end of each month interest is calculated on overdue receivables paid, if delay in payment exceeds 30 days. If the interest amount on the invoices paid by a specific customer is lower than PLN 50, it is not booked in the accounts. The interest calculated as of day of payment in commercially justified cases may be amortized by decision of the Chairman of the Management Board. As of the end of the turnover year interest is calculated on all the receivables unpaid. In commercially justified cases (as above) the Companies may decide on the total or partial waiver from calculation of interest to some customers. If the interest amount on invoices unpaid by a given customer as of the balance-sheet day is lower than PLN 50,00, it is not included in the accounts and the customer is not charged. In case of concluding arrangements with the customers on receivable repayment in installments, two procedures are applied to interest calculation: Interest is added to the amount of receivables covered by installments for the entire overdue period until the moment of repayment. In case of timely repayment of receivables covered by the arrangement, a decision on partial reduction of interest calculated can be made, Interest is not calculated on the amount of receivables covered by installments, provided the repayments are made by dates provided in the arrangement. In case of delays in repayment of receivables covered by the arrangement, the interest of the entire overdue period until the moment of repayment is calculated Short-term deferred expenditures Short-term deferred expenditures include expenses concerning the periods following that of incurring such expenses. They are recorded under the value of expenses incurred and cleared in time. They also include preliminary payments incurred in relation to lease agreements concluded and cleared throughout the agreement duration Short-term financial assets cash and equivalents Short-term financial assets represent trading partners promissory notes with redemption period above 3 months. Cash includes assets in the form of domestic and foreign currencies on hand and on bank accounts. Domestic cash is booked at the nominal value. Cash expressed in foreign currencies as of the balance-sheet day is valued at the average rate fixed for a given currency by Narodowy Bank Polski [National Bank of Poland]. MICRA METRIPOND KFT values cash in foreign currencies as of the balance-sheet day at the average rate fixed for a given currency by the National Bank of Hungary. 11

48 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) The exchange rate differences occurring in relation to the evaluation of cash in foreign currencies as of the balance-sheet day are booked as follows: - exchange rate gains under financial revenues, - exchange rate losses under financial costs. The promissory notes of trading partners with redemption period up to 3 months are also presented under cash and other financial assets. The same principles of recording and valuation are applied to the promissory notes as to trade receivables. Cash on bank accounts are presented together with interest, the latter carried over into financial revenues. The interest on the Company Social Fund increase the fund. In the cash flow account cash differs from cash presented in the financial standing report by exchange rate differences on the balance-sheet valuation. 4. Long-term financial assets classified as intended for sale Long-term assets are classified as intended for sale represent assets whose balance-sheet value shall be restored by way of a sale transaction, not through its further use in business (IFRS 5 Assets intended for sale).this condition is considered fulfilled when the sale transaction occurrence is highly probable and the asset item is available as is for immediate sale transaction. Classification of long-term assets for sale assumes the Company intention to close the sale transaction within one year from the date of changing the classification of assets. The depreciation write-offs are stopped in relation to the assets intended for sale. The valuation of long-term assets classified as intended for sale is made at the lower amount of either the balance-sheet value or equitable value minus costs of sale. 5. Equity The Capital Group equity includes the following items: The Capital Group share capital is recorded in the amount determined in the parent company statute, entered in the National Court Register. The Company s own shares include the value of ELZAB S.A. own shares bought by the Company for redemption and resale or other purposes related to the Company strategy performance. The value reduces the ELZAB Group equity. The Capital reserves - created to fund the Company s own shares buyout. The Reserve capital is presented in the amount corresponding to the parent company s supplementary capital. The supplementary capital includes: 12

49 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) - The Capital on the issue of shares above their nominal value the surpluses gained on the issue minus costs incurred for the share issue are transferred to the capital, - The supplementary capital created from profit write-offs for subsequent turnover years, - Capital on fixed asset revaluation. The exchange rate differences on conversion of the financial statement of MICRA METRIPOND KFT presented in HUF. Retained profits, of which: - accumulated profits and losses of the previous years include capital on revaluation of fixed assets and results of transformation to meet the International Accounting Standards. This item also includes all the consolidation adjustments of the previous years. - the net profit of the current period considering the current consolidation adjustments. In the report on the changes in equity the changes resulting from transactions with equity owner acting under their entitlements and other total income were considered. 6. Long-term and short-term liabilities 6.1. Provisions. The ELZAB Group entities create provisions when there is a current, legal or customarily expected obligation resulting from past events, occurrence of a probable liability. The fact that outflow of funds will be required in order to meet the obligation must be more probable than the opposite situation and its amount can be reliably estimated. The costs of provisions, depending on their type, are presented under appropriate cost category. If it is probable that part or all the economic profits required to clear a provision can be restored from a third party, such liability is presented as an asset item, if the probability of restoring this amount is sufficiently high and it is possible to value it reliably. The amount of provisions created is verified as of the balance-sheet day in order to adjust the estimated to ones corresponding to the level of knowledge as of the same day. Provisions for employee benefits The employees of some ELZAB entities acquire the entitlement to benefit payment in due time. The Companies create provisions for such benefits. The jubilee bonuses and retirement severances are estimated by independent actuary. Moreover, the Companies create provisions for unused holidays, the value whereof is estimated in virtue of the principles of calculating the equivalent for unused holidays. The provisions for employee benefits are charged on other operating costs. The Companies estimate the provisions for performance bonuses in the scope of sales revenues and profits/losses paid after the period they refer to. Provision for deferred income tax The provisions for deferred income tax are created in the amount of the income tax payable in the future, due to the occurrence of positive temporary differences that will cause the increase of income tax calculation base in the future. The positive temporary differences occur when the book value of the assets is higher than their tax value and the book value of the liabilities is lower than their tax value. 13

50 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) 6.2. Bank credits Bank credits and loans are recorded at the equitable value of cash gained minus costs directly related to earning them. In the subsequent periods the bank credits are valued at depreciated purchase price, applying the efficient interest rate. The insignificant discount rates are not included either in the accounts or the financial statement. The credits with maturity falling later than 12 months from the balance-sheet day are presented under long-term bank credits. 6.3 Other financial liabilities Other financial liabilities include liabilities due to financial lease agreements. Other financial liabilities with maturity falling later than 12 months from the balance-sheet day are presented as other long-term financial liabilities Short-term liabilities Short-term liabilities include liabilities with maturity calculated from the balance-sheet day, fall within a period below 12 months. Trade liabilities are presented in the balance-sheet, whatever the maturity, are presented as short-term liabilities. Trade and other liabilities are presented at the historical cost. The possible interest is recorded at the moment of receipt of notes from the suppliers. This item also includes the Company Welfare Fund liability Accruals and deferred revenues The deferred revenues constitute funds received on account of future services. The deferred revenues also include revenues booked but not received for payments classified under revenues under the cash desk principle. 7. Principles of preparing the profit and loss account and total income report The profit and loss account is made in the calculative variant in which the revenues, costs, profits and losses and compulsory CIT charges are presented separately. In the profit and loss account the continued and ceased activity are separated The net profit/loss consists of: - Profit/loss on sales, - Profit/loss on other operating activity, - Profit/loss on financial operations, - The compulsory charges on profit/loss due to CIT. Cost of production sold is adjusted by the finished product inventory revaluation, respectively. The value of goods and supplies sold considers the result of goods and supplies inventory revaluation. The receivable revaluation result adjusts the costs of sales. In the profit and loss account the following results are presented: Profit or loss on selling non-financial fixed assets under other operating activity, Under financial activity: - Profit or loss on selling investments under financial revenues or costs, respectively, - The surplus of exchange rate gains over losses under other financial revenues, - The surplus of exchange rate losses over gains under other financial costs. 14

51 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) Total income report includes the net profit and other total income presented under equity. The current income tax is calculated in virtue of the tax result (tax base) of a given period. The tax result is settled in virtue of the balance-sheet result excluding the taxable revenues and costs representing the allowable costs in other years than the financial year and such revenues that will never be taxable as well as such costs that will never become allowable costs. The charge due to the current tax is calculated in virtue of the tax rates applicable in a given financial year. The exchange rate differences, for tax purposes, are calculated under the principles defined in art. 15a of the Law on CIT. The realized exchange rate differences profits represent tax revenue, while the realized exchange rate losses represent tax cost, depending on the exchange rate variation. The deferred income tax is settled in relation to significant temporary differences between the value of assets and liabilities presented in the accounts and their tax value. The deferred income tax presented in the profit and loss account and the total income report results from the change of the level of assets and provisions for the deferred income tax. 8. The principles of preparing the cash flow account The Company makes the cash flow account by the indirect method. The following division of activity is applied in the cash flow account: Operating activity, including the sales of products, goods, supplies and services. It includes all the procedures aimed at gaining profits. The value of net cash flows on operations is received through adjustment of profit/loss by items that did not cause cash flow and were presented in the profit/loss and by cash entitlements related to activities other than operating activity. Investment activity includes: - Cash spent on purchase of tangible fixed assets and intangible assets, - Cash inflows gained on sales of tangible fixed asset and intangible asset items, - Cash expenses on purchase of stock, shares and bonds and securities, - Cash inflows on sales or redemption of third party stock, shares and bonds, - Expenses due to loans granted to entities or persons, - Earnings due to reimbursement of loans granted plus interest, - Earnings on dividends obtained on stock and shares held and interest on cash deposits. Financial activity includes: - Cash inflows on bank credits incurred, - Reimbursement of credits and related payments (interest), - Expenses on repayment of financial lease liabilities, - Cash inflows on issue of the Company s own shares, - Expenses on buyout of the Company s own shares, - Expenses on dividend payment to shareholders. In the cash flow account cash differs from that presented in the financial standing report by exchange rate differences on balance-sheet valuation. 15

52 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) 9. Transactions in foreign currencies. The transactions in foreign currencies are presented as of such transaction day at the respective rates: - The average rate fixed by Narodowy Bank Polski, - Foreign currency purchase of sale applied by the bank used by the Companies for payment of receivables or liabilities, - Purchase or sale of currencies applied by the bank used by the Companies for sale or purchase of currencies. The exchange rate differences occurring as a result of calculating transactions in foreign currencies and valuation as of the balance-sheet day are carried over into financial revenues and costs, respectively. CONSOLIDATION According to IAS 27, the consolidated financial statement should include all the subsidiaries. ELZAB S.A. excluded ELZAB SOFT Sp. z o.o. and ORHMET Sp. z o.o. from consolidation. In view of one of the qualitative characteristics of a financial statement made according to IAS, i.e. significance, the omission of such information would not affect the investor s decisions made in virtue of the consolidated financial statement made with the omission of ELZAB SOFT Sp. z o.o. and ORHMET Sp. z o.o. The financial statements of ELZAB SOFT Sp. z o.o. and ORHMET Sp. z o.o. represent an Appendix to the financial statement published. CONVERSION OF THE FINANCIAL STATEMENT OF MICRA METRIPOND KFT Hungary To convert the financial statement of MICRA METRIPOND KFT, expressed in HUF the following HUF / PLN exchange rates have been assumed: - to convert the asset and liability items and cash flows the average HUF rate announced by NBP as of PLN 1,5168 for HUF 100, - to convert the profit and loss account for 2009 the arithmetic average of average HUF rates announced by NBP as of the last day of each month from January to December, 2009 PLN 1,5479 for HUF 100. Indication of average PLN exchange rates in the periods covered by the consolidated financial statement and comparable financial data, in relation to EURO, fixed by Narodowy Bank Polski, including in particular: - the exchange rate applicable as of the last day of each period, - the average rate in the period, calculated as the arithmetic average of the rates applicable as of the last day of each month in a given period and in justified cases calculated as the arithmetic average of the rates applicable as of the last day of a given period and the last day of the preceding period,, - the highest and the lowest rate applicable in a given period, To convert the selected financial data the following EURO exchange rates have been assumed: - To convert the asset and liability items as of and as of as well as cash flows for 2009 and 2008 the average EURO announced by NBP as of ,1082, 16

53 ELZAB Capital Group INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENT (PLN thousand) - To convert the profit and loss account for 2009 and 2008, the arithmetic average of the average EURO announced by NBP as of the last day of each month from January to December, ,3401. The highest rate assumed for the calculation of the average rate in 2009 was PLN 4,7013 ( ), while the lowest was PLN 4,0998 ( ). Basic financial statement items and comparable financial data converted into EURO PLN thousand EUR thousand SELECTED ELZAB GROUP FINANCIAL DATA Net revenues on sales of products, goods and supplies Profit/loss on operating activity Gross profit/loss Net profit/loss attributed to shareholders in the parent company Net cash flows on operating activity Net cash flows on investments Net cash flows on financial activity Total net cash flows Annualized profit/loss per one ordinary share(pln / EUR) 0,27-0,01 0,06 0,00 PLN thousand EUR thousand ELZAB GROUP SELECTED FINANCIAL DATA Total assets Long-term liabilities and provisions Short-term liabilities and provisions Equity Share capital Number of shares Book value per share (PLN / EUR) 2,55 2,35 0,62 0,57 17

54 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand BALANCE SHEET (PLN thousand) ELZAB GROUP PLN THOUSAND ASSETS Note As of As of A. Fixed assets (long-term) Tangible fixed assets Note Goodwill Note Intangibles Note 2a Long-term financial assets Note Deferred income tax assets Note Long-term receivables and prepayments Note B. Current assets (short-term) Inventory Note Short-term receivables and prepayments Note Tax receivables Note Cash and cash equivalents Note C. Long-term assets classified as intended for sale Note Total assets LIABILITIES Note As of As of A. Equity capital Initial capital Note Surplus on shares sale above their nominal value Own shares Note Other supplementary capital - own shares Supplementary capital Note Exchange rate differences from associates conversion Profit accumulated, including: Accumulated profit/loss from prior years Net profit/loss of current financial year Minority interest B. Long-term liabilities Provisions Note Deferred income tax provisions Note Long-term bank credits and loans Note Other long-term liabilities (leasing) Note Long-term liabilities and accruals Note C. Short-term liabilities Provisions Note Short-term bank credits and loans Note Short-term part of long-term bank credits and loans Note Other short-term financial receivables (leasing) Note Short-term liabilities and accruals Note Tax liabilities Note 17 Total liabilities Signatures of Members of the Management Board Eugeniusz Pajączek President of the Management Board Jerzy Biernat Vice-president of the Management Board - General Director Jerzy Malok Member of the Management Board, Commercial Vice-president Signature of a person charged with conducting accounts Elżbieta Załóg Finance Director, Chief Accountant Polish Financial Supervision Authoruty 1

55 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand CONDITIONAL LIABILITIES AND OFF-BALANCE POSITIONS As of As of Conditional liabilities In favour of other entities (at the title of) promisory note securement of operating leasing agreement Off-balance liabilities In favour of other entities (at the title of) operating lease agreement (net capital part) Conditional liabilities and off-balance positions total: CONSOLIDATED PROFIT AND LOSS ACCOUNT (PLN thousand) ELZAB GROUP PLN thousand CALCULATION VARIANT Note For the period from to For the period from to A. Net revenues on sale products, goods and materials Note B. Costs of sold products, goods and materials Note C. Gross profit/loss on sale (A B) D. Costs of sale Note E. Overhead costs Note F. Net profit/loss on sale (C-D-E) G. Other operating revenues Note H. Other operating costs Note I. Profit (loss) on operating activity (F+G-H) J. Financial revenues Note K. Negative goodwill write-off Note L. Financial expenses Note M. Goodwill write-off Note N. Gross profit/loss (I+J+K-L-M) O. Income tax Note P. Net profit/loss on operating activity (N-O) R. Profit/loss for the financial year on ceased activity 0 0 S. Net profit/loss for the financial year (P+R) Falling on: Shareholders of the parent company Minority interest T. Other total income Increase of capitals from revaluation at the title of fixed assets value increase 403 Release of provisions at the title of tax and balance sheet depreciation difference as a result of fixed assets valuation Exchange rate differences from recalculation of associates U. Total income (S+T) Annualed net profit Note For the period from to For the period from to Annualed earnings per share: - number of shares profit (loss) per one share on continued activity Note 23 0,27-0,01 - profit (loss) per one share on ceased activity 0 0 Signatures of Members of the Management Board Eugeniusz Pajączek President of the Management Board Jerzy Biernat Vice-president of the Management Board - General Director Jerzy Malok Member of the Management Board, Commercial Vice-president Signature of a person charged with conducting accounts Elżbieta Załóg Finance Director, Chief Accountant Polish Financial Supervision Authoruty 2

56 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand CONSOLIDATED CASH FLOW ELZAB GROUP PLN thousand INDIRECT METHOD Note For the period from to For the period from to Cash flow from operating activity Net profit/loss Adjustments by: Participation in net profits/losses of associates and joint ventures accounted with equity method Minority interest Amortization of tangible assets Amortization of intangible assets Goodwill loss Profits/losses on exchange rate differences Costs and revenues on interest Revenues on dividends Profit/loss on investment activity Change in provisions position Change in inventory position Change in receivables and prepayments position Change in liabilities and accruals position Income tax covered by the profit and loss account Paid / returned income tax Other adjustments Net cash flow from operating activity Cash flow from investment activity Income from sale of tangible and intangible assets Net income from sale of associates and subsidiaries Income from sale of financial assets Income from interest Income from dividends Repayment of granted loans Expenses for acquisition of tangible and intangible assets Net expenses for acquisition of subsidiaries and associates 287 Expenses for acquisition of short-term financial assets Loans granted Other Net cash flow from operating activity Cash flow from financial activity Income from loans and credits Net income from issue of shares, bonds, bills of exchange Other 122 Repayment of loans and credits Payment of liabilities resulting from agreements on financial leasing 34 Dividends paid to the Company's shareholders Dividends paid to the minority shareholders Acquisition of own shares Interest paid Other 65 Net cash flow from financial activity Increase/ decrease in position of cash and cash equivalents Cash and cash equivalents at the beginning of the period Profit/loss due to exchange rate differences concerning cash and cash equivalents valuation Cash and cash equivalents at the end of the period including: Funds purposed for repayment of factoring loan/credit: Advance payment cash of Company s Social Benefits Fund (ZFŚS) Amount of unused overdraft in the bank account Signatures of Members of the Management Board Eugeniusz Pajączek President of the Management Board Jerzy Biernat Vice-president of the Management Board - General Director Jerzy Malok Member of the Management Board, Commercial Vice-president Signature of a person charged with conducting accounts Elżbieta Załóg Finance Director, Chief Accountant Polish Financial Supervision Authoruty 3

57 ELZAB S.A. CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand CONSOLIDATED LIST OF CHANGES IN THE EQUITY CAPITAL OF ELZAB GROUP ( in thousand PLN) Initial capital Surplus on shares sale above their nominal value Own shares Other reserve capital - own shares Supplementary capital created from profits Reserve capital from fixed assets revaluation Exchange rate differences from associates conversion Profit / loss from prior Profit / loss from prior years and from current years year Net profit /loss of current financial year Total Capitals of minority shareholders TOTAL GROUP CAPITAL Position (balance sheet) as of Change of accountancy principles 0 0 Position (balance sheet) as of after adjustments (after conversion) Total income Fised asstes revaluation Prior year financial result clearance Income tax - Provisions release due to differences in balance sheet and tax amortization as a result of fixed assets valuation Exchange rate differences from associates conversion MEDESA Sp. z o.o. capitals write-off as of the day of merger Profit / loss for the financial year Other changes in equity capital MICRA METRIPOND KFT fixed assets revaluation capital adjustment Own shares buy-back, creation of reserve fund Roundings Position (balance sheet) as of Initial capital Surplus on shares sale above their nominal value Own shares Other reserve capital - own shares Supplementary capital created from profits Reserve capital from fixed assets revaluation Exchange rate differences from associates conversion Profit / loss from prior Profit / loss from prior years and from current years year Net profit /loss of current financial year Total Capitals of minority shareholders Position (balance sheet) as of Change of accountancy principles 0 Position (balance sheet) as of after adjustments (after conversion) Total income Prior year financial result clearance Income tax - Provisions release due to differences in balance sheet and tax amortization as a result of fixed assets valuation Movement of fixed assets actualization results from profits / losses from prior years due to their sale, liquidation Roundings Exchange rate differences from associates conversion Profit / loss for the financial year Other changes in equity capital Buy-back of own shares for redemption Position (balance sheet) as of TOTAL GROUP CAPITAL Signatures of Members of the Management Board Eugeniusz Pajączek President of the Management Board Jerzy Biernat Vice-president of the Management Board - General Director Jerzy Malok Member of the Management Board, Commercial Vice-president Signature of a person charged with conducting accounts Elżbieta Załóg Finance Director, Chief Accountant 4

58 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 1 A. EXPLANATORY NOTES BALANCE SHEET EXPLANATORY NOTES TANGIBLE FIXED ASSETS (PLN thousand) TANGIBLE FIXED ASSETS Fixed assets Fixed assets under construction Tangible fixed assets total: As of As of For the period from to Buildings Means of transport Machinery Other Total Gross value at the beginning of the period Increase: purchase due to revaluation improvement fixed assets taken over from MEDESA Sp. z o.o Decrease: sale write-off of amortized fixed assets Revaluated fixed assets gross value write-off Write-off of gross value of fixed assets taken over from MEDESA Sp z o.o Ascribed to ceased activity 0 Internal transfer (+/-) 0 Gross value at the end of period Depreciation value at the beginning of the period Amortization for the period Other increases - depreciation of fixed assets taken over from MEDESA Sp. z o.o Decrease: Revaluated fixed assets depreciation write-off Depreciation write-off of fixed assets taken over from MEDESA Sp. z o.o Depreciation value at the end of the period Actualization write-off of impairment at the beginning of the period 0 Actualization write-off due to impairment for the period 0 Reversal in period of actualization write-off due to impairment 0 Value including depreciation and write-off due to impairment at the end of period Net exchange rate differences adjustment due to conversion 0 MEDESA Sp. z o.o. fixed assets net value write-off at the beginning of the period Write-off of net value of fixed assets taken over from MEDESA Sp. z o.o Net value at the end of the period For the period from to Lands Buildings Means of transport Machinery Other Total Gross value at the beginning of the period Increase: purchase improvement Decrease: sale, liquidation Ascribed to ceased activity 0 Movement to the position "Long-term assets classified as intended for sale" Gross value at the end of the period Depreciation value at the beginning of the period Amortization for the period Other decrease - adjustment on sale, liquidation Decrease due to movement to position "Long-term assets classified as intended for sale" Depreciation value at the end of the period Actualization write-off of impairment at the beginning of the period 0 Actualization write-off due to impairment for the period 0 Reversal in period of actualization write-off due to impairment 0 Value including depreciation and write-off due to impairment at the end of period Net exchange rate differences adjustment due to conversion 0 Net value at the end of the period Polish Financial Supervision Authoruty 5

59 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand OPERATING LEASING AT THE BENEFICIARY 1. Assets value being the subject of operating leasing 2. Operating leasing liability, including: - 1 year, - from 1 to 5 years - above 5 years 3. Instalments resulting from subleasing posted as an income in the given period As of As of FINANCIAL LEASING AT THE BENEFICIARY As of As of Total amount of future leasing instalments as of the balance sheet day The current value of capital fees paid in the following periods, including: year, from 2 to 3 years - above 3 to 5 years above 5 years 3. Amount of conditional leasing instalments posted as a cost in the given period OFF-BALANCE FIXED ASSETS As of As of Used on the base of rent or lease agreement, or other type of agreement, including leasing contract, including: used on the base of operating lease agreement Rental of space by MICRA METRIPOND KFT perpetual land use Off-balance fixed assets, total In the reporting period a verification of established periods of fixed assets economic usefulness and their value took place. As a result of verification the value of fixed assets increased by PLN 498 thousand. This amount has increased the accumulated profits from prior years. For the difference arisen between balance sheet and tax fixed assets value a reserve for deferred income tax in the amount of PLN 95 thousand has been created and also carried into accumulated profits from prior years. In 2009 in MICRA METRIPOND KFT revaluation of tangible fixed assets building and land, took place. The amount of fixed asset increase totaled 51 million HUF. In the financial period indemnities on tangible fixed assets in the amount of PLN 11thousand occurred. In the financial period external financing costs have not been applied to tangible fixed assets gross value. Liabilities related to purchase of fixed assets as of PLN 15 thousand. As of there are the following securities on the Company's intangible fixed assets: a) collateral for overdraft credit in the bank account conducted by ING BANK ŚLĄSKI S.A. in Katowice, Centre of Corporate Banking in Gliwice deposit collateral for real property in Zabrze, ul. Kruczkowskiego 39 to the amount of PLN thousand KW 10341, b) securing of the investment credit for acquisition of real property at ING BANK ŚLĄSKI S.A. in Katowicach the ordinary real estate mortgage securing an existing or future claim on to the real estate covered by the mortgage and land register: KW PO1P /6 amounting to PLN 5500 thousand and the real estate mortgage securing an existing or future claim amounting to PLN 2750 thousand MICRA METRIPOND KFT uses credits for purchase of cars, where the cars are securing the credits. The note presents off-balance fixed assets, hierin the main position consists of the value of production hall leased by MICRA METRIPOND KFT. In 2009 the Company ordered valuation of this property. The value of the production hall according to the price amounted million HUF. The note presents the lower value. ELZAB S.A. sub-rents space for its Warsaw branch as well as a warehouse at RELKAS BIS Sp. z o.o. in Żary.There is no information on the value of leased spaces. GENEZA SYSTEM S.A. partially runs its activities on spaces leased from HOLDING DOMATOR S.A. The lease agreement includes office space, a warehouse and a training-conference room. There is no information on the value of leased spaces. Moreover GENEZA SYSTEM S.A. runs its trade activities in spaces leased from ELZAB S.A. The off-balance records indicate cars used due to operating leasing as well as the value of perpetual land usufruct. Polish Financial Supervision Authoruty 6

60 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 2 THE ASSOCIATES' GOODWILL As of As of a) goodwill - the associates The associates' goodwill total CHANGE OF THE ASSOCIATES' GOODWILL As of As of a) Gross goodwill of the entity at the beginning of the financial period b) write-off of MEDESA Sp. z o.o. gross goodwill (due to to merger with ELZAB S.A.) c) gross goodwill of the entity at the end of the financial period d) entity goodwill write-off at the beginning of the financial period e) entity goodwill write-off for the financial period f) write-off of MEDESA Sp. z o.o. net goodwill (due to merger with ELZAB S.A.) g) write-off of prior MEDESA Sp z o.o. goodwill write-offs (due to merger with ELZABS.A.) h) entity goodwill write-off at the end of the financial period i) net goodwill of the entity at the end of the financial period As of the entity goodwill from consolidation of particular subsidiaries is, as follows: GENEZA SYSTEM S.A. - the company included into consolidation from January the goodwill of the entity from consolidation appeared at acquisition of thousand PLN The entity goodwill as of thousand PLN MICRA METRIPOND KFT the company included into consolidation from February the goodwill of the entity from consolidation appeared at acquisition of thousand PLN Write-off of the entity goodwill in thousand PLN The entity goodwill as of thousand PLN Total entity value of the consolidated companies as of amounts to PLN thousand. In 2009 in relation to the merger of ELZAB S.A. with MEDESA Sp. z o.o. the goodwill of MEDESA Sp. z o.o. has been written off. As of the end of 2009 a test for MICRA METRIPOND KFT goodwill impairment was carried out. The test result did not indicate the necessity of goodwill write-off. THE ASSOCIATES' NEGATIVE GOODWILL As of As of a) negative goodwill - the associates 0 0 The associates' negative goodwill total 0 0 CHANGE OF THE ASSOCIATES' NEGATIVE GOODWILL As of As of a) Gross negative goodwill of the entity at the beginning of the financial period 0 0 b) gross negative goodwill of the entity at the end of the financial period 0 0 c) entity negative goodwill write-off at the beginning of the financial period 0 0 d) increase - due to fixed assets valuation at MICRA METRIPOND KFT 698 e) entity negative goodwill write-off for the financial period f) entity negative goodwill write-off at the end of the financial period g) net negative goodwill of the entity at the end of the financial period 0 0 Polish Financial Supervision Authoruty 7

61 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 2a INTANGIBLES (EXCLUDING GOODWILL) in PLN thousand INTANGIBLES As of As of Intangibles carried out in-house R&D in progress Other intangibles Intangibles total INTANGIBLES - GOODWILL The goodwill arisen as a result of the merger of ELZAB S.A. with MEDESA Sp. z o.o. Intangibles - goodwill, total As of As of For the period from to Intangibles carried out in-house Other intangibles Total R&D Other R&D Other Gross value at the beginning of the period Increase purchase R&D carried out in-house purchase among mergers of business entities - - at the title of revaluation - - other - Decrease (64) (64) - withdraw from usage - - liquidation sale - - due to revaluation - - Write-off of gross value of intangibles taken over from MEDESA Sp. z o.o. (74) (74) -other - Gross value at the end of the period Write-off value at the beginning of the period Amortization for the period Other increase - Other decrease Write-off of depreciated intangibles taken over from MEDESA Sp. z o.o. (74) (74) Write-off value at the end of the period Actualization write-off due to impairment at the beginning of the period - Actualization write-off due to impairment for the period - Reversal in period of actualization write-off due to impairment - Value including depreciation and write-off due to impairment at the end of the period Net exchange rate differences adjustment due to conversion - Net value at the end of the period For the period from to Intangibles carried out in-house Other intangibles Total R&D Other R&D Other Gross value at the beginning of the period Increase purchase R&D carried out in-house purchase among mergers of business entities - - due to revaluation - - other - Decrease write-off of amortized intangibles liquidation - - sale - - due to revaluation - - due to retraining into fixed assets classified as intended for sale - - other - Gross value at the end of the period Write-off value at the beginning of the period Amortization for the period Other increase - Decrease - adjustment-write-off of amortized intangibles Write-off value at the end of the period Actualization write-off due to impairment at the beginning of the period - Actualization write-off due to impairment for the period - Reversal in period of actualization write-off due to impairment - Value including depreciation and write-off due to impairment at the end of the period Net exchange rate differences adjustment due to convertion - Net value at the end of the period Liabilities related to intangibles purchase as of r. - PLN 9 thousand Intangibles with undefined usage period do not occur. Polish Financial Supervision Authoruty 8

62 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand NOTE 3 STOCKS AND SHARES IN THE ASSOCIATED COMPANIES Name (company) Registered seat Subject of the Nature of connection Applied The date of Value of shares Revaluation balance sheet indicating legal status company (associated company, method of taking cocontrol / stock acc to adjustments value of the subsidiary, indicating consolidation / over the purchase price value (total) stock and the direct and indirect evaluation with an entity / or shares connections) ownership method or significant indicate that the entity influence over it is not subjected to consolidation / evaluation by an ownership method Per cent of the initial capital owned As of As of Voting share in the total number of shares at GM As of As of GENEZA SYSTEM S.A. Tarnowskie Góry Hodmesovasarhely, 2 MICRA METRIPOND KFT Hungary 3 ELZAB SOFT Sp. z o.o. Zabrze 4 ORHMET Sp. z o.o. Warszawa services, production, trade, distributor of ELZAB products subsidiary company full % 76% 76% 76% production and distribution of balances subsidiary company full ,18% 92,18% 92,18% 92,18% production and distribution of software subsidiary company not consolidated % 55% 55% 55% production of cash register for self-service petrol station subsidiary company not consolidated % 100% 100% 100% GENEZA SYSTEM S.A. share in ELZAB SOFT Sp. z o.o. is 25%. ELZAB S.A. directly or indirectly owns 74% shares in ELZAB SOFT Sp. z o.o. STOCKS AND SHARES IN SUBSIDIARIES Name of the company Initial capital Equity capital, including: Supplementary Other equity capital, including: capital Profit (loss) from Net profit (loss) previous years 1 GENEZA SYSTEM S.A MICRA METRIPOND KFT ELZAB SOFT Sp. z o.o ORHMET Sp. z o.o Liabilities and provisions for liabilities including: Assets Revenues Dividend received of the entity, from or due from total sales the entity for the last financial year The item other equity capital in MICRA METRIPOND KFT contains PLN 554 thousand resulting from negative exchange rate differences from units calculation of HUF into PLN in the financial statement of the Company. - long-term liabilities - short-term liabilities Receivables, of which: - long-term receivables - short-term receivables

63 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 6 INVENTORY PLN thousand As of As of Materials Semi-finished products and work in progress Finished goods Goods INVENTORY total VALUE OF INVENTORY REVALUATION WRITE-OFFS AS OF Inventory gross Revaluation writeoff value Inventory net value Materials Semi-finished products and work in progress Finished goods Goods INVENTORY total VALUE OF INVENTORY REVALUATION WRITE-OFFS AS OF Inventory gross Revaluation writeoff value Inventory net value Materials Semi-finished products and work in progress Finished goods Goods INVENTORY total Note 5 RECEIVABLES AND PREPAYMENTS PLN thousand As of As of Receivables due to supplies and services long-term part - short-term part Receivables due to supplies and services from subordinates long-term part - short-term part Receivables from associates long-term part - short-term part Prepayments: long-term part 0 - short-term part Other receivables long-term part short-term part Prepayments and accrued income: long-term part - short-term part Actualization write-off due to impairment at the beginning of the period Actualization write-off due to impairment for the period Reversal in period of actualization write-off due to impairment Actualization write-off due to impairment at the end of the period TOTAL As of the end of 2009 there is a collateral security for receivables as ELZAB S.A. had a loan (advance) at its disposal. The collateral for this loan is the receivables financed with this loan. As of r. the loan advance was used to the amount of PLN 819 thousand. Collateral for the loan investment taken out for the acquisition of real property in Suchy Las from ING BANK ŚLĄSKI S.A. in Katowice is the receivables from rental agreement of this real property. The average monthly rent amounted around PLN 35 thousand in In other entities there are no collateral securities for receivables. SHORT-TERM RECEIVABLES As of As of a) from associated companies as a result of supplies and services, maturity period: up to 12 months above 12 months - other 50 b) receivables from other companies as a result of supplies and services, maturity period: up to 12 months above 12 months arising from taxes, subsidies, duties, social and health insurance and other benefits - other Short-term receivables net in total c) receivables revaluation write-offs Short-term receivables gross in total Polish Financial Supervision Authoruty 10

64 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand CHANGE OF SHORT-TERM RECEIVABLES REVALUATION WRITE- OFFS As of As of Value at the beginning of the period a) increase (as a result of) revaluation write-offs made creation of deferred income 0 36 b) decrease (as a result of) use of the revaluation write-offs reversal of the revaluation write-offs Short-term receivables revaluation write-offs at the end of the period SHORT-TERM RECEIVABLES FROM ASSOCIATES As of As of a) due to supplies and services, of which: from subsidiaries b) other from subsidiaries 50 0 Net short-term receivables from associates, in total c) revaluation write-offs for receivables from associates Gross short-term receivables from associates, in total GROSS SHORT-TERM RECEIVABLES (BY FOREIGN CURRENCIES) As of As of a) in PLN b) in foreign currencies (acc to currencies and after converting into PLN) b1. unit/currency 21 thousand GBP PLN thousand b2. unit/currency 95 thousand EUR PLN thousand b3. unit/currency 11 thousand USD PLN thousand b4. unit/currency thousand JPY PLN thousand 144 other currencies in PLN thousand Short-term receivables, in total TRADE RECEIVABLES (GROSS) TO BE PAID AFTER THE BALANCE SHEET DATE: As of As of a) up to 1 month b) above 1 month and up to 3 months, c) above 3 months and up to 6 months, d) above 6 months and up to 1 year, e) above 1 year f) overdue receivables Trade receivables gross in total g) revaluation write-offs of trade receivables Trade receivables net in total The disclossed schedule of receivables to be paid after the balance sheet date covers gross receivables which were not paid up till ELZAB S.A. applies towards its customers credit policy principles consisting in the allocation of the appropriate credit limit to each customer depending on the amount of annual gross purchases, timeliness of their payments and financial standing of the customer. For dealers and distributors, the 30 or 60 or 90-day maturity applies, counted from the last day of the month the purchase was made. The maturity may be extended to 150 days for the customers whose liabilities are funded by the Zaliczka [Prepayment] credit. ELZAB S.A. consistently treats the customers who fail to pay their liabilities on time. In case of non-observance of the terms of payment agreed, for the subsequent orders the terms are changed into prepayment or the deliveries to such customer shall be blocked. GENEZA SYSTEM S.A. applies maturities for normal course of sales. For strategic customers, the maturities are days. MICRA METRIPOND KFT applies 8-day maturities its customers for normal course of sales. For cash register customers and strategic customers, the company applies day maturities from the day of invoice issuance. Polish Financial Supervision Authoruty 11

65 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand OVERDUE TRADE RECEIVABLES (GROSS) DIVIDED INTO THE RECEIVABLES NOT PAID IN THE FOLLOWING PERIODS: As of As of a) up to 1 month b) above 1 month and up to 3 months, c) above 3 months and up to 6 months, d) above 6 months and up to 1 year, e) above 1 year Overdue trade receivables gross, in total f) overdue revaluation write-offs of trade receivables Overdue trade receivables net, in total SHORT-TERM ACCRUALS As of As of Lease agreement security Long-term lease 26 Dealers training 8 Insurance of property Liability insurance of Board of Directors (Management Board) and Supervisory Board Cost of E series shares issue 0 52 Others Short-term accruals, in total Note 8 CASH AND CASH EQUIVALENTS PLN thousand As of As of Cash in hand and on bank accounts Short-term investments Customer's bills of exchange Cash and cash equivalents gross in total Customer's bills of exchange revaluation write-offs Cash and cash equivalents net in total cash and cash equivalents in hand and on bank accounts ascribed to ceased activity 0 0 -cash in hand and on bank accounts, that is not available (purposed for repayment of Advanced credit and Company's Social Benefits Fund (ZFŚS)) Amount of unused overdraft in the bank account Cash and cash equivalents indicated in cash flow does not correspond with balance sheet values by exchange rate differences from balance valuation. Exchange rate differences total : PLN 4 thousand, PLN (-14) thousand. Non-monetary transactions indicated in cash flow, that would be excluded from financial and investment activity, did not occur. Net cash flows related to ceased activity did not occur. Polish Financial Supervision Authoruty 12

66 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 10 INITIAL CAPITAL (PLN thousand) Series / issue Type of share Type of preference rights to the share Number of shares Value of the series / issue acc to nominal value Kind of capital covering Registration date Right to dividend (from the day) A ordinary cash paid in B preference* (number of votes) cash paid in B ordinary cash paid in C ordinary cash paid in D ordinary cash paid in Number of shares in total Initial capital, in total Nominal value of one share = PLN 1.36 Note 11 OWN SHARES (PLN thousand) As of As of Own shares acquired for redemption Own shares acquired in order to resell them or in order with other purpose related to -254 the Company's strategy Own shares In 2008 ELZAB S.A. acquired in total of equity shares in order to redeem them which constitute 2.514% of the initial capital which translates into votes (2.291%) for OSM. The average price of acquired shares was PLN In 2009 ELZAB S.A. acquired in total of own shares in order to resell them or in order with other purpose related to the Company's strategy, which constitute 0.65% of the initial capital which translates into votes (0.59%) for OSM. The average price of acquired shares was PLN Note 12 SUPPLEMENTARY CAPITAL (PLN thousand) For the period from to Supplementary capital created from profits Reserve capital from fixed assets revaluation Total Balance at the beginning of the period Change of accountancy principles (policy) Balance at the beginning of the period after adjustments (after transformation) Profits/losses due to fixed assets revaluation Increase due to fixed assets sale and liquidation 1 1 Profits/losses pertaining to cash flow hedges (effective part) Covering of loss from prior financial year from supplementary capital Movement into other supplementary capital - own shares Income tax related to positions presented in other total incomes. 0 Balance at the end of the period For the period from to Supplementary capital created from profits Reserve capital from fixed assets revaluation Total Balance at the beginning of the period Change of accountancy principles (policy) 0 Balance at the beginning of the period after adjustments (after transformation) Profits/losses due to fixed assets revaluation 0 Profits/losses from valuation of investments available for sale, carried into equity capital 0 Profits/losses pertaining to cash flow hedges (effective part) 0 Increase due to fixed assets sale and liquidation 5 5 Reinforcement of supplementary capital with profit from prior year Exchange rate differences from valuation of entities acting abroad 0 Income tax related to positions presented in other total incomes. 0 Balance at the end of the period Capital created from profits may be payed as a dividend. Other supplementary capitals are not subjects to payment. ELZAB S.A. creates supplementary capital for own shares buyout or other purposes related to the Company'strategy. Polish Financial Supervision Authoruty 13

67 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 13 PROVISIONS (PLN thousand) For the period from to Provisions for warranty services Provisons for jubilee bonuses and retirement-disability pension severances, unused employee holidays Other employee benefits (quarterly bonuses, annual bonuses, rationalization, competition prohibition agreement) Other provisions (herein: provision for marketing fund, provision for licence agreement) Total Value at the beginning of the period, herein: short-term at the beginning of the period long-term at the beginning of the period Increase created in period and increase of current purchased among mergers of business entities 0 Decrease used during financial year released but not used Adjustment due to exchange rate differences from conversion 0 Adjustment of discount rate 0 Value at the end of the period, herein: short-term at the end of the period long-term at the end of the period Polish Financial Supervision Authoruty 14

68 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand NOTE 15 LONG TERM BANK CREDITS AND LOANS Name (company) Registered seat Amount of credit/loan acc. to the contract Amount of the credit / loan at the beginning of the period Amount of the credit / loan at the end of the period Terms Effective Date Securities indicating legal status PLN thousand currency currency currency PLN thousand currency currency currency PLN thousand currency currency currency of interest interest rate of payment ING BANK ŚLĄSKI Collateral on real property KW WIBOR 1M+1,5% PO1P/ /6 ordinary- PLN thousand. deposit one - to PLN 2 (instalments to 750 thousand. debt cession as a Katowice, ul. Sokolska PLN PLN bank PLN commission be paid 5,32% from1/2011) result of rent concerning the financed real property Raiffeisen Hungary 455 PLN khuf 0 PLN 0 khuf 296 PLN HUF RIVHK +1,25% bank khuf comission 18,99% Secured by insurer - Hitelgarancia Zrt. ERSTE BANK Hungary 46 PLN khuf 12 PLN 799 khuf 0 PLN 0 khuf 9,07% car CIB Hungary 30 PLN khuf 16 PLN 993 khuf 0 PLN 0 khuf 9,05% 9,43% car CIB Hungary 30 PLN khuf 15 PLN 993 khuf 10 PLN 663 khuf 9,05% 9,43% car CIB Hungary 61 PLN khuf 39 PLN khuf 27 PLN khuf 5,50% 5,64% two cars CIB Hungary 50 PLN khuf 31 PLN khuf 22 PLN khuf 5,50% 5,64% car 0 0 SHORT-TERM BANK LOANS/CREDITS AND SHORT-TERM PART OF LONG-TERM BANK LOANS AND CREDITS Name (company) Registered seat Amount of credit/loan acc. to the contract Amount of the credit / loan at the beginning of the period Amount of the credit / loan at the end of the period Terms Effective Date Securities indicating legal status PLN thousand currency currency currency PLN thousand currency currency currency PLN thousand currency currency currency of interest interest rate of payment ING Bank Śląski (revolving loan [overdraft facility] in current account) ING Bank Śląski (short-term part of long-term credit) PEKAO S.A. Katowice, ul. Sokolska PLN 0 PLN 0 Katowice, ul. Sokolska PLN 555 PLN 555 O/Gliwice, ul. Berbeckiego PLN PLN 819 Raiffeisen Hungary 455 PLN PLN 0 91,00 PLN WIBOR 1M + 1,75 % bank commission WIBOR 1M + 1,5 % bank commission 5,32% (instalments to be paid from 1/2010 to 12/2010) WIBOR 1M + 1,7 % bank commission 4,51% HUF RIVHK +1,25% bank comission khuf khuf khuf 18,99% ERSTE BANK Hungary 46 PLN khuf 11 PLN 710 khuf 0,00 PLN 0 khuf 9,07% car CIB Hungary 30 PLN khuf 5 PLN 328 khuf 0,00 PLN 0 khuf 9,05% 9,43% car CIB Hungary 30 PLN khuf 5 PLN 328 khuf 6,00 PLN 345 khuf 9,05% 9,43% car CIB Hungary 61 PLN khuf 13 PLN 856 khuf 12,00 PLN 804 khuf 5,50% 5,64% two cars CIB Hungary 50 PLN khuf 12 PLN 729 khuf 10,00 PLN 664 khuf 5,50% 5,64% car CAMPESA SA Spain PLN 584 thousand euro 963 PLN 231 thousand euro 985 PLN 235 thousand euro 4,00% Raiffeisen Hungary 492 PLN PLN khuf khuf 0 0 Annual effective interest rate has been calculated based on average credit level accordingly to deb level at the end of each month of 2009 including interest paid in RIVHK - Raiffeisen Bank interest rate for corporate credits 0 PLN 0 khuf BUBOR 1M+3,5% bank comission Deposit collateral on the real property KW to the amount of PLN Collateral on real property KW PO1P/ /6 ordinary PLN 5500 thousand, deposit one - to PLN thousand, debt cession as a result of rent concerning the financed real property Financial receivables Secured by insurer - Hitelgarancia Zrt Collateral on machinery and equipment - HUF thousand and inventories - HUF thousand 15

69 Note 16 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand LIABILITIES AND ACCRUALS (PLN thousand) As of As of Liabilities due to supplies and services long-term part 0 - short-term part Liabilities to subordinates long-term part 0 - short-term part Liabilities to associates long-term part 0 - short-term part 0 Prepayments: long-term part - short-term part 1 9 Other Liabilities long-term part 0 - short-term part Accruals: long-term part - short-term part Accrued income: long-term part short-term part Total SHORT-TERM LIABILITIES As of As of a) to subsidiaries / associated companies deliveries and services with maturity period: up to 12 months above 12 months b) against the parent entity for dividends c) against other entities deliveries and services with maturity period: up to 12 months above 12 months - due to leasing - due to taxes, duties, insurance and other benefits remuneration liabilities other as result of premium for Employee Retirement Scheme (PPE) as result of property insurance liability insurance premium for Board of Directors and Supervisory Board other d) special funds (acc to titles) Company s Social Benefits Fund (ZFŚS) Total short-term liabilities SHORT-TERM LIABILITIES (BY FOREIGN CURRENCY STRUCTURE) As of As of a) in Polish currency b) in foreign currencies (by foreign currencies and after conversion into PLN) b1. unit/currency 236 thousand EUR PLN thousand b2. unit/currency 21 thousand USD PLN thousand b3. unit/currency GBP PLN thousand 143 other foreign currencies in PLN thousand 0 Short-term liabilities, in total SHORT-TERM ACCRUALS As of As of a) accrued liabilities short-term (acc titles) costs of financial statement audit other b) accrued income long-term (acc titles) participation in repair costs in accordance with rental fees 21 - government subsidy short-term (acc titles) participation in repair costs in accordance with rental fees government subsidy Short-term accruals, in total Polish Financial Supervision Authoruty 16

70 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand EXPLANATORY NOTES TO PROFIT AND LOSS ACCOUNT (PLN thousand) Note 18 NET REVENUE ON SALE OF PRODUCTS, GOODS AND MATERIALS (MATERIAL STRUCTURE) For the period from to For the period from to Revenues on products sales Revenues on sales of services Revenues on materials sales Revenues on sales of goods Total including: revenues from associated companies NET REVENUE ON SALE OF PRODUCTS, GOODS AND MATERIALS (AREA STRUCTURE) For the period from to For the period from to Revenues on sales in Poland % share in the sales in total 88,9% 86,9% including: products and services goods and materials Revenues on the sales in foreign markets % share in the sales in total 11,1% 13,1% including: products and services goods and materials Total Revenues on sales obtained by MICRA METRIPOND KFT on the Hungarian market are disclosed as sale on the foreign markets. Incomes and results of branch sectors The main activity subject of the ELZAB Capital Group companies and main source of sales revenues are electronic devices produced by the same companies and goods purchased for resale. The revenues gained on other sales of supplies are related to the electronic sector and supplement the major offer of the companies. Furthermore, the services provided are mainly the guarantee and post-guarantee service repairs of the equipment offered for sale. The product range offered for sale is characterized with a similar production process, distribution and service provision methods applied and is addressed to a specific group of customers. Therefore, the balance-sheet values in the scope of assets and liabilities are not divided as they participate in generating the ELZAB Capital Group profit/loss in one electronic sector segment. The specification below presents data related to the revenues and gross margin of the branch sector for 2009 and for the comparable period of 2008 with electronic equipment of own production, services goods and materials specified. For the management reporting purposes, in each entity of the ELZAB Capital Group, the revenues gained, costs incurred and margin gained on the specific product ranges of own production, supplies and goods offered for sale are analyzed. The gegraphical structure of sales revenues is presented in II.1 ELZAB CAPITAL GROUP FINANCIAL STATEMENT Name of entity Electronic equipment with warranty and postwarranty service repairs Goods (electronic equipment) and supplies and accessories TOTAL REVENUES ON SALES ELZAB S.A. 87,5% 12,5% 100,0% -revenues GENEZA SYSTEM S.A. 0,5% 99,5% 100,0% -revenues MEDESA sp. z o.o. 54,5% 45,5% 100,0% -revenues MICRA METRIPOND KFT 32,3% 67,7% 100,0% -revenues TOTAL ELZAB GROUP 69,6% 30,4% 100,0% -revenues Consolidation adjustments of internal \group turnovers CONSOLIDATED VALUE OF REVENUES to external customers 66,3% 33,7% 100,0% Gross margin on sales gained in Polish Financial Supervision Authoruty 17

71 Note 19 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand COSTS PER KIND AND IN CALCULATION VARIANT (PLN thousand) COST PER KIND For the period from to For the period from to Fixed assets depreciation Intangibles depreciation Cost of employee s benefits Raw materials and consumables Costs of external services Costs of taxes and fees Other costs (including: remuneration of Supervisory Board) Level change of products, work in progress and cost of manufacturing of products for its own need In total COSTS IN CALCULATION VARIANT For the period from to For the period from to Sales costs Overhead costs Costs of sold products, goods and materials In total Value of goods and materials sold Result of products inventories revaluation Result of goods and material inventories revaluation Result of receivables revaluation Sales prime costs in total COSTS OF EMPLOYEES BENEFITS For the period from to For the period from to Costs of remunerations Costs of social insurance Write-off to Company s Social Benefits Fund Costs resulting from paying the premium within Employee Retirement Scheme Costs of benefits resulting from the regulations of H&S Costs of employee training and improving their qualifications Costs of benefits as a result of jubilee bonuses Costs of retirement and disability benefits Other benefits for employees In total COSTS OF DEVELOPMENT WORK For the period from to For the period from to Stocks and auxiliaries usage Remunerations Other costs (including departmental costs, third part services) In total Polish Financial Supervision Authoruty 18

72 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 20 OTHER REVENUES AND COSTS (PLN thousand) OTHER REVENUES For the period from to For the period from to Revenues on fixed assets lease Release of provisions for indemnities due to agreement on competition prohibition Release of provision for guarantee fund 43 Profit on sales of tangible fixed assets Release of provision for employee benefits Write-off of retirement-pension benefits provision (taken over from MEDESA Sp. z 14 o.o.) Payment of receivables 3 Subsidies received 3 Revenues adjustment due to property rental within the Capital Group Inventory surpluses Return of tax and refund of VAT 20 Adjustment of the costs of Others (including: adjudicated proceeding costs and legal procedure, indemnities, return of paid liabilities, grant- subvention) TOTAL including: non monetary revenues at the title of goods and services exchange 0 0 OTHER COSTS For the period from to For the period from to Costs of maintenance of rented property (depreciation) Costs adjustment due to renting fixed property within the Capital Group Ceased developement work write-off 28 Write-off of costs of unrealized issue of E series shares. 242 Provision for employee benefits Provision for licence costs 230 Provision for indemnity due to agreement on competition prohibition 36 Provision for guarantee fund Payment of adjudicated remunerations 118 Costs of: execution, court and proceedings at law (including provision for adjudicated costs of proceedings at law) Payment of indemnity due to agreement on competition prohibition Local fees and taxes Others (including: grants, costs of casualty events, penalties) TOTAL Note 21 FINANCIAL REVENUES AND EXPENSES (PLN thousand) FINANCIAL REVENUES For the period from to For the period from to Revenues on interest Reversal of revaluation write-offs on interest on receivables Adjustment of revaluation write-offs of shares value in DOMATOR OMEGA Sp. z o.o Positive exchange rate difference occurred as a result of revaluation of fixed assets in MICRA METRIPOND KFT 50 Other financial revenues 6 1 Financial revenues, in total FINANCIAL EXPENSES For the period from to For the period from to Costs of interest, including interest relating to: bank credits agreements of financial leasing written off interest on calims and receivables 20 - other interest 53 1 Other costs of external financing (commissions, fees, charges on unused part of credit granted) Losses due to exchange rate differences Arrangement fee due to signed agreement on issue of bonds 50 Interest revaluation write-offs on main receivables Receivables revaluation write-offs 137 Booking off the shares of Domator Omega Sp. z o.o. cancelled in the National Court Register (KRS) basing on the Court decision TOTAL Polish Financial Supervision Authoruty 19

73 Note 22 INCOME TAX CURRENT INCOME TAX ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand PLN thousand For the period from to For the period from to Gross profit /loss (financial result) before taxation on continued activity Profit/loss before taxation on discontinued activity 0 0 Consolidation adjustments Write-off of the associates goodwill from the entity goodwill Tax rate (in %) 19% 19% Differences between gross result and taxation base for income tax, including: a/ exclusion of revenues not being subject to taxation b/ addition of costs which do not determine costs of gaining revenues c/ deduction of grants -3-3 d/ adjustment by negative base of taxation against subsidiaries e/ deduction of loss from prior years -6-8 f/ exclusion from taxation base of gross loss Taxation base Tax debit in compliance with the applied tax rate Adjustment of income tax for the prior year in MICRA METRIPOND KFT Tax debit/credit disclosed in the profit and loss account DEFERRED INCOME TAX For the period from to For the period from to Decrease due to fixing assets and release of provisions for temporary differences -1-3 Decrease due to investment release applied in the year 1999 (release of provisions) Increase due to assets write-off and establishing provisions for temporary differences Increase of difference between balance and tax depreciation in connection with 53 increase of fixed assets value Roundings difference Deferred income tax, in total Note 4 i 14 DEFERRED INCOME TAX PLN thousand Balance sheet As of As of Profit and Loss Account For the period from to For the period from to Deferred income tax provisions Temporary differences - investment release applied in financial lease differences between balance and tax value at the title of fixed assets value increase difference between fixed assets balance and tax value, quoted during transformation into IFRS Deferred income tax gross provision Deferred income tax assets - jubilee bonuses, retirement-pension benefits unused holidays calculated costs inventory suspended margin marketing fund guarantee fund difference between balance and tax amortization repair costs rounding -1 0 Deductable tax loss Deferred income tax gross assets Deferred income tax debit/credit Polish Financial Supervision Authoruty 20

74 ELZAB CAPITAL GROUP Annual consolidated financial statement for 2009 in PLN thousand Note 23 EARNINGS PER SHARE DATA RELATED TO FINANCIAL RESULT AND SHARES, THAT WERE USED TO CALCULATION OF BASIC AND DILUTED EARNINGS PER SHARE For the period from to For the period from to Annualed net profit/loss on continued activity (208) Profit/loss on ceased activity - - Annualed net profit/loss (208) Weighted average number of issued ordinary shares applied to calculation of basic earning/loss per share Dilution impact: Adjusted weighted average number of ordinary shares applied to calculation of diluted earning/loss per share For the period from to For the period from to Profit/loss on ceased activity falling on ordinary shareholders, applied to calculation of basic earning/loss per share Net profit/loss on ceased activity falling on ordinary shareholders applied to calculation of diluted earning/loss per share For the period from to For the period from to As of ELZAB S.A. holds of equity shares bought for redemption. Resolution on redemption of own shares has not been adopted. In 2009 ELZAB S.A. bought of own shares in order to resale them or in order with other purposes related to the Company's strategy. As of ELZAB S.A. holds own shares bought in order to redeem them, resell or in order with other purposes related to the Company's strategy. CEASED ACTIVITY (PLN thousand) Financial results on ceased activity did not occur. LONG-TERM ASSETS CLASSIFIED AS INTENDED-FOR-SALE AND LIABILITIES RELATED TO THESE ASSETS As of As of ASSETS Tangible fixed assets, herein: lands buildings Intangibles Inventory Receivables and prepayments Cash Long-term assets classified as intended-for-sale, in total LIABILITIES Bank credits and loans Liabilities and accruals Liabilities related to assets classified as intended-for-sale, in total The following notes did not occur: Note No 7 (Tax Receivables - receivables presented in financial statement in position B.3.), Note No 17 (Tax Liabilities - tax liability did not occur) Signatures of Members of the Management Board Eugeniusz Pajączek President of the Management Board Jerzy Biernat Vice-president of the Management Board - General Director Jerzy Malok Member of the Management Board, Commercial Vice-president Signature of a person charged with conducting accounts Elżbieta Załóg Finance Director, Chief Accountant Polish Financial Supervision Authoruty 21

75 ELZAB CAPITAL GROUP ACTIVITY REPORT 2009 Zabrze,