POLISH FINANCIAL SUPERVISION AUTHORITY

Transcription

1 POLISH FINANCIAL SUPERVISION AUTHORITY Annual Report R 2009 (According to 82 par. 1 point 3 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 2008 comprising the period from to That includes financial statement in accordance to IFRS In currency: PLN Date (date of delivery) ZUK ELZAB S.A. 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) PLN thousand EUR thousand SELECTED FINANCIAL DATA OF ELZAB Net revenues on sales of products, goods and supplies Profit (loss) on operations Gross profit (loss) Net profit (loss) Net cash flows on operations Net cash flows on investments Net cash flows on finance Total net cash flows Annualized profit (loss) per one ordinary share (PLN / EUR) 0,28-0,19 0,06-0,04 PLN thousand EUR thousand SELECTED FINANCIAL DATA OF ELZAB Total assets Long-term liabilities and provisions Short-term liabilities and provisions Equity Share capital Number of shares Book value per share (PLN / EUR) 2,81 2,52 0,68 0,61 Dividend paid per share for the previous year (PLN / EUR) The report includes: 1. Opinion on audit of ELZAB financial statements 2. Report on audit of ELZAB 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 financial statement 7. Financial statement the tables 8. Management Board s commentary about activity

2 ZAKŁADY URZĄDZEŃ KOMPUTEROWYCH ELZAB SPÓŁKA AKCYJNA BASED IN ZABRZE THE AUDITOR S OPINION THE REPORT ON RESULTS OF THE AUDIT OF THE FINANCIAL STATEMENTS THE FINANCIAL STATEMENTS THE MANAGEMENT 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, MARCH 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 financial statements of Zakłady Urządzeń Komputerowych ELZAB S.A. based in Zabrze comprising: 1/ the statement of financial position prepared as of 31 December 2009 with total assets and liabilities amounting to PLN thousand 2/ the statement of comprehensive income for the financial year from 1 January to 31 December 2009 disclosing total comprehensive income of PLN thousand 3/ the statement of changes in equity for the financial year from 1 January to 31 December 2009 showing an increase in equity of PLN thousand 4/ the 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 326 thousand 5/ notes on applied accounting policies and additional explanatory notes to the financial statements. The company s management is responsible for preparing the financial statements. Our task was to perform the audit of the financial statements and to express an opinion about their reliability, correctness and clearness and about the correctness of accounting books being the basis for preparing these statements. We have carried out the audit 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). We have planned the audit in such a manner to achieve a rational assurance which allows expressing an opinion about these statements. 1

4 In particular, the audit procedures have included assessing the correctness of accounting rules (policy) and material estimations applied by the entity, examining mostly by means of random methods evidences and book entries supporting the amounts and information disclosed in the financial statements, evaluating the overall financial statements presentation. We believe that the audit has brought basis for expressing a reliable opinion. In our opinion, the audited 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 entity as of 31 December 2009 as well as its financial result for the financial year from 1 January to 31 December 2009, b) have been prepared, in all material respects, according to accounting rules (policy) resulting from International Accounting Standards, International Financial Reporting Standards as well as interpretations relating to them that have been published in the form of European Commission regulations and in the range not regulated in these Standards according to rules presented in the Accounting Act as well as to regulations issued on its basis and on the basis of books of accounts kept properly, c) are consistent with the financial statements influencing on law regulations and the company s agreement. The Management Report is complete according to art. 49 entry 2 of the Accounting Act and information included in it, originated from the audited 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, 23 March

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

6 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 financial statements of 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 financial statements mentioned above. The report includes 25 numbered pages and the following: Page I. General information 2 II. Financial position 9 III. Specific information 11 1

7 I. GENERAL INFORMATION 1. INITIAL INFORMATION 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 Register of the Companies kept by the Regional Court in Gliwice, X Economic Department of National Court Register under the number KRS The company is located in Zabrze, Kruczkowskiego Street no.39. Zakłady Urządzeń Komputerowych ELZAB is a joint stock company. According to a certificate dated 8 May 2008 the 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 Company are as follows: Z production of computers and peripherals, Z production of common user electronics, Z installation of factory machines, appliances and equipment, Z other service activity in the scope of IT and computer technology, Z machines repair and maintenance, Z computers and peripherals repair and maintenance, Z scientific research and development work in the field of other natural and technical science, Z activity of advertising agencies, Z activity connected with software, Z activity connected with consultancy in the scope of IT, Z other activity supporting financial services, excluding insurances and pension funds, B other non-school education forms, nowhere else classified, Z other accommodation, Z other financial service activity, nowhere else classified, excluding insurances and pension funds, 2

8 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 Company was extended and includes: 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 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 bearer s B shares, ordinary bearer s C shares, ordinary bearer s D shares. 3

9 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 ,16 X strategy) 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

10 After the financial statement date, on 16 March 2010 the Management Board of audited Company 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 audited Company. In result privatization process has been finished. As at the balance sheet date being 31 December 2009 the equity capital totalled PLN thousand and in comparison to the end of the previous financial year it increased by the amount of PLN thousand. Extraordinary General Meeting of Shareholders in Resolution no. 1 dated 29 April 2009 agreed on merger of audited Company as acquiring company with MEDESA Sp. z o.o. based in Warszawa. Merger took place by transferring all of the assets of MEDESA S. z o.o. to Zakłady Urządzeń Komputerowych ELZAB S.A. By Court decision dated 31 July 2009 the merger of Zakłady Urządzen Komputerowych ELZAB S.A and MEDESA Sp. z o.o. was entered in the National Court Register. As of 31 December 2009 the related entities of the audited entity are: Micra Metripond KFT based in Węgry, Geneza System S.A. based in Tarnowskie Góry, Elzab Soft Sp. z o.o. based in Zabrze, Orhmet Sp. z o.o. based in Warszawa. The audited company is a dominant entity of the capital group Zakłady Urządzeń Komputerowych ELZAB S.A. As of 31 December 2009 the Management Board members were as follows: Chairman of the Board - Mr. Eugeniusz Pajączek, Vice-chairman of the Board Director General - Mr. Jerzy Biernat, Member of the Board - Mr. Jerzy Malok. During the audited period there were changes in the Management Board. On 19 December 2008 Mr. Jan Chadam submitted a resignation from performing a function of the Board member. 5

11 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 performing a function of the Management Board Chairman. By Court decision dated 8 May 2009 the above change was entered in the National Court Register. By the Resolution no. 68/VI/2009 of the Supervisory Board dated 27 March 2009, Mr. Eugeniusz Pajączek, was appointed to the post of the Management Board Chairman. By Court decision dated 8 May 2009 the above change was entered in the National Court Register. As of 31 December 2009 the Supervisory Board members were as follows: Chairman of the Supervisory Board Deputy-chairman of the Supervisory Board Secretary of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board - Mr. Paweł Dudziuk, - Mr. Dawid Marek Sukacz, - Mr. Jerzy Ciesielski, - Mr. Jarosław Kopański - Mr. Andrzej Dudziuk, - Mr. Jarosław Astramowicz, - Mr. Marcin Dobrzański. During the audited period there were changes in the 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 by the Resolution no. 5 of the Extraordinary General Meeting Mr. Jarosław Kopański was appointed to the Supervisory Board. By the Resolution no. 6 of the Extraordinary General Meeting Mr. Andrzej Dudziuk was appointed to the Supervisory Board. On 19 February 2009 by the Resolution no. 7 of the Extraordinary General Meeting Mr. Jarosław Astramowicz was appointed to the Supervisory Board. By Court decision dated 6 May 2009 the above changes was entered in the National Court Register. On 17 June 2009 by the Resolution no. 17 of the Ordinary General Meeting Mr. Paweł Dudziuk was appointed to the Supervisory Board. By Court decision dated 6 October 2009 the above change was entered in the National Court Register. 6

12 2. FINANCIAL STATEMENTS 2.1. Audited financial statements The financial statements prepared for the financial year from 1 January to 31 December 2009 consist of the following: the statement of financial position prepared as of 31 December 2009 with total assets and liabilities amounting to PLN thousand the statement of comprehensive income for the financial year from 1 January to 31 December 2009 disclosing total comprehensive income of PLN thousand the statement of changes in equity for the financial year from 1 January to 31 December 2009 showing an increase in equity of PLN thousand the 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 326 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 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. 7

13 The audit was conducted in December 2009 and in January, February and March 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 Company's Management Board provided the auditor with all financial statements, accounting books and evidences; provided also with information and presented explanations required for issuing the opinion. We have also been provided with the Management Board statement signed by all the Board members (performing as of 23 March 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 financial statements for the previous financial year The financial statements for the previous financial year were audited by Kancelaria Porad Finansowo- Księgowych dr Piotr Rojek Spółka z ograniczoną odpowiedzialnościa based in Katowice and the issued opinion on 18 March 2009 was unqualified. The financial statements were confirmed by the Resolution no. 1 of the Ordinary General Meeting dated 17 June The financial statements for the previous financial year were submitted to the National Court Register and on 30 September 2009 were published in Monitor Polski B no According to the Resolution no. 4 of the Ordinary General Meeting dated 17 June 2009 the net loss for the previous financial year in the amount of PLN thousand was covered from supplementary capital of the company. As of 1 January 2009 the books of accounts were open properly according to the approved financial statement as of 31 December

14 II. FINANCIAL SITUATION 1. The Entity 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) Balance sheet sum Fixed assets Equity capital including: financial result (3.004) EBITDA net result on operating activities + depreciation Profitability of gross sale (%) EBITDA/ operating incomes Profitability 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) 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 ,13 20,02 20,57 7,68 (5,19) 10,09 10,00 (7,38) 12,33 7,60 (5,44) 9,20 4,06 3,60 3,21 2,80 2,55 2,

15 Global indebtedness structure ratio (%) Balance sheet sum equity / balance sheet sum Current payables coverage ratio (%) EBITDA / short-term payables 24,03 26,26 25,43 99,61 134,56 126,40 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) for the audited year in the amount of PLN thousand includes: - profit on sales in the amount of PLN thousand, - loss on other operating activity in the amount of PLN 100 thousand, - loss on financial activity in the amount of PLN 127 thousand, - gross financial result burden in virtue of income taxes in the amount of PLN thousand. Liquidity ratios (current and quick) increased comparing to the previous year and reach a high level. The cycle of receivables turnover is comparable with the level of the previous year, the cycle of payables turnover shortened and the cycle of inventories turnover keeps on the same level. The global indebtedness structure remained on the level of 24,03% of balance sheet sum and in comparison to the previous year it decreased by 2,23 of percentage point. The net result on operating activity adjusted by depreciation (EBITDA) covers the short-term payables in 99,61% as at the balance sheet date. 10

16 III. INFORMACJE SZCZEGÓŁOWE 1. Evaluation of the documentation for accepted accounting policy, manner of preparing documentary evidences for transactions and bookkeeping maintenance The worked out by the entity documentation for accepted accounting policy complies with the regulation of the Accounting Act and is consistent with International Financial Reporting Standards (IFRS). During the audit we have not disclosed any irregularities which have not been removed, related to documents preparation and bookkeeping maintenance, which could have material influence on the audited financial statements, including in the scope of reliability, correctness and testing the books of accounts, linking entries in the books with source documents and prepared financial statements and the correctness of books opening. The books of accounts are maintained on a computer system and comply with the legal requirements for computerised bookkeeping systems. The accounting books and the bookkeeping documentary are stored according to regulations of chapter no. 8 of the Accounting Act. 2. The stock count of assets component The company performed the physical stock count procedures of following assets components: cash in hand as of , financial assets on bank accounts as of , other financial assets as of , materials as of , finished products as of , goods and trade materials as of , finished products, goods and trade materials in trade office in śary as of , receivables as of and Performed stock count procedures of assets components were a fulfilment by the audited company of the duty arising from the article 26 of the Accounting Act. 11

17 The differences were calculated properly and recorded in the books of accounts of audited period. The employees of Kancelaria participated in the observation of materials stock-counting procedures on 7 January Basic accounting rules applied during preparing the financial statements Accounting rules applied during preparing the financial statements are in agreement with regulations determined in International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and interpretations relating to them that have been published in the form of European Commission executory orders and in the range not regulated in IAS and IFRS in accordance with rules presented in the Accounting Act (Journal of Law from 2009 No. 152 entry 1223 as amended) and executive acts issued on its basis. Those rules were applied continuously in relation to the previous year. 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 received in the purpose of using them in production process, in goods deliveries or services providing and which useful life is predicted to be longer than one period. 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. 12

18 c) Intangible fixed assets The intangible assets refer to possible to identify non-financial assets components not having physical form, being under the entity s control, from which the entity will achieve 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 (development work) corrected by depreciation charges. d) Depreciation Values of depreciation rates for tangible and intangible fixed assets are stated by the Company according to the period of predicted economical utility. The depreciation rates for particular groups of fixed assets are as follows: from buildings and premises 10 years to 40 years from plant and machinery 2 years to 20 years from means of transportation 2,5 years to 8 years from other fixed assets 2 years to 10 years The periods of utility for intangible assets are as follows: research and development costs from 3 years to 5 years software 2 years Assets components of initial value not higher than PLN 3,5 thousand are presented in costs in one portion at the moment of their transfer to utility. The depreciation provisions are calculated starting no earlier than from the moment when particular fixed assets were put into utility and ending no later than till the moment when the depreciation provisions are equal to initial value or the particular fixed assets component was liquidated, sold or recognised as shortage. e) Financial assets The financial assets include shares in related entities. Shares in related entities are valued at the purchase cost corrected by impairment write-offs. 13

19 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. g) Inventories The inventories comprise of materials, work in progress, finished products and goods. The stock components are valued at the purchase price or at the manufacture cost not higher than their net selling price as at the balance sheet date. h) Prepayments The prepayments include incurred or accrued expenses relating to future reporting periods costs as well as assets being equivalents to incomes that are not receivables as at the balance sheet date. Prepayments include in particular: prepaid for the following periods insurance charges and subscriptions, license charges security, long-term rental. i) Short-term receivables 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 one year as at the balance sheet date. Receivables are valued at the amount due corrected by impairment allowances. j) 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. 14

20 k) Equity capital The equity position comprises the value of capitals created by the Company according to the obligatory law, regulations, proper acts and the Company s statute. The equity capital includes also the current year profit. The Company s share capital is presented at the value consistent with the Company s statute and registered in the Court Register at the nominal value. The net financial result for the financial year is the net profit presented in the profit and loss statement. l) Provisions for deferred income tax The provisions for deferred income tax are established in the amount of income tax of amounts due in relation to positive temporary differences. m) 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: provisions for jubilee rewards, provisions for retirement and pension payments, provisions for unused holiday leaves, provisions for other employee benefits, provisions for deferred tax. According to the Company s remuneration system employees are entitled to retirement and pension payments. The company recognizes costs of that kind on the memorial basis. Valuation of benefits is made using the actuarial method. n) 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. 15

21 o) Short-term liabilities The short-term liabilities comprise all trade payables irrespective of the stated payback date and other liabilities required to be paid within 12 months starting from the balance sheet date. The short-term liabilities are presented at the amount due. p) Accruals The accruals comprise provision for non-invoiced services. r) 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 net value excluding VAT and comprising donations, discounts, bonuses, etc. s) 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. t) 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 calculation. u) Financial revenues and expenses The financial revenues and expenses consist of revenues and expenses related to financial activities influencing on financial result calculation. w) 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. 16

22 4. Characterization of particular statement of financial position and statement of comprehensive income Tangible fixed assets The value of tangible fixed assets presented in the balance sheet is in agreement with the Company s accounting books. Changes in value of fixed assets 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 Accumulated depreciation fixed assets, including: building and premises In the audited year the Company purchased and improved fixed assets of total value of PLN thousand. In 2009 the greatest changes appeared in the group of machinery and equipment and in the group of buildings and premises. As of 31 December 2009 the tangible fixed assets value was equal to 16,46 of the entity s assets Intangible assets The value of intangible assets presented in the statement of financial position is in agreement with the Company's books of accounts. In the audited year the increase of the value of intangible assets by PLN 685 thousand concerned the development work in the amount of PLN 183 thousand and acquired licenses in the amount of PLN 502 thousand. As at the balance sheet date the intangible assets value was equal to 4,96% of the entity s assets Long-term financial assets The value of long-term financial assets presented in the statement is in agreement with the Company's books of accounts. (PLN 000) Value at the end of the period Value at the beginning of the period shares in related entities As at the balance sheet date the Company owns shares in related entities of total purchase price of PLN thousand covered by allowance in the amount of PLN thousand. 17

23 As of 31 December 2009 the long-term financial assets value was equal to 6,70% of the entity s assets Inventories The inventories value presented in the statement of financial position results from the books of accounts. (PLN 000) Value at the end of the period % Value at the beginning of the period % Pos. 2/ materials , ,99 1,06 semi-finished , ,44 2,41 finished products , ,39 0,93 goods , ,18 2,23 Total , ,00 1,15 Allowance for inventories 297 2, ,39 0,58 Net value of inventories , ,61 1,19 Comparing to the previous year the value of inventories increased by 18,53%. As at the balance sheet date the greatest share in the inventories structure was related to materials which share totalled 42,33%. As of 31 December 2009 the inventories value was equal to 17,78% of the Company s assets Short-term receivables The receivables value presented in the statement of financial position is in agreement with the books of accounts. The structure of trade receivables by age according to due dates was as follows: (PLN 000) Value at the end of the period % Value at the beginning of the period In due time , ,25 to 12 months , ,25 Overdue , ,75 to 1 month , ,55 from 1 month to 3 months 838 5, ,65 from 3 months to 6 months 501 3, ,80 % 18

24 from 6 months to 1 year 141 0, ,33 over 1 year 649 3, ,42 Gross receivables , ,00 Allowances for receivables 840 5, ,73 Net receivables , ,27 As at the balance sheet date the value of trade receivables with the overdue period longer than 6 months was equal to 4,85%. As of 31 December 2009 the short-term trade receivables were equal to 25,89% of the Company s assets Prepayments The value of prepayments presented in the statement of financial position is in agreement with the books of accounts and it related to the following items: Short-term prepayments: (PLN 000) license charges security long-term rental 26 property and personal insurances 30 other 48 Total As of 31 December 2009 the prepayments were equal to 1,85% of total amount of assets Cash and other money assets The value of cash and other money assets presented in the statement results from the books of accounts. As at the end of the financial year the main position was: (PLN 000) % cash in hand and on bank accounts ,00 Total ,00 As of 31 December 2009 the cash and other money assets value was equal to 9,32% of the total amount of assets. 19

25 4.8. Assets classified as held for sale Assets classified as held for sale include land in the value of PLN 612 thousand and structures and building in the value of PLN thousand Equity capital The equity capital value presented in the statement resulted from the books of accounts. (PLN 000) share capital surplus from sale of shares above their nominal value other reserve capital own shares 254 supplementary capital own shares (2.250) profit brought forward net profit Total equity According to the Resolution no. 4 of Ordinary General Meeting dated 17 June 2009 the net loss from the previous financial year in the amount of PLN thousand was covered from supplementary capital. Within the realization of The programme of acquiring own shares by Zakłady Urządzeń Komputerowych ELZAB S.A. for sale or for other purpose connected with realization of the Company s strategy in 2009 the audited Company acquired own shares in the amount of PLN 252 thousand for sale or for other purpose connected with realization of the Company s strategy. The value of equity amounts to 75,97% of balance sheet sum Financial liabilities The value of financial liabilities presented in the statement of financial position results from the books of accounts. 20

26 The value of financial liabilities at the beginning and end of the financial year according to type was as follows: Long-term liabilities: related to credits other financial liabilities Short-term liabilities: related to credits other financial liabilities (PLN 000) Value at the end of the period Value at the beginning of the period Total As of 31 December 2009 financial liabilities were equal to 8,06% of the Company s total amount of equity and liabilities Provisions The value of provisions presented in the financial statement is in agreement with the books of accounts. The value of provisions at the beginning and end of the financial year according to type was as follows: Long-term provisions: provisions for retirement and pension benefits provisions for deferred income tax Short-term provisions: (PLN 000) Value at the end of the period Value at the beginning of the period provisions for jubilee rewards and retirement and pension payments provisions for other employee benefits provisions for non-invoiced services Total Short-term liabilities The presented short-term liabilities value is in accordance with the books of accounts. 21

27 The value of trade payables according to due date is as follows: (PLN 000) Value at the end of the period % Value at the beginning of the period In due time , ,00 to 12 months , ,00 Overdue 0 0,00 0 0,00 Total , ,00 % Trade liabilities presented as at the balance sheet date decreased by 5,40% comparing to the previous year. As of 31 December 2009 there were no overdue trade liabilities. Short-term liabilities also included public law accounts, liabilities related to remunerations and other current liabilities. As of 31 December 2009 the tax, customs duties, insurance and other benefits included: PLN 000) social security system contributions 423 personal income tax 133 Value Added Tax 381 PFRON (National Fund for Disabled Persons) 18 Total 955 During the audited financial year there were no fiscal inspections. As of 31 December 2009 the short-term liabilities value was equal to 14,05% o of total amount of equity and liabilities Revenues from sale of products, goods and materials The revenues value presented for the financial year is in agreement with the books of accounts. In 2009 the Company achieved sale revenues in the amount of PLN thousand. Comparing to the previous year sale revenues increased by 2,29%. In the financial year sale revenues included income on sale of products, materials, goods and services. 22

28 4.14. Expenses of sold products, goods and materials, selling expenses and general and administrative costs The expenses value presented for the financial year results from the books of accounts. In 2009 the Company bore expenses of sold products, selling expenses and general and administrative costs in the total amount of PLN thousand. In comparison with the previous year they increased by 8,82%. The Company achieved a profit on sale in the amount of PLN thousand Other operating revenues and expenses The values presented in the statement of comprehensive income are in agreement with the books of accounts. Other operating revenues included mainly incomes form renting tangible property in the amount of PLN 657 thousand. Other operating expenses included mainly 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 company bore a loss on other operating activity in the amount of PLN 100 thousand Financial revenues and expenses The values presented in the statement of comprehensive income are in agreement with the books of accounts. The financial revenues include mainly incomes from interests in the amount of PLN 355 thousand and receivables discount from the related entity in the amount of PLN 120 thousand. The financial expenses include mainly interests costs in the amount of PLN 283 thousand and loss from exchange rate differences in the amount of PLN 160 thousand. The Company bore a loss on financial activity in the amount of PLN 127 thousand. 5. Contingent liabilities and risks 5.1. Property securities for third parties As of 31 December 2009 property securities for third parties comprise: (PLN 000) ordinary real estate mortgage real estate mortgage securing an existing or future claim Total

29 5.2. 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, bill of exchange security related to the lease agreement in the amount of PLN thousand Other significant risks The regulations concerning taxes, customs duties and social insurance were subject of frequent changes and therefore practice of application of tax system causes significant ambiguities in tax regulations. Moreover, existence of differences in interpretations of tax law regulations results in consequence in the fact that the tax risk is high. Though the Company Board is convinced of fulfilling requirements of tax law, the risk of misinterpreting regulations of that law exists. Tax authorities are entitled to perform inspections within 5 years time starting from the end of the period that was a subject to audited procedures. 6. Events occurring after balance sheet date After the financial statement date, on 16 March 2010 the Management Board of audited Company 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 S.A. Thus, as of the date of issuing the opinion State Treasury does not own shares in equity share capital of the audited Company. In result privatization process has been finished. After the balance sheet date there were no other than mentioned above significant events influencing on financial and property standing of the audited entity. 7. Introduction to the financial statements Data included in the introduction to the financial statements is correct and complete. 8. Statement of changes in equity Data included in the statement of changes in equity are complete and in the agreement with information presented in the statement of financial position and entries in the books of accounts. 24

30 9. Statement of cash flows Statement of cash flows prepared by the Company for the period from 1 January to 31 December 2009 is properly linked with the statement of financial position, the statement of comprehensive income and the entries in the books of accounts. During the audit no material incorrectness in drawing up the statement were noticed. 10. Additional notes attached as explanatory notes to the financial statements Data included in the additional notes attached as explanatory notes to the financial statements result from entries in the books of accounts and are agreed with amounts presented in other parts of the statement. We did not state any material mistakes and irregularities which could influence negatively on the reliability of the financial statements. 11. Management Board Report The financial data included in the Management Board Report for the financial year 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, 23 March

31 MANAGEMENT BOARD DECLARATION OF ELZAB S.A. COMPUTER WORKS Ul. KRUCZKOWSKIEGO 39, ZABRZE Pursuant to 91 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 extended consolidated financial statement of ELZAB S.A. 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 reflects the property and financial standing and the Company profit/loss in a true, reliable and clear way. We further declare that the ELZAB S.A. financial statement contains the true image of the Company 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

32 DECLARATION OF ELZAB S.A. MANAGEMENT BOARD UL. KRUCZKOWSKIEGO 39, ZABRZE Pursuant to 91 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 auditor to audit the financial statements of ELZAB S.A, auditing the extended consolidated financial statement of ELZAB Group and abridged financial statement of ELZAB S.A. for 2009 was made by the 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

33 ELZAB S.A. Computer Works CHAIRMAN S LETTER TO THE SHAREHOLDERS Ladies and Gentlemen! On behalf of the Management Board of ELZAB S.A. Computer Works, I hereby present to you information on the Company activity and its results in In 2009 the Company achieved 2,3 % growth of revenues on sales, despite the fact that no new groups of taxpayers were included in the obligation to install cash registers and despite the drop of investment activity due to the financial and economic crisis. The 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 a modern 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. 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 continued. 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. 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. In 2009 the actions were continued in order to further improve the efficiency of subsidiaries and ELZAB Group. 1

34 ELZAB S.A. Computer Works CHAIRMAN S LETTER TO THE SHAREHOLDERS The Management Board of MICRA METRIPOND KFT, Hungary changed in the first half of In the second half of the year cost restructuring was performed, which significantly affected the Company profit/loss of the said period. For the whole 2009 the Company generated loss, which was largely affected by low revenues performed due to the bad economic situation of Hungary. The restructuring will bring positive effects in In the third quarter of 2009 the merger between ELZAB S.A. and subsidiary MEDESA Sp. z o.o. took place. 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. 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 carried out between 3rd July, 2009 to 15th December, Within the buyout the Company purchased 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. 2

35 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT INTRODUCTION TO THE FINANCIAL STATEMENT a) Name (company) and registered office thereof, indication of the issuer s court of registration and register number and basic area of operation, according to Polish Activity Classification, hereinafter referred to as PAC, in case the issuer s securities are traded in market overt, also indication of business area, according to the classification accepted by a given market. Name of the Company: Zakłady Urządzeń Komputerowych ELZAB S.A., ul. Kruczkowskiego 39, Zabrze. The Company has 2 branches located outside Zabrze: in Warsaw, ul. Taborowa 14, and in Wrocław, ul. Słubicka 22. Krajowy Rejestr Sądowy - Rejestr Przedsiębiorców [National Court Registration -Register of Entrepreneurs] - KRS The subject of activity according to PAC Z Production of computers and peripherals". According to the entry in the Company's statute, the issuer s areas of activity are as follows: 1. Manufacture of computers and peripherals PAC Z 2. Manufacture of common use electronic equipment PAC Z 3. Installing industrial machines, equipment and fittings PAC Z 4. Other services in the scope of information and computer technologies PAC Z 5. Repair and maintenance of machines PAC Z 6. Repair and maintenance of computers and peripherals PAC Z 7. Research and development in the scope of other branches of science and technology Z 8. Activity of advertising agencies PAC Z 9. Activity related to software PAC Z 10. Activity related to consulting in computer science Z 11. Other activity supporting financial services, excluding insurance and pension funds PAC Z 12. Other off-school forms of education not classified elsewhere 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. Rent and management of own or leased property PAC Z. 18. Activity of agents dealing in sales of machines, industrial devices, ships and airplanes 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 1

36 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT 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 b) Indication of the issuer s duration if determined, The Company has been established for time undetermined. c) Indication of periods the financial statement and comparable financial data are presented for, The report includes financial statements for the period from to and comparable period of the previous year, i.e. from to Data presented in the financial standing report are as of and d) Approval of the financial statement for publication On the Management Board of ELZAB S.A. Computer Works adopted a resolution on approval of the Company financial statement for 2009 for publishing. e) Information on Management and Supervisory Board members The Management Board members: Eugeniusz Pajączek Chairman (since ) Paweł Damian Dudziuk Chairman (until ) Jerzy Biernat Deputy Chairman - CEO Jerzy Malok Member, Deputy Chairman for Commerce The Company Proxy was Ms. Elżbieta Załóg Financial Director, Chief Accountant. The Supervisory Board members: Paweł Damian Dudziuk appointed to the Supervisory Board on , Chairman of the Supervisory Board since Dawid Marek Sukacz Chairman of the Supervisory Board until , Deputy Chairman of the Supervisory Board since Jerzy Ciesielski Supervisory Board Secretary Marcin Dobrzański Supervisory Board member Jarosław Kopański Supervisory Board member since Andrzej Dudziuk Supervisory Board member since Jarek Astramowicz Supervisory Board member since Artur Olszewski Deputy Chairman of the Supervisory Board until

37 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT Piotr Karmelita Supervisory Board member until Dariusz Krzysztof Wiatr Supervisory Board member until f) Indication whether the financial statement and comparable financial data conclude combined data if the Issuer s entity includes internal organizational units that prepare individual financial statements The Company has branches located in Warsaw and in Wrocław and they do not make separate financial statements. g) Indication whether the Issuer is a parent company or a significant investor and whether the Issuer prepares consolidated financial statements. The Company is a parent company and makes a consolidated financial statement. h) In case of financial statement made for the period in which a merger took place indication that this a financial statement made after the merger and indication of the method of clearing the merger, On ELZAB S.A. (the taking over company) and MEDESA Sp. z o.o. (the taken over company) merged. The taking over company - ELZAB S.A. with registered office in Zabrze, ul. Kruczkowskiego 39 entered in the Register of Court of First Instance in Gliwice, X Business Department of National Court Register, under No KRS ELZAB S.A. is a company specializing at designing, manufacture and distribution of a wide range of cash registers, cashier equipment and systems, peripherals and accessories for sales registration and management. The taken over company - MEDESA Sp. z o.o. with registered office in Warsaw, ul. Taborowa 14 entered in the Register of Entrepreneurs kept by the Court of First Instance for the Capital City of Warsaw, XIII Business Department of National Court Register under No KRS MEDESA Sp. z o.o. was a subsidiary of ELZAB S.A., in which ELZAB S.A. held 100 % shares. The object of the Company business was the production and distribution of commercial scales, platform scales and commercial personal scales. The Company sold supplies, mainly paper and communication accessories for scales and it provided service repairs of the scales. The merger was made under art section 1 in relation to art ; 5 and 6 of Commercial Companies Code, through transfer of all the property of MEDESA Sp. z o.o. to ELZAB S.A. The merger of the companies took place under art of Commercial Companies Code, without the increase of ELZAB S.A. share capital, the latter being 100% shareholder in MEDESA Sp. z o.o. The expected effects of the Companies merger are as follows: Joining the economic, commercial and organizational potentials of the Companies to increase the competitive potential on the market, Expanding the offer by new products, 3

38 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT Increasing net turnover in the range of products, goods, supplies and services sold by MEDESA Sp. z o.o. as a target to the level of PLN 6 million p.a., Reduction of costs of business run. ELZAB S.A. took over from MEDESA Sp. z o.o.: - fixed assets worth PLN 31 thousand, - inventories worth PLN 467 thousand, - receivables in the amount PLN 490 thousand, - cash in the amount PLN 293 thousand, - liabilities in the amount PLN 452 thousand. Equities as of taking over date of MEDESA Sp. z o.o. amounted to PLN 829 thousand, of which: - share capital: PLN 750 thousand, - reserve capital: PLN 171 thousand, - revaluation reserves PLN 7 thousand, - net loss PLN 99 thousand. The merger was cleared by the acquisition method. As a result of the clearing, goodwill in the amount PLN 362 thousand arose. For fiscal purposes, the goodwill will not be included in the allowable costs. MEDESA Sp. z o.o. was included in consolidation until The costs of the merger are insignificant and include the costs of convening Shareholders Meetings in the respective Companies and legal / fiscal opinions. The costs were charged on the Companies profits/losses at the moment of being incurred. They were not considered when calculating the goodwill. i) Indication whether the financial statement was prepared with the assumption of continuing business by the issuer in the foreseeable future and whether there are any circumstances threatening the continuing of business in the foreseeable future, The financial statement was prepared with assumption of continuing the business and there are no circumstances threatening the continuing of business in the foreseeable future. j) Indication whether the financial statements were subject to conversion in order to provide data comparability and the specification and explanation of differences resulting from adjustments due to the changes of accounting principles (policy) or adjustments of basic errors were included in the additional explanatory note. According to Resolution No 11 of the GM of , ELZAB S.A. has applied the rules determined in the IAS/IFRS for preparation of the Company financial statements, accounting policy since In the periods presented no changes in the accounting principles occurred and the financial 4

39 statements are comparable. ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT k) Specification and explanation of differences between data disclosed in the financial statement and comparable financial data and the financial statements prepared and published prior thereto. No differences occurred between the financial statement presently published and the quarterly report for the 4 th quarter of 2009 published on l) Indication whether any adjustments were made to the presented financial statement or comparable financial data due to qualifications in the opinions of entities authorized to audit, on the financial statements for the years the financial statement or comparable financial data were published in the issue Prospectus, The opinions of certified auditors on ELZAB S.A. financial statements contained no qualifications. m) Description of assumed accounting principles(policy), including the primary accounting principles, methods of asset and liability valuation (also depreciation), settling the profit/loss and method of preparing the financial statement and comparable data, 1. Preliminary information The Company prepares consolidated financial statement based on the principle of historical cost. The financial statement for 2009 and the comparable period 2008 was prepared considering the IFRS principles that include the standards and interpretations accepted by the International Accounting Standard Council and the Permanent Committee for Interpretation. The financial statement considers the requirements of Minister s of Finance Decree of 19 th February, 2009 on current and periodic information provided by issuers of securities and conditions of recognizing as equivalent of information required by a non-member State legislation (Journal of Laws, No 33, item 259). No changes in the accounting principles occurred in the periods presented. The functional currency and the currency of presentation of all the financial statement items and explanatory data is PLN. Data presented in the consolidated financial statement are in PLN thousand. A case of presenting data with more accuracy may occur. 2. Fixed Assets 2.1. Tangible fixed assets include fixed assets and expenses on fixed assets under construction, maintained in order to be used in the production process at deliveries of goods and service 5

40 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT provision, in order to be handed over for use with other entities pursuant to tenancy agreements or for administration purposes with projected time of use exceeding 1 year, which will bring expected economic profits to the Company. For recording, calculation of the balance-sheet value and depreciation and revaluation write-offs due to obsolescence of tangible fixed assets, the provisions of IAS 16 (Tangible fixed assets) and IAS 36 (Impairment of Assets) apply. The tangible fixed assets include: - Buildings, plant, - Machines and equipment (including under long-term lease) - Means of transport, - Other tangible fixed assets, - Land, - Machines and equipment under construction to be assembled and tangible fixed assets under construction. Fixed assets and fixed assets under construction at the moment of being entered as asset item are valued at purchase price or production cost. The purchase price is the price of purchase as invoiced by the supplier plus costs related to the purchase incurred by date of commissioning the tangible asset (e.g. transport, loading/unloading costs, insurance in transport, assembly, installation and start-up, notary fees, financial costs, duties and taxes). The production cost means the value at purchase prices used for the production of the fixed assets, material property components, third party services, costs of remuneration, interest and commission and other costs attributable to the value of the fixed asset produced, incurred by date of commissioning of such asset. The initial value includes the reasonable part of external funding costs. The costs of modernization are included in the balance-sheet value of fixed assets when it is probable that economic benefits for the Company will occur for this reason and the costs incurred on modernization are measurable in a reliable way. All the other expenses incurred on repair and modernization of fixed assets are charged on the profit and loss account in the reporting periods they were incurred. Land is not depreciated. Fixed assets are depreciated throughout the period of their economic usability. The depreciation is deducted with the straight-line method. As of the balance-sheet day, the tangible assets are booked at purchase price or production cost minus depreciation write-offs and the possible write-offs made on account of impairment. The following periods of use for specific groups of fixed assets have been assumed: - buildings, plant years. - machinery and equipment from 2 to 20 years - means of transport from 2,5 to 8 years - other tangible assets from 2 to 10 years, Due to insignificance, the assets with usability period exceeding 1 year: - are depreciated in 100% at the moment of being available for use if their initial value exceeds PLN and is below PLN

41 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT - Are in 100% booked under cost of supply wear at the moment of being available for use, if the initial value does not exceed PLN The quantitative records of those tangible assets are kept on an off-balance account. The fixed assets depreciation is carried over on core business costs in addition to the depreciation of space leased, the latter carried over on other operating costs. At the moment of selling fixed assets the initial value and the depreciation up till then are written off and the result of the sale is charged on other revenues or operating costs. The profit/loss on selling fixed assets is on balance presented as a profit or loss on sale, respectively. Leasing A lease agreement where the total risk and all the benefits from the use are on the Company, are classified as financial lease. The financial lease object is classified within assets on the day of commencing the lease at the lower of the two amounts: lease object equitable value or current value of minimum lease payments. Each lease installment is divided into the amount reducing the liability balance and amount of financial costs in so as to keep the permanent rate in relation to the unpaid for liability part. The interest element of the lease installment is booked under financial costs in the profit and loss account for the lease period. The assets subject to depreciation acquired within financial lease are depreciated within financial lease throughout the period of using similar own assets, including the end value. Lease where significant part of benefits from value remains on the part of the lessor (funder) represents operating lease. Lease installments paid within operating lease (minus the possible special bargain offers obtained from the lessor (funder), are settled under costs with the straight line method, throughout the lease period The intangible assets comprise assets that have no physical form, are identifiable, under the Company s control as a result of past events and which will bring the Company expected economic profits in the future. An intangible asset item is booked only when it is probable that the entity will gain future economic revenues in the future and they may be attributed to a given asset and the purchase price or production cost can be reliably fixed. For recording purposes, fixing the value as of the initial presentation and fixing the amount of depreciation and revaluation write-offs, due to the impairment, the provisions of IAS 38 Intangible assets and art. 36 ( Impairment of Assets ) are applied. 7

42 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT Intangible assets include: intangible assets produced as a result of ELZAB. S.A. own R&D work upon meeting the following conditions; - it is possible that the development work is intended to be completed and used or sold; - there is evidence that the development work is intended to be completed and it will be usable or saleable; - development work will be usable or saleable; - the method a development work will produce the probable future economic benefits is known (existence of market for products made thanks to such development work or the development work itself) - there are technical and financial means available, necessary to complete the development work and its use or sale - it is possible to settle the expenses for the development work in a reliable way. The above criteria are applied to initial expenses and costs incurred at a later stage. - other intangible assets copyrights on property and related to property rights, entitlement to inventions, patents, trademarks, utility models and licenses, knowhow (of which: software under long-term lease). - Development work in progress. - Goodwill on merger of ELZAB S.A. and MEDESA Sp. z o.o. Expenses on development work not complying with the above conditions are charged on the current period profit / loss. Intangible assets at the moment of being introduced as an asset item are valued at the production cost or purchase price. The production cost includes all the expenses that may be directly or indirectly attributed to the procedures of creation, production and adaptation of the asset item to use in a way intended by the management. The asset production costs include: supplies and services used or consumed at production of the intangible asset item, employee benefit costs, justified costs of external funding and other costs directly related to preparation of the asset to be used according to its planned designation. The purchase price is the purchase price including the import duty, non-deductible taxes and other expenses related to preparation of the intangible asset item to use, according to its planned designation. 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 made due to impairment. Depreciation of intangible assets is made with the straight-line method. The depreciation periods reflect the periods of using the intangible assets and have the following duration: - For the R&D work 3-5 years, 8

43 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT - Other intangible assets 2 years. The depreciation of intangible assets is put under current costs of core activity of the Company. The intangible assets of value below PLN may be charged on the costs of current period or be depreciated as a single write-off, due to insignificance. Goodwill is not depreciated. 2.3 Long-term financial assets comprise stock and shares in other entities held by ELZAB S.A. Stock and shares are recorded at purchase price minus revaluation write offs. For each balance-sheet day it is assessed whether there is impartial evidence that financial asset items were impaired, by comparing net assets or part of net assets to the value of stock or shares held. The revaluation write-off is charged on financial costs. If it is found with sufficient certainty that the reasons for making such revaluation write-off ceased to exist, the revaluation write-off shall be released in part or in whole, through recognition of financial revenues up to the amount not exceeding the purchase price of the assets Assets for deferred income tax. Assets for deferred income tax are fixed in the amount anticipated to be deduced from income tax due to negative temporary differences that will cause reduction of income tax calculation base in the future. The negative temporary differences occur when the book value of assets is lower than their tax value and the book value of liabilities is higher than their tax value. The assets on deferred income tax are included if it is probable that taxable income may be gained in the future that will make it possible to use temporary differences Receivables Receivables (excluding trade receivables) are receivables with maturity exceeding 12 months from the balance-sheet day. Due to insignificance the receivables were not discounted. 3. Current Assets 3.1. Inventories According to IAS 2 Inventories, inventories are assets intended to be sold during ordinary business, production in progress intended for sale or supplies and materials used in the production process or service provision. Inventories are recorded at net value minus revaluation write-offs. The inventories are valued at purchase prices or at production cost. As of the balance-sheet day the inventories for sale are presented at the value not exceeding the possible net sale prices. The purchase price is the price of purchase of an asset item, including the amount payable to the seller without the deductible VAT and, in case of import, increased by public-legal charges and reduced by rebates, discounts and other similar reductions and recovered payments. 9

44 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT The revaluation write-offs are created due to impairment, in order to bring the inventory value to the level of recoverable net value. The revaluation write-offs charged under other operating costs, while the release of inventory value write-off is classified as reduction of other operating costs. The presentation of revaluation write-offs in the profit and loss account is made on balance respectively within the cost of production sold and under value of goods and materials sold. The revaluation value decreases the balance-sheet value of material current assets under revaluation write off. The incoming and outgoing supplies and goods are at real purchase prices under the FIFO principle. The purchase costs are carried under the period cost at the moment of being incurred, because they are insignificant and do not deform the reliable Company profit/loss. Finished products are valued at standard prices based on the planned technical production cost. Finished product outgoings are carried out with the FIFO method. Production in progress is evaluated at the technical production cost covering the material costs, workmanship, third party processing and overheads. Office supplies, toiletries, fuels and oils used directly in transport, etc. are not included in warehouse records. Such items are carried directly under consumption costs, according to appropriate cost positions. Fixed assets of low value (small devices, tools, etc.) are treated as supplies writing off their value on one time basis into consumption costs and introducing them for control purposes into quantitative records on off-balance accounts, by persons materially responsible for the same. At the end of each month the analysis of inventories is made in terms of their usability. The assessment of inventory usability is the main criterion taken into the consideration while making revaluation write-offs Short-term receivables Receivables are primarily recognized in the amount payable minus revaluation write-offs on receivables. Settling the revaluation write-offs on receivables occurs when there is impartial evidence that the Company will not be able to receive all the amounts receivable resulting from primary receivable conditions and the overdue period exceeds 180 days. The Company creates revaluation write-offs for specific customers upon prior analysis thereof considering prerequisites on the possibility of being paid for. The Company may also create collective revaluation write-offs for low though numerous receivables. The Management Board decides to cover receivables by revaluation write-offs. The revaluation write-off is carried over on other operating costs. The revaluation write-off release increases other operating costs. The presentation of the revaluation write-offs in the profit and loss account is on balance under core business costs of sales, respectively. 10

45 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT The Company, taking into account significance, discounts the receivables with repayment divided in installments. The Company calculates interest on overdue receivables paid at the end of each moth, if the delay in payment exceeds 30 days. If the amount of interest on the invoices paid by an invoice recipient is below PLN 50, it is not booked. Interest calculated as of the day of payment in cases justified by commercial reasons may be amortized by decision of Chairman of the Management Board. As of the end of the financial year interest is calculated on all the unpaid receivables. In cases justified by commercial reasons (as above) the Company may decide on total or partial waiver of interest calculation to some customers. If the amount of interest on invoices unpaid by a given customer as of the balance-sheet day is lower than PLN 50, it is neither booked nor charged on the customer. In case of concluding agreements with customers on payment of the receivables in installments (in the scope of interest calculation) two methods of proceeding are applied: The amount of receivables covered by installments is increased by interest for the whole overdue period until the moment of repayment, The amount of receivables covered by installments is increased by interest for the whole overdue period until the moment of repayment. In case of timely repayment of receivables covered by agreement, a decision on partial reduction of the interest may be made, The amount of receivables covered by installments is not charged with interest provided the receivables are paid exactly on the dates resulting from the agreement. In case of delays in payment of receivables covered by agreement interest is calculated for the whole overdue period until the moment of repayment Short-term financial assets cash and equivalents Short-term financial assets are represented by trading partners promissory notes with redemption maturity above 3 months. Cash includes assets in the form of domestic funds and foreign currencies in hand and on bank accounts. Domestic cash is presented at nominal value. Cash expressed in foreign currencies as of the balance-sheet day is valued at the average rate fixed by National Bank of Poland for a given currency. The exchange rate differences arising due to valuation as of the balance-sheet day of cash in foreign currencies are booked as follows: - exchange rate gains are presented under financial revenues, - exchange rate losses are presented under financial costs. Under cash and other equivalents, the promissory notes of trading partners with maturity up to 3 months are presented The principles of booking and valuation applied to promissory notes are the same as to trade receivables Cash on bank accounts are booked together with interest that is carried over to financial revenues. The interest on funds on the Company Welfare Fund increase the same. 11

46 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT 3.4. Short-term prepayments. The Company makes short-term prepayments if the expenses incurred refer to the periods following the one such expenses were made in Long-term assets classified as intended for sale Long-term assets classified as intended for sale are assets whose balance-sheet value shall be recovered through sale transaction, not through any further use in business (IFRS 5 Assets Intended for Sale ). Such condition shall be met when the sale transaction is highly probable and asset item available for immediate sale in its present condition. 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 assets intended for sale. The evaluation of long-term assets classified as intended for sale is at the balance-sheet or equitable value minus costs of sale, whichever is lower. 4. Equity The Company equity includes: Share capital, Own shares (the value of shares repurchased reduces the Company equity), Reserves capital, Supplementary capital, Retained profits, including: o Retained profit or uncovered loss of previous years (accumulated profits / losses of the previous years), capital on revaluation of fixed assets (1995), o Profit / loss of current financial year. The share capital is presented at the value presented in the statute and National Court Register. The Company divides the supplementary capital into: Capital on issue of shares above their nominal value the surpluses gained at the issue are transferred to this capital, minus costs incurred in relation to the share issue, Supplementary capital created from profit write-offs for subsequent financial years in the amount of at least 8% of the net profit for a financial year, when the reserve capital does not reach one third of the share capital, Capital on revaluation of fixed assets. The retained profit or uncovered loss of the previous years (accumulated profits / losses of the previous years) includes the capital on revaluation of fixed assets and the effects on conversion onto the International Accounting Standards. 12

47 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT 5. Liabilities and provisions for liabilities 5.1. Provisions. The Company creates provisions when there is a current, legal or customarily expected obligation resulting from past events, of the occurrence of liability possible to become payable. 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 booked under appropriate cost category. If some or all the economic profits required to settle the reserve are possible to be regained from a third party, such liability is booked as an asset item, provided such probability is appropriately high and can be reliably evaluated. The amount of provisions created is verified as of the balance-sheet day, in order to adjust the estimations to the level of knowledge for that day. Provisions for employee benefits The employees of the Company gain entitlement to payment of benefits after gaining particular rights to these benefits. According to the Company Collective Employment Contract, all the employees are entitled to jubilee bonuses and pension severances. The Company creates provisions for such benefits. The jubilee bonuses and pension severances are estimated by independent actuaries. Moreover the Company creates provisions for unused holidays the value thereof estimated under the principles of fixing the equivalent for unused holidays. The provisions for employee benefits are charged under other operating costs. The Company also estimates the provisions for Management Board quarterly bonuses depending on results on ELZAB S.A. sales and net profits on sales of the capital group. Provisions are also created for the annual employee bonus, depending on the level of sales budget performance and ELZAB S.A. net profit. Furthermore, provisions are created for payment of remuneration related to the effects gained as a result of application of employee invention projects. The above provisions are carried over on core business costs Bank credits and loans Bank credits and loans are booked at equitable value of funds gained minus the costs directly related to their obtainment. In the following periods bank credits are valued at depreciated acquisition price with application of effective interest rate. The insignificant amounts of discount are not booked in the accounts and in the financial statement. The company considers credits as long-term ones when their maturity exceeds 12 months from the balance-sheet day Short-Term Liabilities Short-term liabilities include liabilities with maturity below 12 months from the balance-sheet day. Trade liabilities are presented in the balance-sheet, regardless the maturity, as short-term liabilities. Trade liabilities and other liabilities are presented at historical cost. The possible interest is presented upon receipt from suppliers. 13

48 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT 5.4. Special funds include the Company Welfare Fund Deferred revenues Deferred revenues comprise funds received on account of future services. The Company also includes under deferred revenues income booked though not received for services presented under revenues. 6. Stocktaking Stocktaking as of the end of the year includes: Physical stocktaking: - Production in progress, - Selected stock levels of products, supplies and goods, - Cash in hand at ELZAB S.A. and branches, Confirmation of receivable and liability balances within the Capital Group as of , Confirmation of receivable balances of other customers as of , Confirmation of debt levels due to credits and confirmation of balances on bank accounts as of Verification of documents and real value of the following property items: - Development work, - Intangible assets, - Long-term financial assets, - Civil-legal, disputable, doubtful and other receivables and liabilities, - Own property items entrusted with third parties. 7. Principles of preparing the cash flow account and statement of total income ELZAB S.A. prepares the cash flow account in the calculating variant in which it presents revenues, costs, profits and losses and compulsory charges on profit/loss due to CIT, separately. In the profit and loss account the continued and ceased business are separated. The net profit/loss consists of: - Profit / loss on sales, - Profit / loss on other operations, - Profit / loss on financial operations, - Compulsory charge on profit / loss due to CIT. The cost of production sold is adjusted by finished product inventory revaluation, respectively. The value of goods and materials sold includes the result of goods and supplies revaluation. The receivable revaluation result adjusts the costs of sales. 14

49 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT The profit and loss account presents the results of: 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, - surplus of exchange rate gains over losses under other financial revenues, - surplus of exchange rate losses over gains under other financial costs. The statement of total income includes the net profit and other total income included in equity. Current income tax is calculated in virtue of the taxable profit/loss (tax base) of a given financial year. The taxable profit/loss is fixed in virtue of the balance-sheet profit/loss, excluding the taxable revenues and costs constituting the allowable costs in other years than the financial year and such revenues that will never be taxable and such costs that will never represent allowable costs. The charge on account of the current tax is calculated in virtue of 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 gains represent taxable revenue and the realized exchange rate losses represent taxable cost, depending on the change of a foreign currency exchange rate. Deferred income tax is calculated due to temporary differences between the assets and liabilities value presented in the accounts and their taxable value. The deferred income tax in the profit and loss account and in the statement of total income results from the change of the level of assets and provisions for income tax. 8. Principles of preparing the cash flow account The Company prepares the cash flow account using the indirect method. The cash flow account applies the following division of activity: 1. Operating activity including sales of products, goods, supplies and services. It comprises the total actions aimed at gaining profit. The value of net cash flows on operating activity is obtained by adjusting the profit/loss by items that did not cause any cash flow and were booked within the profit/loss and cash titles related to other [than operating] types of activity. 2. Investment activity includes: - Cash spent on buying material components of tangible assets and intangible assets. - Cash incomings gained on sale of material components of tangible and intangible assets, 15

50 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT - Cash expenses for purchase of stock, shares and bonds, and securities, - Cash incomings on sale or redemption of third party stock, shares and bonds, - Cash incomings for dividends obtained from stock and shares held and interest on long-term cash deposits. 3. Financial activity includes: - Cash incomings on bank loans incurred and issue of bonds, - Repayment of loans and buyout of bonds and service of loans (interest) payment, - Cash incomings on issue of the Company own shares, - Cash expenses on buyout of the Company own shares, - Expenses on payment of dividends to shareholders. In the cash flow account cash differs from cash presented in the financial statement by exchange rate differences on balance-sheet evaluation. Cash also includes funds from the Company Welfare Fund and designated for repayment of the Zaliczka [Prepayment] factoring credit, presented for informative purposes as a separate item of the Cash flow Account. 9. Transactions in foreign currencies. Transactions expressed in foreign currencies are booked as of the day of closing them, at the respective rates: - average fixed for a given currency by National Bank of Poland, - purchase or sale of currencies applied by the bank serving the Companies in case of payment of receivables or liabilities, - purchase or sale of currencies applied by the bank serving the Companies in case of sale or purchase of currencies. The exchange rate differences occurring as a result of clearing transactions in foreign currencies and on evaluation as of the balance-sheet day are carried over into financial revenues and cost, respectively. n) Indication of average PLN exchange rates in the periods covered by the financial statement and comparable financial data, in relation to Euro, settled by National Bank of Poland, particularly: - exchange rate applicable as of the last day of each period, - the average rate in each period calculated as the arithmetical average of rates applicable as of the last day of each month in a particular period and in justified cases calculated as the arithmetic average of rates applicable as of the last day of a particular period and the last day of period preceding it, - the highest and the lowest rate in each period, To convert the selected financial data, the following EURO rates have been assumed: 16

51 ELZAB S.A. Computer Works INTRODUCTION TO THE FINANCIAL STATEMENT - to convert the assets and liabilities as of and as of and cash flows for 2009 and 2008, the average EURO rate announced by NBP as of ,1082, - to convert the profit and loss account items for 2009 and for 2008 the arithmetic average of average EURO rates announced by NBP as of the last day of each month from January to December, ,3401. The highest rate assumed for calculation of the average rate in 2009 was PLN 4,7013 ( ), while the lowest was 4,0998 ( ) o) indication of at least the basic balance-sheet, profit and loss account and cash flow account items from the financial statement and comparable financial data, converted into EURO, indicating the principles assumed for the conversion, PLN thousand EUR thousand SELECTED FINANCIAL DATA OF ELZAB Net revenues on sales of products, goods and supplies Profit (loss) on operations Gross profit (loss) Net profit (loss) Net cash flows on operations Net cash flows on investments Net cash flows on finance Total net cash flows Annualized profit (loss) per one ordinary share (PLN / EUR) 0,28-0,19 0,06-0,04 PLN thousand EUR thousand SELECTED FINANCIAL DATA OF ELZAB Total assets Long-term liabilities and provisions Short-term liabilities and provisions Equity Share capital Number of shares Book value per share (PLN / EUR) 2,81 2,52 0,68 0,61 Dividend paid per share for the previous year (PLN / EUR) Rates assumed for conversion of selected financial data were shown under section n. 17

52 ELZAB S.A PLN thousand BALANCE SHEET (PLN thousand) ELZAB S.A. PLN thousand ASSETS Note No. As of As of A. Fixed assets (long-term) Tangible fixed assets Note No Intangibles Note No Long-term financial assets Note No Deferred income tax assets Note No Long-term receivables and prepayments Note No B. Current assets (short-term) Inventories Note No Short-term receivables and prepayments Note No Tax receivables Note No Cash and cash equivalents Note No C. Long-term assets classified as intended for sale Note No Total assets LIABILITIES Note No. As of As of A. Equity capital Initial capital Note No Surplus on shares sale above their nominal value Own shares Note No Other supplementary capital - own shares Supplementary capital Note No Profit accumulated, including: Accumulated profit/loss from prior years Net profit/loss of current financial year B. Long-term liabilities Provisions Note No Deferred income tax provisions Note No Long-term bank credits and loans Note No Other long-term liabilities (leasing) Note No. 15 a Long-term liabilities and accruals Note No C. Short-term liabilities Provisions Note No Short-term bank credits and loans Note No Short-term part of long-term bank loans and credits Note No Other short-term financial receivables (leasing) Note No. 15 a Short-term liabilities and accruals Note No Tax liabilities Note No. 17 Total liabilities 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 Conditional liabilities and off-balance positions total: 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 1

53 ELZAB S.A PLN thousand PROFIT AND LOSS ACCOUNT (PLN thousand) ELZAB S.A. PLN thousand CALCULATION VARIANT Note No A. Net revenues on sale products, goods and materials Note No B. Costs of sold products, goods and materials Note No C. Gross profit/loss on sale (A B) D. Costs of sale Note No E. Overhead costs Note No F. Net profit/loss on sale (C-D-E) G. Other operating revenues Note No H. Other operating costs Note No I. Profit (loss) on operating activity (F+G-H) J. Financial revenues Note No K. Financial expenses Note No L. Gross profit/loss (I+J-K) M. Income tax Note No N. Net profit/loss on operating activity (I-M) O. Profit/loss for the financial year for ceased activity 0 0 P. Net profit/loss for the financial year (N+O) R. Other total incomes Income tax - reserve settlement due to difference in balance sheet and tax depreciation Increase of capitals at the title of fixed assets value increase 403 S. Total income (P+R) Note No Annualed earnings per share: Note No profit (loss) per one share on continued activity 0,28-0,19 - profit (loss) per one share on ceased activity 0,00 0,00 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 2

54 ELZAB S.A PLN thousand CASH FLOW ELZAB S.A. PLN thousand INDIRECT METHOD Note No Cash flow from operating activity Net profit/loss Adjustments by: Amortization of tangible assets Amortization of intangible assets Goodwill loss Profits/losses on exchange rate differences 4-14 Costs and revenues on interest Revenues on dividends Profit/loss on investment activity Change in provisions position Change in inventories 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 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 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 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 3

55 LIST OF CHANGES IN THE EQUITY CAPITAL OF ELZAB ( in thousand PLN) ELZAB S.A. Initial capital Surplus on shares sale above their nominal value Own shares Other reserve capital - own shares Supplementa ry capital created from profits Reserve capital from fixed assets revaluation Profit / loss from prior years and from current year Profit / loss from prior years Net profit /loss of current financial year 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 Fised asstes revaluation Income tax - Provisions release due to differences in balance sheet and tax amortization as a result of fixed assets valuation Profit / loss for the financial year Other changes in equity capital Own shares buy-back in order to resale or in order with other purposes related to the Company's strategy Roundings 1 1 Position (balance sheet) as of Total Position (balance sheet) as of Change of accountancy principles 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 Income tax related to positions presented in capital or moved from capital 0 0 Revenues and costs in total for the financial year presented directly in equity capital 0 Profit / loss for the financial year Other changes in equity capital Buy-back of own shares for redemption Position (balance sheet) as of Signatures of Members of the Management Board Eugeniusz Pajączek President of 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 Finanse Director, Chief Accountant 4

56 ELZAB S.A PLN thousand Note No. 1 A. EXPLANATORY NOTES BALANCE SHEET EXPLANATORY NOTES TANGIBLE FIXED ASSETS (PLN thousand) TANGIBLE FIXED ASSETS As of As of Fixed assets, including: long-term lease 11 Fixed assets under construction Tangible fixed assets total: For the period from to Buildings Means of transport Machinery Other Total Gross value at the beginning of the period Increase: purchase improvement fixed assets taken over from MEDESA Sp. z o.o fixed assets according to revaluated value Decrease: sale Revaluated fixed assets gross value write-off Ascribed to the 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 Other decrease Revaluated fixed assets depreciation write-off 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 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 the 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

57 ELZAB S.A PLN thousand Note No. 15 a 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 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 the financial period indemnities on tangible fixed assets in the amount of PLN 10 thousand occurred. In the financial period external financing costs have not been applied to tangible fixed assets gross value. Liabilities connected with 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. ELZAB S.A. leases the space for the Warsaw Branch, and warehouse space at RELKAS BIS Sp. z o.o. in Żary. There is no information on the value of leased spaces. The off-balance records indicate cars used due to operating leasing as well as the value of perpetual land usufruct in the amount of PLN 414 thousand. 6

58 ELZAB S.A PLN thousand Note No. 2 INTANGIBLES (EXCLUDING GOODWILL) (PLN thousand) INTANGIBLES As of As of Intangibles carried out in-house R&D in progress Other intangibles Intangibles total INTANGIBLES - GOODWILL 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 withdraw from usage - - 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 - Other decrease - 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 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. Total - 7

59 ELZAB S.A PLN thousand NOTE No 3 LONG TERM FINANCIAL ASSETS 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, subsidiary, indicating method of consolidation / taking cocontrol over the / stock acc to purchase price adjustments value (total) value of the 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 Węgry 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: 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 Assets Revenues Dividend received of the entity, from or due from total sales the entity for the last financial year

60 ELZAB S.A PLN thousand Note No. 6 INVENTORIES As of As of Materials Semi-finished products and work in progress Finished goods Goods INVENTORIES in total VALUE OF INVENTORIES REVALUATION WRITE-OFFS AS OF Inventories gross Revaluation write- Inventories net value off value Materials Semi-finished products and work in progress Finished goods Goods INVENTORIES in total VALUE OF INVENTORIES REVALUATION WRITE-OFFS AS OF Inventories gross value Revaluation writeoff Inventories net value Materials Semi-finished products and work in progress Finished goods Goods INVENTORIES in total

61 ELZAB S.A PLN thousand NOTE No 6 INVENTORIES PLN thousand For the period from to r. Valuation according to purchase price/production cost Valuation according to net value possible to gain Amount of inventories actualization writeoffs at the beginning of the period Amounts of inventories actualization writeoffs reversal treated as decrease of these write-offs in period Amounts of inventories actualization writeoffs treated in period as a cost Amount of inventories actualization writeoffs at the end of the period Amount of inventories treated in period as a cost Inventories balance sheet value at the end of the period. Value of inventories constituting liabilities security Materials Semi-finished products and work in p Finished goods Goods IN TOTAL hierin long-term part Circumstanes or events that leaded to inventories aktualization write-offs reversal in period. - inventories management through production usage and/or sale - materials PLN 40 thousand - products PLN 89 thousand - scrap of inventories not promising to be sold or used after acquisition - materials PLN 8 thousand - goods PLN 10 thousand - products PLN 41 thousand For the period from to Valuation according to purchase price/production cost Valuation according to net value possible to gain Amount of inventories actualization writeoffs at the beginning of the period Amounts of inventories actualization writeoffs reversal treated as decrease of these write-offs in period Amounts of inventories actualization writeoffs treated in period as a cost Amount of inventories actualization writeoffs at the end of the period Amount of inventories treated in period as a cost Inventories balance sheet value at the end of the period. Value of inventories constituting liabilities security Materials Semi-finished products and work in p Finished goods Goods IN TOTAL hierin long-term part Circumstanes or events that leaded to inventories aktualization write-offs reversal in period. - inventories management through production usage and/or sale - materials PLN 74 thousand - products PLN 89 thousand - scrap of inventories not promising to be sold and technologically out of date - materials PLN 190 thousand 10

62 ELZAB S.A PLN thousand Note No. 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 0 - short-term part Receivables from associates long-term part 0 - short-term part 0 Prepayments: long-term part 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 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 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

63 ELZAB S.A 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 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 50 - from subsidiaries 50 Net short-term receivables from associates, in total b) revaluation write-offs for receivables from associates Gross short-term receivables from associates, in total GROSS SHORT-TERM RECEIVABLES (BY FOREIGN As of As of a) in PLN b) in foreign currencies (acc to currencies and after converting into PLN) b1. unit/currency ,62 GBP/4,5986 PLN thousand b2. unit/currency ,85 EUR/4,1082 PLN thousand b3. unit/currency HUF/ 1,5168 /100 PLN thousand b4. unit/currency ,90 USD/2,8503 PLN thousand b5. unit/currency JPY/3,089/100 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 OF WHICH: TRADE RECEIVABLES (GROSS) FROM ASSOCIATED COMPANIES 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. 12

64 ELZAB S.A 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 OF WHICH: TRADE RECEIVABLES FROM ASSOCIATED COMPANIES, OVERDUE (GROSS) DEVIDED INTO THE As of As of RECEIVABLES NOT PAID IN THE FOLLOWING PERIODS: 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, 0 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 Long-term lease 26 Lease agreement security Insurance of property 16 5 Liability insurance of Board of Directors (Management Board) and Supervisory Board Cost of E series shares issue 52 Others Short-term accruals, in total Note No. 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. 13

65 ELZAB S.A PLN thousand Note No. 10 INITIAL CAPITAL (PLN thousand) Series / issue Type of share Type of preference rights to the share Type of restriction rights to the share Number of shares Value of the series / issue acc to nominal value Kind of capital covering Registration date 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 No. 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 -254 related to 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 Right to dividend (from the day) Note No. 12 SUPPLEMENTARY CAPITAL (PLN thousand) For the period from to Supplementary capital created from profits Reserve capital from fixed assets revaluation 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. - Roundings - Balance at the end of the period For the period from to Supplementary capital created from profits Reserve capital from fixed assets revaluation 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 5 5 Profits/losses pertaining to cash flow hedges (effective part) Reinforcement of supplementary capital with profit from prior year Exchange rate differences from valuation of entities acting abroad - Income tax related to positions presented in other total incomes. - Roundings - 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. Total Total Note No. 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) 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 Decrease used during financial year released but not used Adjustment due to exchange rate differences from conversion - Adjustment of discount rate - Value at the end of the period, herein: short-term at the end of the period long-term at the end of the period

66 ELZAB S.A PLN thousand NOTE No 15 LONG TERM BANK CREDITS AND LOANS Amount of credit/loan acc. to the Amount of the credit / loan at the Amount of the credit / loan at the end Name (company) Registered seat contract beginning of the period of the period indicating legal status PLN thousand currency PLN thousand currency PLN thousand currency Terms of interest Effective interest rate Date of payment Securities ING BANK ŚLĄSKI Katowice, ul. Sokolska PLN PLN PLN WIBOR 1M+1,5% bank commission 5,32% (instalments to be paid from1/2011) Collateral on real property KW PO1P/ /6 ordinary- PLN thousand. deposit one - to PLN thousand. debt cession as a result of rent concerning the financed real property SHORT-TERM BANK LOANS/CREDITS AND SHORT-TERM PART OF LONG-TERM BANK LOANS AND CREDITS Amount of credit/loan acc. to the Amount of the credit / loan at the Amount of the credit / loan at the end Name (company) Registered seat contract beginning of the period of the period indicating legal status PLN thousand currency PLN thousand currency PLN thousand currency ING Bank Śląski(revolving loan) [overdraft facility] Katowice, ul. Sokolska PLN 0 PLN 0 Terms of interest Effective interest rate Date of payment WIBOR 1M + 1,75 % bank commission Securities Deposit collateral on the real property KW to the amount of PLN ING Bank Śląski (shortterm part of long-term credit) PEKAO S.A. Katowice, ul. Sokolska PLN 555 PLN 555 O/Gliwice, ul. Berbeckiego PLN PLN 819 WIBOR 1M + 1,5 % bank commission 5,32% (instalments to be paid from 1/2010 to 12/2010) 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 WIBOR 1M + 1,7 % bank commission 4,51% financial receivables 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

67 ELZAB S.A PLN thousand Note No. 16 LIABILITIES AND ACCRUALS (PLN thousand) As of As of Liabilities due to supplies and services long-term part short-term part Liabilities to subordinates long-term part short-term part Liabilities to associates long-term part short-term part - - Prepayments: long-term part - short-term part 1 9 Other Liabilities long-term part short-term part Accruals: long-term part - short-term part Accrued income: long-term part 21 - short-term part 21 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 taxes, duties, insurance and other benefits remuneration liabilities other as result of premium for Employee Retirement Scheme (PPE) as result of property insurance 0 - liability insurance premium for Board of Directors and Supervisory 1 21 Board - other 10 2 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 ,87 EUR / 4,1082 PLN thousand b2. unit/currency USD / 2,8503 PLN thousand b3. unit/currency GBP / PLN thousand 143 b4. unit/currency HUF / 1,5168 / 100 PLN thousand - 3 other foreign currencies in PLN thousand 0 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 b) accrued income long-term (acc titles) 21 - participation in repair costs in accordance with rental fees 21 - short-term (acc titles) participation in repair costs in accordance with rental fees 21 - Short-term accruals, in total

68 ELZAB S.A PLN thousand EXPLANATORY NOTES FOR PROFIT AND LOSS ACCOUNT (PLN thousand) Note No. 18 NET REVENUE ON SALE OF PRODUCTS, GOODS AND MATERIALS (MATERIAL STRUCTURE) 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) Revenues on sales in Poland % share in the sales in total 95,9% 96,0% including: products and services goods and materials Revenues on the sales in foreign markets % share in the sales in total 4,1% 4,0% including: products and services goods and materials Total INFORMATION ON ACTIVITY SECTORS The main activity subject of the ELZAB S.A. and main source of sales revenues are electronic devices of own production 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. Due to the fact that most factors determined within the segment definition meet the similarity criterion and the Company activity areas do not meet the conditions to acknowledge them reporting segments acc. IAS 14, there is no need to separate sector and geographic segments differing by the level of risk and return of investments/expenses incurred. Therefore, the balance-sheet values in the scope of assets and liabilities are not divided as they participate in generating the profit/loss in one electronic sector segment. ELZAB S.A. like in the prior years, supplied its products to the market through mixed distribution system. The Company performed sales directly to dealers and through its Warsaw and Wrocław branches, as well as through its sales offices in Żary and in Suchy Las near Poznań. Other sales were made through the two-stage network based on distributors and authorized dealers. Note No. 19 COSTS IN CALCULATION VARIANT (PLN thousand) COST PER KIND 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 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 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 Stocks and auxiliaries usage Remunerations Other costs (including departmental costs, third part services) In total

69 ELZAB S.A PLN thousand Note No. 20 OTHER REVENUES AND COSTS (PLN thousand) OTHER REVENUES Revenues on fixed assets lease Profit on sales of tangible fixed assets Release of provisions for indemnities due to agreement on competition prohibition 20 Write-off of taken over from MEDESA Sp. z o.o. provision for retirementdisability pension severances 14 Other (including: adjudicated trial costs and court proceedings,compensation ) In total including: non monetary revenues at the title of goods and services exchange OTHER COSTS Write-off of costs of unrealized issue of E series shares. 242 Provision for licence costs 230 Provision for jubilee bonuses and retirement-disability pension severances, employee holidays Costs of execution, court and trial Ceased development work write-off 28 Payment of indemnity due to agreement on competition prohibition 20 Maintenance costs of leased property Other (including: donations, costs of acts of God) In total Note No. 21 FINANCIAL REVENUES AND EXPENSES (PLN thousand) FINANCIAL REVENUES Revenues from interest GENEZA SYSTEM S.A. receivables discount Reversal of revaluation write-offs due to financial assets value impairment, including: interest on receivables In total FINANCIAL EXPENSES Costs of interest, including interest relating to: bank credits agreements of financial leasing other interest 20 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 Revaluation write-offs due to investment impairment In total

70 ELZAB S.A PLN thousand Note No. 22 CURRENT INCOME TAX Gross profit /loss (financial result) before taxation on continued activity Profit/loss before taxation on ceased activity 0 0 Gross profit /loss (financial result) before taxation 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 not providing revenue c/ deduction of subsidies -3-3 Taxation base Tax debit in compliance with the applied tax rate Tax debit/credit disclosed in the profit and loss account DEFERRED INCOME TAX Decrease due to fixed assets creation and release of provisions for temporary differences -1-3 Decrease due to investment release applied in 1999 (release of provisions) Increase due to writing-off and establishing provisions for temporary differences Roundings Deferred income tax, in total MAIN POSITIONS OF TAX DEBIT/CREDIT IN PROFIT AND LOSS ACCOUNT Current income tax current debit at the title of income tax prior years current income tax adjustments 0 0 Deferred income tax debit/credit at the title of deferred tax concerning creation and reversal of temporary differences - debit/credit at the title of deferred tax concerning change of tax rates 0 0 Tax debit/credit presented in profit and loss account, including: ascribed to continued activity ascribed to ceased activity 0 0 DEFERRED INCOME TAX Balance sheet As of As of Profit and Loss Account 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 GENEZY SYSTEM S.A. receivables discount marketing fund difference between balance and tax amortization rounding -1 1 Deductable tax loss Deferred income tax gross assets Deferred income tax debit/credit

71 ELZAB S.A PLN thousand Note No. 23 ANNUALED EARNINGS PER SHARE DATA RELATED TO FINANCIAL RESULT AND SHARES, THAT WERE USED TO CALCULATION OF OF BASIC AND DILUTED EARNINGS PER SHARE Annualed net profit/loss on activity 0,28 (0,19) Profit/loss on ceased activity - - Annualed net profit/loss 0,28 (0,19) Profit/loss applied to calculation of diluted profit/loss per share Weighted average number of issued ordinary shares applied to calculation of basic earning/loss per share Dilution impact 0 0 Adjusted weighted average number of ordinary shares applied to calculation of diluted earning/loss per share 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 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. NOTE 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 Inventories 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), Note No 17 (Tax 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 20

72 ELZAB S.A. Computer Works ELZAB S.A. ACTIVITY REPORT 2009 Zabrze, March, 2010