Report of the management board of the company AB S.A. for the first half year 2010/2011. covering the period from to

Report of the management board of the company AB S.A. for the first half year 2010/2011 covering the period from 01-07-2010 to 31-12-2010 25-02-2011

TABLE OF CONTENTS I) INTRODUCTION... 4 II) BASIC INFORMATION ON THE COMPANY AB S.A.... 4 1. Basic data... 4 2. BODIES OF THE COMPANY... 4 2.1 Management Board... 4 2.2 Supervisory Board... 4 3. Structure of the ownership... 5 III) BASIC ECONOMIC-FINANCIAL AMOUNTS.... 6 OTHER INFORMATION, WHICH IN THE OPINION OF THE COMPANY IS SIGNIFICANT FOR THE ASSESSMENT OF THE ITS FINANCIAL, PROPERTY, STAFF SITUATION AND THE CHANGES AND THE INFORMATION WHICH IS ESSENTIAL FOR THE ASSESSMENT OF THE POSSIBILITY OF THE LIABILITIES REALIZATION... 6 1st The more important events affecting the activity of the company... 6 2nd Economic situation of the Company... 7 2nd1 Revenues on sale. Result on sale... 7 2.2 Profitability... 9 2.3 Assets... 9 2.4 Capitals and liabilities... 11 2.5 Liquidity. Working indices... 12 2.6 Cash flows... 14 IV) SIGNIFICANT RISK FACTORS CONNECTED WITH THE ACTIVITY OF THE COMPANY... 15 1st The risk of the influence of the macro-economic situation on the results of the company... 15 2nd The risk connected with the strong competition... 15 3rd The risk of changing the law provisions and their interpretation and application... 15 4th Risk of changes of percentage rates... 16 5. Exchange rate risk... 16 6th The risk connected with being dependant on main suppliers... 16 7th The risk connected with being dependant on main recipients... 16 8th The risk connected with the seasonability of the sale... 17 9th The risk connected with the inventories and receivables... 17 10th The risk connected with the financing structure... 17 11th The risk connected with the investment process... 18 12th The risk connected with the ownership structure... 18 13th The risk connected with the loss of key employees of the Company... 18 V) THE PROCEEDINGS PENDING BEFORE THE COURT, COMPETENT BODY FOT THE ARBITRARY PROCEEDINGS OR PUBLIC ADMINISTRATION BODY... 18 VI) THE ORGANIZATIONAL OR CAPITAL RELATIONS OF THE COMPANY WITH OTHER ENTITIES.... 19 VII) SIGNIFICANT TRANSACTIONS CONCLUDED BY THE COMPANY OR THE UNIT DEPENDANT ON IT WITH THE AFFILIATED UNITS UNDER OTHER CONDITIONS THAN MARKET ONES... 20 VIII) THE INCURRED AND TERMINATED AGREEMENTS CONCERNING THE CREDITS AND LOANS... 20 IX) GRANTED LOANS... 22 X) GRANTED AND OBTAINED SURETIES AND GUARANTEES... 23 2 S t r o n a

XI) EXPLANATION OF THE DIFFERENCES BETWEEN THE FINANCIAL RESULTS SHOWN IN THE ANNUAL REPORT AND PREVIOUSLY PUBLISHED FORECASTS OF RESULTS FOR A GIVEN YEAR... 23 XII) THE ASSESSMENT OF THE FACTORS AND NON-TYPICAL EVENTS AFFECTING THE RESULT ON THE ACTIVITY FOR THE FINANCIAL YEAR... 23 XIII) THE CHARACTERISTICS OF EXTERNAL AND INTERNAL FACTORS SIGNIFICANT FOR THE DEVELOPMENT OF THE COMPANY AND THE DESCRIPTION OF THE PROSPECTIVES OF DEVELOPMENT OF THE COMPANY S ACTIVITY... 23 XIV) CHANGES IN THE BASIC PRINCIPLES OF MANAGING THE ISSUER S ENTERPRISE AND ITS CAPITAL COMPANY... 25 XV) INCENTIVE AND BONUS PROGRAMMES BASED ON THE ISSUER S CAPITAL... 25 XVI) THE SHARES BEING IN THE POSSESSION OF THE PERSONS MANAGING AND SUPERVISING... 25 XVII) INFORMATION ON THE AGREEMENTS KNOWN TO THE ISSUER (INCLUDING ALSO THOSE CONCLUDED AFTER THE BALANCE SHEET DAY), AS A RESULT OF WHICH THERE CAN BE CHANGES IN THE FUTURE IN THE PROPORTIONS OF THE POSSESSED SHARES BY THE PRESENT SHAREHOLDERS AND OBLIGORS... 26 XVIII) THE INFORMATION ON THE ENTITY ENTITLED TO AUDIT THE FINANCIAL REPORT... 26 1st The data on the entity entitled to audit the financial report... 26 2nd The date of concluding the agreement for making the audit... 26 3rd The remuneration of the entity entitled to audit the financial reports... 27 3 S t r o n a

I) INTRODUCTION The report presented below of the Management Board of the Company AB S.A. covering the period from 01 July 2010 to 31 December 2010 was prepared on the basis of the Regulation of the Minister of Finances of 19 February 2009 on the current and periodical information transferred by the issuers of the of the securities and the conditions to recognize as equivalent the information required with the law provisions of the Non-Member State (J. of L. No 33 it.259). II) BASIC INFORMATION ON THE COMPANY AB S.A. 1. BASIC DATA The company AB S.A. was established with the Notary deed as of 24 September 1998 and incorporated into the National Court Register conducted for Wrocław Fabryczna, VI Economic Division of the National Court Register under the KRS number 0000053834. The company was granted the statistical REGON number 931908977. The seat of the company is at ul. Kościerzyńska 32, 51-416 Wrocław. Basic subject of the Company s activity, in accordance with the Statute, is the commercial service activity. AB S.A. is a dominant unit of the highest level of the Capital Group. 2. BODIES OF THE COMPANY 2.1 Management Board The composition of the Management Board of AB S.A. on 31 December 2010 consisted of: Andrzej Przybyło President of the Management Board Krzysztof Kucharski Member of the Management Board Zbigniew Mądry Member of the Management Board, Commercial Director Grzegorz Ochędzan Member of the Management Board, Financial Director On 30 September 2010, the Supervisory Board of AB S.A. appointed the new Member of the Management Board Mr Krzysztof Kucharski. On the publication day of the report the composition of the Management Board remains unchanged. 2.2 Supervisory Board The composition of the Supervisory Board of AB S.A. as of 31 December 2010 included: Iwona Przybyło Jacek Łapiński 4 S t r o n a

Jan Łapiński Radosław Kiełbasiński Andrzej Bator Katarzyna Jażdrzyk During the reporting period by the publication day of the Report, the composition of the Supervisory Board was not changed. 3. STRUCTURE OF THE OWNERSHIP The shareholders possessing as of 25 February 2011 of a total number of votes at the general meeting of shareholders of the company AB S.A. State as of 2011-02-25 Number shares Shareholder structure by number of shares Number of votes Shareholder structure by number of votes Andrzej Przybyło 1316200 8,08% 2629200 14,93% Iwona Przybyło 2944052 18,07% 2944052 16,72% Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK 1500000 9,20% 1500000 8,52% Aviva Investors Poland S.A. 1281769 7,86% 1281769 7,28% ING TFI S.A. 1024118 6,28% 1024118 5,82% PZU Asset Management S.A. 903679 5,55% 903679 5,13% Others 7325184 44,95% 7325184 41,60% In total 16 295 002 100,00% 17 608 002 100,00% Since the transfer day of the last periodical report, i.e. since 15 November 2010 there were the following changes in the ownership structure of significant packages of shares: In December 2010 PZU Asset Management S.A. acquired 27.688 pcs. of shares, at the same time it reached the level of 5,13% shares of votes at the General Meeting of Shareholders AB S.A and 5,55% percentage share in the company s initial capital. On 17 December there was a sale of 1.000.000 pcs of shares by Iwona Przybyło, which decreased the share of the Investor in the initial capital from 24,20% to 18,07% and a share in total number of votes WZ from 22,40% to 16,72%. In the provided period, there was also an increase of the status of the shares possessed by Otwarty Fundusz Emerytalny Aviva BZ WBK by 118.782 pcs of shares (the share in the initial capital and the number of the votes before change amounted to respectively 8,48% and 7,84%). The increase in share in the initial capital by 105.604 pcs of shares was recorded also by Aviva Inwestors Poland (share in the initial capital and the number of votes before the change amounted to 7,21% and 6,68%). 5 S t r o n a

III) BASIC ECONOMIC-FINANCIAL AMOUNTS. OTHER INFORMATION, WHICH IN THE OPINION OF THE COMPANY IS SIGNIFICANT FOR THE ASSESSMENT OF THE ITS FINANCIAL, PROPERTY, STAFF SITUATION AND THE CHANGES AND THE INFORMATION WHICH IS ESSENTIAL FOR THE ASSESSMENT OF THE POSSIBILITY OF THE LIABILITIES REALIZATION 1st THE MORE IMPORTANT EVENTS AFFECTING THE ACTIVITY OF THE COMPANY The macroeconomic surrounding in the first half of the financial year 2010/2011 was characterized by a weaker and weaker influence of the economic crisis on the purchase decisions of the consumer, in particular in the sector of the business clients and stabilization of the currency situation. However, these positive changes were accompanies by a high variability of demand in particular months, which significantly obstructed the effective management of the warehouse statuses, including the planning and financing of purchases. In accordance with the assumed policy of development, the Company adopted an active approach in order to counteract the macroeconomic factors with the demand nature, inter alia. The projects and activities were successfully started or continued from the previous period, aiming at increasing the dynamics of market demand. The cost discipline was also maintained with a simultaneous assurance of high operational efficiency. The financial result worked in the period of 6 months, was largely affected by the judgment announced on 30 December 2010 by the Appellate Court in Wrocław on reimbursement of the amount collected unduly by Raiffeisen Bank Polska S.A. of 7 499 590 PLN with interests. It validated the decision of the Regional Court ordering an immediate reimbursement to the Company of the amounts due. The disputable amount was covered with the reserve, which charged the result of the financial year 2008/2009, in the period covered with the report, the reserve for the disputable amount was terminated. The Company realized also a long-term policy, concentrating on further organization integration with the Czech and Slovakian companies operating within AT Computers Holding. The development of the Company and the increase of its effectiveness will be realized by: a/ continuation of the unification process of the product offer within the whole group AB, in order to maximize the margins obtained and further strengthening of the market position; the factor is a key one for further maintenance of the AB Group position of the leader on the connected markets of Poland, Czech Republic and Slovakia; b/ continuation of the organization consolidation processes of the Group in order to reduce the operational costs incurred; c/ permanent increasing the logistic efficiency of the Company, in particular, usage of broad possibilities which are provided by the completed investment in the modern system of warehouse automatics. 6 S t r o n a

Realization of the Own Shares Acquisition programme In accordance with the resolution no 1/2008 NWZA AB S.A. of 19 August 2008 the purchase of the own shares covered with the Programme of Own Shares Acquisition completed on 31 December 2009. As of 30 June 2010 the Company possessed in total 146 358 own shares constituting 0,8982% of the Company s initial capital and giving the right to 146 358 votes, i.e. 0,8312% of total number of votes at WZA of the Company. 2nd ECONOMIC SITUATION OF THE COMPANY Company AB S.A. is one of the largest and the most dynamically developing entities conducting the distribution activity in the IT industry in the region of the Central Europe covering Poland. The Company in the period from 1 July 2010 to 31 December 2010r 36% the increase of revenues on sale. Due to the restrictive cost policy and extending the distribution offer, the Company reached 309% dynamics of net profitability. The factors of key importance for the economic situation of AB S.A. included: Increase of revenues on ale; Increase of the enterprise s profitability on the level of the operational result and net profit; The increase in profitability of assets and equity; 31% drop of sale costs and general management in revenues; Won dispute with Raiffeisen Bank Polska S.A. 2nd1 Revenues on sale. Result on sale In the first half of the financial year, the Company AB S.A. recorded the increase of 36% of revenues on sale, reaching at the same time much more dynamic increase than the whole IT market. The result developed is the effect of the product offer diversification strategy adopted by the Company, supported by high quality sale services. The Company made available for its business partners the Competence Centre, which concentrates on training the resellers wishing to enter the integration market. The increase of revenues on sale was accompanied by a significant increase of the gross profit on sale (27%) and the net profit on sale (increase by as much as 59%). A significant influence on the record dynamics of net profit (309%) developed in the period covered with the report was made by the result of the dispute with Raiffeisen Bank Polska S.A., which on 30 December 2010 was resolved to the benefit of AB S.A., at the same time the disputable amount of 7 499 590 PLN, with the interests was reimbursed to the Company, and the reserve previously created for the result for the financial year 2008/2009 was terminated. 7 S t r o n a

Revenues on sale Gross profit on sale 1 300 000 60 000 tys. PLN 1150000 1000000 850000 700000 833 714 1 133 723 tys. PLN 40000 20000 33 791 42 922 550 000 400 000 1H 2009/10 1H 2010/11 0 1H 2009/10 1H 2010/11 Operating expenses Net profit tys. PLN 1150000 1000000 850000 700000 816 321 1 106 145 tys. PLN 35000 30000 25000 20000 15000 32 505 550 000 10000 5000 7 944 400 000 1H 2009/10 1H 2010/11 0 1H 2009/10 1H 2010/11 The Company reduced the relation of the share of sale costs and general management to the revenues on sale reached (SGA). In the opinion of the company s Management Board, this is the basic measurement of the activity s effectiveness of the distribution company presenting the degree of expenses discipline. In case of AB S.A. its value for the first half of the financial year 2010/2011 amounted to 1,35%% and is lower than the value obtained in the analogous period of the previous year (1,97%). Cost structure 100% 3556 4940 50% 12842 10404 0% 1H 2009/10 1H 2010/11 Selling costs Administrative expenses 2,50% 2,00% 1,50% 1,00% 0,50% 0,00% SGA 1,97% 1,35% 1H 2009/10 1H 2010/11 8 S t r o n a

2.2 Profitability The increase of the revenue on sale in the first half of the financial year 2010/11 was accompanied by the increase in profitability of the operational activity, which reached the level of 1,73%. The profitability of sale on the level of the net result amounted to 2,87%, and at the same time the dynamics of net sale profitability amounted to 201%. While analyzing the profitability on the level of business activity, in the audited period the Company worked the result of 3,16% and is significantly higher in comparison with the one reached in the analogous period of the previous year (1,27%). Operating profitability Return on sales 2,00% 1,50% 1,73% 3,50% 3,00% 2,50% 2,87% 1,00% 1,06% 2,00% 1,50% 0,50% 1,00% 0,50% 0,95% 0,00% 1H 2009/10 1H 2010/11 0,00% 1H 2009/10 1H 2010/11 In the first half of 2010/2011, the Company improved also the profitability of equity (ROE) in relation to the comparable period from 5,07% to 14,38%. Also the assets profitability index (ROA) increased in the current and comparable period properly by 5,18% and 2,07%. ROA ROE 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% 2,07% 5,18% 16,00% 14,00% 12,00% 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% 5,07% 14,38% 1H 2009/10 1H 2010/11 1H 2009/10 1H 2010/11 2.3 Assets The increase of the enterprise s revenues was reflected in a larger value of its working assets. In the comparable periods, the increase was recorded of the working assets of AB S.A. in the area of 9 S t r o n a

receivables, which as of the end of December 2010 reached the value of 276 740 thous. PLN and inventories - 234 308 thous. PLN. Assets 800 000 Current assets tys.pln 600 000 400 000 340 340 521 387 Fixed assets 200 000 0 170 560 171 311 31.12.2009 31.12.2010 Struktura aktywów 100% Current assets 80% 60% 66,6% 75,3% Fixed assets 40% 20% 33,4% 24,7% 0% 31.12.2009 31.12.2010 In the period described, the value of the working assets was significantly increased. While analyzing the property situation, one may notice an increase in value and percentage share of the inventories. The reason for the recorded increase is on one hand the increase in demand and on the other hand high variability, which obstructed the conducting effective warehouse management. The structure of components itself, remained however on the levels approximate to 2009. The largest share in the working assets is occupied by short-term receivables 53,1% (in the comparable period their share amounted to 55,8%), inventories are another important position, the share of which amounts to 44,9% of total working assets (39,2 % in the previous year). The share of short-term investments amounted to 1,8% (4,9% in comparable period). 10 S t r o n a

Current assets tys.pln 600000 500000 400000 300000 200000 100000 0 902 9437 500 276740 16553 189758 234308 133529 31.12.2009 31.12.2010 Short-term prepayments and accruals Short-term investments Short-term receiveables Inventories Current assets structure 100% 80% 60% 40% 20% 0,1% 0,2% 4,9% 1,8% 55,8% 53,1% 39,2% 44,9% Short-term prepayments and accruals Short-term investments Short-term receiveables Inventories 0% 31.12.2009 31.12.2010 2.4 Capitals and liabilities In the area of liabilities in the reporting period, the changes refer to two main positions: equity and short-term liabilities. The Company increased the share of short-term liabilities in financing the property (62,5% in comparison to 57,9% from the previous year). The equity increased by 41 116 thous. PLN, and their share in the structure of liabilities amounted to 36%. Also the share of reserves for liabilities increased insignificantly from 1,3% to 1,5%. 11 S t r o n a

tys. PLN 700000 600000 500000 400000 300000 200000 100000 0 Equity and Liabilities 14 60 432825 296036 0 0 10414 6475 208329 249445 31.12.2009 31.12.2010 Other accruals Short-term liabilities Long-term liabilities Provisions for liabilities Equity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Equity and Liabilities structure 0,0% 0,0% 57,9% 62,5% 0,0% 1,3% 0,0% 1,5% 40,8% 36,0% 31.12.2009 31.12.2010 Other accruals Short-term liabilities Long-term liabilities Provisions for liabilities Equity 2.5 Liquidity. Working indices The Company maintained the ability to settle its current liabilities on the approximate, safe level as in the previous years. The values of the liquidity indices insignificantly differ from the presented in the previous years. Also the values of turnover indices maintained on a similar level: the index of receivables rotation was subject to slight increase from 40 to 41 day in accordance with the state as of 31 December 2010. The cycle of settling the liabilities was shortened (from 42 days as of the end of December 2009 to 39 days as of 31 December 2010). The cycle of inventories rotation was extended from 29 to 37 days which was caused by prior described fluctuation of demand. 12 S t r o n a

Liquididy ratio 1,40 1,20 1,00 1,15 1,20 0,80 0,60 0,70 0,66 Current ratio Quick ratio 0,40 0,20 0,00 31.12.2009 31.12.2010 dni 45 40 35 30 25 20 15 10 5 0 40 41 42 39 29 Cash cycles 37 31.12.2009 31.12.2010 Rotation of inventories Rotation of receivables Rotation of liabilities dni 45 40 35 30 25 20 15 10 5 0 40 41 42 39 29 Cash cycles 37 31.12.2009 31.12.2010 Rotation of inventories Rotation of receivables Rotation of liabilities 13 S t r o n a

Methodology of calculating the indices: Current liquidity: Working assets / Short-term liabilities Quick liquidity: (Working assets - inventories) / Short-term liabilities Rotation of inventories: (Inventories / Revenues on sale) x 180 Rotation of receivables: (receivables / Revenues on sale) x 180 Rotation of liabilities: (Liabilities for supplies / Revenues on sale) x 180 2.6 Cash flows In the first half of 2010/2011 negative consolidated cash flows were generated in the amount of 3 821 thous. PLN (in the comparable period the amount of positive floes amounted to 11 644 thous. PLN), which consisted of negative flows from operational activity, negative on the investment activity and positive from financial activity. Negative operational flows result mainly from extending the inventory cycles, which was the result of the exceptional variability of demand in the period described Cash flows 40000 34953 30309 30000 20000 10000 0-2437 -1855-10000 -20000-20872 -30000-32275 -40000 1H 2009/10 1H 2010/11 Cash from operating activities Cash from investing activities Cash from financing activities 14 S t r o n a

IV) SIGNIFICANT RISK FACTORS CONNECTED WITH THE ACTIVITY OF THE COMPANY The risks to which the Company is expose are connected with its surrounding (the risk of the influence of the macro-economic situation, the risk connected with the strong competition, changes of the law provisions and their interpretation and application) and the nature of the conducted activity (exchange rate risk, connected with being dependant on main suppliers and recipients, connected with the seasonability of the risk sale connected with the inventories and receivables, with the investment process, the ownership structure, the loss of key employees of the Company). A significant influence on the activity of the Company is executed, first of all, by strong market competition and exchange rate risk. The influence of particular risk factors and the activities of the company undertaken in order to limit them are described below. 1st THE RISK OF THE INFLUENCE OF THE MACRO-ECONOMIC SITUATION ON THE RESULTS OF THE COMPANY The consumption level in the economy depends on the pace of the economy growth and perceiving present and future volumes of incomes of households and profits of the enterprises. These incomes and profits affect also the volumes of purchases IT. As a result, the sale in the whole industry strongly depends on the conjuncture in the economy. The growth pace of GNP maintained presently implied the growth of sale of the whole market. The reversal of the positive increasing tendencies entailed the drop of the consumption expenses, including: IT products and at the same time the drop of revenues. In order to minimalize the negative effects of the new situation on the market, a number of activities were undertaken to extend the commercial offer of the company. Additionally the company continues a stiff cost policy. 2nd THE RISK CONNECTED WITH THE STRONG COMPETITION The industry, in which the AB Company operates, is characterized by high competitiveness. A high competitiveness degree in combination with growing market absorption may result in lowering the margin level and as a result negatively affect the level of the realized revenues and profits. As an additional risk factor, the Management Board deems the possibility to extend the sale channel by means of suppliers of the Company with next distributors, which also may have a negative influence on the obtained financial results. 3rd THE RISK OF CHANGING THE LAW PROVISIONS AND THEIR INTERPRETATION AND APPLICATION The changing law provisions or its different interpretations, especially with reference to the tax law, the provisions governing the business activity, the provisions on labor law and social insurance or the law in the area of securities, may cause negative consequences for the Company. Especially frequent and dangerous are the interpretation changes of tax law. There is no 15 S t r o n a

unification in the practice of the fiscal bodies and judicial interpretation in the area of taxation. The adoption by the tax bodies of the interpretation of the tax law other than the one adopted by the Company may imply serious deterioration of its financial situation, as a result may negatively affect the achieved results and the prospectives of development. The risk of changes in the legal circles covers also the possibility to cause unfavorable resolutions for the Company in the pending or potential proceedings before courts or the administration bodies. 4th RISK OF CHANGES OF PERCENTAGE RATES Due to the system of the operational cycle characteristics for the enterprises, where time, which is occupied by making the inventories liquid and accepting the receivables exceeds the available dates of payment for the liabilities, the company, to a large extent, must support itself with the external financing sources. The increase of the base rates may results for the Company in the drop of the achieved profitability. 5. EXCHANGE RATE RISK The main suppliers of the Company are the international manufacturers of the IT equipment and utility electronics. The settlements with the suppliers are conducted in a significant part in foreign currencies (EUR or USD). Simultaneously, a larger part of sale of particular Companies is realized on their domestic markets in parent currencies. Despite the fact that the Company conducts an active policy of currency risk management, using the forward transaction, there is a currency risk connected with the settlement of the trade liabilities towards suppliers of the Company. High variability of the exchange rates of EUR and USD forces the Company for action in the conditions of high currency risk. 6th THE RISK CONNECTED WITH BEING DEPENDANT ON MAIN SUPPLIERS The Company cooperates directly with the world leaders of IT solutions. The risk connected with being dependant on main suppliers is connected with their significant share in the Company s provision structure. The loss of one of the major suppliers could in a short period deteriorate the results of sale in particular product groups and negatively affect the financial results achieved by the Company. 7th THE RISK CONNECTED WITH BEING DEPENDANT ON MAIN RECIPIENTS The Company possesses a diversified port folio of recipients. Some of the Company s clients may be however interested in shortening the chain of supplies. Large retail networks may, for example, try to be supplied directly with the manufacturers omitting the distributors such as AB S.A. In turn, among the smaller and medium retail recipients there may be a phenomenon of combining the purchase potential in order to obtain more attractive supply conditions. For the Company it may be connected with the risk of losing a part of the clients, which as a result may negatively affect the sale level and the financial results achieved by the Company. The Company 16 S t r o n a

limits the risk of being dependant on main suppliers by the share in creating the retail sale network of digital technology, managed by Alsen Sp. z o.o. 8th THE RISK CONNECTED WITH THE SEASONABILITY OF THE SALE The volume of the sale achieved by the Company by analogy as in case of other entities operating in the IT industry is subject to fluctuations of season variability of the demand. Its intensity usually takes place in the last quarter of the calendar year, when the sale may constitute up to 35% of the value of the whole annual sale. It results in the inability to assess exactly the situation of the Company and makes difficult to estimate the results for a given financial year on the basis of the quarter results. 9th THE RISK CONNECTED WITH THE INVENTORIES AND RECEIVABLES The trade receivables constitute about 37% of the balance sweet sum of the Company. Their high level results from the specifics of the trade activity conducted by the Company. The Company conducts the sale to its recipients on the basis of the granted credit limit with the defined term of payment. Each credit limit is established individually on the basis of the possessed financial data, obtained personal and tangible securities and with the use of the methods for establishing credit available on the market. The situation of each client is strictly monitored and in case of any signals threatening the payment of liabilities, the immediate vindication activities are undertaken. Despite the monitoring of the receivables and good system of the credibility assessment one may not exclude the risk of insolvency of single business partners and incurring by the Company the financial losses for this. In order to limit significantly the credit risk, the Company concluded with Atradius Credit Insurance the insurance agreement of the trade liabilities of the companies AB S.A. and Alsen sp. z o.o. and trade receivables in Czech and Slovakian companies. On this basis, the liabilities in the whole trade were covered with the insurance protection. It significantly reduces the risk of creating the losses for insolvency and lingering delay in paying for the purchased goods. As of 31 December 2010 the receivables were covered with the insurance and constituted 94,5% of the trade receivables. 10th THE RISK CONNECTED WITH THE FINANCING STRUCTURE The Company uses external financing sources in the form of the bank credit, mainly short-term revolving credits, the purpose of which is to finance current activity of the company. An additional source of financing is factoring, which enables for larger diversification of short-term working assets. The company has the credit agreements signed with Kredyt Bank S.A. for the next annual period (credit agreement with the maturity by the end of April 2011) Besides, the company extended the credit agreements with the bank BPH S.A., in which the maturity of the incurred liabilities on 31.03.2011 and with PEKAO S.A. with expiry date as of 30 April 2011. 17 S t r o n a

11th THE RISK CONNECTED WITH THE INVESTMENT PROCESS AB S.A. conducted a number of key investment for its current activity. The main investment task was completed in the logistic infrastructure, i.e. the extension of the logistic centre in Wroclaw. It enabled, inter alia, the application of modern technologies in the area of completion and dispatch of goods to the client, which brought in measurable benefits in the achieved efficiency and optimalization of costs. In the past period, the new IT system of ERP was implemented to support the business processes realized by AB. Presently, there are no prerequisites, indicating for the necessity to conduct further capital-absorptive investment undertakings. The investment decisions made by the companies of the Company are previously planned in detail in the prepared business plans and the cash-flow projections, due to which the risk is minimalized of losing the liquidity or interrupting the current investment activity. 12th THE RISK CONNECTED WITH THE OWNERSHIP STRUCTURE After conducting the Public Offer, Mrs Iwona Przybyło and Mr Andrzej Przybyło possess 37,3% of a total number of votes at the General Meeting of Shareholders which enables to preserve a significant level of control over the Company and decisive influence on the operational activity and strategic decisions concerning the development of the Company. Moreover, properly to the text of art. 12 it. 4a of the Company s Statute of AB S.A. Mrs Iwona Przybyło and Mr Andrzej Przybyło are entitled to appoint and recall one member of the Supervisory Board. 13th THE RISK CONNECTED WITH THE LOSS OF KEY EMPLOYEES OF THE COMPANY The perspectives of the development of the Company to a large extent depend on the stability of employment of high qualified employees and management staff. In case of expansion of the Company it is also possible to win additional employees with a proper experience level and specialist knowledge. There is a risk of the drop of the distribution effectiveness in case of the loss of the key employees. In such a situation, one cannot assure about properly fast winning of new persons with the proper qualifications or it may be connected with the significant costs. V) THE PROCEEDINGS PENDING BEFORE THE COURT, COMPETENT BODY FOT THE ARBITRARY PROCEEDINGS OR PUBLIC ADMINISTRATION BODY AB S.A. is not the subject of the proceedings pending before the court, body competent for the arbitrary proceedings or the body of public administration, concerning the liabilities, the value of which (single or total) exceeds 10% of own capitals. The court proceedings described in previous reports, instituted by AB S.A. on 27 May 2009 against Raiffeisen Bank Polska SA. Was resolved to the benefit of the company. On 30 December 2010 the Appellate Court in Wrocław, dismissed the appeal of Raiffeisen Bank Polska S.A. and at the same time upheld the judgment of the Regional Court in Wroclaw adjudicating to the Company AB S.A. 18 S t r o n a

the amount of 7 499 590 PLN with statutory interests. The judgment is valid, the whole amount was covered with the revaluation write-off for the results of the financial year 2008/2009. VI) THE ORGANIZATIONAL OR CAPITAL RELATIONS OF THE COMPANY WITH OTHER ENTITIES. On the basis of the agreement concluded on 19 July 2004 the limited liability company was established under the name ALSEN Sp. z o.o. with its seat in Katowice. The Company was established for the indefinite period. Initially the Company AB S.A. possessed 348 shares which constituted 59% of the initial capital and the votes at the general meeting of Alsen Sp. z o.o. On 2008 the Company increased its capital involvement in Alsen Sp. z o.o. by next 60 shares. As of 30 June 2010 AB S.A is the owner of 408 shares with total value of 204.000 PLN constituting 69,39% shares Alsen Sp. z o.o and 100% shares in the company Alsen Marketing Sp. z o.o. with its seat in Katowice. On 19 September 2007 the management board of AB S.A. signed the purchase agreement of 100% of shares AT Computers Holding a.s., one of the largest enterprise from the IT industry operating in Czech Republic and Slovakia. AT Computers Holding a.s. is the owner of 100% shares of the following entities : AT Computers a.s.- distribution company offering software, IT equipment, utility electronics products and products of mobile technology in the area of Czech Republic; AT Compus s.r.o. the largest enterprises dealing with the production of personal computer in Czech Republic with the production capacity of 100.000 of items annually; Comfor Stores a.s.- He company managing a network of over 20 of retail shops in the Czech Republic; AT Computer s.r.l. the company conducting the distribution activity in Slovakia. On 30 October 2007 the last conditions suspending the acquisition process were fulfilled. On 2 November 2009 the target company was established B2B IT Sp. z o.o. with the initial capital of 5.000 PLN, the subject of which will be the marketing and commercial activity. The company as the day of preparing the report does not conduct the operational activity. As of the publication day the composition of the capital group AB S.A. presents as follows: 19 S t r o n a

AB S.A. B2B IT Sp. z o.o. 100% Alsen Sp. z o.o. 69,39% Alsen Marketing Sp. z o.o. 100% AT Computers Holding a.s. 100% AT Computers a.s. 100% AT Computer s.r.l 100% Comfor Stores a.s. 100% AT Compus s.r.o 100% In the period covered with the report there were no changes in the Company s structure. VII) SIGNIFICANT TRANSACTIONS CONCLUDED BY THE COMPANY OR THE UNIT DEPENDANT ON IT WITH THE AFFILIATED UNITS UNDER OTHER CONDITIONS THAN MARKET ONES In the period covered with the report, the issuer did not conclude with the affiliated units the transaction with the nature exceeding the normal scope of the operational activity conducted by the issuer, concluded under the conditions others than the market ones. VIII) THE INCURRED AND TERMINATED AGREEMENTS CONCERNING THE CREDITS AND LOANS The credit agreement no WR1/Rb/8/99 for the revolving credit in the current account concluded with Kredyt Bank S.A. with its seat in Warsaw on 1 February 1999 annexed on 23 April 2010. The bank granted to AB S.A. a short-term revolving credit in the current account in the amount of 70.000.000 PLN, allocated for financing the current economic activity, for the period to 30 April 2011. A total amount of the credit made available may not exceed 67% of the sum of the pledged movables and receivables. The credit is an interest-bearing one in accordance with the variable rate, based on the WIBOR O/N rate, increased with the bank margin. The security of the credit agreement constitute the following: 20 S t r o n a

taking over the inventories of the trade goods of the Company to the amount of 50.000.000 PLN, with the assignment of the rights from the policy; in blanc bill of exchange issued by the Company; transfer of liabilities towards the recipients of the Company; the statement on being subject to the execution to the amount of 84 000 000 PLN. The bank shall be entitled to terminate the agreement in the cases indicated in the agreement, in particular in case of infringing by AB S.A. defined liabilities, resulting from the agreement, e.g. the obligation to maintain on the proper level the solvency index. In the area not settled in the agreement, the provisions of the General Crediting Conditions in Kredyt Bank S.A. (OWK) shall be applicable, constituting the annex to the agreement. The credit agreement concluded with Bank Polska Kasa Opieki Spółka Akcyjna with its seat in Warsaw on 29 May 2008 annexed on 29 November 2010. Bank Polska Kasa Opieki S.A. granted to the Company a credit limit to the equivalent of the amount of 86 mln PLN. The credit limit made available enables to incur debt in the current account maximum to 80 mln PLN and grant on the order of AB S.A. bank guarantees to the total amount not exceeding 6 mln PLN, however a total amount of the credit made available may not exceed the sum of 62,5% of the pledged movables and receivables. The credit is an interest-bearing one in accordance with the variable rate, based on the WIBOR rate for one-month deposits, increased with the bank margin. The security of the credit agreement constitute the following: a register pledge on the inventories with the value not lower than 35.000.000 PLN with the assignment of rights from the insurance policy; a transfer of liabilities from the trade contracts accepted by the Bank concluded by the Company in the amount not lower than 30.000.000 PLN; a power of attorney to dispose of the Current Accounts of the Company conducted in the Bank;; a statement on being subject to execution to the amount of 103 200 000 PLN. The day of the final payment of the credit limits or their extension for the next period are relatively: - 30 April 2011 with reference to the credit in the current account, - 30 June 2013 with reference to the Credit Limit of the bank guarantees, including 3.000.000 PLN to 30 April 2011. In the area not governed with the subjective agreement, the provisions of the Agreement establishing the general crediting principles shall be applied No 2008/11/DDF of 29 May 2008. The Credit Agreement for the multi-target line concluded with the Bank BPH S.A. with its seat in Kraków on 23 March 2009 annexed on 18 March 2010. The Bank granted to the Company a credit in the form of the multi-target line in the amount of 27.000.000 PLN, however a total amount of the credit made available will be decreased in proportion to the pledged movables and receivables, if their sum drops below 32 mln PLN (with 21 S t r o n a

the reservation that the share of inventories may not exceed 50% of the sum). The granted sublimit consists of: a credit sublimit to the amount of 19.900.00 PLN intended for the financing of the current activity of the company, a credit sublimit to the amount of 7.000.000 PLN with the intention to cover the credit and market risk in connection with the transactions concluded of the financial market, a credit sublimit to the amount of 100.000 PLN to be used in the form of the credit cards. The day of the final day of the payment of the liability or its extension for the next period is 31 March 2011. The security for the granted credit includes: a register pledge on the inventories of the Company in the amount of 8.000.000 PLN; an assignment of receivables for the amount of 24.000.000 PLN; an assignment of rights from the policy of receivables insurance; a statement on being subject to execution to the amount of 40 500 000 PLN a power of attorney to dispose of the means on the bank account of the Borrower. The factoring agreement concluded with the company SEB Commercial Finance Sp. z o.o. with its seat in Warsaw on 7 September 2009 with later schedules In accordance with the concluded agreement, the limit of the Company amounts to 78 000 000 PLN As a legal security for the claims resulting from the Agreement, the Issuer established the following: bill of exchange in Blanc issued by the Issuer with the bill of exchange declaration; a power of attorney to dispose of the bank account of the Issuer by the Factor; The factoring agreement was extended by 30 September 2011. AGREEMENT AFTER A BALANCE DAY The Company did not conclude any agreements after a balance day. IX) GRANTED LOANS In December 2008 the Company concluded the loan agreement in the amount of 20 thous. PLN the payment with interests was established by the parties as of 30.04.2012. In December 2009 the Company concluded the loan agreement in the amount of 360 thous. PLN the payment with interests was established by the parties as of 31.12.2013. In May 2010 Company concluded the loan agreement in the amount of 30 thous. PLN the payment with interests was established by the parties as of 31.12.2015. In July 2010 Company concluded the loan agreement in the amount of 30 thous. PLN the payment with interests was established by the parties as of 31.12.2015. In August 2010 the Company concluded the loan agreement in the amount of 50 thous. PLN the payment with interests was established by the parties as of 31.12.2015. 22 S t r o n a

In December 2010 the Company concluded the loan agreement in the amount of 200 thous. PLN the payment with interests was established by the parties as of 31.12.2015. In December 2010 the Company concluded the loan agreement in the amount of 15 thous. PLN the payment with interests was established by the parties as of 30.06.2012. X) GRANTED AND OBTAINED SURETIES AND GUARANTEES Within the frames of the security of the conclude trade contracts, the Company granted in total to its business partners in particular years bank guarantee for the following values (amounts in thous units): 31.12.2010 31.12.2009 PLN USD EUR PLN USD EUR - 1000 - - 1000 - The amount of 1 mln USD covers single guarantee for the company Intel with the expiry date of 21 January 2011 (the guarantee was extended for the next year). XI) EXPLANATION OF THE DIFFERENCES BETWEEN THE FINANCIAL RESULTS SHOWN IN THE ANNUAL REPORT AND PREVIOUSLY PUBLISHED FORECASTS OF RESULTS FOR A GIVEN YEAR The company did not publish forecasts. XII) THE ASSESSMENT OF THE FACTORS AND NON-TYPICAL EVENTS AFFECTING THE RESULT ON THE ACTIVITY FOR THE FINANCIAL YEAR The developed result in the period of 6 months, was largely affected by the judgment of the Appeal Court announced on 30 December 2010 in Wrocław on the reimbursement of the unduly collected amount by Raiffeisen Bank Polska S.A. the amounts of 7 499 590 PLN with interests. It validated the decision of the Regional Court, ordering an immediate return of the due amounts to the Company. A disputable amount was covered with the reserve which encumbered he result of the financial year 2008/2009. XIII) THE CHARACTERISTICS OF EXTERNAL AND INTERNAL FACTORS SIGNIFICANT FOR THE DEVELOPMENT OF THE COMPANY AND THE DESCRIPTION OF THE PROSPECTIVES OF DEVELOPMENT OF THE COMPANY S ACTIVITY The basic scope of activity of AB is distribution of computer, computer hardware and software. The experience gained by two decades brings measurable effects on the requiring market, 23 S t r o n a

characterized by high demand variability, large competition in the sector and changing macroeconomic surrounding. As a result of the acquisition of the group of companies within the Czech holding AT Computers Holding a.s., AB became a key player on the market of IT distribution, holding a leader position in the CEE region. This fact undoubtedly, plays a significant meaning within the present development of the Company and the Group as well as will indicate the directions in the next periods. After making the acquisition, many projects were started aiming at using the effects of synergy in many levels cross the companied Merced. In the coming period, AB will continue the implementation of the coherent, unified ERP system class for the whole Group with the solution of business intelligence, the functions of which will allow for larger automatization of the business processes, the unified reporting system and many other benefits. Defining and realized directions of development are presently connected with the development of the whole capital group in which AB as a dominant unit plays a key and strategic role. Already AB uses the benefits brought by new IT infrastructure, acceleration of the reporting and analytical processes which are reflected in a direct manner into the acceleration of the decision processes in key and effective management a large organization. In the current year, the Company continues the construction of the sale structure of its own products, first of all, the computer under the brands Triline and Alsen. As a result of the acquisition made, the AB Company possesses large and professional manufacturing capacities in the Czech company AT Compus, where the computers are manufactured, i.a., in Poland. The adopted plans assume the dynamic increase of the amount of sale of these computers, through consequently constructed network of sale, which is based on three channels: Integrator channel including the system integrators, their main target market are the tenders organized by the institutions, self-governments and enterprises. Commercial networks sale channel based on the present partners such as MediaMarkt, however first of all based on new trade networks. SMB sale channel for the small and medium business, based on the present network of the commercial partners. The activities undertaken and realized by the Company take place in the conditions of high variability of demand, in connection with the general economic situation. Bearing this in mind, the Company assumes the further development on the basis of the following pillars: - low costs of sale and general management low basis of costs contributes to a high er flexibility of operations and at the same time makes that the companies of the Company are more resistant to the negative external factors with the demand nature. - market activity based on a wide port folio of the clients and on the business realized in accordance with the run-rate-business principle, namely daily sale to the clients the Company possesses a diversified Company of clients, concentration of the sale to the largest recipient does not exceed 10% (3,92%). The sale to the clients is based on the granted merchant limits, which are insured in the company Atradius, one of the largest present insurance companies of this type of risk in Poland. 24 S t r o n a

The Management Board of the dominant Company informs in addition that the possession of AT Computers Holding a.s. one of the largest companies dealing with the distribution of the electronic equipment in Czech Republic and Slovakia is very import ant for the development prospectives. As a result of the transaction made, the AB Company consequently constructs the position of the leader in the industry in the region of the Central-Eastern Europe. A significant factor, which will be definite for the development of the Company and the realization of the tasks in the current year shall be the further development of the situation of the world economic crisis and its consequences on the economic growth in the CEE region. The AB Company possesses developed tools for identification and risk management and undertakes proper steps aiming at conducting effective business activity in the forthcoming period. XIV) CHANGES IN THE BASIC PRINCIPLES OF MANAGING THE ISSUER S ENTERPRISE AND ITS CAPITAL COMPANY In the reporting period for which the report is prepared, there were no significant changes in the management principles of the AB Company. XV) INCENTIVE AND BONUS PROGRAMMES BASED ON THE ISSUER S CAPITAL With the Resolution of the Extraordinary Meeting of Shareholders no 23/2007 of 21 September 2007 with the incentive programme, the managerial staff of the subsidiaries was covered. The programme is foreseen for the realization in the next three years starting with 2008, i.e. in 2008, 2009 and 2010. The realization of the programme will take place by means of the issue of the subscription variants entitling to cover not more than 115 000 bearers shares of the Company of the K series. On 6 May 2010, r as a result of fulfilling the conditions defined in the manager programme, the initial capital was increased as a result of the issue of 76 000 items of shares of the K series. For the period completed for 2010 the last tranche of the shares will be granted. XVI) THE SHARES BEING IN THE POSSESSION OF THE PERSONS MANAGING AND SUPERVISING The state of possession of the issuers shares or rights by the persons managing and supervising of the issuer as of the day of transferring the interim report, ie. As of 25 February 2011: State as of 2011-02-25 Number of shares Management Board Shareholder structure by number of shares Numbeof votes Shareholder structure by number of votes Andrzej Przybyło 1 316 200 8,10% 2 629 200 14,90% Krzysztof Kucharski 25 000 0,15% 25 000 0,14% 25 S t r o n a

Zbigniew Mądry 0 0,00% 0 0,00% Grzegorz Ochędzan 15000 0,10% 15000 0,09% Supervisory Board Iwona Przybyło 2944052 18,07% 2944052 16,72% Jacek Łapiński 0 0,00% 0 0,00% Jan Łapiński 0 0,00% 0 0,00% Radosław Kiełbasiński 0 0,00% 0 0,00% Andrzej Bator 0 0,00% 0 0,00% Katarzyna Jażdrzyk 0 0,00% 0 0,00% XVII) INFORMATION ON THE AGREEMENTS KNOWN TO THE ISSUER (INCLUDING ALSO THOSE CONCLUDED AFTER THE BALANCE SHEET DAY), AS A RESULT OF WHICH THERE CAN BE CHANGES IN THE FUTURE IN THE PROPORTIONS OF THE POSSESSED SHARES BY THE PRESENT SHAREHOLDERS AND OBLIGORS The Management Board does not possess the information on the agreements defined in the point. In the company there are three programmes active of employment shares. The details concerning the programmes were described in the consolidated financial report in the note 13. XVIII) THE INFORMATION ON THE ENTITY ENTITLED TO AUDIT THE FINANCIAL REPORT 1st THE DATA ON THE ENTITY ENTITLED TO AUDIT THE FINANCIAL REPORT Avanta Audit Sp. z o.o. with its seat in Bielany Wrocławskie at ul. Szwedzka 5, incorporated into the District Court for Wrocław-Fabryczna, VI Economic Division of the National Court Register, under the KRS number KRS 350760 conducted by KIBR under the number 3595. 2nd THE DATE OF CONCLUDING THE AGREEMENT FOR MAKING THE AUDIT The agreement was concluded on 27 January 2011 covers the conducting the audit of the unit and consolidated financial report for the period of 6 months completed on 31 December 2010, as well as the audit of the nit financial report for the period of 12 months of 2010 and 2011, completed on 30 June 2011. 26 S t r o n a