Asseco Poland S.A. Annual Report
Annual Report
for the year ended 31 December 2015
WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
FINANCIAL STATEMENTS OF ASSECO POLAND S.A. for the year ended 31 December 2015 FINANCIAL HIGHLIGHTS OF ASSECO POLAND S.A...... 5 INCOME STATEMENT OF ASSECO POLAND S.A...... 8 STATEMENT OF COMPREHENSIVE INCOME OF ASSECO POLAND S.A...... 9 STATEMENT OF FINANCIAL POSITION OF ASSECO POLAND S.A...... 10 STATEMENT OF CHANGES IN EQUITY OF ASSECO POLAND S.A...... 12 STATEMENT OF CASH FLOWS OF ASSECO POLAND S.A...... 13 SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS ...... 14 I. GENERAL INFORMATION...... 14 II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS ...... 15 1. Basis for preparation ...... 15 2. Compliance statement ...... 15 3. Estimates ...... 15 4. Professional judgement ...... 15 5. Changes in the accounting policies applied ...... 16 6. New standards and interpretations published but not in force yet ...... 16 7. Corrections of material errors ...... 18 8. Changes in the presentation methods applied ...... 18 III. SIGNIFICANT ACCOUNTING POLICIES ...... 21 1. Property, plant and equipment ...... 21 2. Intangible assets ...... 21 3. Government grants ...... 23 4. Borrowing costs ...... 23 5. Impairment of non-financial assets ...... 23 6. Investments in subsidiaries and associates ...... 24 7. Combination of businesses under common control ...... 24 8. Financial assets ...... 25 9. Financial guarantee contracts ...... 26 10. Inventories ...... 26 11. Prepayments and accrued income ...... 26 12. Trade receivables ...... 26 13. Interest-bearing bank loans and borrowings ...... 27 14. Leasing (Company as a lessee) ...... 28 15. Trade payables ...... 28 16. Transactions and items in foreign currencies ...... 28 17. Provisions ...... 28 18. Provision for warranty repairs ...... 29 19. Revenues ...... 29 20. Revenues and costs related to the execution of implementation contracts ...... 30 21. Operating costs ...... 31 22. Income tax and value added tax ...... 32 23. Earnings per share (basic and diluted) ...... 33 IV. INFORMATION ON OPERATING SEGMENTS ...... 34 V. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS ...... 36 1. Sales revenues and operating costs ...... 36 2. Other operating income and expenses ...... 38 3. Financial income and expenses ...... 39
All figures in millions of PLN, unless stated otherwise 2 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
4. Corporate income tax...... 39 5. Earnings per share ...... 42 6. Information on dividends paid out ...... 42 7. Property, plant and equipment ...... 43 8. Intangible assets ...... 45 9. Investments in subsidiaries and associates ...... 51 10. Impairment testing of non-financial assets ...... 54 11. Other financial assets ...... 57 12. Prepayments and accrued income ...... 59 13. Long-term and short-term receivables ...... 60 14. Implementation contracts ...... 62 15. Inventories ...... 62 16. Cash and cash equivalents ...... 63 17. Non-current assets held for sale ...... 63 18. Assets and liabilities of the Company Social Benefits Fund ...... 63 19. Share capital and other components of equity ...... 63 20. Interest-bearing bank loans and debt securities issued ...... 64 21. Finance lease liabilities and other financial liabilities ...... 65 22. Provisions ...... 67 23. Long-term and short-term trade payables and other liabilities ...... 68 24. Accruals and deferred income ...... 69 25. Related party transactions ...... 70 26. Notes to the Statement of Cash Flows ...... 75 27. Off-balance-sheet liabilities towards related parties ...... 76 28. Off-balance-sheet liabilities towards other entities ...... 76 29. Employment ...... 77 30. Objectives and principles of financial risk management ...... 77 31. Remuneration of the entity authorized to audit financial statements ...... 83 32. Remuneration of the Management Board and Supervisory Board of Asseco Poland S.A...... 83 33. Capital management ...... 84 34. Significant events after the balance sheet date ...... 84
All figures in millions of PLN, unless stated otherwise 3 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Financial Highlights Asseco Poland S.A.
Selected financial data for the year ended 31 December 2015
All figures in millions of PLN, unless stated otherwise 4 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
FINANCIAL HIGHLIGHTS OF ASSECO POLAND S.A. The following table presents selected financial data of Asseco Poland S.A.
12 months ended 12 months ended 12 months ended 12 months ended
31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014 mPLN mPLN mEUR mEUR
Sales revenues 1,313.0 1,321.3 313.8 315.4 Operating profit 180.6 240.3 43.2 57.4 Pre-tax profit 297.9 344.1 71.2 82.1 Net profit 257.1 290.3 61.4 69.3 Net cash provided by (used in) operating 276.7 207.8 66.1 49.6 activities Net cash provided by (used in) investing (39.2) 50.7 (9.4) 12.1 activities Net cash provided by (used in) financing (280.9) (279.6) (67.1) (66.7) activities Cash and cash equivalents at the end of 43.3 86.7 10.2 20.3 period Earnings per ordinary share (in PLN/EUR) 3.10 3.50 0.74 0.84
The financial highlights disclosed in these financial statements were translated into EUR in the following way: . items of the income statement and statement of cash flows have been translated into EUR at the arithmetic average of mid exchange rates as published by the National Bank of Poland and in effect on the last day of each month. These exchange rates were respectively: o in the period from 1 January 2015 to 31 December 2015: EUR 1 = PLN 4.1848 o in the period from 1 January 2014 to 31 December 2014: EUR 1 = PLN 4.1892 . The Company’s cash and cash equivalents as at the end of the reporting period and the comparable period of the previous year have been translated into EUR at daily mid exchange rates as published by the National Bank of Poland. These exchange rates were respectively: o exchange rate effective on 31 December 2015: EUR 1 = PLN 4.2615 o exchange rate effective on 31 December 2014: EUR 1 = PLN 4.2623
All figures in millions of PLN, unless stated otherwise 5 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Financial Statements Asseco Poland S.A.
Financial Statements for the year ended 31 December 2015
prepared in accordance with the International Financial Reporting Standards as endorsed by the EU
All figures in millions of PLN, unless stated otherwise 6 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
FINANCIAL STATEMENTS of Asseco Poland S.A. for the year ended 31 December 2015 These financial statements have been approved for publication by the Management Board of Asseco Poland S.A. on 16 March 2016. Management Board:
President Adam Góral of the Management Board
Vice President Przemysław Borzestowski of the Management Board
Vice President Andrzej Dopierała of the Management Board
Vice President Tadeusz Dyrga of the Management Board
Vice President Rafał Kozłowski of the Management Board
Vice President Marek Panek of the Management Board
Vice President Paweł Piwowar of the Management Board
Vice President Zbigniew Pomianek of the Management Board
Vice President Włodzimierz Serwiński of the Management Board
Vice President Przemysław Sęczkowski of the Management Board
Vice President Robert Smułkowski of the Management Board
Person responsible for maintaining the accounting books:
Renata Bojdo Chief Accountant
All figures in millions of PLN, unless stated otherwise 7 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
INCOME STATEMENT OF ASSECO POLAND S.A.
12 months 12 months
ended 31 Dec. 2015 ended 31 Dec. 2014 Note mPLN mPLN
Sales revenues 1 1,313.0 1,321.3
Cost of sales 1 (1,007.3) (949.3)
Gross profit on sales 305.7 372.0
Selling costs 1 (54.7) (53.4) General and administrative expenses 1 (77.6) (78.5)
Net profit on sales 173.4 240.1
Other operating income 2 9.8 3.7 Other operating expenses 2 (2.6) (3.5)
Operating profit 180.6 240.3
Financial income 3 137.2 146.7 Financial expenses 3 (19.9) (42.9)
Pre-tax profit 297.9 344.1
Corporate income tax 4 (40.8) (53.8) (current and deferred tax expense)
Net profit for the reporting period 257.1 290.3
Earnings per share (in PLN): Basic earnings per share for the reporting period 5 3.10 3.50 Diluted earnings per share for the reporting period 5 3.10 3.50
All figures in millions of PLN, unless stated otherwise 8 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
STATEMENT OF COMPREHENSIVE INCOME OF ASSECO POLAND S.A.
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Net profit for the reporting period 257.1 290.3
Other comprehensive income:
Components that may be reclassified to profit or loss Net profit/loss on valuation of financial assets available for sale, 0.2 0.3 net of deferred income tax
Components that will not be reclassified to profit or loss Amortization of intangible assets recognized directly in equity, (0.8) (0.8) net of deferred income tax
Total other comprehensive income (0.6) (0.5)
TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 256.5 289.8
All figures in millions of PLN, unless stated otherwise 9 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
STATEMENT OF FINANCIAL POSITION OF ASSECO POLAND S.A.
31 Dec. 2015 31 Dec. 2014 1 January 2014 ASSETS Note (restated) (restated) mPLN mPLN mPLN
Non-current assets Property, plant and equipment 7 360.3 376.1 404.0 Intangible assets 8 2,348.3 2,370.8 2,390.3 of which goodwill from business combinations 8 2,040.1 2,057.3 2,057.3 Investment property 0.4 0.4 0.8 Investments in subsidiaries and associates 9 2,162.9 1,999.5 1,967.1 Long-term receivables 13 17.8 12.7 18.7 Other long-term financial assets 11 72.7 65.0 35.3 Deferred tax assets - - 9.8 Long-term prepayments and accrued income 12 5.9 9.5 12.5 4,968.3 4,834.0 4,838.5
Current assets Inventories 15 8.8 13.8 51.0 Trade receivables 13 508.3 485.4 450.3 Corporate income tax receivable 2.2 23.6 5.1 Other receivables 13 24.2 23.2 16.4 Other non-financial assets 2.6 2.2 10.8 Other financial assets 11 43.1 15.3 35.8 Prepayments and accrued income 12 17.7 23.5 31.9 Cash and short-term deposits 16 43.3 86.7 108.2 Non-current assets held for sale 17 6.7 13.2 15.0 656.9 686.9 724.5
TOTAL ASSETS 5,625.2 5,520.9 5,563.0
All figures in millions of PLN, unless stated otherwise 10 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
STATEMENT OF FINANCIAL POSITION OF ASSECO POLAND S.A.
31 Dec. 2015 31 Dec. 2014 1 January 2014 EQUITY AND LIABILITIES Note (restated) (restated) mPLN mPLN mPLN
TOTAL EQUITY Share capital 19 83.0 83.0 83.0 Share premium 19 4,180.1 4,180.1 4,180.1 Retained earnings and current net profit 726.5 710.7 637.1 4,989.6 4,973.8 4,900.2
Non-current liabilities Long-term interest-bearing bank loans, borrowings 20 77.2 89.9 122.1 and debt securities Long-term finance lease liabilities 21 85.1 104.6 119.5 Other long-term financial liabilities 21 18.3 - - Deferred tax liabilities 4 3.3 15.2 - Other long-term liabilities 23 4.5 1.9 1.4 Long-term provisions 22 37.5 28.7 34.1 Long-term deferred income 24 43.2 49.7 50.3 269.1 290.0 327.4
Current liabilities Interest-bearing bank loans, borrowings and debt 20 13.2 13.3 16.0 securities Finance lease liabilities 21 19.5 18.1 16.4 Other financial liabilities 21 9.2 - 0.8 Trade payables 23 204.6 125.9 172.0 Corporate income tax payable 23 - - - Liabilities to the state and local budgets 23 25.3 27.0 36.6 Other liabilities 23 9.3 2.9 9.6 Provisions 22 32.0 15.8 16.9 Accruals 24 41.6 41.2 47.9 Deferred income 24 11.8 12.9 19.2 366.5 257.1 335.4
TOTAL LIABILITIES 635.6 547.1 662.8
TOTAL EQUITY AND LIABILITIES 5,625.2 5,520.9 5,563.0
All figures in millions of PLN, unless stated otherwise 11 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
STATEMENT OF CHANGES IN EQUITY OF ASSECO POLAND S.A.
Retained earnings Note Share capital Share premium and current net Total equity profit mPLN mPLN mPLN mPLN
As at 1 January 2015 83.0 4,180.1 710.7 4,973.8
Net profit for the reporting period - - 257.1 257.1 Total other comprehensive income for the reporting period - - (0.6) (0.6) Dividend for the year 2014 6 - - (240.7) (240.7)
As at 31 December 2015 83.0 4,180.1 726.5 4,989.6
As at 1 January 2014 83.0 4,180.1 637.1 4,900.2
Net profit for the reporting period - - 290.3 290.3 Total other comprehensive income for the reporting period - - (0.5) (0.5) Merger with PiW Postinfo - - (0.4) (0.4) Dividend for the year 2013 6 - - (215.8) (215.8)
As at 31 December 2014 83.0 4,180.1 710.7 4,973.8
All figures in millions of PLN, unless stated otherwise 12 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
STATEMENT OF CASH FLOWS OF ASSECO POLAND S.A.
12 months ended 12 months ended 31 Dec. 2015 31 Dec. 2014 Note mPLN mPLN
Cash flows – operating activities Pre-tax profit 297.9 344.1 Total adjustments: 26.6 (90.6) Depreciation and amortization 1 54.2 60.3 Changes in working capital 26 77.0 (44.9) Interest income/expenses 5.0 5.3 (Gain)/loss on foreign exchange differences 1.2 3.7 Dividend income (128.0) (99.3) Other financial (income)/expenses 2.2 (14.3) Impairment write-downs on intangible assets - - (Gain)/loss on investing activities 15.0 (1.4) Cash generated from operating activities 324.5 253.5 Corporate income tax paid (47.8) (45.7) Net cash provided by (used in) operating activities 276.7 207.8
Cash flows – investing activities Disposal of tangible fixed assets and intangible assets 9.0 4.0 Acquisition of tangible fixed assets and intangible assets 26 (20.3) (18.2) Expenditures for development projects in progress 26 (19.8) (6.9) Prepayments for the acquisition of shares - - Acquisition of shares in related companies 26 (143.3) (7.0) Cash and cash equivalents in subsidiaries acquired - 0.1 Disposal of financial assets carried at fair value through profit or 2.7 2.6 loss Loans collected 26 41.0 18.8 Loans granted 26 (42.7) (41.0) Interest received 4.1 6.3 Dividends received 26 130.1 92.0 Net cash provided by (used in) investing activities (39.2) 50.7
Cash flows – financing activities Dividend paid out 26 (240.7) (215.8) Repayment of bank loans and borrowings 26 (12.9) (34.7) Finance lease liabilities paid (17.8) (16.5) Interest paid (9.5) (12.6) Net cash provided by (used in) financing activities (280.9) (279.6) Net change in cash and cash equivalents (43.4) (21.1) Net foreign exchange differences - (0.4) Cash and cash equivalents as at 1 January 86.7 108.2 Cash and cash equivalents as at 31 December 16 43.3 86.7
All figures in millions of PLN, unless stated otherwise 13 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS I. GENERAL INFORMATION software in Europe (Top 100 European Software Asseco Poland S.A. (the “Company”, “Issuer”, Vendors, Truffle Capital 2015). “Asseco”) with registered office at 14 Olchowa St., Rzeszów, Poland, was established on Asseco Poland S.A. concentrates on the 18 January 1989 as a limited liability company, production and development of proprietary and subsequently under notary deed of 31 August software, dedicated for each sector of the 1993 it was transformed into and since then has economy. It is one of the very few companies in operated as a joint-stock company with registered Poland to develop and implement centralized and office at 72a, 17 Stycznia St., Warsaw, Poland. comprehensive IT systems for the banking sector The Company is entered in the Register of that are utilized by over half of domestic banks. Entrepreneurs of the National Court Register Furthermore, Asseco offers software solutions for under the number KRS 0000033391 (previously it the insurance industry and implements dedicated was entered in the Commercial Register systems for the public administration, among maintained by the District Court of the Capital others for the Polish Social Insurance Institution City of Warsaw, Commercial Court, XVI (ZUS), Agency for Restructuring and Commercial and Registration Department, under Modernization of Agriculture (ARMiR), and the the number RHB 17220). Ministry of the Interior and Administration (MSWiA). Asseco implements numerous IT On 4 January 2007 the Issuer changed its projects for the energy industry, corporate name from Softbank S.A. to Asseco telecommunications, healthcare, local Poland S.A., and moved its registered office from governments, agriculture, uniformed services, as ul. 17 Stycznia 72a, Warsaw to Al. Armii Krajowej well as for international organizations and 80, Rzeszów. institutions such as NATO or FRONTEX. Asseco’s On 8 March 2010, the Issuer moved its registered product portfolio also includes sector- office from 80 Armii Krajowej Av., Rzeszów to independent ERP and Business Intelligence 14 Olchowa St., Rzeszów. solutions. Since 1998, the Company’s shares have been As a leader of the Group, Asseco Poland S.A. listed on the main market of the Warsaw Stock intends to be actively engaged in mergers and Exchange S.A. The Company has been assigned acquisitions both in the domestic and foreign the statistical ID number REGON 010334578. markets, seeking to strengthen its position across Europe and worldwide. Now the Company is The period of the Company’s operations is expanding its investment spectrum for software indefinite. houses, with an eye to gain insight into their local Asseco Poland S.A. is the largest IT company listed markets and customers, as well as access to on the Warsaw Stock Exchange. Asseco also innovative and unique IT solutions. ranked in the top ten of the largest producers of
All figures in millions of PLN, unless stated otherwise 14 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS
1. Basis for preparation management best knowledge about the current activities and occurrences, the actual results may These financial statements were prepared in differ from those anticipated. accordance with the historical cost convention, except for financial assets carried at fair value Presented below are the main areas which, in through profit or loss, financial assets available the process of applying our accounting policies, for sale, and investment property which are were subject not only to accounting estimates measured at fair value. but also to the management’s professional judgement, and whose estimates, if changed, The presentation currency of these financial could significantly affect the Company’s future statements is the Polish zloty (PLN), and all results. figures are presented in millions of PLN (mPLN), unless stated otherwise. i. Valuation of IT contracts and measurement of their completion These financial statements were prepared on a going-concern basis, assuming the Company will The Company executes a number of contracts for continue its business operations over a period construction and implementation of information not shorter than 12 months from 31 December technology systems. Additionally, some of those 2015. Till the date of approving these financial contracts are denominated in foreign currencies. statements, we have not observed any Valuation of IT contracts requires that future circumstances that would threaten the operating cash flows are determined in order to Company’s ability to continue as a going arrive at the fair value of income and expenses concern. and to provide the fair value of the embedded currency derivatives, as well as it requires 2. Compliance statement measurement of the progress of contract These financial statements have been prepared execution. The percentage of contract in compliance with the International Financial completion shall be measured as the relation of Reporting Standards (“IFRS”) as endorsed by the costs already incurred (provided such costs European Union (“EU IFRS”). contribute to the progress of work) to the total costs planned, or as a portion of man-days IFRS include standards and interpretations worked out of the total work effort required. accepted by the International Accounting Standards Board (IASB) and the International Assumed future operating cash flows are not Financial Reporting Interpretations Committee always consistent with the agreements with (IFRIC). customers or suppliers due to modifications of IT projects implementation schedules. As at As at the date of approving publication of these 31 December 2015, receivables generated from financial statements, given the ongoing process valuation of IT contracts amounted to PLN 116.7 of implementing IFRS in the EU as well as the million, while liabilities arising from such nature of the Company’s operations, within the valuation equalled PLN 13.8 million. scope of accounting policies applied by the Company there is no difference between IFRS In case of contracts denominated in foreign that came into force and IFRS endorsed by the currencies deemed to be functional currencies or European Union. in case of contracts denominated in EUR (even if EUR is not a functional currency), embedded 3. Estimates financial derivatives are not disclosed separately. In the period of 12 months ended 31 December In the Management’s opinion, EUR should be 2015, our approach to making estimates was not regarded as a currency commonly used in subject to any substantial change. contracts for the sale or purchase of IT systems and services. Revenues and expenses relating to 4. Professional judgement such contracts are determined on the basis of Preparation of financial statements in spot exchange rates. In all the other cases accordance with IFRS requires making estimates embedded derivatives are separated from their and assumptions which have an impact on the host contracts. When an embedded instrument data disclosed in such financial statements. is separated, revenues resulting from the host Despite the estimates and assumptions have contract are recognized at the embedded been adopted based on the Company’s exchange rate; whereas, any foreign exchange
All figures in millions of PLN, unless stated otherwise 15 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015 differences between the exchange rate applied cash-generating unit requires estimating the in the issued invoice and the embedded future cash flows expected to be achieved from exchange rate are recognized as financial income such an asset or cash-generating unit, as well as or expense. As at 31 December 2015, no determining a discount rate to be subsequently embedded instruments were separated from any used in order to calculate the present value of effective agreements. those cash flows. Disclosures concerning the annual impairment test, which was performed as ii. Rates of depreciation and amortization at 31 December 2015, have been presented in The level of depreciation and amortization rates explanatory note 10 to these financial is determined on the basis of anticipated period statements. of useful economic life of the components of v. Classification of lease agreements tangible and intangible assets. The Company verifies the adopted periods of useful life on an The Company classifies its lease contracts as annual basis, taking into account the current operating or financial depending on whether estimates. In 2015, the rates of depreciation and substantially all the risks and rewards incidental amortization applied by the Company were not to ownership of leased assets are retained by the subject to any significant modifications. lessor or transferred to the lessee. Such assessment is based on the economic substance iii. Internally generated intangible assets of each leasing transaction. The costs of internally generated intangible 5. Changes in the accounting policies applied assets are measured and capitalized in line with the Company’s accounting policy. The The accounting policies adopted in the determination of when to begin the preparation of these financial statements are capitalization of such costs is subject to the consistent with those followed when preparing management’s professional judgement as to the the Company’s annual financial statements for technological and economic feasibility of the year ended 31 December 2014, which were completing the development project. This published on 13 March 2015. moment is determined by reaching a stage The Company did not decide on early adoption (milestone) of the project, at which the Company of any standard, interpretation or amendment is reasonably certain of being able to complete which has been published but has not yet the intangible asset so that it will be available for become effective. use or sale, and that future economic benefits to be obtained from use or sale of such intangible 6. New standards and interpretations published asset will exceed its production cost. but not in force yet Thus, when determining the amount of The following standards and interpretations capitalizable expenditures, the Management were issued by the International Accounting Board needs to estimate the present value of Standards Board (IASB) and International future cash flows to be generated by the Financial Reporting Interpretations Committee intangible asset. (IFRIC), but have not yet come into force: iv. Impairment of non-financial assets . IFRS 9 Financial Instruments (issued on 24 July 2014) – not yet endorsed by the EU till the Goodwill is tested for impairment on an annual date of approval of these financial statements basis, whereas in the case of other assets, – effective for annual periods beginning on or the Company determines whether there are any after 1 January 2018; indications of possible impairment of non- . Amendments to IAS 19 Defined Benefit Plans: financial fixed assets (including intangible assets, Employee Contributions (issued on tangible fixed assets, and investments in 21 November 2013) – effective for annual subsidiaries). If such indications are identified or periods beginning on or after 1 July 2014 – to if it is necessary to perform an annual be applied in the EU at the latest for annual impairment test on non-financial assets, periods beginning on or after 1 February the Company shall compare the carrying value of 2015; an asset with the higher of the following two amounts: the market value or value in use of such an asset or of the cash-generating unit, to which such an asset has been allocated. Determination of the value in use of an asset or
All figures in millions of PLN, unless stated otherwise 16 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
. Annual Improvements to IFRSs: 2010-2012 . Annual Improvements to IFRSs: 2012-2014 Cycle (issued on 12 December 2013) – some Cycle (issued on 25 September 2014) – amendments are effective for annual periods effective for annual periods beginning on or beginning on or after 1 July 2014, and some after 1 January 2016; prospectively for transactions occurring on or . Amendments to IFRS 10, IFRS 12 and IAS 28 after 1 July 2014 – to be applied in the EU at Investment Entities: Applying the the latest for annual periods beginning on or Consolidation Exception (issued on after 1 February 2015; 18 December 2014) – not yet endorsed by the . IFRS 14 Regulatory Deferral Accounts (issued EU till the date of approval of these financial on 30 January 2014) – the European statements – effective for annual periods Commission has decided not to initiate the beginning on or after 1 January 2016; process of endorsement of this standard until . Amendments to IAS 1 Disclosure Initiative the release of its final version – not yet (issued on 18 December 2014) – effective for endorsed by the EU till the date of approval annual periods beginning on or after of these financial statements – effective for 1 January 2016; annual periods beginning on or after 1 January 2016; . IFRS 16 Leases (issued on 13 January 2016) – it has not yet been decided when the EFRAG . Amendments to IFRS 11 Accounting for shall perform specific steps for the Acquisitions of Interests in Joint Operations endorsement of these amendments – not yet (issued on 6 May 2014) – effective for annual endorsed by the EU till the date of approval periods beginning on or after 1 January 2016; of these financial statements – effective for . Amendments to IAS 16 and IAS 38 annual periods beginning on or after 1 January Clarification of Acceptable Methods of 2019; Depreciation and Amortization (issued on . Amendments to IAS 12 Recognition of 12 May 2014) – effective for annual periods Deferred Tax Assets for Unrealized Losses beginning on or after 1 January 2016; (issued on 19 January 2016) – not yet . IFRS 15 Revenue from Contracts with endorsed by the EU till the date of approval Customers (issued on 28 May 2014), including of these financial statements – effective for the amendment of the Effective Date of IFRS annual periods beginning on or after 1 January 15 (issued on 11 September 2015) – not yet 2017; endorsed by the EU till the date of approval . Amendments to IAS 7 Disclosure Initiative of these financial statements – effective for (issued on 29 January 2016) – not yet annual periods beginning on or after 1 January endorsed by the EU till the date of approval 2018; of these financial statements – effective for . Amendments to IAS 16 and IAS 41 annual periods beginning on or after 1 January Agriculture: Bearer Plants (issued on 30 June 2017. 2014) – effective for annual periods beginning
on or after 1 January 2016; The Company is currently conducting an analysis . Amendments to IAS 27 Equity Method in of how the above-mentioned amendments are Separate Financial Statements (issued on going to impact its financial statements. 12 August 2014) – effective for annual periods beginning on or after 1 January 2016; . Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (issued on 11 September 2014) – it has not yet been decided when the EFRAG shall perform specific steps for the endorsement of these amendments – not yet endorsed by the EU till the date of approval of these financial statements – the effective date of these amendments has been deferred indefinitely by the IASB;
All figures in millions of PLN, unless stated otherwise 17 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
7. Corrections of material errors In the reporting period, no events occurred that would require making corrections of any misstatements. 8. Changes in the presentation methods applied As of 1 January 2015, the Company has changed the method of classification of certain receivables and liabilities, and in particular the way of recognizing receivables/liabilities as related to trade or other activities. Starting from 1 January 2015, the Company decided that all receivables resulting in the recognition of sales revenues shall be presented as trade receivables. Hence, as of 1 January 2015, trade receivables include the following categories: . receivables from issued invoices, . receivables from uninvoiced deliveries, . receivables from valuation of IT contracts. Until 31 December 2014, the two last-mentioned categories used to be presented by the Company in “other receivables”. Changes in the presentation of receivables resulted in the necessity of introducing analogous changes in the methods of presentation of liabilities. This involved in particular the following reclassifications: . liabilities arising from valuation of IT contracts as well as liabilities for uninvoiced deliveries have been, as of 1 January 2015, classified as trade payables; . provisions for losses on IT contracts have been reclassified as “provisions”. The impact of the above-described changes on the comparable data has been presented in the tables below.
All figures in millions of PLN, unless stated otherwise 18 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Restated Restated Statement of Changes in the Statement of Changes in the statement of statement of Restatement of comparable data financial presentation Restatement of comparable data financial presentation financial position financial position position as at methods position as at methods as at 31 December 2014 as at as at 31 December 2014 as at 31 Dec. 2014 applied 31 Dec. 2014 applied 31 Dec. 2014 31 Dec. 2014
(restated) (restated)
mPLN mPLN mPLN mPLN mPLN mPLN
Non-current assets 4,834.0 - 4,834.0 Total equity 4,973.8 - 4,973.8 Property, plant and equipment 376.1 - 376.1 Share capital 83.0 - 83.0 Intangible assets 2,370.8 - 2,370.8 Share premium 4,180.1 - 4,180.1 of which goodwill from business combinations 2,057.3 - 2,057.3 Retained earnings and current net profit 710.7 - 710.7 Investment property 0.4 - 0.4 Investments in subsidiaries and associates 1,999.5 - 1,999.5 Non-current liabilities 290.0 - 290.0 Long-term receivables 12.7 - 12.7 Bank loans and borrowings 89.9 - 89.9 Long-term financial assets 65.0 - 65.0 Finance lease liabilities 104.6 - 104.6 Deferred tax assets - - - Financial liabilities - - - Prepayments and accrued income 9.5 - 9.5 Deferred tax liabilities 15.2 - 15.2 Other liabilities 1.9 - 1.9 Provisions 28.7 - 28.7 Deferred income 49.7 - 49.7
Current assets 686.9 - 686.9 Current liabilities 257.1 - 257.1 Inventories 13.8 - 13.8 Bank loans and borrowings 13.3 - 13.3 Trade receivables 207.6 277.8 485.4 Finance lease liabilities 18.1 - 18.1 Corporate income tax receivable 23.6 - 23.6 Financial liabilities - - - Other receivables 301.0 (277.8) 23.2 Trade payables 84.0 41.9 125.9 Other non-financial assets 2.2 - 2.2 Corporate income tax payable - - - Financial assets 15.3 - 15.3 Liabilities to the state and local budgets 27.0 - 27.0 Prepayments and accrued income 23.5 - 23.5 Other liabilities 42.9 (40.0) 2.9 Cash and cash equivalents 86.7 - 86.7 Provisions 7.9 7.9 15.8 Assets held for sale 13.2 - 13.2 Accruals 51.0 (9.8) 41.2 Deferred income 12.9 - 12.9 TOTAL LIABILITIES 547.1 - 547.1 TOTAL ASSETS 5,520.9 - 5,520.9 TOTAL EQUITY AND LIABILITIES 5,520.9 - 5,520.9
All figures in millions of PLN, unless stated otherwise 19 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Statement of Changes in the Restated Statement of Changes in the Restated Restatement of comparable data financial presentation statement of Restatement of comparable data financial presentation statement of as at 1 January 2014 position as at methods financial position as at 1 January 2014 position as at methods financial position 1 Jan. 2014 applied as at 1 Jan. 2014 1 Jan. 2014 applied as at 1 Jan. 2014 (restated) (restated)
mPLN mPLN mPLN mPLN mPLN mPLN
Non-current assets 4,838.5 - 4,838.5 Total equity 4,900.2 - 4,900.2 Property, plant and equipment 404.0 - 404.0 Share capital 83.0 - 83.0 Intangible assets 2,390.3 - 2,390.3 Share premium 4,180.1 - 4,180.1 of which goodwill from business combinations 2,057.3 - 2,057.3 Retained earnings and current net profit 637.1 - 637.1 Investment property 0.8 - 0.8 Investments in subsidiaries and associates 1,967.1 - 1,967.1 Non-current liabilities 327.4 - 327.4 Long-term receivables 18.7 - 18.7 Bank loans and borrowings 122.1 - 122.1 Long-term financial assets 35.3 - 35.3 Finance lease liabilities 119.5 - 119.5 Deferred tax assets 9.8 - 9.8 Financial liabilities - - - Prepayments and accrued income 12.5 - 12.5 Deferred tax liabilities - - - Other liabilities 1.4 - 1.4 Provisions 34.1 - 34.1 Deferred income 50.3 - 50.3
Current assets 724.5 - 724.5 Current liabilities 335.4 0.0 335.4 Inventories 51.0 - 51.0 Bank loans and borrowings 16.0 - 16.0 Trade receivables 239.3 211.0 450.3 Finance lease liabilities 16.4 - 16.4 Corporate income tax receivable 5.1 - 5.1 Financial liabilities 0.8 - 0.8 Other receivables 227.4 (211.0) 16.4 Trade payables 116.5 55.5 172.0 Other non-financial assets 10.8 - 10.8 Corporate income tax payable - - - Financial assets 35.8 - 35.8 Liabilities to the state and local budgets 36.6 - 36.6 Prepayments and accrued income 31.9 - 31.9 Other liabilities 70.9 (61.3) 9.6 Cash and cash equivalents 108.2 - 108.2 Provisions 4.2 12.7 16.9 Assets held for sale 15.0 - 15.0 Accruals 54.8 (6.9) 47.9 Deferred income 19.2 - 19.2 TOTAL LIABILITIES 662.8 0.0 662.8 TOTAL ASSETS 5,563.0 - 5,563.0 TOTAL EQUITY AND LIABILITIES 5,563.0 0.0 5,563.0
All figures in millions of PLN, unless stated otherwise 20 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
III. SIGNIFICANT ACCOUNTING POLICIES
1. Property, plant and equipment For this to be the case, the asset must be available for immediate sale in its present condition and its Property, plant and equipment are disclosed at sale must be highly probable. The fact of purchase cost or production cost decreased by classifying an asset as held for sale means that the accumulated depreciation and any impairment Company’s management intends to complete the write-downs. The initial value of a tangible asset sale transaction within one year from the date of corresponds to its purchase cost increased by such classification. Fixed assets that have been expenditures related directly to the purchase classified as held for sale are measured at the and adaptation of such asset to its intended use. lower of their carrying value and fair value less Such expenditures may also include the cost of costs to sell. replacing parts of machinery or equipment at the time that cost is incurred if the recognition 2. Intangible assets criteria are met. Any costs incurred after a Intangible assets purchased in a separate tangible asset is made available for use, such as transaction shall be capitalized at purchase cost. maintenance or repair fees, are expensed in the income statement at the time when incurred. Goodwill is disclosed at purchase cost less any accumulated impairment charges. The principles At the time of purchase tangible assets are for recognition of goodwill are described in item divided into components of significant value for 7, whereas the principles for carrying out an which separate periods of useful life may be annual impairment test are described in item 5 adopted. General overhaul expenses constitute a of this accounting policy. component of assets as well. The period of useful life of an intangible asset Such assets are depreciated using the straight- shall be assessed and classified as definite or line method over their expected useful lives. indefinite. Intangible assets with a definite The Company verifies the adopted periods of period of useful life are amortized using the useful life on an annual basis, taking into account straight-line method over the expected useful the current estimates. In 2015, the rates of life, and amortization charges are expensed depreciation and amortization applied by the adequately in the income statement. Company were not subject to any significant The Company verifies the adopted periods of modifications. useful life on an annual basis, taking into account A tangible asset may be derecognized from the the current estimates. In 2015, the rates of balance sheet after it is disposed of or when no depreciation and amortization applied by the economic benefits are expected from its further Company were not subject to any significant use. Any gains or losses resulting from modifications. derecognition of an asset from the balance sheet Impairment tests shall be performed every year (measured as the difference between net for intangible assets with an indefinite period of proceeds from disposal of such asset and its useful life and those which are no longer used. carrying value) are recognized in the income The remaining intangible assets shall be tested statement for the period when such for impairment if there are indications of a derecognition is made. possible impairment. Should the carrying value Investments in progress relate to tangible assets exceed the estimated recoverable amount (the under construction or during assembly and are higher of the following two amounts: net sales recognized at purchase cost or production cost, price or value in use), the value of these assets decreased by any potential impairment shall be reduced to the recoverable amount. write-downs. Tangible assets under construction Any gains or losses resulting from derecognition are not depreciated until their construction is of an intangible asset from the balance sheet completed and they are made available for use. (measured as the difference between net Tangible assets or groups of tangible assets are proceeds from disposal of such asset and its classified as held for sale when their carrying carrying value) are recognized as other operating value will be recovered principally through a sale income or expenses in the income statement at transaction rather than through continuing use. the time when such derecognition is made.
All figures in millions of PLN, unless stated otherwise 21 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Internally generated intangible assets including depreciation of equipment used in the generation process as well as rental The Company presents in separate categories costs of any office space utilized by the work the final products of development projects team. (“internally generated software”) and the products which have not been finished yet The cost of an internally generated intangible (“costs of development projects in progress”). An asset shall not include: intangible asset generated internally as a result . selling, administrative and other general of development work (or completion of the overhead expenditures; development phase of an internal project) may be recognized if, and only if, the Company is able . clearly identified work inefficiencies and to demonstrate: initial operating losses incurred before an intangible asset achieves planned . the technical feasibility of completing such performance; and intangible asset so that it would be available . expenditures on training staff to operate for use or sale; such intangible asset. . the intention to complete the construction of such intangible asset; Until completion of the development work, accumulated costs directly attributable to such . the ability to use or sell such intangible development work are disclosed as “costs of asset; development projects in progress”. Upon . how such intangible asset is going to completion of the development work, the ready- generate probable future economic benefits; made product of the development work is . the availability of adequate technical, reclassified to the category of “Internally financial and other resources to complete generated software” and from that time the the development work and to make the Company begins to amortize such internally intangible asset ready for use or sale; generated software. Costs of development work . its ability to measure reliably the which satisfy the above-mentioned criteria are expenditure for the development work recognized at purchase cost less accumulated attributable to such intangible asset. amortization and accumulated impairment write-downs. All the expenditures carried The cost of an internally generated intangible forward to future periods are subject to asset is the sum of expenditures incurred from amortization over the estimated period in which the date when the intangible asset first meets the related undertaking generates sales the above-mentioned recognition criteria. revenues. Expenditures previously recognized as expenses may not be capitalized. The cost of an internally generated intangible asset comprises directly attributable costs necessary to create, produce, and prepare that asset to be capable of operating in the manner intended by management. Such costs shall include: . costs of benefits for employees who are directly involved in the generation of an intangible asset; . all directly attributable costs necessary to create, produce, and adjust an intangible asset, including any legal title registration fees and amortization of patents and licenses that are used to generate such intangible asset; . costs of materials and services that are used or consumed directly in generating an intangible asset; . indirect costs that are directly attributable to the generation of an intangible asset,
All figures in millions of PLN, unless stated otherwise 22 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
3. Government grants the carrying value of an asset is higher than its recoverable amount, in which case such asset Government grants are recognized if, and only if, shall be written-down to the determined there is reasonable assurance that a beneficiary recoverable amount. In order to determine the company will comply with the conditions value in use, estimated future cash flows shall be attached to such grants and that such grants will discounted to their present value by applying a be received. A grant shall be accounted for using pre-tax discount rate that reflects the current the same approach irrespective of whether it is market assessments of the time value of money received in cash or as a reduction of liabilities and the risks related to the given asset. towards the government. Impairment write-downs on assets used in If a grant is related to a specific cost item, then it continuing operations are recognized as shall be recognized as income (or as a reduction operating expenses. of expense) proportionally to the costs that the At each balance sheet date, the Company grant is intended to compensate. determines whether there are any indications for Whereas, if a grant is related to a specific asset, reversal or reduction of an impairment charge then its fair value is accounted for as deferred that was recognized on a given asset in the prior income which is afterwards systematically, by periods. If such indications exist, the Company way of equal annual write-offs, recognized in the needs to estimate the recoverable amount of income statement over the estimated useful life relevant asset. A formerly recognized of the related asset as a reduced depreciation impairment charge may be reversed only when, expense. from the date of the last recognition of impairment, changes in the estimates applied for 4. Borrowing costs determination of the recoverable amount of the Borrowing costs that are directly attributable to relevant asset occurred. If this is the case, the the acquisition, construction or production of an carrying value of such asset shall be increased to asset, that requires substantial time to be its recoverable amount. The increased amount prepared to its intended use or sale, shall be cannot exceed the given asset’s book value (net capitalized as part of such asset’s purchase cost of depreciation) that would be carried in case no or production cost. Other borrowing costs shall impairment charge was recognized on such asset be recognized as an expense in the period in in the prior years. A reversal of an impairment which they are incurred. Borrowing costs include charge shall be immediately recognized as a interest expense as well as foreign exchange reduction of operating expenses. Following a gains or losses to the extent achievable by an reversal of an impairment write-down, the adjustment of interest expense. depreciation charges made on the relevant asset during subsequent financial periods shall be 5. Impairment of non-financial assets adjusted in such a way as to enable systematic At each balance sheet date, the Company depreciation of the asset’s verified book value determines whether there are any indications of (net of residual value) over the remaining period impairment of non-financial fixed assets. In the of its useful life. event such indications occur, or when it is necessary to carry out an annual impairment test, the Company estimates the recoverable amount of a given asset or cash-generating unit to which such asset has been allocated. The recoverable amount of an asset or cash- generating unit corresponds to the fair value of such asset or cash-generating unit less the costs necessary to make the sale of such asset or cash- generating unit, or to the value in use of such asset or cash-generating unit, whichever is higher. This recoverable amount is measured for individual assets unless a given asset does not generate cash flows significantly independent from cash flows generated by other assets or groups of assets. Impairment takes place when
All figures in millions of PLN, unless stated otherwise 23 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
6. Investments in subsidiaries and associates . any difference between the purchase price paid/transferred and the value of net assets Subsidiaries are entities in which the Company acquired (at their carrying values disclosed in possess all the following three elements of the consolidated financial statements) shall control: be recognized in equity of the acquirer (such power over the investee; amounts recognized in equity are not included in reserve capital, and therefore rights to variable returns from involvement they are not distributable); with the investee; and . the income statement presents the financial the ability to use power over the investee to results of both combined entities from the affect the amount of the investor’s returns. date when their merger was effected; Associates are entities in which the Company whereas, the results for earlier reporting holds more than 20% and not more than 50% of periods are not restated. voting rights at the general meeting of In the event of a business combination in which shareholders and on which the Company exerts a an investment in one subsidiary is contributed to significant influence, however, without the another subsidiary or in which two subsidiaries ability to control them jointly. This means they of Asseco Poland are combined, the carrying are neither subsidiaries nor joint ventures. value of investment in the acquiree subsidiary is Investments in subsidiaries and associates are only transferred to the value of investment in recognized by the Company at historical cost less the acquirer subsidiary. Hence, a takeover of one any impairment charges. subsidiary by another subsidiary has no impact on the Company’s financial results whatsoever. 7. Combination of businesses under common control A business combination involving business entities under common control is a business combination whereby all of the combining business entities are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not transitory. This refers in particular to transactions such as a transfer of companies or ventures between individual companies within a capital group, or a merger of a parent company with its subsidiary. The effects of combinations of businesses under common control are accounted for by the Company by the pooling of interests method, assuming that: . assets and liabilities of the combining business entities are measured at their carrying values as disclosed in the Company’s consolidated financial statements. This means that goodwill recognized initially in the consolidated financial statements as well as any other intangible assets recognized in the merger accounting process are transferred to the separate financial statements; . merger-related transaction costs are expensed in the income statement (financial expenses); . mutual balances of accounts receivable/payable are eliminated;
All figures in millions of PLN, unless stated otherwise 24 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
8. Financial assets income or expenses in the income statement. In the event a contract includes one or more Financial assets are divided into the following embedded financial derivatives, the whole categories: contract may be classified as a financial asset . financial assets held to maturity, carried at fair value through profit or loss. This is . financial instruments carried at fair value not applicable where the embedded derivative through profit or loss, instrument does not significantly modify the cash flows that otherwise would be required by the . loans and receivables, contract, or it is clear with little or no analysis . financial assets available for sale. when a similar hybrid instrument is first Financial assets held to maturity are financial considered that separation of the embedded assets quoted on an active market that are not derivative is prohibited. Financial assets may be derivative instruments, have identified or initially recognized as assets carried at fair value identifiable payments and a fixed maturity date, through profit or loss provided the following which the Company intends and is able to hold criteria are met: (i) such qualification eliminates till maturity, and are different from: or substantially decreases any inconsistency in recognition or measurement (accounting . financial assets designated at the initial mismatch); or (ii) such assets belong to the group recognition as carried at fair value through of financial assets which are managed and profit or loss, evaluated on a fair value basis, according to a . financial assets designated as available for documented risk management strategy. sale, Loans and receivables are financial assets, not . assets qualifying as loans and receivables. classified as derivative instruments, with Financial assets held to maturity are valued at identified or identifiable payments which are not amortized cost using the effective interest rate. quoted on an active market. They are recognized Financial assets held to maturity shall be as current assets unless their maturity periods classified as fixed assets if their maturity exceeds are longer than 12 months from the balance 12 months from the balance sheet date. sheet date. Loans granted and receivables with maturity periods longer than 12 months from the Financial assets carried at fair value through balance sheet date are recognized as fixed profit or loss include assets that satisfy one of assets. the following conditions: Financial assets available for sale comprise . have been classified as assets held for financial assets which are not derivative trading. Financial assets are classified as held instruments, and which have been designated as for trading if they are: available for sale, or do not belong to any of the purchased for resale in short term (up to above three categories of financial assets. 3 months), Financial assets available for sale are carried at a part of the portfolio of specific financial fair value, increased by the transaction-related instruments which are managed costs that are directly attributable to the together, and which are likely to acquisition or issuance of a financial asset. If generate short-term gains, financial instruments are not quoted on an active market and it is impossible to determine their derivative instruments, except for fair value reliably with alternative methods, such derivatives which are used as the financial assets available for sale shall be elements of hedge accounting or measured at purchase cost adjusted by financial guarantee contracts; impairment charges. Any positive or negative . have been classified in this category, in differences between the fair value of financial accordance with IAS 39, at the time of initial assets available for sale (on condition the price recognition. of such assets is determined in a regulated active Financial assets carried at fair value through market or their fair value can be measured in profit or loss are measured at the market value another reliable way) and their purchase cost, of financial instruments as at the balance sheet shall be recognized net of deferred tax in other date with no regard to any costs of their disposal comprehensive income. A decrease in the value transaction. Changes in the value of such of assets available for sale, resulting from their financial instruments are recognized as financial
All figures in millions of PLN, unless stated otherwise 25 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
impairment, shall be recognized as a financial The initial value of service parts is expensed on a expense. straight-line basis over the duration of the maintenance service contract, for which such Purchases or disposals of financial assets are parts have been purchased. recognized in the accounting books at the transaction date. At the initial recognition, Every year the Company verifies whether the financial assets are measured at fair value which, adopted principles for recognition of write- in case of assets not classified as carried at fair downs correspond to the actual impairment of value through profit or loss, shall be increased by its inventories. directly attributable transaction-related Write-downs on inventories shall be recognized expenses. as operating expenses. A financial asset shall be derecognized from the 11. Prepayments and accrued income balance sheet if the Company no longer controls the contractual rights arising from such financial Prepayments comprise expenses incurred before instrument; this usually takes place when the the balance sheet date that relate to future instrument is sold or when all cash flows periods or to future revenues. generated by that instrument are transferred to Prepayments may in particular include the an independent third party. following items: 9. Financial guarantee contracts . prepaid third-party services (inclusive of A financial guarantee contract is a contract that maintenance services) which shall be requires the issuer to make specified payments provided in future periods, to reimburse the holder for a loss it incurs . rents paid in advance, because a specified debtor fails to make . advance payments of insurance and payment when due in accordance with the subscription fees, original or modified terms of a debt instrument. Financial liabilities under any guarantees issued . any other expenses incurred in the current are initially recognized and measured at fair period, but related to future periods. value. Subsequently to initial recognition, all 12. Trade receivables financial liabilities are measured at the higher of the following two amounts: amortized cost Trade receivables, usually with payment terms calculated using the effective interest rate ranging from 14 and 30 days, are recognized and method, or expected actual settlement of a disclosed at the amounts initially invoiced, less liability resulting from a financial guarantee. any allowances for doubtful accounts. Receivables with remote payment terms are 10. Inventories recognized at the present value of expected The Company distinguishes two categories of payments. inventories: goods for resale, and service parts Allowances for doubtful receivables are (spare parts and computer hardware that have estimated when it is no longer probable that been purchased for the purposes of the entire amount of original receivables will be maintenance service contracts). collected. The amount of allowances represents At each balance sheet date, an ageing analysis of the difference between the nominal amount of goods for resale is performed, providing receivables and their recoverable amount, which rationale for making any write-downs subject to corresponds to the net present value of the following rules: expected cash flows discounted using the interest rate applicable to similar debtors. . 100% write-down on goods stored for 24 months or longer, . 75% write-down on goods stored between 18 and 24 months, . 50% write-down on goods stored between 12 and 18 months, . 25% write-down on goods stored between 6 and 12 months.
All figures in millions of PLN, unless stated otherwise 26 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Receivables are revaluated taking into account events are related to receivables carried in the the probabilities of their collection, by making books as at the balance sheet date. Every year allowances for: the Company verifies whether the adopted principles for recognition of allowances . receivables from debtors who went into correspond to the actual impairment of its liquidation or bankruptcy – up to the receivables. amount receivable not covered by any guarantee or other collateral, reported to Allowances for trade receivables are recognized the liquidator or magistrate in bankruptcy as operating expenses. Allowances for other proceedings; receivables are recognized as other operating . receivables from debtors in case the expenses. Allowances for accrued interest declaration of bankruptcy is dismissed and receivable are recognized as financial expenses. the debtor’s assets are insufficient to satisfy If the cause for recognition of an allowance is no the costs of bankruptcy proceedings – in full longer valid, such allowance shall be reversed, in amount receivable; the whole amount or in appropriate portion, . receivables disputed by debtors and past- being recognized as an increase in the value of a due where, following an assessment of the relevant asset or as an adjustment to respective debtor’s property and financial condition, cost items. collection of full contractual amounts is 13. Interest-bearing bank loans and borrowings unlikely – up to the amount receivable not covered by any guarantee or other All bank loans, borrowings and debt securities collateral; are initially recognized at their purchase cost, . receivables that constitute an increase of being the fair value of cash received net of any other receivables subject to prior allowances costs associated with obtaining a credit or loan, – in full amount receivable until they are or with issuing debt securities. received or written-off as uncollectible; Subsequently to initial recognition, bank loans, . past-due (or not yet due) receivables, where borrowings as well as debt securities are it is highly probable they will become measured at amortized cost using the effective uncollectible because of the type of business interest rate. Determination of the amortized or structure of customers – in the amount of cost shall take into account the costs related to reliably measured or full allowance for obtaining a credit or loan, or issuing debt doubtful receivables. securities, as well as any discounts or bonuses Furthermore, the minimum levels of allowances obtained on repayment of the liability. for receivables as recognized by the Company The difference between the cash received (net of are: costs related to obtaining a credit or loan, or . 100% in relation to receivables in litigation, issuing debt securities) and the repayment unless the Management Board believes that amount shall be disclosed in the income obtaining a favourable judgment by the statement over the term of such financing. Company is almost certain;
. 100% in relation to receivables past-due over 12 months (from the payment deadline), taking into account any partial payments or arrangements made after the balance sheet date; . 50% in relation to receivables past-due between 6 and 12 months (from the payment deadline), taking into account any partial payments or arrangements made after the balance sheet date. When deciding on any allowances, the Group takes into consideration not only events that took place before the balance sheet date, but also later events that took place prior to the preparation of financial statements if such
All figures in millions of PLN, unless stated otherwise 27 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
14. Leasing (Company as a lessee) As at the balance sheet date, assets and liabilities denominated in currencies other than Lease agreements, under which substantially all Polish zloty are translated to Polish zlotys at the the risks and rewards incidental to ownership of mid exchange rates of such currencies as the leased asset are transferred to the Company, published by the National Bank of Poland and in are classified as finance lease agreements and effect on the last day of the reporting period. recognized in the balance sheet at Foreign currency differences resulting from such the commencement of the lease term, at the fair translation are accounted for respectively as value of the leased tangible asset or at the financial income or financial expenses. present value of the minimum lease payments, whichever is lower. Lease payments are Non-cash assets and liabilities carried at allocated between the finance charge and the historical cost expressed in a foreign currency reduction of the outstanding lease liability so as are disclosed the historical exchange rate of the to obtain a constant periodic rate of interest on transaction date. Non-cash assets and liabilities the outstanding amount of the liability. carried at fair value expressed in a foreign currency are reported at the exchange rate from Financial expenses are recognized in the income the date when fair value measurement was statement unless they are eligible for carried out. capitalization (both in 2015 and the comparable period, the Company did not capitalize any 17. Provisions interest expenses incurred under finance lease A provision should be recognized when the agreements). Company has a present obligation (legal or Property, plant and equipment used under constructive) as a result of a past event, and finance lease agreements are subject to when it is probable that an outflow of resources depreciation over their estimated useful life or embodying economic benefits will be required to the lease term, whichever is shorter. However, if settle the obligation, and a reliable estimate can the lease agreement provides that after its be made of the amount of the obligation. termination the lessee shall obtain ownership of Where the Company expects that the the leased asset, then such an asset shall be expenditure required to settle a provision is to depreciated over its estimated useful life, i.e. be reimbursed, e.g. under an insurance contract, following the depreciation rules applicable to this reimbursement should be recognized as a similar owned assets. separate asset. When, and only when, it is Lease agreements, whereby the lessor retains virtually certain that such reimbursement will be substantially all the risks and rewards incidental received, expenses relating to such provision to ownership of the leased asset, are considered shall be disclosed in the income statement, net as operating lease. Leasing fees and instalments of the amount of any reimbursements. under operating lease are recognized as The Company recognizes provisions for onerous operating expenses in profit or loss on a straight- contracts in which the unavoidable costs of line basis over the lease term. The conditional meeting the obligations under the contract leasing fees are recognized as expense in the exceed the economic benefits expected to be period when they become due. received therefrom. 15. Trade payables Where the effect of the time value of money is Trade payables relating to operating activities material, the amount of a provision shall be are recognized and disclosed at the amounts due determined by discounting the expected future for payment, and are recognized in the reporting cash flows to their present value, using a pre-tax periods which they relate to. discount rate that reflects current market assessments of the time value of money and the 16. Transactions and items in foreign currencies risks related to the liability. Where discounting Transactions denominated in currencies other method is used, the increase in a provision due than Polish zloty are translated to Polish zlotys at to the passage of time is recognized as a financial the mid exchange rate applicable for the expense. transaction date as published by the National
Bank of Poland.
All figures in millions of PLN, unless stated otherwise 28 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
18. Provision for warranty repairs The Company identifies the following types of revenues: The provision for warranty repairs is created to cover anticipated future costs of warranty or revenues from the sale of proprietary service obligations resulting from the executed IT licenses and services, contracts. The costs of fulfilment of our warranty revenues from the sale of third-party obligations comprise mainly labour costs licenses and services, and (number of man-days multiplied by the standard rate) as well as the cost of goods, materials and revenues from the sale of hardware. third-party services used in performing such The category of “Proprietary licenses and warranty obligations. services” includes revenues from contracts with This provision is set aside in the cases where: customers under which we supply our own software and provide related services. Such . the client has not signed any contract for services may be performed by the Company’s maintenance services; employees (internal resources) as well as by . the scope of the maintenance services subcontractors (external resources). The contract does not fully cover all anticipated engagement of subcontractors in this category of costs of the fulfilment of warranty revenues has no impact on the scope of obligations; responsibility or relationship between . the scope of the manufacturer’s warranty the Company and the customer to whom a for any equipment resold is narrower than service is provided. It is entirely up to the the scope of warranty the Company is Company to decide whether services required contractually committed to provide to its for this type of projects should be performed by client. subcontractors or by own employees. In addition, this category includes revenues from The provision amount recognized at the balance the provision of own services for third-party sheet date shall be proportional to the progress software and infrastructure. of the IT contract execution. The category of “Third-party licenses and Any costs associated with the provision of our services” includes revenues from the sale of warranty services shall be, when incurred, third-party licenses as well as from the provision deducted from the previously created provision. of services which, due to technological or legal At each balance sheet date, the Company reasons, mast be carried out by subcontractors verifies the amount of carried provision for (this applies to hardware and software warranty repairs. If the actual costs of warranty maintenance and outsourcing services provided services or anticipated future costs are by their manufacturers). lower/higher than assumed at the time of initial recognition of a provision, such provision shall be Revenues from the sale of own software licenses decreased/increased accordingly to reflect the and/or services, which are supplied/rendered Company’s current expectations in respect of under an implementation contract, shall be fulfilment of its warranty obligations in future recognized proportionally to the completion of periods. the entire contract. The rules for recognition of sales revenues from implementation contracts 19. Revenues are described in explanatory note 20 to these . Sales revenues financial statements. Sales revenues are recognized if the amount of In the case of own software licenses and/or revenue can be measured reliably and if it is services, revenues are recognized in the period highly probable that economic benefits in which the Company expects to be required to associated with the transaction will flow to the provide such services to the client. Company. Revenues from the sale of third-party software Should it be impossible to estimate reliably the licenses and/or services may be recognized as amount of revenue from a service transaction, sales of goods or as sales of services, depending such revenue shall only be recognized in the on the nature of the contract with the client. amount of costs incurred which the Company expects to recover.
All figures in millions of PLN, unless stated otherwise 29 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
In the case of third-party software licenses anticipates that a client may decide to resign and/or services for which the significant risks and from a portion of contracted work). rewards of ownership are transferred to the Contract revenues include the following: buyer at the time of the sale, revenues are recognized as sales of goods, this is in a lump . revenues resulting from issued invoices, sum at the time of the sale, regardless of . future revenues resulting from signed whether a third-party license and/or service is agreements and/or orders placed on the provided for a specified or unspecified period of basis of framework agreements. time. The Company considers that significant Contract costs include the following: risks are transferred to the buyer when, after the delivery of a license/service, the Company is not costs of goods, materials and third-party obligated to provide any additional and services sold (COGS), and potentially costly benefits to the client. . costs of internal resources being involved in the contract execution. In other cases, i.e. when the significant risks and rewards incidental to the ownership of a third- The costs of internal resources employed in the party license and/or service are not transferred contract execution are calculated on the basis of to the buyer at the time of the sale, revenues are actual workload (for ended periods) or estimated recognized as sales of services, this is over a workload (for forecast periods), and appropriate period in which such services are performed and standard (cost) rate covering the production proportionally to the completion of the entire costs. transaction. The standard rate corresponds to the cost of Revenues from the sale of hardware are man-hour (or man-day) of our own production recognized as sales of goods, provided that the resources calculated on the basis of production significant risks and rewards resulting from a costs budgeted for a given year. contract have been transferred to the buyer and Valuation of implementation contracts the amount of revenue can be measured reliably. The purpose for valuation of an IT implementation contract is to determine the . Interest amount of revenues to be recognized in a given Interest income shall be recognized on a time period. The Company performs such valuation proportion basis (taking into account the using the percentage of completion method. effective yield, this is the interest rate which Should the percentage progress of incurred accurately discounts future cash flows during the costs, decreased by expected losses and estimated useful life of a financial instrument) on increased by profits included in the income the net book value of a financial asset. statement, exceed the percentage progress of Interest income comprises interest on loans invoiced sales, the amount of uninvoiced sales granted, investments in securities held to resulting from such difference shall be disclosed maturity, bank deposits and other items, as well as trade receivables in the balance sheet, under as the discounts on costs (liabilities) according to “Receivables arising from valuation of IT the method of the effective interest rate. contracts”. . Dividends Conversely, if the percentage progress of invoiced sales exceeds the percentage progress Dividends shall be recognized when the of costs incurred, decreased by expected losses shareholders’ right to receive payment is vested. and increased by profits included in the income 20. Revenues and costs related to the execution statement, then future-related (unearned) of implementation contracts revenues resulting from such difference shall be disclosed as trade payables, under “Liabilities Revenues from implementation contracts shall arising from valuation of IT contracts”. include highly probable revenues resulting from the concluded contracts and/or orders, which can be measured reliably. Therefore, the pool of such revenues does not include any proceeds that are considered as doubtful despite being determined in a signed contract (e.g. the Company
All figures in millions of PLN, unless stated otherwise 30 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
In case of contracts denominated in foreign currencies deemed to be functional currencies or Combining and segmenting of implementation in case of contracts denominated in EUR (even if contracts EUR is not a functional currency), embedded financial derivatives are not disclosed separately. Valuation is usually performed on single In the Management’s opinion, EUR should be contracts or contracts with annexes thereto, if regarded as a currency commonly used in Poland such annexes modify the main contract by in contracts for the sale or purchase of IT extending or limiting the subject thereof. In the systems and services. Revenues and expenses event an annex represents an additional order, relating to such contracts are determined on the going beyond the subject of the main contract, basis of spot exchange rates. In all the other and the price of such order is determined cases embedded derivatives are separated from without reference to the main contract price, their host contracts. such annex shall be valued separately. Loss generating contracts When a contract covers a number of elements, the implementation of each element should be Loss generating contract is a contract, under treated as a separate contract, only if the which total revenues are lower than total costs. following conditions are jointly met: In the event it is highly probable that the total . separate offers have been submitted for contract execution costs exceed the total each of the identified elements; contract revenues, the anticipated loss shall be recognized as cost in the reporting period in . each element has been subject to separate which it has been detected, by creating a negotiations; and provision for contractual losses. . the costs and revenues of each element can be identified – revenues must be specified in The amount of such provision and/or its the contract and/or order. legitimacy are subject to verification at each subsequent reporting date, until the completion Whereas, a group of contracts may be treated as of the contract. a single contract, if the following conditions are jointly met: The amount of created provisions for losses shall be disclosed under “Provisions for potential . the group of contracts is negotiated as a losses arising from valuation of IT contracts”. single package; Methods for measuring the percentage of . the contracts are so closely interrelated that contract completion they are, in effect, part of a single project with an overall profit margin; and In order to measure the progress of contract . the contracts are performed concurrently or completion, the Company applies a variety of in a continuous sequence. methods allowing to determine reliably the percentage of work executed under the contract. 21. Operating costs Depending on the contract nature, these The Company maintains cost accounting both by methods may include: cost nature and by cost function. Cost of sales . determination of the proportion of costs comprises the costs resulted directly from incurred for work performed up to the purchases of goods sold and generation of balance sheet date to the estimated total services sold. Selling costs include the costs of contract costs; distribution, marketing and sponsoring activities. . measurement of work performed; or General and administrative expenses include the costs of the Company’s management and . comparison of work performed as a physical administration activities. proportion of total work under the contract.
The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenues and contract costs. The effects of changes in estimates of contract revenues or contract costs are recognized in the period in which such changes occur.
All figures in millions of PLN, unless stated otherwise 31 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
22. Income tax and value added tax The carrying value of an individual deferred tax asset shall be verified at every balance sheet Liabilities and receivables resulting from current date and shall be adequately decreased or income tax, for the current and prior periods, are increased in order to reflect any changes in the measured at the amounts of expected payments estimates of achieving taxable profit sufficient to to the tax authorities (or repayments from the utilize such deferred tax asset partially or tax authorities), applying the tax rates and tax entirely. regulations legally or factually in force at the balance sheet date. Deferred tax assets and deferred tax liabilities shall be valued using the future tax rates For the purpose of financial reporting, deferred anticipated to be applicable at the time when a income tax is calculated applying the balance deferred tax asset is realized or a deferred tax sheet liability method to all temporary liability is reversed, based on the tax rates (and differences that exist, at the balance sheet date, tax regulations) legally or factually in force at the between the tax base of an asset or liability and balance sheet date. its carrying value disclosed in the financial statements. Deferred tax liabilities are Deferred tax assets are compensated against recognized in relation to all positive temporary deferred tax liabilities if and only if the Company differences – except for situations when a holds an enforceable legal title to make a deferred tax liability arises from initial compensation of current income tax receivables recognition of goodwill or initial recognition of and liabilities, and the deferred income tax is an asset or liability on a transaction other than related to the same taxpayer and the same tax combination of businesses, which at the time of authority. its conclusion has no influence on pre-tax profit, Income tax relating to items that are directly taxable income or tax loss, as well as in relation recognized in equity shall be disclosed under to positive temporary differences arising from equity and not in the income statement. investments in subsidiaries or associates or from interests in joint ventures – except for situations Revenues, expenses and assets shall be disclosed when the investor is able to control the timing of in the amounts excluding value added tax unless: reversal of such temporary differences and when . value added tax paid at the purchase of it is probable that such temporary differences goods or services is not recoverable; in such will not be reversed in the foreseeable future. event the value added tax paid shall be Deferred tax assets are recognized in relation to recognized as a part of the purchase cost of all negative temporary differences, as well as an asset or as an expense, and unutilized deferred tax assets or unutilized tax . receivables and liabilities are presented losses carried forward to subsequent years, in including value added tax. such amount that it is probable that future taxable income will be sufficient to allow the Any excess of the value added tax paid over the above-mentioned temporary differences, assets amount collected, or an excess of the value added or losses to be utilized. This does not apply to tax collected over the amount paid, shall be situations when deferred tax assets related to disclosed in the statement of financial position, negative temporary differences arise from initial respectively under receivables or liabilities. recognition of an asset or liability on a transaction other than combination of businesses, which at the time of its conclusion has no influence on pre-tax profit, taxable income or tax loss. In relation to negative temporary differences arising from investments in subsidiaries or associates or from interests in joint ventures, deferred tax assets are recognized in the balance sheet in such amount only that it is probable that the above- mentioned temporary differences will be reversed in the foreseeable future and that sufficient taxable income will be available to offset such negative temporary differences.
All figures in millions of PLN, unless stated otherwise 32 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
23. Earnings per share (basic and diluted) Basic earnings per share for each reporting period shall be computed by dividing the net profit from continuing operations for the reporting period by the weighted average number of shares outstanding in the given reporting period. Diluted earnings per share for each reporting period shall be calculated by dividing the net profit from continuing operations for the reporting period by the total of weighted average number of shares outstanding in the given reporting period and all shares of potential new issues.
All figures in millions of PLN, unless stated otherwise 33 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
IV. INFORMATION ON OPERATING SEGMENTS
According to IFRS 8, an operating segment is a Infrastructure – this segment is engaged in the separable component of the Company’s business provision of integration services for clients who, for which separate financial information is due to the nature of their business operations, available and regularly reviewed by the chief belong to other operating segments identified by operating decision maker in order to allocate the Company, i.e. financial institutions, central resources to the segment and to assess its and local administration bodies, and enterprises. performance. The Company has identified the None of the Company’s operating segments following reportable segments: needed to be combined with another segment in Banking and Finance – this segment offers order to identify the above-mentioned comprehensive baking systems as well as capital reportable segments. The results achieved by market systems (for brokerage houses, banks, individual segments are regularly monitored by firms and institutions engaged in investing the management in order to decide on allocation activities). During the year ended 31 December of resources among operating segments as well 2015, the segment’s major clients included: PKO as to assess their performance and effects of BP Bank, and PZU Insurance Group. Revenues such allocation. Operating profit (loss) is the from none of the above-mentioned clients main measure in evaluation of the segment’s exceeded 10% of the Company’s total sales in performance. the year ended 31 December 2015. Financing activities (including financial expenses Public Administration – within this segment and income) as well as income taxes are Asseco Poland S.A. executes projects including monitored on the company level; therefore, design, development, implementation and these items are not taken into consideration exploitation of dedicated IT systems. During the when allocating resources to individual year ended 31 December 2015, the segment’s segments. major clients included: Social Insurance The transfer prices applied in transactions Institution (ZUS), Agency for Restructuring and conducted between our operating segments are Modernization of Agriculture (ARiMR), and the determined on an arm’s length basis just as in Marshal’s Office of Mazovia Province. Only case of transactions with unrelated parties. revenues obtained from the Social Insurance Institution exceeded the threshold of 10% of the Company’s total sales in the year ended 31 December 2015. General Business – this segment is engaged in the provision of dedicated IT solutions for large and medium-sized industrial enterprises. This segment is primarily a provider of information technology services such as IT consulting, systems integration and implementation as well as provision of the related support services. During the year ended 31 December 2015, the segment’s major clients included: Orange Poland (telecommunications), Tauron Group (energy industry), and PGE Group (energy industry). Revenues from none of the above-mentioned clients exceeded 10% of the Company’s total sales in the year ended 31 December 2015.
All figures in millions of PLN, unless stated otherwise 34 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
For the period of 12 months ended Banking and Public General Business Infrastructure Other Eliminations Total 31 December 2015 Finance Administration mPLN mPLN mPLN mPLN mPLN mPLN mPLN
Sales to external customers 351.8 659.5 291.5 - 10.2 - 1,313.0 Inter-segment settlements 40.2 7.8 12.8 47.4 5.6 (113.8) -
Net profit on sales of reportable segment 80.5 68.6 33.0 8.9 (17.6) - 173.4
Depreciation and amortization (14.8) (21.5) (11.9) (2.4) (0.6) - (51.2)
Average workforce in the reporting period, 866 1,112 601 127 25 - 2,731 recalculated into full-time salaried jobs
Goodwill from business combinations allocated to 854.2 925.2 129.7 131.0 n/a n/a 2,040.1 the segment
For the period of 12 months ended
31 December 2014
Sales to external customers 371.6 601.5 305.9 - 42.3 - 1,321.3 Inter-segment settlements 57.7 32.2 37.2 47.0 1.0 (175.1) -
Net profit on sales of reportable segment 114.6 77.5 49.4 8.6 (10.0) - 240.1
Depreciation and amortization (16.4) (22.0) (16.1) (2.9) (0.5) - (57.9)
Average workforce in the reporting period, 1,013 1,156 638 146 14 - 2,967 recalculated into full-time salaried jobs
Goodwill from business combinations allocated to 871.4 925.2 129.7 131.0 n/a n/a 2,057.3 the segment
All figures in millions of PLN, unless stated otherwise 35 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
V. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS
1. Sales revenues and operating costs Operating revenues generated and operating costs incurred during the year ended 31 December 2015 and in the comparable period were as follows:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Sales revenues Proprietary licenses/software and services 973.9 1,049.8 Third-party licenses/software and services 154.5 134.8 Hardware and infrastructure 181.3 136.1 Other sales 3.3 0.6 Total 1,313.0 1,321.3
Operating costs Cost of goods and third-party services sold (327.5) (259.0) Employee benefits (383.5) (416.0) Depreciation and amortization (51.2) (57.9) Services for internal purposes (255.0) (248.8) Other (122.4) (99.5) Total (1,139.6) (1,081.2)
Cost of sales (1,007.3) (949.3) Selling costs (54.7) (53.4) General and administrative expenses (77.6) (78.5) Total (1,139.6) (1,081.2)
In 2015, other operating costs included primarily the maintenance of property and business cars in the amount of PLN 52.1 million, advertising expenses in the amount of PLN 23.6 million, as well as business trips in the amount of PLN 10.0 million. Whereas, in the comparable period other operating costs included primarily the maintenance of property and business cars in the amount of PLN 51.0 million, as well as business trips in the amount of PLN 10.6 million.
All figures in millions of PLN, unless stated otherwise 36 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015 i. Costs of employee benefits
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Remuneration (324.9) (351.5) Social insurance contributions (25.8) (28.3) Retirement benefit expenses (24.0) (25.7) Other post-employment benefits (1.9) (4.0) Other costs of employee benefits (6.9) (6.5) Total employee benefit expenses (383.5) (416.0) ii. Reconciliation of depreciation and amortization charges The table below presents the reconciliation of depreciation and amortization charges reported in the income statement with those disclosed in the tables of changes in property, plant and equipment (note 7) and in intangible assets (note 8):
12 months ended 12 months ended
31 Dec. 2015 31 Dec. 2014 Note mPLN mPLN
Depreciation charge for the year as disclosed in the table of 7 (31.2) (36.6) changes in property, plant and equipment Amortization charge for the year as disclosed in the table of 8 (25.5) (28.8) changes in intangible assets Amortization charge recognized directly in other comprehensive 0.8 0.8 income Reduction of amortization charge due to recognition of a grant 1.4 4.0 to internally generated licenses Amortization charges capitalized for development projects 0.3 0.3 in progress Total depreciation and amortization charges disclosed in the (54.2) (60.3) statement of cash flows Depreciation of rental property recognized in other operating 3.0 2.4 expenses Total depreciation and amortization charges recognized in (51.2) (57.9) operating costs
All figures in millions of PLN, unless stated otherwise 37 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
2. Other operating income and expenses Other operating income in the period of 12 months ended 31 December 2015 and in the comparable period was as follows:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 Other operating income mPLN mPLN
Gain on disposal of property, plant and equipment 2.2 2.2 Gain on disposal of intangible assets 6.0 - Reversal of provisions 0.5 0.1 Compensations received 1.1 1.0 Other - 0.4 Total 9.8 3.7
In 2015, the amount of other operating income was significantly influenced by the transaction of selling a business of Asseco Poland S.A. to its subsidiary Insseco Sp. z o.o. This transaction concerned certain assets, including copyrights as well as the rights and obligations arising from contracts that have so far been executed by the Company for some clients in the commercial insurance industry. Having examined the conducted transaction in line with IFRS 3, the Company concluded that the transaction involved selling an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits, the results of which activities and assets were previously part of the Banking and Finance operating segment as identified by the Company. Because IAS 36 requires that, as at the date of sale, the disposed set of activities and assets must be allocated a relevant portion out of the amount of goodwill allocated to the operating segment that the disposed business was previously part of, therefore the Company has made such an allocation assuming that the allocation ratio should be determined by comparing the value of the disposed business to the value of the entire segment as at the transaction date. Due to making such an allocation, while calculating the result on the disposal, the Company recognized PLN 17.2 million of goodwill in its transaction costs. The fair value of the disposed business has been determined by the selling price of the above-mentioned set of activities and assets which was stated in the agreement between Asseco Poland S.A. and Insseco Sp. z o.o., in accordance with the requirement that all transactions between the related parties of Asseco Group should be conducted at arm’s length. In accounting for the described transaction, the Company has recognized, in other operating income for the period of 12 months ended 31 December 2015, a gain on the disposal of the set of activities and assets in the amount of PLN 5.9 million which has been calculated as the proceeds from the sale amounting to PLN 27.4 million, less the net value of the disposed assets amounting to PLN 4.3 million, less the allocated goodwill amounting to PLN 17.2 million as mentioned above. Other operating expenses in the period of 12 months ended 31 December 2015 and in the comparable period were as follows:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 Other operating expenses mPLN mPLN
Costs related to income from rental of office space (1.0) (0.3) Creation of provisions - (1.0) Grants made (0.3) (0.4) Costs of post-accident repairs (1.1) (1.0) Liquidation of property, plant and equipment, and intangible (0.2) (0.8) assets Total (2.6) (3.5)
All figures in millions of PLN, unless stated otherwise 38 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
3. Financial income and expenses Financial income earned during the period of 12 months ended 31 December 2015 and in the comparable period was as follows:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 Financial income mPLN mPLN
Interest income on bank deposits, loans granted, and 5.9 7.2 own receivables Other interest income 0.6 0.5 Dividends received and receivable 128.0 99.3 Reversal of impairment write-downs on financial assets 0.4 28.4 Gain on disposal of shares in subsidiaries, jointly controlled 2.3 - entities and associates Gain on exercise and/or valuation of derivative instruments - 0.1 Other financial income - 11.2 Total 137.2 146.7
Financial expenses incurred during the period of 12 months ended 31 December 2015 and in the comparable period were as follows:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 Financial expenses mPLN mPLN
Interest expenses on bank loans and liabilities (3.5) (5.4) Interest expenses under finance leases (6.4) (7.4) Other interest expenses (1.9) (1.8) Negative foreign exchange differences (2.3) (3.2) Impairment write-down on investments in subsidiaries (2.9) (25.0) Loss on impairment of financial assets (0.6) - Loss on exercise and/or valuation of derivative instruments (1.0) - Other financial expenses (1.3) (0.1) Total (19.9) (42.9)
Positive and negative foreign exchange differences are presented in net amounts (reflecting the surplus of positive differences over negative differences or otherwise). Interest expenses under finance leases are associated with the leasing of an office building in Gdynia. 4. Corporate income tax The main charges on pre-tax profit resulting from corporate income tax (current and deferred portions):
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Current portion of income tax and prior years’ adjustments (52.6) (28.7) Deferred portion of income tax 11.8 (25.1) Income tax expense as disclosed in the income statement (40.8) (53.8)
All figures in millions of PLN, unless stated otherwise 39 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
During the period of 12 months ended 31 December 2015, the effective tax rate equalled 13.7% as compared with 15.6% in the comparable period last year. Regulations applicable to the value added tax, corporate income tax, personal income tax or social security contributions are subject to frequent amendments, thereby depriving taxpayers of a possibility to refer to well established legal decisions and precedents. The current regulations in force are not always unambiguous, which may cause additional discrepancies in their interpretation. Tax settlements are subject to control by the taxation authorities. Should any irregularities in tax settlements be detected, a taxpayer is obliged to pay the outstanding amounts along with the statutory interest thereon. Payment of tax arrears does not always release a taxpayer from penal and fiscal liability. Such circumstances lift the tax-related risk in Poland above the level characteristic to countries with better developed taxation systems. Settlement of tax liabilities may come under control in a period of five years, counting from the end of the year in which relevant tax returns were filed. In effect, the amounts of taxes payable disclosed in the financial statements may be later changed, after they are finally determined by the taxation authorities. Presented below is the reconciliation of corporate income tax payable on pre-tax profit according to the statutory tax rate with corporate income tax computed at the effective tax rate.
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Pre-tax profit from continuing operations 297.9 344.1 Statutory corporate income tax rate 19% 19% Corporate income tax computed at the statutory tax rate 56.6 65.4 Dividends received from subsidiaries and associates (21.0) (14.0) Representation expenses 0.3 0.4 Taxes and charges (PFRON) 0.5 0.6 Depreciation of tangible fixed assets (inclusive of cars with 0.1 0.1 the initial value exceeding EUR 20 thousand) Adjustments to the prior years’ current income tax - (1.3) Impairment of investments in subsidiaries - 2.6 Goodwill – accounting for disposal of assets to Insseco 3.3 - Allowances for receivables – VAT (Mostostal) 0.4 - Other permanent differences 0.6 - Corporate income tax computed at the effective tax rate 40.8 53.8
All figures in millions of PLN, unless stated otherwise 40 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Comprehensive income Deferred tax liabilities Deferred tax assets for the period 12 months ended 31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 (restated) (restated) mPLN mPLN mPLN mPLN mPLN Property, plant and equipment 12.0 11.0 10.2 10.3 (1.1) Intangible assets 32.0 32.3 - - 0.3 Shares in subsidiaries - - 0.7 0.2 0.5 Financial assets available for sale - - 0.1 0.2 (0.1) Financial assets carried at fair value through profit or loss 0.5 1.2 - - 0.7 Borrowings 0.2 0.2 - 0.1 (0.1) Inventories - - 0.2 0.3 (0.1) Prepayments and accrued income 0.5 0.2 6.5 14.0 (7.8) Trade receivables 22.3 36.6 3.3 1.6 16.0 Other receivables 5.0 7.7 2.9 8.8 (3.2) Non-current assets classified as held for sale 0.3 0.7 - - 0.4 Interest-bearing bank loans, borrowings and debt securities - - 0.1 0.1 - Provisions - - 14.3 9.2 5.1 Trade payables - - 9.2 4.3 4.9 Financial liabilities - - 10.6 12.5 (1.9) Other liabilities 0.6 - 0.4 0.4 (0.6) Accruals - - 7.9 7.7 0.2 Deferred income - - 3.7 5.0 (1.3)
Deferred tax liabilities, gross 73.4 89.9 - - 16.5 Deferred tax assets, gross 70.1 74.7 (4.6)
Deferred tax assets (+)/liabilities (-), net (3.3) (15.2) - - Change in deferred income tax in the reporting period, of which: 11.9 change in deferred income tax recognized directly in other comprehensive 0.1 income deferred income tax change recognized in the income statement 11.8
All figures in millions of PLN, unless stated otherwise 41 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
5. Earnings per share Basic earnings per share are computed by dividing net profit for the reporting period by the weighted average number of ordinary shares outstanding during that financial year. Diluted earnings per share are computed by dividing the net profit for the reporting period by the adjusted (for the diluting impact of potential shares) weighted average number of ordinary shares outstanding during the reporting period, adjusted by the impact of diluting instruments. Both during the period of 12 months ended 31 December 2015 and the comparable period, no events occurred that would cause a dilution of earnings per share. The table below presents net profits and numbers of shares used for the calculation of earnings per share:
12 months 12 months ended 31 Dec. 2015 ended 31 Dec. 2014
Weighted average number of ordinary shares outstanding, 83,000,303 83,000,303 used for calculation of basic earnings per share Net profit for the reporting period (in millions of PLN) 257.1 290.3 Net earnings per share (in PLN) 3.10 3.50
6. Information on dividends paid out In 2015 the Company paid out to its shareholders a dividend for the year 2014. On 29 April 2015, the Ordinary General Meeting of Shareholders of Asseco Poland S.A. passed a resolution to allocate PLN 240.7 million out of the Company’s net profit for the financial year 2014 to payment of a dividend amounting to PLN 2.90 per share. The remaining portion of net profit in the amount of PLN 49.6 million was disclosed in retained earnings. The dividend record date was set for 15 May 2015; whereas, the dividend payment was scheduled for 2 June 2015. In 2014 the Company paid out to its shareholders a dividend for the year 2013. On 12 May 2014, the Ordinary General Meeting of Shareholders of Asseco Poland S.A. passed a resolution to allocate PLN 215.8 million out of the Company’s net profit for the financial year 2013 to payment of a dividend amounting to PLN 2.60 per share. The remaining portion of net profit in the amount of PLN 64.5 million was disclosed in retained earnings. The dividend record date was set for 21 May 2014; whereas, the dividend payment was scheduled for 5 June 2014.
All figures in millions of PLN, unless stated otherwise 42 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
7. Property, plant and equipment The net book value of property, plant and equipment, during the period of 12 months ended 31 December 2015 and in the comparable period, changed as a result of the following transactions:
Computers and Tangible assets Land and Transportation Other tangible other office under Total buildings vehicles assets equipment construction As at 1 January 2015, less depreciation and impairment write-downs 277.5 70.3 13.8 13.7 0.8 376.1
Additions, of which: 0.3 9.4 6.8 0.9 2.4 19.8 Purchases and modernization 0.1 7.9 6.0 0.7 2.4 17.1 Transfers from tangible assets under construction 0.2 1.5 0.8 0.2 - 2.7
Reductions, of which: (11.7) (12.7) (5.6) (2.9) (2.7) (35.6) Depreciation charges for the reporting period (11.6) (12.2) (4.7) (2.7) - (31.2) Disposal and liquidation (0.1) (0.5) (0.9) (0.2) - (1.7) Transfers from tangible assets under construction - - - - (2.7) (2.7)
As at 31 December 2015, less depreciation and 266.1 67.0 15.0 11.7 0.5 360.3 impairment write-downs
As at 1 January 2015 Gross value 343.2 137.2 31.8 31.3 0.8 544.3 Depreciation and impairment write-downs (65.7) (66.9) (18.0) (17.6) - (168.2) Net book value as at 1 January 2015 277.5 70.3 13.8 13.7 0.8 376.1
As at 31 December 2015 Gross value 343.2 139.0 31.2 30.6 0.5 544.5 Depreciation and impairment write-downs (77.1) (72.0) (16.2) (18.9) - (184.2) Net book value as at 31 December 2015 266.1 67.0 15.0 11.7 0.5 360.3
All figures in millions of PLN, unless stated otherwise 43 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Computers and Tangible assets Land and Transportation Other tangible other office under Total buildings vehicles assets equipment construction As at 1 January 2014, less depreciation and impairment write-downs 291.2 82.8 13.1 16.1 0.8 404.0
Additions, of which: 0.1 3.0 6.4 0.6 0.7 10.8 Purchases and modernization 0.1 2.8 5.9 0.6 0.7 10.1 Transfers from tangible assets under construction - 0.2 0.5 - - 0.7
Reductions, of which: (13.8) (15.5) (5.7) (3.0) (0.7) (38.7) Depreciation charges for the reporting period (13.8) (15.4) (4.7) (2.7) - (36.6) Disposal and liquidation - (0.1) (1.0) (0.3) - (1.4) Transfers from tangible assets under construction - - - - (0.7) (0.7)
As at 31 December 2014, less depreciation and 277.5 70.3 13.8 13.7 0.8 376.1 impairment write-downs
As at 1 January 2014 Gross value 343.5 138.5 34.0 32.0 0.8 548.8 Depreciation and impairment write-downs (52.3) (55.7) (20.9) (15.9) - (144.8) Net book value as at 1 January 2014 291.2 82.8 13.1 16.1 0.8 404.0
As at 31 December 2014 Gross value 343.2 137.2 31.8 31.3 0.8 544.3 Depreciation and impairment write-downs (65.7) (66.9) (18.0) (17.6) - (168.2) Net book value as at 31 December 2014 277.5 70.3 13.8 13.7 0.8 376.1
All figures in millions of PLN, unless stated otherwise 44 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
8. Intangible assets The net book value of intangible assets, during the period of 12 months ended 31 December 2015, changed as a result of the following transactions: Costs of Purchased Intangible assets Internally development software, patents, recognized in “ASSECO” Goodwill generated Total projects in licenses and other business trademark software progress intangibles combinations As at 1 January 2015, less amortization and 2,057.3 17.7 10.0 38.0 110.2 137.6 2,370.8 impairment write-downs
Additions, of which: - - 20.2 4.3 - - 24.5 Purchases and modernization - - - 4.3 - - 4.3 Capitalization of the costs of research and development - - 20.2 - - - 20.2 projects Transfers from the costs of development projects ------in progress
Reductions, of which: (17.2) (4.5) (2.0) (12.5) (10.8) - (47.0) Amortization charges for the reporting period n/a (4.5) n/a (10.2) (10.8) n/a (25.5) Impairment write-downs ------Disposal and liquidation (17.2) - (2.0) (2.3) - - (21.5)
Net book value as at 31 December 2015 2,040.1 13.2 28.2 29.8 99.4 137.6 2,348.3
As at 1 January 2015 Gross value 2,057.4 63.8 18.0 110.4 193.1 137.6 2,580.3 Amortization and impairment write-downs (0.1) (46.1) (8.0) (72.4) (82.9) - (209.5) Net book value as at 1 January 2015 2,057.3 17.7 10.0 38.0 110.2 137.6 2,370.8
As at 31 December 2015 Gross value 2,040.2 63.8 36.2 112.4 193.1 137.6 2,583.3 Amortization and impairment write-downs (0.1) (50.6) (8.0) (82.6) (93.7) - (235.0) Net book value as at 31 December 2015 2,040.1 13.2 28.2 29.8 99.4 137.6 2,348.3
All figures in millions of PLN, unless stated otherwise 45 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Goodwill The largest portion of intangible assets is constituted by goodwill resulting from mergers conducted by the Company in the years 2007-2011. As at 31 December 2015, goodwill arising from business combinations amounted to PLN 2,040.1 million as compared with PLN 2,057.3 million in the comparable period, and it was allocated to the beneath mentioned operating segments which are treated as cash-generating units:
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Goodwill allocated to the segment of “Banking and Finance” 854.2 871.4 Goodwill allocated to the segment of “Public Administration” 925.2 925.2 Goodwill allocated to the segment of “General Business” 129.7 129.7 Goodwill allocated to the segment of “Infrastructure” 131.0 131.0 2,040.1 2,057.3
Costs of development projects in progress The Company carries out a number of development projects, including those co-financed from EU funds. The Company begins to capitalize the costs of such projects which qualify under the requirements of IAS 38, i.e. only the development phase expenditures that can be directly attributed to a performed project are capitalized. Such costs shall include basically employee benefits, expenditures for materials and services that are used or consumed directly in the project implementation, depreciation charges on equipment used in the generation process, as well as costs of any office space utilized by the development team. In the year ended 31 December 2015, total development expenditures amounted to PLN 20.2 million, of which PLN 4.8 million were spent in the Banking and Finance segment, PLN 8.8 million in the Public Administration segment, and PLN 6.6 million in the General Business segment. The largest development projects conducted during the year ended 31 December 2015 included the following: . Public Services Card The main task of this project is to automate the process of collecting cashless smart card payments for services provided by public administration, local government and public benefit institutions, as well as to create an interface to external payment clearing systems. The research phase was performed as part of the Silesian Public Services Card project carried out for KZK GOP, whereas its development phase has been commenced from the beginning of the third quarter of 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 9.4 million, of which PLN 5.9 million in 2015. The project is scheduled to be completed till 31 March 2016. . AUMS The project is aimed at developing a version of AUMS (Asseco Utility Management Solutions) that would be ready for international distribution and implementation. It will in particular involve the translation of the UMTS system into English, its preparation for translation into other languages, as well as expansion of its functionality in order to meet the requirements in foreign markets. The research phase of this project was initiated in the second quarter of 2014, whereas its development phase in the first quarter of 2015. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 3.9 million. The project is scheduled to be completed till 30 June 2018. . Asseco Medical Network This system is dedicated for the networks of public and non-public healthcare centers, which provide medical services within in-house, closed or specialized treatment schemes, this is for the networks of hospitals and specialist outpatient clinics. This software is distinguished by its interoperability and expandable functionality, cooperation with Data Centers, definable workflow, as well as scalable system architecture.
All figures in millions of PLN, unless stated otherwise 46 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
The research phase of this project was initiated in March 2014, whereas its development phase in June 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 2.9 million, of which PLN 2.1 million in 2015. The project is scheduled to be completed till 30 September 2016. . def3000/CBP The main objective of def3000/CBP (Customer Banking Platform) solution will be to enable access to the system’s business functionality by means of the so-called mini-applications, i.e. software components that communicate with other elements of the system through a defined, open interface. In addition, the software will provide the following functionality: multiple banking products and services for bank customers within one platform accessible over the Internet; flexible arrangement of the offered functions by grouping them within dedicated mini-applications; active responding to the needs of bank customers through the interpretation and prediction of activities; possibility of extending the offered functionality by external service providers; ability to use the system on any desktop, tablet or mobile device with a web browser. The development phase of this project was initiated in January 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 4.0 million, of which PLN 3.4 million in 2015. The project is scheduled to be completed in May 2016. . CCR CCR (Comprehensive Consolidated Reporting) is a web-based application, operating in the cloud, which is designed to support the process of preparation of consolidated financial reports. The application features flexible mechanisms allowing to define various types of statements and reports. It also enables the creation of summaries to facilitate the analysis of financial data. Built-in mechanisms allow for rapid implementation of changes in the templates applied for financial reporting. In addition to the functionality of entering and verification of financial reports and intragroup transactions, the CCR application provides support for the entire process of consolidation, including the calculation of consolidation eliminations (automatic and manual), as well as conversion of currencies. Furthermore, the application is capable of importing and exporting of .xls files and has a built-in communicator, allowing to share comments among participants in the consolidation process. The research phase of this project was initiated in January 2012, whereas its development phase in October 2012. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.5 million, of which PLN 0.1 million in 2015. The project is scheduled to be completed till 31 March 2016. . BSS Cloud The aim of this project is to create a product allowing for comprehensive handling of processes performed by Business Support Systems of retail and wholesale telecommunications and television operators, both small- sized (with up to 1,000 subscribers) and medium-sized (with up to 10,000 subscribers). As a result, Asseco Poland will be able to offer comprehensive BSS and Network Inventory for the above-mentioned service providers. The research phase of this project was initiated in April 2014, whereas its development phase in May 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.3 million, of which PLN 0.9 million in 2015. The project is scheduled to be completed till 31 December 2016. . Smart This project is aimed at developing a converged system to support telecom operators in their sales processes and customer service involved in the provision of VOICE, SMS and DATA services. The development phase of this project was initiated in October 2015. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.7 million. The project is scheduled to be completed till 31 December 2018.
All figures in millions of PLN, unless stated otherwise 47 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Purchased software, patents, licenses and other intangibles During the year ended 31 December 2015, the Company did not make any significant purchases of third- party software, patents or other licenses.
“ASSECO” trademark The ASSECO trademark is the only intangible asset considered by the Management Board to have an indefinite useful life. Therefore, this asset is not amortized and only tested for impairment on an annual basis. The Management Board has decided that the useful life of this trademark is indefinite, because it is expected to contribute to the generation of net cash flows by the Company in the future for an indefinite period of time. For impairment testing purposes, this trademark is considered to be a common asset and its value is allocated on a consistent basis to individual operating segments that are treated as cash-generating units. Intangible assets recognized in business combinations
Internally generated Customer relations Total software As at 1 January 2015: Gross value 130.0 63.1 193.1 Amortization (46.9) (36.0) (82.9) Net book value as at 1 January 2015 83.1 27.1 110.2
As at 31 December 2015: Gross value 130.0 63.1 193.1 Amortization (53.9) (39.8) (93.7) Net book value as at 31 December 2015 76.1 23.3 99.4
Amortization charge for the reporting period (7.0) (3.8) (10.8)
All figures in millions of PLN, unless stated otherwise 48 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
The net book value of intangible assets, during the period of 12 months ended 31 December 2014, changed as a result of the following transactions:
Costs of Purchased Intangible assets Internally development software, patents, recognized in “ASSECO” Goodwill generated Total projects in licenses and other business trademark software progress intangibles combinations As at 1 January 2014, less depreciation and 2,057.3 23.2 4.9 46.1 121.2 137.6 2,390.3 impairment write-downs
Additions, of which: - 2.2 7.2 2.2 - - 11.6 Purchases and modernization - - - 2.3 - - 2.3 Capitalization of the costs of research and development - - 7.2 - - - 7.2 projects Transfers from the costs of development projects - 2.1 - - - - 2.1 in progress Changes in the presentation methods - 0.1 - (0.1) - - -
Reductions, of which: - (7.7) (2.1) (10.3) (11.0) - (31.1) Depreciation charges for the reporting period n/a (7.7) n/a (10.3) (10.8) n/a (28.8) Disposal and liquidation - - - - (0.2) - (0.2) Transfers to internally generated software - - (2.1) - - - (2.1)
Net book value as at 31 December 2014 2,057.3 17.7 10.0 38.0 110.2 137.6 2,370.8
As at 1 January 2014 Gross value 2,057.4 61.6 12.9 108.2 203.0 137.6 2,580.7 Depreciation and impairment write-downs (0.1) (38.4) (8.0) (62.1) (81.8) - (190.4) Net book value as at 1 January 2014 2,057.3 23.2 4.9 46.1 121.2 137.6 2,390.3
As at 31 December 2014 Gross value 2,057.4 63.8 18.0 110.4 193.1 137.6 2,580.3 Depreciation and impairment write-downs (0.1) (46.1) (8.0) (72.4) (82.9) - (209.5) Net book value as at 31 December 2014 2,057.3 17.7 10.0 38.0 110.2 137.6 2,370.8
All figures in millions of PLN, unless stated otherwise 49 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Costs of development projects in progress In the year ended 31 December 2014, total development expenditures amounted to PLN 7.2 million, of which PLN 2.2 million were spent in the Banking and Finance segment, PLN 4.6 million in the Public Administration segment, and PLN 0.4 million in the General Business segment. Purchased software, patents, licenses and other intangibles During the year ended 31 December 2014, the Company did not make any significant purchases of third- party software, patents or other licenses. “ASSECO” trademark The ASSECO trademark is the only intangible asset considered by the Management Board to have an indefinite useful life. Therefore, this asset is not amortized and only tested for impairment on an annual basis. For impairment testing purposes, this trademark is considered to be a common asset and its value is allocated on a consistent basis to individual operating segments that are treated as cash-generating units. Intangible assets recognized in business combinations Intangible assets recognized in the purchase price allocation process include the following:
Internally generated Customer relations Total software As at 1 January 2014: Gross value 130.0 73.0 203.0 Amortization (40.0) (41.8) (81.8) Net book value as at 1 January 2014 90.0 31.2 121.2
As at 31 December 2014: Gross value 130.0 63.1 193.1 Amortization (46.9) (36.0) (82.9) Net book value as at 31 December 2014 83.1 27.1 110.2
Amortization charge for the reporting period (7.0) (3.8) (10.8)
All figures in millions of PLN, unless stated otherwise 50 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
9. Investments in subsidiaries and associates The structure of Asseco Poland’s investments in subsidiaries and associates is presented in the chart below:
Asseco Poland S.A.
Peak Consulting Group ApS Asseco South Eastern Europe S.A. Asseco Business Solutions S.A. Podkarp. Fund. Nieruchomości Sp. z o.o. Denmark Poland Poland Poland 73.78/70 (73.78/70) 51.06/51.06 (51.06/51.06) 46.47/46.47 (46.47/46.47) 100/100 (100/100)
Asseco Danmark A/S Formula Systems Ltd. Asseco Data Systems S.A. KKI-BCI Sp. z o.o. 1) Denmark Israel Poland Poland 61.11/55 (61.11/55) 46.33/46.33 (46.33/46.33) 100/100 (100/100) 100/100 (100/100)
SINTAGMA UAB Asseco Central Europe, a.s. Infovide - Matrix S.A. Gladstone Consulting Ltd. Lithuania Slovakia Poland Cyprus 81.34/81.34 (81.34/81.34) 93.51/93.51 (93.51/93.51) 100/100 (0/0) 100/100 (100/100)
Asseco Lietuva UAB Exictos SGPS S.A. SKG S.A. Postdata S.A. Lithuania Portugal Poland Poland 81.34/81.34 (81.34/81.34) 61.38/61.38 (0/0) 60/60 (60/60) 49/49 (49/49)
Asseco Software Nigeria Ltd Asseco Western Europe S.A. SIGILOGIC Sp. z o.o. Nigeria Poland Poland 51/51 (51/51) 100/100 (100/100) 100/100 (100/100)
CodeConnexion Ltd Asseco Georgia LLC ZUI Novum Sp. z o.o. Sri Lanka Georgia Poland 45/45 (45/45) 51/51 (51/51) 51/51 (51/51)
R-Style Softlab JSC Russia 70/70 (70/70)
Asseco Kazakhstan LLP 1) company in liquidation Kazakhstan 51/51 (51/51) subsidiary company associated company Asseco Bel LLC Belarus voting rights / equity interest 100/100 60/60 (0/0) as at 31 December 2015 (in %)
voting rights / equity interest (100/100) as at 31 December 2014 (in %)
All figures in millions of PLN, unless stated otherwise 51 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
The Company’s capital investments held as at 31 December 2015 and in the comparable period are disclosed in the table below:
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Investments in companies quoted on active markets Asseco Central Europe a.s. 478.0 478.0 Asseco Business Solutions S.A. 69.0 69.0 Formula Systems (1985), Ltd. 427.0 427.0 Asseco South Eastern Europe S.A. 270.4 270.4
Investments in non-listed companies R-Style Softlab JSC 67.9 67.9 Z.U.I. Otago Sp. z o.o. - 26.3 ZUI Novum Sp. z o.o. 3.9 3.9 ADH-Soft Sp. z o.o. - 7.0 Combidata Poland Sp. z o.o. - 56.7 Asseco DACH S.A. - 158.5 Asseco Western Europe S.A. 252.0 93.6 Asseco Danmark A/S 29.2 29.2 Peak Consulting Group ApS 8.4 8.4 CodeConnexion Ltd. - 2.8 Sintagma UAB and Asseco Lietuva UAB 19.4 19.4 Gladstone Consulting Ltd 33.8 33.8 Podkarpacki Fundusz Nieruchomości Sp. z o.o. 89.2 89.2 Postdata S.A. 1.0 1.0 SKG S.A. 8.7 8.7 Asseco Data Systems S.A. 226.5 136.5 Asseco Georgia LLC 4.9 4.9 Sigilogic Sp. z o.o. 1.2 1.2 Asseco Kazakhstan LLP 3.0 3.0 Asseco Software Nigeria Ltd. 3.1 3.1 Asseco Bel LLC 0.1 - Exictos SGPS S.A. 91.2 - Infovide-Matrix S.A. 75.0 - 2,162.9 1 999.5
During the period of 12 months ended 31 December 2015, Asseco Poland’s investments in subsidiaries and associates changed as follows: . Acquisition of Infovide-Matrix S.A. On 23 September 2015, Asseco Poland S.A. signed with major shareholders in Infovide-Matrix S.A. an agreement concerning the sale of a majority stake in Infovide-Matrix S.A. and subsequently announced a tender offer for shares in that company. Tenders to sell the shares were accepted until 12 November 2015. On 20 October 2015, Asseco Poland S.A. obtained approval from the Office of Competition and Consumer Protection (“OCCP”) to conduct a business concentration by taking over control of Infovide-Matrix S.A. Obtaining such consent from the OCCP was a legal condition specified in the tender offer.
All figures in millions of PLN, unless stated otherwise 52 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
As a result of the tender offer, on 20 November 2015, Asseco Poland S.A. acquired 12,215,609 shares in Infovide-Matrix S.A., representing 97.91% of the share capital and total voting rights in that company. Within the tender offer, the shares were purchased at the price of PLN 6.01 per share. Subsequently, on 21 December 2015, Asseco Poland S.A. announced the demand for the sale of all shares held by minority shareholders Infovide-Matrix S.A. through a squeeze-out procedure. As a result of this demand, on 28 December 2015, Asseco Poland S.A. acquired 261,096 shares in Infovide-Matrix S.A., representing 2.09% of the share capital of that company. Within the squeeze- out procedure, the shares were purchased at the price of PLN 6.01 per share. Following both the above-mentioned transactions, Asseco Poland S.A. holds 12,476,705 shares in Infovide-Matrix S.A., representing 100% of the share capital and 100% of voting rights in that company. . Establishing of Insseco Sp. z o.o. and the sale of shares in Insseco Sp. z o.o. to Sapiens International Corporation On 16 January 2015, Asseco Poland S.A. established the company called Insseco Sp. z o.o., acquiring 100% of its shares. The newly founded company is engaged in building and developing a center of competence responsible for the provision of services and software for the commercial insurance industry. On 27 July 2015, Asseco Poland S.A. and its affiliated Sapiens International Corporation signed an agreement under which the Company sold all the shares it held in its subsidiary Insseco Sp. z o.o., representing 100% of its share capital. The transaction was finalized by transferring the ownership of these shares on 18 August 2015. The total consideration payable to Asseco Poland for the takeover of control and acquisition of 100% percent of shares in Insseco, transfer of property rights as well as selected projects amounted to PLN 34.3 million. On 10 September 2015, the General Meeting of Insseco Sp. z o.o. passed a resolution to change the company’s name to Sapiens Software Solutions (Poland) Sp. z o.o. . Establishing of Asseco Bel LLC On 18 June 2015, Asseco Poland S.A. established a company called Asseco Bel LLC and acquired 60% of its shares representing also 60% of voting rights at the company’s general meeting of shareholders. . Acquisition of shares in Exictos SGPS S.A. On 3 September 2015, Asseco Poland S.A. signed an agreement to acquire a 61.38% stake in Exictos Sociedade Gestora de Participações Sociais, S.A. (“Exictos”), an IT company based in Portugal. The total value of this transaction amounted to EUR 21.5 million (PLN 91.2 million). Exictos is specialized in the production and implementation of software solutions for the banking industry. The company conducts its business operations in Portugal and, through its subsidiaries, also in African countries, such as Angola, Mozambique and the Republic of Cape Verde. Having acquired a majority stake in Exictos, Asseco will be able to strengthen its presence in the Iberian Peninsula as well as in Africa. . Increasing the share capital of Asseco Systems S.A. and changing its name to Asseco Data Systems S.A. On 17 July 2015, Asseco Systems S.A. and Asseco Poland S.A. signed an agreement on the acquisition of shares in exchange for a non-cash contribution of shares in three limited liability companies. On the same day, the Extraordinary General Meeting of Shareholders of Asseco Systems passed a resolution to increase the company’s share capital by the amount of PLN 9,000,530 through the issuance of 900,053 shares with a par value of PLN 10 each, excluding pre-emptive rights. These shares were offered by private subscription to Asseco Poland S.A., being the sole shareholder of Asseco Systems S.A. The issuance price equalled PLN 100 per new share, adding up to PLN 90,005,300 for the whole issuance. The newly issued shares were acquired by Asseco Poland S.A. pursuant to the said agreement and paid up with non-cash contributions in the form of shares in
All figures in millions of PLN, unless stated otherwise 53 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Zakład Usług Informatycznych Otago Sp. z o.o., shares in ADH Soft Sp. z o.o., shares in Combidata Poland Sp. z o.o., in each case representing 100% of the company’s share capital. Furthermore, on 5 August 2015, the company of Asseco Systems S.A. was renamed as Asseco Data Systems S.A. which was registered in court. . Merger of Asseco South Western Europe S.A. and Asseco DACH S.A. On 24 August 2015, there was passed a resolution on the merger of Asseco South Western Europe S.A. (the taking-over company) and Asseco DACH S.A. (the acquired company) by transferring all the assets of Asseco DACH to Asseco South Western Europe in exchange for new shares to be issued by Asseco South Western Europe and allocated to shareholders of Asseco DACH. The merger was registered in court on 1 September 2015. In addition, on 1 September 2015, Asseco South Western Europe S.A. changed its corporate name to Asseco Western Europe S.A. 10. Impairment testing of non-financial assets Both as at 31 December 2015 and during the period of 12 months ended 31 December 2015, the stock market capitalization of Asseco Poland remained under the Company’s book value (the so called “low capitalization”). The Management Board of Asseco considered such situation as an indication of possible impairment of the Company’s assets. In order to analyze the indications of possible impairment, the Company’s assets were divided into two groups: 1. assets employed in operating activities. These assets include among others goodwill, tangible and intangible assets as well as working capital of the Company; 2. assets related to investing activities, such as financial assets and capital investments in subsidiaries and associates. Ref. 1 Assets employed in operating activities As described in explanatory note 8, goodwill arising from business combinations has been allocated to the Company’s operating segments. The value of individual cash-generating units has been subsequently increased by net operating assets, which are used by such units to generate cash flows. Each of the identified cash-generating units was tested for impairment by estimating the value in use of a given unit/segment. The value in use of a cash-generating unit/segment is estimated by applying the model of discounted free cash flow to firm (FCFF). Individual segment cash flows applied in the value-in-use model were based on our budget for 2016 as well as on growth forecasts for the IT market in Poland in the years 2017 - 2020. The residual value was determined assuming no growth of the achieved margins after the forecast period. The discount rate applied to determine the present value of expected future cash flows was equivalent to the Company’s estimated weighted average cost of capital that equalled 7.9% (in real value terms) as at 31 December 2015. Particular components of the discount rate were determined taking into account the market values of risk-free interest rates, the beta coefficient (deleveraged β of 0.90 was adopted that was subsequently leveraged to reflect the average market debt/equity ratio) as well as the expected market yield. The conducted impairment tests, which involved the estimation of the value in use by applying the model of discounted free cash flow to firm (FCFF), indicated that the value in use of our investments is higher than their carrying value.
All figures in millions of PLN, unless stated otherwise 54 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Analysis of sensitivity Additionally, the Company carried out a sensitivity analysis in relation to the conducted impairment test. Such sensitivity analysis examined the impact of changes in: . real discount rate applied for the residual period, i.e. for cash flows generated after 2020; . average annual effective rate of change in free cash flows over the period of forecast, i.e. in the years 2016-2020; as factors with influence on the recoverable amount of a cash-generating unit, assuming other factors remain unchanged. The objective of such sensitivity analysis was to find out how much the selected parameters applied in the model could be changed so that the estimated value in use of each cash-generating unit equalled its carrying value. The results of the conducted analysis are presented in the table below:
Average rate of change Discount rate in cash flows
applied in applied in terminal terminal the model the model
Goodwill allocated to the segment of “Banking and Finance” 7.9% 8.3% (2.3%) (3.7%) Goodwill allocated to the segment of “Public Administration” 7.9% 9.7% 2.7% (1.9%) Goodwill allocated to the segment of “General Business” 7.9% 30.0% (1.2%) (16.8%) Goodwill allocated to the segment of “Infrastructure” 7.9% 10.4% 11.0% 7.2%
Ref. 2 Assets related to investing activities Each impairment test on investments in subsidiaries requires making estimates of the recoverable amount of a cash-generating unit or a group of cash-generating units constituted by individual subsidiaries. In the case of cash-generating units constituted by companies quoted on an active market, the recoverable amount may equal the market value (i.e. stock market capitalization) of a company or its value in use, whichever is higher. Therefore, for cash-generating units constituted by companies quoted on an active market, impairment testing was performed in two stages. First of all, the book value of an investment in a company was compared to its market value (stock market capitalization). If the market value exceeded the book value, the investment was deemed not to have been impaired. Otherwise, the value in use of such investment in a company was estimated by applying the model of discounted free cash flow to firm (FCFF). In the case of investments in companies not quoted on an active market, the recoverable amount was determined as their value in use by applying the model of discounted free cash flow to firm (FCFF). Our companies quoted on active markets include: Asseco Central Europe a.s., Asseco Business Solutions S.A., Formula Systems (1985), Ltd., Asseco South Eastern Europe S.A., and Infovide-Matrix S.A. The table below compares the market values of our investments against their book values:
Asseco South Asseco Central Formula Systems Asseco Business Infovide-Matrix Eastern Europe Europe a.s. (1985), Ltd. Solutions S.A. S.A. S.A. mPLN mPLN mPLN mPLN mPLN
31 Dec. 2015 book value 478.0 427.0 270.4 69.0 75.0 market value 352.3 744.2 262.2 243.2 74.3 surplus (+) / deficit (-) of (125.7) 317.2 (8.2) 174.2 (0.7) fair value over book value
31 Dec. 2014 book value 478.0 427.0 270.4 69.0 - market value 317.8 575.3 205.0 192.5 - surplus (+) / deficit (-) of (160.2) 148.3 (65.4) 123.5 - fair value over book value
All figures in millions of PLN, unless stated otherwise 55 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
As shown in the table above, the market value of an investment exceeds its book value only in the case of Asseco Business Solutions and Formula Systems. Therefore, our investments in Asseco Central Europe S.A. (hereinafter ACE), Asseco South Eastern Europe (hereinafter ASEE), and Infovide-Matrix were tested for impairment by estimating their value in use. As at 31 December 2015, we estimated the value in use of investments in companies not quoted on an active market as well as of our investments in ACE, ASEE and Infovide-Matrix. In the calculation of the value in use of cash-generating units, which are constituted by individual subsidiaries, the following assumptions have been adopted: . for each subsidiary, the so-called business units were analyzed which, when put together, comprise the budget and forecasts of the whole subsidiary company; . detailed forecasts covered the period of 5 years with an assumed increase in cash flows, while the residual value for later operations of each subsidiary was computed assuming no growth in cash flows; . the assumed increases in cash flows depend upon the strategy of the entire Group, tactical plans of individual companies, they take due account of conditions prevailing in particular geographical markets and sectors, and at the same time they reflect the present and potential order backlogs. The potential order backlog presumes gaining new clients whilst keeping the present ones; . the forecasts for foreign subsidiaries assumed growth of sales in their functional currencies; . the discount rates applied were equivalent to the weighted average cost of capital for particular companies. Particular components of the discount rate were determined taking into account the market values of risk-free interest rates, the beta coefficient leveraged to reflect the average market debt/equity ratio, as well as the expected market yield. The conducted impairment tests, which involved the estimation of the value in use by applying the model of discounted free cash flow to firm (FCFF), indicated that the value in use of our investments is higher than their carrying value. Analysis of sensitivity Additionally, the Company carried out a sensitivity analysis in relation to the conducted impairment test. Such sensitivity analysis examined the impact of changes in: . real discount rate applied for the residual period, i.e. for cash flows generated after 2020; . average annual effective rate of change in free cash flows over the period of forecast, i.e. in the years 2016-2020; as factors with influence on the recoverable amount of a cash-generating unit, assuming other factors remain unchanged. The objective of such sensitivity analysis was to find out how much the selected parameters applied in the model could be changed so that the estimated value in use of each cash-generating unit equalled its carrying value.
All figures in millions of PLN, unless stated otherwise 56 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
The results of the conducted analysis are presented in the table below:
Book value of Discount rate Average rate of change in cash flows investment applied for applied for the residual terminal the forecast terminal mPLN period period Investments in companies quoted on
active markets Asseco Central Europe a.s. 478.0 6.7% 97.5% (3.5%) (25.0%) Asseco South Eastern Europe S.A. 270.4 8.7% 45.7% 17.1% (1.2%) Infovide-Matrix S.A. 75.0 9.0% 9.8% 10.7% 9.6%
Investments in non-listed companies Asseco Western Europe S.A. 252.0 10.1% 59.3% 3.0% (16.4%) Asseco Data Systems S.A. 226.5 9.0% 20.2% 5.3% (5.9%) Asseco Danmark A/S 29.2 7.6% 19.7% 16.4% 0.4% Peak Consulting Group ApS 8.4 7.6% 19.7% 16.4% 0.4% Gladstone Consulting Ltd 33.8 10.8% 23.9% 10.5% (1.0%) Sintagma UAB and Asseco Lietuva UAB 19.4 11.4% ∞ (13.6%) (31.5%) ZUI Novum Sp. z o.o. 3.9 11.4% ∞ 0.5% (86.4%) SKG S.A. 8.7 11.4% 40.3% (6.5%) (20.4%) R-Style Softlab JSC 67.9 18.0% 18.1% 16.4% 14.7% Asseco Georgia LLC 4.9 23.6% 56.9% 32.4% 21.5% Asseco Kazakhstan LLP 3.0 18.0% ∞ 106.1% 12.2%
∞ - means that the terminal discount rate for the residual period is greater than 100%; hence, no reasonable modification of the discount rate for the residual period would indicate impairment. 11. Other financial assets As at 31 December 2015 and in the comparable period, the Company held the following categories and classes of financial assets:
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term mPLN mPLN mPLN mPLN
Loans, of which: granted to related parties 62.2 40.4 52.3 11.6 granted to employees 0.3 0.9 0.5 0.3 granted to other entities - - - - 62.5 41.3 52.8 11.9 Financial assets carried at fair value through profit
or loss, of which: currency forward contracts (EUR & USD) 0.6 1.8 2.7 3.4 0.6 1.8 2.7 3.4
Financial assets available for sale, of which: shares in companies quoted on active markets 0.8 - 0.7 - shares in companies not listed on stock markets 8.8 - 8.8 - 9.6 - 9.5 -
Total 72.7 43.1 65.0 15.3
Loans granted are measured at amortized cost at the balance sheet date. Loans to related parties were granted on an arm’s length basis.
All figures in millions of PLN, unless stated otherwise 57 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Loans granted to related parties Loans granted to related parties include the following:
31 Dec. 2015 31 Dec. 2014 Loans granted to related parties mPLN mPLN
Z.U.I. Otago Sp. z o.o. 1.0 2.1 Sigilogic Sp. z o.o. 4.1 - Combidata Poland Sp. z o.o. - 4.4 Podkarpacki Fundusz Nieruchomości Sp. z o.o. 33.9 36.5 Asseco Resovia S.A. 1) 19.4 14.4 Gdyński Klub Koszykówki Arka S.A.2) 9.5 6.5
Insseco Sp. z o.o.3) 9.0 -
Unizeto Technologies S.A.4) 20.7 -
Infovide-Matrix S.A.5) 5.0 - Total 102.6 63.9
1) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Adam Góral, President of the Company’s Management Board, served as Member of the Supervisory Board of Asseco Resovia S.A., whereas Mr. Marek Panek, Vice President of the Company’s Management Board, served as President of the Management Board of Asseco Resovia S.A. Furthermore, Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served respectively as Member and Chairman of the Supervisory Board of Asseco Resovia S.A. 2) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Przemysław Sęczkowski, Vice President of the Company’s Management Board, served as President of Gdyński Klub Koszykówki Arka S.A. Furthermore, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A., while Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served as Members of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A. 3) From 15 January 2015, Mr. Włodzimierz Serwiński, Vice President of the Company’s Management Board, served as President of the Management Board of Insseco Sp. z o.o.; whereas, from 21 July 2015, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Insseco Sp. z o.o. 4) From 16 March 2015, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, served as Member of the Supervisory Board of Unizeto Technologies S.A.; while Mr. Andrzej Dopierała, Vice President of the Company’s Management Board, served as President of the Management Board of Unizeto Technologies S.A. Furthermore, Mr. Marek Panek and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as Member of the Supervisory Board and Vice President of the Management Board of Unizeto Technologies S.A. 5) From 17 November, Mr. Paweł Piwowar and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as President and Vice President of the Management Board of Infovide-Matrix S.A.
During the period of 12 months ended 31 December 2015, the amount of loans granted to related parties changed primarily as a result of loan that has been granted to Unizeto Technologies S.A. The loan for Unizeto Technologies S.A. was granted under an agreement of 25 February 2015. The loan interest rate is variable and equals 3M WIBOR + margin. Such interest shall be charged and paid on a quarterly basis. The loan shall be repaid till 31 December 2016. The loan has been secured by a promissory note. Financial assets carried at fair value through profit or loss include forward transactions for the purchase or sale of foreign currencies – EUR and USD. Such forward transactions have been concluded in order to hedge against our foreign currency risk resulting from finance leases of real estate as well as from other contracts. The fair values of currency forward contracts and embedded derivatives are determined at each balance sheet date using calculation models based on inputs that are directly observable in active markets. Financial assets available for sale include primarily equity investments not exceeding 20% of the target company’s outstanding stock. Investments in companies quoted on active markets are measured at fair value at each balance sheet date, on the basis of their closing prices on the balance sheet date. Investments in companies not quoted on active markets are measured at their purchase cost adjusted by any impairment charges. As at 31 December 2015, these assets comprised mainly shares held in Bank Polskiej Spółdzielczości S.A.
All figures in millions of PLN, unless stated otherwise 58 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
12. Prepayments and accrued income As at 31 December 2015 and in the comparable period, prepayments and accrued income included the following items:
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term mPLN mPLN mPLN mPLN
Prepaid services, of which: 5.9 16.0 9.5 21.9 Prepaid maintenance services and license fees 5.1 8.5 5.4 7.7 Prepaid sponsoring - 3.7 2.8 9.9 Prepaid rents and averaging of instalments under operating - 0.3 - 0.6 leases Prepaid insurance 0.1 0.6 0.2 0.7 Other prepaid services 0.7 2.9 1.1 3.0 Expenses related to services performed for which - 1.2 - 1.3 revenues have not been recognized yet Other prepayments and accrued income - 0.5 - 0.3
Total 5.9 17.7 9.5 23.5
As at 31 December 2015 as well as at the end of the comparable period, prepayments and accrued income comprised mainly: . costs of prepaid maintenance services and licensing fees that will be gradually expensed in the income statement in future periods; . prepaid marketing and advertising expenses, mostly in favour of Asseco Resovia S.A. (volleyball club) and Gdyński Klub Koszykówki Arka S.A. (basketball club). In connection with the existing sponsorship agreements concluded with Gdyński Klub Koszykówki Arka S.A. and Asseco Resovia S.A., the Company has off-balance-sheet liabilities arising from remunerations payable under these agreements. The sponsorship agreement with Gdyński Klub Koszykówki Arka S.A shall remain in effect till 31 July 2017 and the amount of outstanding payments equals PLN 8.0 million. The sponsorship agreement with Asseco Resovia S.A. shall remain in effect till 31 May 2016 and the amount of outstanding payments equals PLN 3.1 million.
All figures in millions of PLN, unless stated otherwise 59 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
13. Long-term and short-term receivables
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term (restated) (restated) mPLN mPLN mPLN mPLN
Trade receivables 2.0 526.9 0.1 493.9 From related parties, of which: - 9.8 - 7.5 Invoiced receivables - 8.1 - 4.1 from subsidiaries - 6.5 - 0.3 from associates - 0.9 - 2.3 from other related parties - 0.7 - 1.5 Uninvoiced receivables - 1.7 - 3.0 from subsidiaries - 1.3 - 0.2 from associates - 0.4 - 0.4 from other related parties - - - 2.4 Receivables from valuation of IT contracts - - - 0.4 from subsidiaries - - - - from associates - - - 0.4 from other related parties - - - -
From other entities, of which: 2.0 517.1 0.1 486.4 Invoiced receivables 2.0 254.3 0.1 212.0 Uninvoiced receivables - 146.1 - 82.5 Receivables from valuation of IT contracts - 116.7 - 191.9
Allowance for doubtful receivables - (18.6) - (8.5)
Total trade receivables 2.0 508.3 0.1 485.4
Related party transactions have been presented in explanatory note 25 to these financial statements. Receivables from valuation of IT (implementation) contracts result from the surplus of the percentage of completion of implementation contracts over invoices issued. Receivables relating to uninvoiced deliveries result from sales of services which were performed during the reporting period, but have not been invoiced until the balance sheet date. As at 31 December 2015, allowance for doubtful receivables amounted to PLN 18.6 million. In 2015, the Company utilized and allowance of PLN 0.6 million and created a new allowance in the amount of PLN 10.7 million. The amount of allowance for receivables as at 31 December 2015 was influenced primarily by the recognition of an allowance for trade receivables from Mostostal Warszawa. As at 31 December 2015, the Company’s trade receivables from Mostostal Warszawa S.A. amounted to PLN 15.4 million. The Company created an allowance for these receivables in the amount of PLN 7.7 million which was determined by an individual decision, independently of the rules of the Company’s accounting policy in this regard.
All figures in millions of PLN, unless stated otherwise 60 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
31 Dec. 2015 31 Dec. 2014
Other receivables Long-term Short-term Long-term Short-term (restated) (restated) mPLN mPLN mPLN mPLN
Receivables from guarantees of due performance of 1.3 3.1 2.2 3.0 contracts Receivables from dividends - 8.0 - 13.5 Receivables from disposal of tangible fixed assets 1.2 - - - Receivables from disposal of financial instruments or 3.4 3.5 - 1.4 capital investments Receivables from security deposits paid-in 10.3 9.6 10.7 4.2 Receivables in court litigation - 0.3 - 0.5 Other receivables 0.1 0.9 0.2 1.4
Allowance for other uncollectible receivables (0.5) (1.2) (0.5) (0.8)
Total other receivables 15.8 24.2 12.6 23.2
Receivables relating to guarantees of due performance of contracts constitute a security in cash extended in favour of customers in order to compensate for their potential losses should the company fail to fulfil its contractual obligations. The Company’s policy is to sell its products and services to reliable clients. Owing to that, in the Management’s opinion the credited sales risk would not exceed the level covered with allowances for doubtful trade receivables. The Company’s policy for establishing allowances for doubtful receivables is described in item 12 of the “Significant accounting policies”. The following table presents the ageing structure of gross receivables (i.e. before allowances and discounts) as at 31 December 2015 and 31 December 2014, which provides the basis for recognition of allowances following the general rules:
31 Dec. 2015 31 Dec. 2014
Ageing of trade receivables mPLN % mPLN %
Receivables not yet due 486.4 92.0% 447.5 90.6% Past-due receivables 24.3 4.6% 32.2 6.5% Receivables past-due up to 3 months 12.1 2.3% 20.0 4.0% Receivables past-due from 3 to 6 months 1.8 0.3% 6.9 1.4% Receivables past-due from 6 to 12 months 2.5 0.5% 1.2 0.2% Receivables past-due over 12 months 7.9 1.5% 4.1 0.8% 510.7 96.6% 479.7 97.1%
Trade receivables in court litigation 18.2 3.4% 14.3 2.9%
Total 528.9 100.0% 494.0 100.0%
All figures in millions of PLN, unless stated otherwise 61 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
14. Implementation contracts In the years 2015 and 2014, the Company executed a number of the so-called IT implementation contracts. In line with IAS 11, sales generated from such contracts are recognized according to the percentage of completion of relevant contracts. The Company measures the percentage of completion of IT implementation contracts using the “cost-to-cost” method (this is by determining the relation of costs incurred to the overall project costs) or by the “effort-expended” method (by determining the portion of work completed out of the total work effort required in a project). The following table includes basic data about the ongoing IT implementation contracts:
12 months ended 12 months ended 31 Dec. 2015 31 Dec. 2014 mPLN mPLN
Revenues from execution of IT contracts recognized in the reporting 399.9 443.5 period
For all projects being in progress at the balance sheet date: Revenues recognized from execution of IT contracts (cumulative) (-) 739.3 717.0 Costs incurred due to execution of IT contracts (cumulative) (-) (624.4) (592.7) Net provisions for losses on IT contracts (0.4) (7.9) Profit (loss) on execution of IT contracts 114.5 116.4
Invoiced revenues from execution of IT contracts (cumulative) 636.4 537.2 Receivables arising from valuation of IT contracts 116.7 192.3 Liabilities arising from valuation of IT contracts (13.8) (12.5)
15. Inventories The Company holds two main categories of inventories: goods for resale, and service parts. The category of goods for resale includes mainly computer hardware and third-party software licenses intended for resale under the implementation or supply contracts. Hence, majority of goods for resale are purchased for the purpose of execution of already signed or highly probable contracts. The category of service parts includes computer hardware, spare parts and other materials that have been purchased for the performance of maintenance services.
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Computer hardware, third-party software licenses and other 9.8 14.6 goods for resale Computer hardware, spare parts and other materials intended for 1.2 1.3 the performance of repair/maintenance services
Impairment write-down (-) (2.2) (2.1)
Total 8.8 13.8
All figures in millions of PLN, unless stated otherwise 62 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
16. Cash and cash equivalents
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Cash at bank 14.4 4.8 Short-term (overnight) bank deposits 28.9 81.9
Total cash and cash equivalents as disclosed in the balance sheet 43.3 86.7
Bank overdraft facilities utilized for current liquidity management - -
Total cash and cash equivalents as disclosed in the cash flow 43.3 86.7 statement
The interest on cash at bank is calculated with variable interest rates, depending on interest rates offered on bank deposits. Short-term deposits are made for varying periods of between one day and three months and earn interest at their respective fixed interest rates. 17. Non-current assets held for sale The value of assets held for sale declined partially because, on 24 February 2015, the Company signed an agreement to sell its real estate located in Warsaw, at 74, 17-go Stycznia St.
18. Assets and liabilities of the Company Social Benefits Fund The Social Benefits Fund Act dated 4 March 1994 (with subsequent amendments) requires enterprises that have at least 20 full-time employees to establish and run a social benefits fund. The purpose of our Social Benefits Fund is to finance the Company’s social activities, loans to employees, and other social expenditures. The Company has offset the Fund’s assets against its liabilities towards the Fund, because such assets do not qualify as the Company’s assets. The structure of assets, liabilities and costs of the Social Benefits Fund is presented in the table below.
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Loans granted to employees - 0.1 Cash and cash equivalents 0.5 0.4 Liabilities of the Fund (0.5) (0.5) Balance after netting off - -
Amounts contributed to the Fund in the reporting period (0.8) (0.8)
19. Share capital and other components of equity Share capital The Company’s share capital as at 31 December 2015 and in the comparable period amounted to PLN 83,000,303.00 and has been fully paid up. The share capital is divided into 83,000,303 ordinary shares with a par value of PLN 1 each. The Company has not issued any preference shares. During the year ended 31 December 2015, the amount of the share capital remained unchanged. The Company’s authorized capital is equal to its share capital.
All figures in millions of PLN, unless stated otherwise 63 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Reserve capital In accordance with the Commercial Companies Code (CCC), reserve capital was established from the premium of issuance price over the par value on shares (less the share issuance-related expenses) and from the retained earnings that have been appropriated to reserve capital by the Company’s General Meeting of Shareholders. The reserve capital is presented in the line “Retained earnings and current net profit”. In order to demonstrate the Company’s ability to pay out dividends, the table below presents the components and amount of the Company’s reserve capital as at 31 December 2015 and 31 December 2014.
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Share premium 4,180.1 4,180.1 Retained earnings appropriated to reserve capital by the General 1,182.1 1,132.5 Meeting of Shareholders Result on settlement of transactions in treasury shares (734.0) (734.0) Reserve fund intended for the buy-back of own shares for - - cancellation 4,628.2 4,578.6
In accordance with the Commercial Companies Code, the Company is required to create a reserve capital to be able to cover its losses. At least 8% of the reported net profit for each financial year must be appropriated to such reserve capital until the amount thereof reaches at least one-third of the Company’s share capital. The General Meeting of Shareholders may decide on any distributions from the Company’s reserve capital and other capital reserves; however, the amount of reserve capital equalling one-third of the Company’s share capital (i.e. PLN 27.7 million) can be only used to cover any losses reported in the financial statements and cannot be allocated for any other purpose. As at 31 December 2015, there were no other restrictions as regards payment of dividends. 20. Interest-bearing bank loans and debt securities issued
Outstanding debt as at: Maximum debt Repayment Type of loan limit available as at Effective interest rate 31 Dec. 2015 31 Dec. 2014 date 31 Dec. 2015 mPLN mPLN
Bank overdraft facility 1M WIBOR + 150.0 2016-12-31 - - margin Bank overdraft facility 1M WIBOR + 200.0 2016-09-30 - - margin Bank overdraft facility 1M WIBOR + 150.0 2016-08-31 - - margin Bank overdraft facility 1M WIBOR + 70.0 2018-04-02 - - margin 570.0 - -
3M WIBOR + Investment loan n/a 2022-11-18 90.4 103.2 margin
As at 31 December 2015, total funds available to the Company under bank account overdraft facilities amounted to PLN 570 million, as compared with PLN 520 million available in the comparable period. Both as at 31 December 2015 and 31 December 2014, no liabilities were outstanding under such bank overdrafts. The investment loan represents the loan taken by the Company to finance the construction of Asseco Poland’s office building situated in Wilanów, Warsaw. The loan shall be ultimately repaid till 18 November 2022; whereas, its interest shall be based on WIBOR variable interest rate plus the creditor margin. The repayment of this loan is secured with a contractual joint mortgage amounting up to PLN 218.6 million.
All figures in millions of PLN, unless stated otherwise 64 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
During the period of 12 months ended 31 December 2014, the Company made an early repayment of a portion of this loan in the amount of PLN 20.0 million. As a result of this partial repayment, the future payments of principal have been reduced, yet the schedule of future payments of principal and interest remained unchanged.
The table below presents the ageing structure of liabilities under the investment loan, including interest payable, as at 31 December 2015 and 31 December 2014.
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Investment loan 100.5 117.9 falling due within 3 months 3.9 4.1 falling due within 3 to 12 months 11.6 12.2 falling due within 1 to 5 years 58.2 60.7 falling due after 5 years 26.8 40.9 Total 100.5 117.9
Both as at 31 December 2015 and in the comparable period, no other assets served as security for any bank loans. Whereas, bank overdraft facilities have been secured by issuing the declaration of submission to enforcement, as well as the bank account authorization.
21. Finance lease liabilities and other financial liabilities As at 31 December 2015, the subjects of finance lease agreements, where the Company is a lessee, included: . office building located at 21 Podolska St. in Gdynia; . IT hardware. The table below presents the amounts of finance lease liabilities as at 31 December 2015 and in the comparable period:
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term mPLN mPLN mPLN mPLN
Leasing of real estate 83.4 18.1 101.5 16.8 Leasing of IT hardware 1.7 1.4 3.1 1.3 Total 85.1 19.5 104.6 18.1
Leasing of real estate The net value of the office building in Gdynia, which is held under a finance lease agreement, amounted to PLN 35.6 million as at 31 December 2015, as compared with PLN 42.8 million as at 31 December 2014.
All figures in millions of PLN, unless stated otherwise 65 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Future minimum cash flows and liabilities under the real estate finance lease agreement are as follows:
31 Dec. 2015 31 Dec. 2014 mPLN mPLN Minimum lease payments in the period shorter than 1 year 23.4 23.1 in the period from 1 to 5 years 93.1 95.9 in the period longer than 5 years - 20.7 Future minimum lease payments 116.5 139.7
Future interest expense 15.0 21.4
Present value of finance lease commitment in the period shorter than 1 year 18.1 16.8 in the period from 1 to 5 years 83.4 81.5 in the period longer than 5 years - 20.0 Finance lease commitment 101.5 118.3
As at 31 December 2015, the effective interest rate on the above finance leases equalled 5.83% and it remained unchanged from the level observed as at 31 December 2014. Leasing of IT hardware As at 31 December 2015, the net value of IT hardware held under finance lease agreements amounted to PLN 3.0 million. Whereas, as at 31 December 2014, the net value of IT hardware held under finance lease agreements amounted to PLN 4.4 million. The aggregate future cash flows and liabilities under such finance leases of equipment are as follows:
31 Dec. 2015 31 Dec. 2014
mPLN mPLN Minimum lease payments in the period shorter than 1 year 1.6 1.6 in the period from 1 to 5 years 1.7 3.3 in the period longer than 5 years - - Future minimum lease payments 3.3 4.9
Future interest expense 0.2 0.5
Present value of finance lease commitment in the period shorter than 1 year 1.4 1.3 in the period from 1 to 5 years 1.7 3.1 in the period longer than 5 years - - Finance lease commitment 3.1 4.4
As at 31 December 2015, the effective rate of return on the above finance leases equalled 6.2% and it remained unchanged from the level observed as at 31 December 2014.
All figures in millions of PLN, unless stated otherwise 66 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Other financial liabilities Other financial liabilities include primarily our liability resulting from future payments to non-controlling shareholders in the Portuguese company Exictos SGPS S.A. that was acquired on 3 September 2015. The amount of the above-mentioned contingent liability has been measured using the price calculation formula defined in the option agreement; this is by multiplying the consolidated profit of the group of companies controlled by Exictos SGPS S.A. earned over the period specified in the agreement, by a predetermined coefficient.
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term mPLN mPLN mPLN mPLN
Other financial liabilities 18.3 9.2 - -
22. Provisions During the period of 12 months ended 31 December 2015, the amount of provisions changed as follows:
Provision for potential Provision for post- Provision for losses arising from Total employment benefits warranty repairs valuation of long-term IT contracts mPLN mPLN mPLN mPLN As at 1 January 2015 2.0 34.6 7.9 44.5
Provisions created (+) - 69.4 3.4 72.8 Unwinding of discount (+) - 1.2 - 1.2 Provisions utilized (-) / reversed (-) (0.6) (37.5) (10.9) (49.0) As at 31 December 2015, of which 1.4 67.7 0.4 69.5 Short-term as at 31 December 2015 0.2 31.4 0.4 32.0 Long-term as at 31 December 2015 1.2 36.3 - 37.5
As at 1 January 2014 1.7 36.6 12.7 51.0 (restated)
Provisions created (+) 0.3 5.0 7.1 12.4 Unwinding of discount (+) - - - - Provisions utilized (-) / reversed (-) - (7.0) (11.9) (18.9) As at 31 December 2014 2.0 34.6 7.9 44.5 (restated), of which Short-term as at 31 December 2014 0.3 7.6 7.9 15.8 Long-term as at 31 December 2014 1.7 27.0 - 28.7
The provision for warranty repairs is held against future unidentified losses which may be incurred in the post-implementation phase of executed projects (or parts thereof) as a result of performing our contractual obligations to provide services (e.g. warranty repairs), for which the Company will not be paid or the received consideration will cover the total cost of performing such services. In 2015, we created a provision in the amount of PLN 38.2 million for warranty repairs under the project of the Silesian Public Services Card. The provision for post-employment benefits relates entirely to retirement benefits which are to be potentially paid to the Company’s employees when they go into retirement. In compliance with the Labour Code provisions, Asseco Poland S.A. pays out a one-month average salary to each retiring employee. The amount of this post-employment benefits provision was based on the calculations prepared by an actuary.
All figures in millions of PLN, unless stated otherwise 67 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
In order to measure the value of such liabilities as at the balance sheet date, the actuary made the following main assumptions:
31 Dec. 2015 31 Dec. 2014
Discount rate (%) 3.18% 2.70% Forecast inflation rate (%) 2.50% 2.50% Probability of leaving the job prior to becoming eligible for 10.8% 9.00% benefits (%) Projected rate of salaries increase (%) 5.00% 5.00%
23. Long-term and short-term trade payables and other liabilities As at 31 December 2015 and in the comparable period, the Company had the following liabilities:
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term (restated) (restated) mPLN mPLN mPLN mPLN
Trade payables To related parties, of which: - 40.8 - 6.3 Invoiced payables - 40.6 - 5.1 to subsidiaries - 27.0 - 4.7 to associates - 0.1 - 0.1 to other related parties - 13.5 - 0.3 Uninvoiced payables - 0.2 - 1.0 to subsidiaries - 0.1 - 0.9 to associates - - - - to other related parties - 0.1 - 0.1 Liabilities arising from valuation of IT contracts - - - 0.2 to subsidiaries - - - - to associates - - - 0.2 to other related parties - - - - To other entities, of which: 0.1 163.8 0.2 119.6 Invoiced payables 0.1 120.4 0.2 78.9 Uninvoiced payables - 29.6 - 28.4 Liabilities arising from valuation of IT contracts - 13.8 - 12.3 0.1 204.6 0.2 125.9
Corporate income tax payable - - - -
Liabilities to the state and local budgets Value added tax (VAT) - 12.5 - 12.6 Personal income tax (PIT) - 5.1 - 5.8 Social Insurance Institution (ZUS) - 7.3 - 8.1 Withholding income tax - 0.2 - 0.2 Other - 0.2 - 0.3 - 25.3 - 27.0 Other liabilities Prepayments received - - - 1.5 Liabilities for purchases of tangible assets and intangible - 1.6 - 1.2 assets Other liabilities 4.4 7.7 1.7 0.2 4.4 9.3 1.7 2.9
All figures in millions of PLN, unless stated otherwise 68 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Trade payables are non-interest bearing. The total amount of trade payables increased by PLN 78.6 million in comparison with that reported for 2014, primarily due to the increase in invoiced payables by PLN 76.9 million which resulted from purchases of hardware for project implementation purposes.
Other liabilities included primarily the amounts of payables secured in an escrow account (long-term portion of PLN 3.5 million, and short-term portion of PLN 6.9 million) which resulted from the sale of shares in Insseco Sp. z o.o. that has been described in explanatory note 2. Related party transactions have been presented in explanatory note 25 to these financial statements. The table below discloses the Company’s gross trade payables as at 31 December 2015 and 31 December 2014, by maturity period based on contractual undiscounted payments.
31 Dec. 2015 31 Dec. 2014
mPLN % mPLN %
Trade payables Liabilities due already 12.7 6.2% 6.9 5.5% Liabilities falling due within 3 months 188.8 92.3% 110.8 87.8% Liabilities falling due within 3 to 6 months 1.5 0.7% 0.5 0.4% Liabilities falling due after more than 6 months 1.7 0.8% 7.9 6.3% 204.7 100% 126.1 100%
24. Accruals and deferred income
31 Dec. 2015 31 Dec. 2014
Long-term Short-term Long-term Short-term (restated) (restated) mPLN mPLN mPLN mPLN
Accruals, of which: Accrual for unused holiday leaves - 11.5 - 12.6 Accrual for employee and management bonuses - 30.1 - 28.6 - 41.6 - 41.2 Deferred income, of which: Prepaid maintenance services and licenses 10.3 10.6 16.3 11.4 Grants for the development of assets 32.9 1.2 33.4 1.5 43.2 11.8 49.7 12.9
The total amount of accruals comprises: accruals for unused holiday leaves, accruals for remunerations of the current period to be paid out in future periods which resulted from the bonus incentive schemes applied by the Company, as well as the provision for the audit of financial statements. The total amount of deferred income comprises mainly future revenues recognized over time for the provision of services, such as IT support services, as well as grants for the development of assets. Grants for the development of assets represent subsidies received by the Company in connection with its development projects or projects related to the creation of IT competence centers.
All figures in millions of PLN, unless stated otherwise 69 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
25. Related party transactions
12 months 12 months Asseco Poland sales to related parties: ended ended 31 Dec. 2015 31 Dec. 2014 Name of entity Transaction type mPLN mPLN Transactions with entities controlled by the Company ADH Soft Sp. z o.o. rental of office space 0.1 0.6 sale of goods and services related to implemented Asseco Central Europe a.s. 0.2 - IT projects sale of goods and services related to implemented ACE DanubePay, a.s. 0.3 0.3 IT projects sale of goods and services related to implemented Asseco Business Solutions S.A. 2.3 1.9 IT projects; rental of office space sale of goods and services related to implemented Asseco Dach S.A. - 0.1 IT projects; rental of office space Asseco South Eastern Europe S.A. sale of advisory services; rental of office space 0.2 0.2 Asseco Western Europe S.A. sale of advisory services; rental of office space 0.1 sale of goods and services related to implemented Asseco Data Systems S.A. 0.2 0.1 IT projects; rental of office space sale of goods and services related to implemented R-Style Softlab JSC 1.8 1.2 IT projects sale of goods and services related to implemented Sapiens Software Solutions (IDIT) Ltd 0.6 0.5 IT projects sale of goods and services related to implemented Sigilogic Sp. z o.o. 0.9 5.3 IT projects and other activities; rental of office space sale of goods and services related to implemented SKG S.A. - 0.1 IT projects rental of office space; sale of goods and services related to Z.U.I. Otago Sp. z o.o. 0.6 0.5 implemented IT projects Gdyński Klub Koszykówki Arka S.A.1) rental of office space 0.1 0.2 sale of goods and services related to implemented Insseco Sp. z o.o.2) 39.1 - IT projects; sale of tangible and intangible assets sale of goods and services related to implemented Unizeto Technologies S.A.3) - IT projects 10.0 sale of goods and services related to implemented PI Zeto Bydgoszcz - IT projects 0.5 57.0 11.0
Transactions with associates sale of goods and services related to implemented Postdata S.A. 5.3 8.4 IT projects 5.3 8.4
Transactions with entities related through the Key Management Personnel sale of goods and services related to implemented Decsoft S.A.4) 9.1 4.6 IT projects sale of goods and services related to implemented Ruch S.A. 5) 0.6 0.6 IT projects 9.7 5.2
Transactions with the Management Board Members and Commercial Proxies Piotr Jakubowski6) sale of goods and services related to other activities 0.01 0.02 0.01 0.02 Transactions with the Supervisory Board Members Dariusz Brzeski sale of goods and services related to other activities 0.02 0.02 0.02 0.02
TOTAL TRANSACTIONS 72.0 24.6
All figures in millions of PLN, unless stated otherwise 70 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
1) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Przemysław Sęczkowski, Vice President of the Company’s Management Board, served as President of Gdyński Klub Koszykówki Arka S.A. Furthermore, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A., while Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served as Members of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A. 2) From 15 January 2015, Mr. Włodzimierz Serwiński, Vice President of the Company’s Management Board, served as President of the Management Board of Insseco Sp. z o.o.; whereas, from 21 July 2015, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Insseco Sp. z o.o. 3) From 16 March 2015, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, served as Member of the Supervisory Board of Unizeto Technologies S.A.; while Mr. Andrzej Dopierała, Vice President of the Company’s Management Board, served as President of the Management Board of Unizeto Technologies S.A. Furthermore, Mr. Marek Panek and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as Member of the Supervisory Board and Vice President of the Management Board of Unizeto Technologies S.A. 4) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Jacek Duch, Chairman of the Company’s Supervisory Board, served as Member of the Supervisory Board of Decsoft S.A. 5) In the period of 12 months ended 31 December 2015, Mr. Dariusz Stolarczyk, Member of the Company’s Supervisory Board, served as Member of the Management Board of Ruch S.A. 6) On 9 December 2015, Mr. Piotr Jakubowski was revoked from the position of the Commercial Proxy of Asseco Poland S.A.
All figures in millions of PLN, unless stated otherwise 71 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
12 months 12 months Asseco Poland purchases from related parties: ended ended 31 Dec. 2015 31 Dec. 2014 Name of entity Transaction type mPLN mPLN Transactions with entities controlled by the Company ADH Soft Sp. z o.o. purchase of services related to implemented IT projects 0.6 0.5 purchase of goods and services related to implemented Asseco Business Solutions S.A. 2.1 2.9 IT projects; rental of office space purchase of goods and services related to implemented Asseco Central Europe a.s. 1.6 0.5 IT projects purchase of goods and services related to implemented Asseco South Eastern Europe S.A. 0.3 1.2 IT projects purchase of goods and services related to implemented Combidata Poland Sp. z o.o. 1.1 1.2 IT projects purchase of goods and services related to implemented Z.U.I. Otago Sp. z o.o. 0.6 2.1 IT projects purchase of goods and services related to implemented CK Zeto S.A. 2.1 1.9 IT projects PI Zeto Bydgoszcz S.A. purchase of services related to implemented IT projects - 0.1 purchase of goods and services related to implemented Sigilogic Sp. z o.o. 7.5 43.7 IT projects SKG S.A. purchase of services related to implemented IT projects 4.9 4.6 R-Style Softlab JSC purchase of services related to other activities - 0.1 Insseco Sp. z o.o.1) purchase of services related to implemented IT projects 25.7 - Infovide - Matrix S.A.2) purchase of services related to implemented IT projects 10.3 - Unizeto Technologies3) purchase of services related to implemented IT projects 0.2 - Gdyński Klub Koszykówki Arka S.A.4) sponsoring 7.4 7.4 Asseco Resovia S.A.5) sponsoring 9.5 7.6 73.9 73.8
Transactions with associates purchase of goods and services related to implemented Postdata S.A. 0.6 0.7 IT projects 0.6 0.7
Transactions with entities related through the Key Management Personnel Koma Nord Sp. z o.o.6) purchase of services related to implemented IT projects 0.1 0.4
Decsoft S.A.7) purchase of goods 10.7 - Top Fin Sp. z o.o.8) rental of office space 2.7 2.7 E-Kiosk S.A. 9) purchase of services related to other activities - 0.1 13.5 3.2 Transactions with the Management Board Members and Commercial Proxies Piotr Jakubowski10) purchase of advisory services 0.4 0.4 Andrzej Gerlach purchase of advisory services 0.7 0.1 1.1 0.5
Transactions with the Supervisory Board Members Dariusz Brzeski purchase of advisory services 2.1 1.7 2.1 1.7
TOTAL TRANSACTIONS 91.2 79.9
All figures in millions of PLN, unless stated otherwise 72 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
1) From 15 January 2015, Mr. Włodzimierz Serwiński, Vice President of the Company’s Management Board, served as President of the Management Board of Insseco Sp. z o.o.; whereas, from 21 July 2015, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Insseco Sp. z o.o. 2) From 19 November 2015, Mr. Paweł Piwowar and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as President and Vice President of the Management Board of Infovide-Matrix S.A.
3) From 16 March 2015, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, served as Member of the Supervisory Board of Unizeto Technologies S.A.; while Mr. Andrzej Dopierała, Vice President of the Company’s Management Board, served as President of the Management Board of Unizeto Technologies S.A. Furthermore, Mr. Marek Panek and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as Member of the Supervisory Board and Vice President of the Management Board of Unizeto Technologies S.A. 4) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Przemysław Sęczkowski, Vice President of the Company’s Management Board, served as President of Gdyński Klub Koszykówki Arka S.A. Furthermore, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A., while Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served as Members of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A.
5) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Adam Góral, President of the Company’s Management Board, served as Member of the Supervisory Board of Asseco Resovia S.A., whereas Mr. Marek Panek, Vice President of the Company’s Management Board, served as President of the Management Board of Asseco Resovia S.A. Furthermore, Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served respectively as Member and Chairman of the Supervisory Board of Asseco Resovia S.A.
6) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, served as Member of the Supervisory Board of Koma Nord Sp. z o.o. 7) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Jacek Duch, Chairman of the Company’s Supervisory Board, served as Member of the Supervisory Board of Decsoft S.A. 8) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, was a partner in the company Top Fin Sp. z o.o. Moreover, during the analyzed period, Mrs. Ewa Góral, the wife of Mr. Adam Góral, President of the Company’s Management Board, was a partner in the company Top Fin Sp. z o.o.; whereas, Mrs. Jolanta Wiza, the wife of Mr. Artur Wiza who performs managerial functions in the Company, was the president and a partner in the company Top Fin Sp. z o.o. In addition, since July 2013, Mr. Adam Góral, President of the Company’s Management Board, has been the owner of business premises rented out to Top Fin Sp. z o.o. 9) In the period of 12 months ended 31 December 2015, Mr. Dariusz Stolarczyk, Member of the Company’s Supervisory Board, served as Member of the Supervisory Board of E-Kiosk S.A. He has held this position since 21 November 2014. 10) On 9 December 2015, Mr. Piotr Jakubowski was revoked from the position of the Commercial Proxy of Asseco Poland S.A.
All figures in millions of PLN, unless stated otherwise 73 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Trade and other receivables Trade and other liabilities from related parties to related parties Name of entity 31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014 mPLN mPLN mPLN mPLN
Transactions with entities controlled by the Company ADH-Soft Sp. z o.o. - - 0.2 0.1 Asseco Business Solutions S.A. 0.1 0.1 0.3 0.3 Asseco Central Europe A.S. 0.1 - 0.6 - Asseco South Eastern Europe S.A. 0.1 - - 0.4 Combidata Poland Sp. z o.o. - - 0.3 0.4 Z.U.I. Otago Sp. z o.o. - - 0.4 0.5 Sapiens Software Solutions (IDIT) Ltd 0.3 0.2 - - Insseco Sp. z o.o. 1.6 - 10.3 - Centrum Komputerowe ZETO S.A. - - 0.5 0.7 PI ZETO Bydgoszcz S.A. 0.5 - - 0.2 Sigilogic Sp. z o.o. 1.7 1.6 0.1 0.2 SKG S.A. - - 1.2 0.8 Gdyński Klub Koszykówki Arka S.A. 1) - 0.1 - 0.5 Asseco Resovia S.A. 2) - - - 1.7 Unizeto Technologies S.A. 3) 5.0 - 0.2 - Dahliamatic Sp. z o.o. - - 13.1 - 9.4 2.0 27.2 5.8
Transactions with associates Postdata S.A. 1.3 3.0 0.1 0.2 1.3 3.0 0.1 0.2
Transactions with entities related through the Key Management Personnel Ruch S.A. 4) 0.7 0.7 - - Decsoft S.A.5) - 3.3 13.1 - Top Fin Sp. z o.o. 6) 0.3 0.3 0.2 0.2 E-Kiosk S.A. 7) - - 0.1 1.0 4.3 13.3 0.3
Transactions with the Management Board Members and Commercial Proxies Piotr Jakubowski8) 0.01 0.01 - 0.04 Andrzej Gerlach - - 0.1 0.01 0.01 0.01 0.1 0.05 Transactions with the Supervisory Board Members and
Commercial Proxies Dariusz Brzeski - - 0.1 0.1 - - 0.1 0.1
TOTAL TRANSACTIONS 11.7 9.3 40.8 6.5
1) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Przemysław Sęczkowski, Vice President of the Company’s Management Board, served as President of Gdyński Klub Koszykówki Arka S.A. Furthermore, Mr. Adam Góral, President of the Company’s Management Board, served as Chairman of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A., while Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served as Members of the Supervisory Board of Gdyński Klub Koszykówki Arka S.A. 2) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Adam Góral, President of the Company’s Management Board, served as Member of the Supervisory Board of Asseco Resovia S.A., whereas Mr. Marek Panek, Vice President of the Company’s Management Board, served as President of the Management Board of Asseco Resovia S.A. Furthermore, Mrs. Renata Bojdo and Mr. Andrzej Gerlach, the Company’s Commercial Proxies, served respectively as Member and Chairman of the Supervisory Board of Asseco Resovia S.A. 3) From 16 March 2015, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, served as Member of the Supervisory Board of Unizeto Technologies S.A.; while Mr. Andrzej Dopierała, Vice President of the Company’s Management Board, served as President of the Management Board of Unizeto Technologies S.A. Furthermore, Mr. Marek Panek and Mr. Rafał Kozłowski, Vice Presidents of the Company’s Management Board, served respectively as Member of the Supervisory Board and Vice President of the Management Board of Unizeto Technologies S.A.
All figures in millions of PLN, unless stated otherwise 74 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
4) In the period of 12 months ended 31 December 2015, Mr. Dariusz Stolarczyk, Member of the Company’s Supervisory Board served as Member of the Management Board of Ruch S.A. He has held this position since 1 September 2013. 5) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Jacek Duch, Chairman of the Company’s Supervisory Board, served as Member of the Supervisory Board of Decsoft S.A. 6) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Andrzej Gerlach, the Company’s Commercial Proxy, was a partner in the company Top Fin Sp. z o.o. Moreover, during the analyzed period, Mrs. Ewa Góral, the wife of Mr. Adam Góral, President of the Company’s Management Board, was a partner in the company Top Fin Sp. z o.o.; whereas, Mrs. Jolanta Wiza, the wife of Mr. Artur Wiza who performs managerial functions in the Company, was the president and a partner in the company Top Fin Sp. z o.o. In addition, since July 2013, Mr. Adam Góral, President of the Company’s Management Board, has been the owner of business premises rented out to Top Fin Sp. z o.o. 7) In the period of 12 months ended 31 December 2015, Mr. Dariusz Stolarczyk, Member of the Company’s Supervisory Board, served as Member of the Supervisory Board of E-Kiosk S.A. He has held this position since 21 November 2014. 8) On 9 December 2015, Mr. Piotr Jakubowski was revoked from the position of the Commercial Proxy of Asseco Poland S.A.
Transactions with related parties are carried out on an arm’s length basis. As at 31 December 2015, receivables from related parties comprised trade receivables (PLN 9.8 million) as well as other receivables (PLN 1.9 million). As at 31 December 2014, receivables from related parties comprised trade receivables (PLN 7.5 million) as well as other receivables (PLN 1.8 million). As at 31 December 2015, liabilities to related parties comprised trade payables (PLN 40.8 million). As at 31 December 2014, liabilities to related parties comprised trade payables (PLN 5.1 million) as well as other liabilities (PLN 1.4 million).
26. Notes to the Statement of Cash Flows Cash flows – operating activities The table below presents items included in the line “Changes in working capital”:
12 months ended 12 months ended 31 Dec. 2015 31 Dec. 2014 mPLN mPLN
Change in inventories 4.9 37.3 Change in receivables (61.1) (30.3) Change in non-financial assets (0.4) 8.6 Change in liabilities excluding bank loans and borrowings 104.7 (63.8) Change in prepayments and accruals 3.9 4.9 Change in provisions 25.0 (1.6) Total 77.0 (44.9)
Cash flows – investing activities In the period of 12 months ended 31 December 2015, the amount of cash flows from investing activities was affected primarily by the following proceeds and expenditures: . Acquisitions of property, plant and equipment for PLN 16.1 million, including purchases of transportation vehicles and computer hardware; . Acquisitions of intangible assets for PLN 4.2 million, including purchases of third-party software and licenses to be used by the Company’s employees; . Expenditures for development projects amounting to PLN 19.8 million; . Acquisitions of shares in related companies for PLN 143.3 million. These expenditures were incurred primarily due to the acquisition of shares in Exictos SGPS S.A. (PLN 63.7 million) as well as in Infovide-Matrix S.A. (PLN 75.0 million); . Dividends received from subsidiaries and associates amounting to PLN 130.1 million.
All figures in millions of PLN, unless stated otherwise 75 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
. The following table presents detailed cash flows relating to loans during the period of 12 months ended 31 December 2015:
Loans collected Loans granted Name of entity mPLN mPLN Combidata Poland Sp. z o.o. 4.4 - Zakład Usług Informatycznych Otago Sp. z o.o. 1.0 -
Podkarpacki Fundusz Nieruchomości Sp. z o.o. 2.5 -
Asseco Resovia S.A. - (5.0)
Gdyński Klub Koszykówki Arka S.A. - (4.4)
Insseco Sp. z o.o. 30.3 -
Sigilogic Sp. z o.o. 1.5 (5.5)
Infovide-Matrix S.A. - (5.0)
Unizeto Technologies S.A. - (20.5)
Asseco Bel LLC - (0.6) Other entities 1.3 (1.7) Total 41.0 (42.7)
Cash flows – financing activities . Dividends paid out – this item includes the divided of PLN 240.7 million distributed by the Company (the dividend for 2015 has been described in detail in explanatory note 6 to these financial statements); . Repayment of bank loans and borrowings – this item represents partial repayment of the investment loan that was taken out by the Company to finance the construction of its new office building in Wilanów, Warsaw.
27. Off-balance-sheet liabilities towards related parties As at 31 December 2015, guarantees and sureties granted by Asseco Poland for its subsidiary Unizeto Technologies S.A. were as follows: . On 30 September 2015, Asseco Poland made a commitment to grant a surety up to the amount of PLN 6.0 million in favour of mBank S.A. in order to secure the repayment of an operating loan amounting to PLN 4.0 million, in the form of a declaration of submission to enforcement. Asseco Poland’s liability under this surety shall expire on 31 March 2017.
28. Off-balance-sheet liabilities towards other entities The Company is a party to a number of rental, leasing and other contracts of similar nature, resulting in the following off-balance-sheet liabilities for future payments:
31 Dec. 2015 31 Dec. 2014 mPLN mPLN Liabilities under leases of space
In the period up to 1 year 10.0 9.0 In the period from 1 to 5 years 27.5 21.9 Over 5 years - 3.1 37.5 34.0
All figures in millions of PLN, unless stated otherwise 76 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
29. Employment
12 months ended 12 months ended Average workforce in the reporting period* 31 Dec. 2015 31 Dec. 2014
Management Board 11 11 Production departments 2,302 2,523 Sales departments 96 100 Administration departments 322 333 Total 2,731 2,967 *Average employment in the reporting period in full-time salaried jobs, i.e. employment in full-time jobs adjusted for (reduced by) positions which are not salaried by the Company (such as an unpaid leave, maternity leave, etc.)
Workforce in persons as at: 31 Dec. 2015 31 Dec. 2014
Management Board 11 11 Production departments 2,382 2,581 Sales departments 101 109 Administration departments 357 361 Total 2,851 3,062
30. Objectives and principles of financial risk management Asseco Poland S.A. is exposed to various types of risk arising either from the macroeconomic situation in Poland as well as from microeconomic situation in its own organization. The main external factors that may have an adverse impact on the Company’s financial performance are: (i) fluctuations in foreign currency exchange rates versus the Polish zloty, and (ii) changes in official interest rates. . Foreign currency risk The Company’s main functional currency is the Polish zloty, however, certain IT contracts or property lease agreements are denominated in foreign currencies (EUR and USD). With regard to the above, the Company is exposed to fluctuations in its financial performance resulting from differences in foreign currency exchange rates versus the Polish zloty in the period from concluding a contract until it is invoiced or paid for. Identification: According to the Company’s procedures pertaining to entering into commercial contracts, each agreement that is concluded or denominated in a foreign currency shall be subject to special registration. Measurement: The exposure to foreign currency risk is measured by the value of a contract concluded in a foreign currency on one hand, and on the other by the nominal amount of currency derivative instruments concluded in the financial market. The procedures applicable to the execution of IT projects require making systematic updates of the project implementation schedules as well as of cash flows generated under individual projects. Objective: The purpose of counteracting the risk of fluctuations in foreign currency exchange rates is to reduce their negative impact on the financial results of our contracts. Contracts settled in foreign currencies are hedged with simple derivatives such as currency forward contracts (deliverable or non-deliverable, depending on a type of the hedged contract). Foreign currency risk hedges are matched by selecting suitable financial instruments to offset the impact of changes in the risk-causing factor on the Company’s financial performance (the changes in embedded instruments and concluded instruments are balanced out). However, due to a considerable variability in project implementation schedules and the resulting variability in cash flows, the Company is prone to changes in its exposure to foreign exchange risk. Therefore, the Company dynamically transfers its existing hedging instruments or concludes new ones with the objective to ensure the most effective matching. It has to be taken into account that the valuation of embedded instruments changes with the reference to the parameters
All figures in millions of PLN, unless stated otherwise 77 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015 as at the contract signing date (spot rate and swap points), while transferring or conclusion of new instruments in the financial market may only be effected on the basis of current rates available. Hence, it is possible that the value of financial instruments will not be matched and the Company’s financial result will be potentially exposed to the foreign currency risk. As at 31 December 2015, the Company holds open forward contracts to purchase euros for the total nominal amount of PLN 33.5 million, which are used to hedge our liabilities under real-estate lease agreements. These forward contracts are settled on a monthly basis, with the last one to be settled on 14 July 2017. The Company also holds open forward contracts to purchase American dollars for the total nominal amount of PLN 46.3 million, which shall be finally settled on 30 September 2016. Furthermore, the Company holds a forward contract to sell American dollars for the total nominal amount of PLN 7.7 million, which shall be finally settled on 31 March 2016. . Interest rate risk The Company is exposed to the risk of interest rate changes primarily in two areas of its business activities: (i) change in the value of interest charged on loans granted to the Company, which are based on variable interest rates, and (ii) change in the valuation of concluded derivative instruments, which are based on the forward interest rate curve. Identification: The interest rate risk arises and is recognized by the Company at the time of concluding a transaction or a financial instrument based on a variable interest rate. Measurement: The Company measures its exposure to the interest rate risk by preparing the statements of total amounts of all of its financial instruments based on a variable interest rate. Additionally, the Company maintains records of debt planned to be incurred during the next 12 months, and in the case of long-term instruments – for the period of their maturity. Objective: The purpose of reducing such risk is to eliminate the incurrence of higher expenses due to the concluded financial instruments based on a variable interest rate. Actions: In order to reduce its interest rate risk, the Company may: (i) try to avoid incurring liabilities based on a variable interest rate or, if not possible, (ii) conclude forward rate agreements. Matching: The Company gathers and analyzes the current market information concerning its present exposure to the interest rate risk. For the time being, the Company does not hedge against changes of interest rates due to a high degree of unpredictability of the repayment schedules of its liabilities based on a variable interest rate. . Counterparty credit risk The Company is exposed to the risk of defaulting contractors. This risk is connected firstly with the financial credibility and good will of customers to whom the Company provides IT solutions, and secondly with the financial credibility of contractors with whom supply transactions are concluded. The maximum exposure to credit risk is limited to the book value of financial assets. Identification: The risk is identified each time when concluding contracts with clients, and afterwards during the settlement of payments. Measurement: Determination of this type of risk requires the knowledge of complaints or pending judicial proceedings against a client already at the time of signing an agreement. Every two weeks the Company is obliged to control the settlement of payments under the concluded contracts, inclusive of the profit and loss analysis for individual projects. Objective: Minimizing the amount of uncollectible receivables. The risk control involves monitoring of the timely execution of bank transfers and, if needed, sending a reminder of outstanding payment, or turning receivables over to debt collection agencies. . Financial liquidity risk The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool, which considers the maturity of its assets and liabilities as well as projected cash flows from its operations. The Company’s objective is to maintain a balance between continuity and flexibility of financing by using various sources of funds.
All figures in millions of PLN, unless stated otherwise 78 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Quantitative analyses of the Company’s liquidity broken down by categories of liabilities and assets are presented: for receivables in note 20, for liabilities in note 23, and for loans in explanatory note 20 to these financial statements. . Analysis of sensitivity – foreign currency risk The Company tries to conclude contracts with its clients in the Polish currency in order to avoid exposure to the risk arising from fluctuations in foreign currency exchange rates versus the Polish zloty. The analysis of sensitivity, which was carried out by the Company as at 31 December 2015 and 31 December 2014, showed that if PLN appreciated 10% versus EUR, the Company would recognize a financial gain of PLN 6.4 million. Analogically, if PLN depreciated 10% versus EUR, the Company’s financial results would deteriorate by PLN 6.4 million.
Amount exposed As at 31 December 2015 Impact on financial results of the Company to risk EUR mPLN (10%) 10% Financial assets Forward contracts 3.4 (3.6) 3.6 Trade receivables 4.9 (0.5) 0.5
Liabilities Trade payables 3.4 0.3 (0.3) Finance lease liabilities 101.5 10.2 (10.2)
Balance 6.4 (6.4)
Amount exposed As at 31 December 2014 Impact on financial results of the Company to risk EUR mPLN (10%) 10% Financial assets Forward contracts 6.1 (4.0) 4.0 Trade receivables 1.1 (0.1) 0.1
Liabilities Trade payables 2.8 0.3 (0.3) Finance lease liabilities 118.3 11.8 (11.8)
Balance 8.0 (8.0)
The analysis of sensitivity, which was carried out by the Company as at 31 December 2015, showed that if PLN appreciated 10% versus USD, the Company would recognize a financial gain of PLN 4.1 million. Analogically, if PLN depreciated 10% versus USD, the Company’s financial results would deteriorate by PLN 4.1 million.
All figures in millions of PLN, unless stated otherwise 79 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
Amount exposed As at 31 December 2015 Impact on financial results of the Company to risk USD mPLN (10%) 10% Financial assets Forward contracts (1.0) (4.3) 4.3 Trade receivables 9.7 (1.0) 1.0
Liabilities Trade payables 12.2 1.2 (1.2)
Balance (4.1) 4.1 Amount exposed As at 31 December 2014 Impact on financial results of the Company to risk USD mPLN (10%) 10% Financial assets Forward contracts 0.1 (0.2) 0.2 Trade receivables 1.2 (0.1) 0.1
Liabilities Trade payables 6.7 0.7 (0.7)
Balance 0.4 (0.4)
. Analysis of sensitivity – interest rate risk The Company generally tries to avoid taking out loan facilities based on a variable interest rate. In case it is necessary to conclude a loan agreement based on a variable interest rate, the Company does not really have a strategy for hedging against the rate risk involved. As at the balance sheet date, the Company’s total liabilities under variable interest rate loans aggregated at PLN 90.4 million, as compared with PLN 103.2 million as at the end of 2014. Such liabilities resulted mainly from a specific purpose loan, which was taken out in order to finance the construction of the Company’s office building in Warsaw.
The following table presents the impact of the loan base interest rate (3M WIBOR) on the interest expense incurred in 2015:
Amount exposed As at 31 December 2014 Impact on financial results of the Company to risk Bank loans based on the WIBOR variable interest rate mPLN (15%) 15%
Interest-bearing bank loans and debt securities issued 90.4 (0.1) 0.1
The following table presents the impact of the loan base interest rate (3M WIBOR) on the interest expense incurred in 2014:
Amount exposed As at 31 December 2014 Impact on financial results of the Company to risk Bank loans based on the WIBOR variable interest rate mPLN (15%) 15%
Interest-bearing bank loans and debt securities issued 103.2 (0.1) 0.1
The interest rate risk involved in the Company’s assets and other liabilities, which are based on variable interest rates, is insignificant and therefore has not been analyzed.
All figures in millions of PLN, unless stated otherwise 80 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
. Other types of risk Other types of risk are not analyzed for sensitivity due to their nature and impossibility of absolute classification. . Methods adopted for conducting the sensitivity analysis The analysis of sensitivity to fluctuations in foreign exchange rates with potential impact on our financial results was conducted using the percentage deviations of +/-10%, by which the reference exchange rates, effective as at the balance sheet date, were increased or decreased. The sensitivity of interest rate exposure was analyzed using the percentage deviations of +/- 15%.
. Fair value As at 31 December 2015, the Company held the following financial assets measured at fair value:
As at 31 December 2015 Book value Level 1i) Level 2 ii) Level 3iii) Financial assets carried at fair value through profit or loss Currency forward contracts 2.4 - 2.4 - Total 2.4 - 2.4 -
Financial assets available for sale Shares in companies listed on regulated markets 0.8 0.8 - - Shares in companies not listed on regulated markets 8.8 - - 8.8 Total 9.6 0.8 - 8.8
i. fair value determined on the basis of quoted prices offered in active markets for identical assets; ii. fair value determined using calculation models based on inputs that are, either directly or indirectly, observable in active markets; iii. fair value determined using calculation models based on inputs that are not, directly or indirectly, observable in active markets.
As at 31 December 2014, the Company held the following financial assets measured at fair value:
As at 31 December 2014 Book value Level 1i) Level 2 ii) Level 3iii) Financial assets carried at fair value through profit or loss Currency forward contracts 6.1 - 6.1 - Total 6.1 - 6.1 -
Financial assets available for sale Shares in companies listed on regulated markets 0.7 0.7 - - Shares in companies not listed on regulated markets 8.8 - - 8.8 Total 9.5 0.7 - 8.8
Both as at 31 December 2015 and 31 December 2014, the fair values of financial assets and financial liabilities held by the Company did not significantly differ from their book values, except for investments in the companies of Asseco Central Europe, Asseco South Eastern Europe, and Formula Systems Ltd., as described in explanatory note 10 to these financial statements.
All figures in millions of PLN, unless stated otherwise 81 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
. Items of income, expenses, gains and losses recognized in the income statement As at 31 December 2015, the following items of income, expenses, gains and losses were recognized in the Company’s income statement:
Interest Gain/(loss) Reversal/ Gain/(loss) on Items of income, expenses, gains and losses recognized income/ on foreign (recognition) valuation and Total in the income statement as at 31 December 2015: (expenses): exchange of impairment exercise differences write-downs Financial assets: 5.9 (1.6) (11.9) (1.0) (8.6) Financial assets carried at fair value through profit or - - - (1.0) (1.0) loss Currency forward contracts - - - (1.0) (1.0) Cash and cash equivalents 1.0 (0.7) - - 0.3 Loans and receivables: 4.9 (0.9) (11.9) - (7.9) Loans granted to related parties 3.4 - (0.6) - 2.8 Loans granted to other entities 0.1 - - - 0.1 Trade receivables from related parties - - - - - Trade receivables from other entities 1.4 (0.9) (11.3) - (10.8) Financial liabilities: (9.9) (0.7) - - (10.6) Financial liabilities carried at fair value through profit (6.3) 0.2 - - (6.1) or loss: Other derivative instruments and financial liabilities (6.3) 0.2 - (6.1) Interest-bearing bank loans, borrowings and debt (3.5) - - - (3.5) securities issued: Bank loans (3.5) - - - (3.5) Trade payables: (0.1) (0.9) - - (1.0) Related party transactions - - - - - Transactions with other entities (0.1) (0.9) - - (1.0)
As at 31 December 2014, the following items of income, expenses, gains and losses were recognized in the Company’s income statement:
Interest Gain/(loss) Reversal Gain/(loss) on Items of income, expenses, gains and losses recognized income/ on foreign (recognition) valuation and Total in the income statement as at 31 December 2014: (expenses): exchange of impairment exercise differences write-downs Financial assets: 7.1 1.3 27.8 - 36.2 Financial assets carried at fair value through profit or - 0.1 - - 0.1 loss Currency forward contracts - 0.1 - - 0.1 Cash and cash equivalents 1.4 0.3 - - 1.7 Loans and receivables: 5.7 0.9 27.8 - 34.4 Loans granted to related parties 2.5 - - - 2.5 Loans granted to other entities 0.3 - 28.1 - 28.4 Trade receivables from related parties - - - - - Trade receivables from other entities 2.9 0.9 (0.3) - 3.5 Financial liabilities: (12.7) (4.4) - - (17.1) Financial liabilities carried at fair value through profit (7.3) (3.4) - - (10.7) or loss: Other derivative instruments and financial liabilities (7.3) (3.4) - - (10.7) Interest-bearing bank loans, borrowings and debt (5.0) - - - (5.0) securities issued: Bank loans (5.0) - - - (5.0) Trade payables: (0.4) (1.0) - - (1.4) Related party transactions - - - - - Transactions with other entities (0.4) (1.0) - - (1.4)
All figures in millions of PLN, unless stated otherwise 82 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
31. Remuneration of the entity authorized to audit financial statements The table below discloses the amounts of remuneration paid or payable to the entity authorized to audit financial statements of the Company, namely Ernst & Young Audyt Polska Sp. z o.o. sp.k., for the years ended 31 December 2015 and 31 December 2014, in a breakdown by type of service:
12 months 12 months
ended 31 Dec. 2015 ended 31 Dec. 2014 mPLN mPLN
Obligatory audit of the annual financial statements 1.0 1.4 Total 1.0 1.4
32. Remuneration of the Management Board and Supervisory Board of Asseco Poland S.A. The table below presents the amounts of remuneration paid to individual Members of the Company’s Management Board and Supervisory Board for performing their duties during the years 2015 and 2014.
12 months ended 12 months ended
31 Dec. 2015 31 Dec. 2014 mPLN mPLN
Management Board Adam Góral 1.9 2.2 Przemysław Borzestowski 1.3 1.4 Andrzej Dopierała 1.2 1.2 Tadeusz Dyrga 1.4 1.6 Rafał Kozłowski 0.7 1.0 Marek Panek 1.1 1.3 Paweł Piwowar 1.6 1.8 Zbigniew Pomianek 2.0 2.3 Włodzimierz Serwiński 0.8 1.2 Przemysław Sęczkowski 1.1 1.9 Robert Smułkowski 1.7 2.0 Total 14.8 17.9
Supervisory Board Jacek Duch 0.20 0.20 Piotr Augustyniak 0.10 0.10 Dariusz Brzeski 0.10 0.10 Artur Kucharski 0.10 0.10 Adam Noga 0.14 0.14 Dariusz Stolarczyk 0.10 0.10 Total 0.74 0.74
All figures in millions of PLN, unless stated otherwise 83 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
33. Capital management The primary objective of the Company’s capital management is to maintain a favourable credit rating and a safe level of capital ratios in order to support the Company’s business operations and maximize shareholder value. The Company manages its capital structure and makes necessary adjustments in response to the changing economic conditions. In order to maintain or adjust its capital structure, the Company may decide to pay out a dividend, return some capital to shareholders, or issue new shares. The Company consistently monitors the level of its capital using the leverage ratio, which is calculated as a relation of net liabilities to total equity increased by net liabilities. Net liabilities include interest-bearing loans and borrowings, finance lease liabilities, trade payables and other liabilities, decreased by cash and cash equivalents.
31 Dec. 2015 31 Dec. 2014
mPLN mPLN
Interest-bearing loans and borrowings 90.4 103.2 Finance lease liabilities 104.6 122.7 Trade payables and other liabilities 218.4 128.8 Minus cash and cash equivalents (-) (43.3) (86.7) Net debt 370.1 268.0
Equity 4,989.6 4,973.8 Equity and net debt 5,359.7 5,241.8
Leverage ratio 6.9% 5.1%
34. Significant events after the balance sheet date
. Acquisition of an 8% stake in Exictos SGPS S.A. by Asseco Poland S.A. On 13 January 2016, Asseco Poland S.A. acquired 34,783 shares in Exictos SGPS S.A., representing 8% of the share capital of that company. The transaction value amounted to EUR 2.8 million (PLN 12.3 million). As a result of this transaction, the shareholding of Asseco Poland S.A in Exictos SGPS S.A. increased from 61.38% to 69.38%. . Change of the name of Insseco Sp. z o.o. to Sapiens Software Solutions (Poland) Sp. z o.o. On 5 February 2016, the company of Insseco Sp. z o.o. was renamed as Sapiens Software Solutions (Poland) Sp. z o.o. . Appeal filed in litigation with Mostostal Warszawa S.A. As at the date of publication of this report, the Company was in a court dispute with Mostostal Warszawa S.A. On 12 November 2015, all the claims lodged by Asseco Poland S.A. against Mostostal Warszawa S.A. have been acknowledged by a court verdict. Mostostal Warszawa S.A. appealed against that judgment on 9 February 2016. The appeal hearing will be held after the date of this report. . Termination of a contract by Bank Gospodarstwa Krajowego On 29 February 2016, Asseco Poland S.A. received a demand for the payment of contractual penalties in the amount of PLN 3.4 million as a result of improper performance of the contract, and subsequently, Bank Gospodarstwa Krajowego terminated the contract with Asseco Poland S.A. on 1 March 2016 and demanded the payment of a contractual penalty of PLN 0.4 million. Therefore, the Company’s Management Board decided to create a provision for the above-mentioned contractual penalties in the total amount of PLN 3.8 million, which was recognized as at 31 December 2015.
All figures in millions of PLN, unless stated otherwise 84 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88 Financial Statements of Asseco Poland S.A. for the year ended 31 December 2015
. Recommendation for the distribution of net profit for the financial year 2015 On 16 March 2016, the Management Board of Asseco Poland S.A. submitted a request to the Supervisory Board for recommending to the General Meeting of Shareholders to distribute the Company’s net profit for the financial year 2015 amounting to PLN 257.1 million, by allocating PLN 249.8 million to the payment of a dividend of PLN 3.01 per share, and by allocating the remaining amount of PLN 7.3 million to the Company’s reserve capital. . Resolution on the intent to sign a plan of merger between Asseco Poland S.A. and Infovide-Matrix S.A. On 16 March 2016, the Management Board of Asseco Poland S.A. adopted a resolution on the intent to sign a plan of merger between Asseco Poland S.A. and Infovide-Matrix S.A. The companies shall be merged pursuant to art. 492 § 1 item 1 of the Commercial Companies Code as well as art. 515 § 1 and art. 516 § 6 of the Commercial Companies Code, this is by transferring all the assets of Infovide-Matrix S.A. to Asseco Poland S.A.
All figures in millions of PLN, unless stated otherwise 85 WorldReginfo - b4ee839a-0624-4c2c-972b-9bf966818a88
Asseco Poland S.A. 14 Olchowa St. 35-322 Rzeszów, Poland phone: +48 17 888 55 55 fax: +48 17 888 55 50 e-mail: [email protected] inwestor.asseco.pl
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