PROKOM SOFTWARE SA ANNUAL REPORT 2006

PROKOM SOFTWARE SA ANNUAL REPORT 2006 Direction: Building an Information Society

The mission of Prokom Software SA lies in constantly striving to fulfil the needs of corporate and institutional clients by providing them with comprehensive IT solutions based on state-of-the-art technologies supporting effectiveness enhancement and strengthening of clients’ market positions.

Our values: Care for our clients, innovativeness, transparency of business processes, and active involvement in building an information society. Our advantages: Latest technologies, knowledge, and unique experience. As Poland’s largest IT company and industry leader in Central and Eastern Europe, we bring to the table proven IT solutions which can be replicated in many countries across the region. Prokom Software SA Annual Report 2006 PROKOM SOFTWARE SA

Table of Contents

Facts. Key Financial Data 06

Letter from the President of the Management Board to the Shareholders 08

Governing Bodies 12

Management Board 12

Supervisory Board 15

General Shareholders Meeting 15

Prokom Software Group 16

Structure of the Prokom Software Group 18

Key Events 20

The Information Society – unique experience in building IT 28

Fostering modern relations between state institutions and the public 30

“Lean state” 31

New generation university 31

Innovation of knowledge-based economy 33

Efficient use of the EU funds 33

Safe country, safe citizens 34 ANNUAL REPORT 2006

Prokom Software SA – competetive strengths 36

SOA – philosophy underlying development of our solutions 38

• SOA at KE ENERGA SA 40

• SOA at Telekomunikacja Polska SA 40

• SOA at PZU SA 41

• SAP business consultancy services for industry, based on Grupa LOTOS SA case 41

Data transmission infrastructure 42

• e-Poczta system at Poczta Polska 42

• INSURER for PZU SA – design and development of hardware and software environment for the purpose of system centralisation 42

• Bilateral Information Exchange System at ZUS – ensuring security 43

• ZUS – design and development of hardware and system environment for the data centre 44

Development of large-scale systems. Management of massive data sets 44

• INSURER system for PZU SA – data migration for the purposes of centralisation 44

• Marketing campaign management for Orange Polska 46

• Unique data repository at KE ENERGA SA 47

Prokom Software Group – business and competence centers 50

Asseco Poland SA 52

ABG Ster-Projekt SA 53

SPIN SA 54

COMP SA 55

Postdata SA 55

Combidata Poland Sp. z o.o. 56

Financial results 57

Contact data 68 .7 PROKOM SOFTWARE SA

300 Facts Key Financial Data

270

In 2006, the Prokom Group posted sales revenue in excess of PLN 1.7bn. Net profit attributable to the shareholders of the parent company grew by almost 15%, to PLN 92m.

The following factors contributed to net profit earned by the Prokom Group in 2006: conclusion of new contracts with a number of clients (including ppup Poczta Polska, TUiR Warta SA, several universities, the Agency for Restructuring and Modernisation of Agriculture, PKO BP SA, the National Health Fund, Border Guard, KGHM Polska Miedź SA, TELE-FONIKA Kable SA, the Ministry of Foreign Affairs, and the Romanian Agency for Payments and Intervention in Agriculture) and continued performance of the contracts concluded in previous years (including the contracts with the Social Insurance Institution – ZUS, the PZU Group, Telekomunikacja Polska SA, the Ministry of Internal Affairs and Administration, Grupa LOTOS SA and KE ENERGA SA). The stagnation seen in the public administration affected the Company’s revenue. The rise in net profit was achieved owing to the restructuring at the parent company (primarily of the marketing functions, and reduction of general and administrative expenses) and reorganisation of the Group, designed to create competence cen- tres, optimise cooperation and operating synergies between individual companies, and to focus on high-margin projects. 226 215

196 1,855 1,693 171 1,573 156 151 1,451

111 108

1,000 100 100 100 92 80 73

42

2003 2004 2005 2006 2003 2004 2005 2006 2003 2004 2005 2006 2003 2004 2005 2006 0 0 0 0

SALES OF PROKOM EBIT EBITDA PROFIT ATTRIBUTABLE TO SHAREHOLDERS GROUP (PLNm) (PLNm) (PLNm) OF PROKOM SOFTWARE SA (PLN m)

6 ANNUAL REPORT 2006

Prokom Group 2006 in Figures

PLN 1.7bn

NET SALES REVENUE

PLN 183m PROFIT BEFORE TAX

EMPLOYEES SHAREHOLDERS BANKS CONTRACTED SERVICES TAXES AND CHARGES

PLN 376m It is our policy to distribute PLN 380m PLN 504m PLN 28m

is the aggregate amount from 10% is the amount of our principal This amount includes is the amount remitted paid out to our employees payments under contracted remuneration paid to our by us as corporate income (over 4,500 staff) as salaries to 40% loans and securities in issue technological subcontractors. tax and other financial (net of interest). and wages. of Prokom Software SA’s net obligations to the central profit for any given year and local governments. to our shareholders by way of dividends. PLN 68m

is the total amount of social security contributions paid on behalf of our employees.

7 PROKOM SOFTWARE SA

Letter from the President of the Management Board to the Shareholders

Dear Shareholders,

It is my well-grounded conviction and a source of satisfaction that 2006 was another successful year for the Prokom Group, despite the difficult environment. High qualifications, reliability and creativity of thousands of our employees bore fruit. Our financial performance strengthened position of the Prokom Group as the leader of the domestic IT industry. In 2006, we strengthened our competence pillars and enhanced our market competitiveness. Prokom Software SA, the Group’s flagship, is the business centre and an R&D base for the entire Group, which comprises strong market players: Asseco Poland SA, ABG Ster-Projekt SA and SPIN SA (merger under way), as well as COMP SA. First significant economic results of the Prokom Group’s pillars are already visible. Consolidation processes, leveraging the new scale and synergies clearly manifested themselves in improved financial performance. The benefits will be even greater in 2007 and the coming years.

Prokom Software Group: We Programme the Future

We are the largest IT group in Poland, prepared to provide services valued by customers investing in their future. We have gained further experience in development and management of large IT projects serving millions of customers and supporting tens of thousands of workstations and thousands of servers. In terms of innovativeness and performance, the Group is among top IT companies in Central and Eastern Europe.

8 ANNUAL REPORT 2006 Letter from the President of the Management Board to the Shareholders

Our R&D facilities and IT specialists guarantee the provision of optimum, well thought-out and thoroughly tested solutions to our clients. We have reached an advanced level of research and development in numerous projects, including building services-based systems in modular architecture, making services available via the Internet and developing dedicated solutions for direct support of our clients’ core business.

Prokom Group: We Believe in High-Quality Versatility

Last year, growth of the Prokom Group was also supported by the strengthening of our position in the manufacturing, educational, financial and administration sectors. The projects launched in 2006 and previous years will bring measurable effects in the future, and these will be amplified by our continuously expanding competencies. All this has been reflected in our positions in domestic IT rankings, prepared by prestigious industry media. We ranked first in dozen or so categories, including “IT Companies – Service Providers”, “Custom Software Vendors”, “Hardware Installation Service Providers”, “Network Design and Building Service Providers” and “Training Revenue Top Performers”. Prokom is also a leader among providers of IT technology to the administration, healthcare, banking and finance, as well as telecommunications sectors. We continue to invest abroad. We successfully leveraged our experience gained in Poland in execution of similar IT projects in other European countries. The mechanism of implementing ready solutions tested by the Group and operating them abroad is among our most promising growth paths.

Prokom Group: We Are Ready To Face Civilisation Challenges

Over the last 20 years, Prokom Software SA, followed by other Group companies, has gathered invaluable expertise. We are ready to share our expertise pro publico bono. We are fully aware that, following accession to the European Union, Poland has to make a great civilisation leap, also in the area of building an information society; this will require large-scale IT, telecommunications and infrastructural projects. We are eager to support efforts designed to eliminate digital exclusion and achieve social e-integration. We are eager to participate in development and implementation of IT projects supporting nearly all aspects of our life, from healthcare to public administration to widespread electronic services in the public domain, both at work and at home.

9 PROKOM SOFTWARE SA

We are eager to participate in each project provided for in the National Strategy Operating Programme – Innovative Economy for 2007–2013 and the Government Computerisation Plan. We believe that our competence, experience and skills will effectively support the great task of modernising Poland. Thank you, dear Shareholders, for your trust. It is my strong belief that this trust will contribute significantly to the Company’s performance this year and in the future.

Respectfully yours

Ryszard Krauze

President of the Management Board of Prokom Software SA Warsaw, April 27th 2007

10 ANNUAL REPORT 2006

11 PROKOM SOFTWARE SA

Governing Bodies Management Board

Ryszard Krauze President of the Management Board

Graduate of the Faculty of Machine Construction at the Gdańsk University of Technology. Known mainly as a business leader, founder and President of Prokom Software SA, Poland’s largest IT company, and of Prokom Investments SA, one of the most multi-faceted corporate groups in the country.

12 ANNUAL REPORT 2006 GOVERNING BODIES MANAGEMENT BOARD

Jarosław Chudziak

Vice-President of the Management Board

Mr. Chudziak is responsible for projects in the telecommunications, finance and insurance sectors. Joined Prokom in 2003.

Tadeusz Dyrga

Vice-President of the Management Board

Mr. Dyrga is responsible for projects in the public sector; with Prokom since its inception in 1987.

Dariusz Górka

Vice-President of the Management Board

Chief Financial Officer; with Prokom since 2003.

Piotr Mondalski

Vice-President of the Management Board

Mr. Mondalski is responsible for sales and execution of strategic projects; with Prokom since 1991.

13 Krzysztof Kardaś

Member of the Management Board

Mr. Kardaś is responsible for projects in the manufacturing sector. Joined Prokom in 1993.

Maciej Wantke

Member of the Management Board

Mr. Wantke is responsible for sales and execution of strategic projects. Joined Prokom in 1994.

Grzegorz Maciąg

Member of the Management Board

Head of the legal department. Joined Prokom in 1995. ANNUAL REPORT 2006 GOVERNING BODIES SUPERVISORY BOARD GENERAL SHAREHOLDERS MEETING

Supervisory Board

As at December 31st 2006

Irena Krauze Marek Modecki Maciej Grelowski

Chairwoman of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board

Leszek Starosta Bo Denysyk

Member of the Supervisory Board Member of the Supervisory Board

General Shareholders Meeting

As at December 31st 2006

Number of votes at the % of total vote at the Shareholder Number of shares % of share capital General Shareholders General Shareholders Meeting Meeting

Ryszard Krauze 1,564,698 11.26% 1,749,498 11.96%

Prokom Investments SA 1,420,776 10.23% 1,716,456 11.73%

ING TFI SA 780,430 5.62% 780,430 5.33%

15 In recent years, as a result of Prokom Group’s consistent efforts, its position in the business market has become move transparent, both for the general public and stock-exchange investors. As we embarked on the restructuring and consolidation process, we made a number of bold promises. Despite the sceptical voices heard from some, we have since gone on to 30 back those promises up with actions, making good on every last one of them. We have achieved success which, apart from finding its reflection in a marked increase in our Stock value, also represents good capital for the future. To a large extent, this .% capital is accounted for by that rare quality of trust – trust in a partner who honours his commitments. Ryszard Krauze, President of the Management Board of Prokom Software SA

60

PROKOM SOFTWARE GROUP 9

2006 The Prokom Software Group is the largest IT group in Poland and the most versatile organisation in terms of its IT competences. For the last 20 years, development of the Group has been driven by Prokom Software SA, the Group’s leading company, whose expertise in the area of designing and integrating IT systems has made it the undisputed leader of the Polish IT industry. PROKOM SOFTWARE SA

Structure of the Prokom Group

Prokom Software SA

Asseco Poland SA ABG Ster-Projekt SA SPIN SA 25.66 / 25.66 38.46 / 38.22 50.40 / 49.99

Softbank Serwis Sp. z o.o. Alcyone Sp. z o.o. Softmax Sp. z o.o. 100.00 / 100.00 100.00 / 100.00 100.00 / 100.00

Koma Nord Sp. z o.o. DRQ Sp. z o.o. SK Galkom Sp. z o.o. 100.00 / 100.00 100.00 / 100.00 87.50 / 87.50

Soft Technologies Sp. z o.o. DRQ Serwis Sp. z o.o. OptiX Polska Sp. z o.o. 45.00 / 45.00 100.00 / 100.00 100.00 / 100.00

Sawan Grupa Softbank SA RADCOMP SA Serum Software Sp. z o.o. 100.00 / 100.00 66.94 / 78.51 64.00 / 64.00

Asseco Business Solutions SA * KKI-BCI Sp. z o.o. PIW Postinfo Sp. z o.o. 100.00 / 100.00 87.04 / 87.04 60.00 / 60.00

Softlab Sp. z o.o. CryptoTech Sp. z o.o. PIW Kom-Pakt Sp. z o.o. 96.20 / 96.20 51.00 / 51.00 50.33 / 50.333

SAFO Sp. z o.o. Sapen Sp. z o.o. 28.30 / 28.30 50.00 / 50.00

Softlab Trade Sp. z o.o. Steren Sp. z o.o. 96.06 / 96.06 25.00 / 25.00

Bezpieczeństwo.pl Sp. z o.o. 100.00 / 100.00

Netpower SA 100.00 / 100.00

Bielpolsoft j.v. 85.00 / 85.00 Merger pending

ZUI Novum Sp. z o.o. 51.00 / 51.00

Gladstone Consulting Ltd. 51.00 / 51.00

WA-PRO Sp. z o.o. 70.00 / 70.00

Asseco Slovakia, a.s. 41.67 / 41.67

Slovanet, a.s. 51.00 / 51.00

Datalock, a.s. 51.00 / 51.00 * formerly Incenti SA Asseco Czech Republic a.s. 100.00 / 100.00

D. Trust Certifikacna Autorita, a.s. 45.00 / 45.00 18 Prvni Certifikacni Autorita, a.s. 23.25 / 23.25 ANNUAL REPORT 2006 STRUCTURE OF THE PROKOM GROUP

COMP SA Combidata Poland Sp. z o.o. 20.11 / 20.11 83.81 / 83.81

Enigma Systemy Postdata SA Ochrony Informacji Sp. z o.o. 49.00 / 49.00 100.00 / 100.00 Ready Sp. z o.o. PACOMP SA 100.00 / 100.00 80.00 / 80.00 RUM IT SA Novitus SA 50.00 / 50.00 55.64 / 55.64 C2 System Polska SA 50.00 / 50.00 TechLab 2000 Sp. z o.o. 30.00 / 30.00 TETRA System Polska SA 30.00 / 30.00

ZETO Sp. z o.o. Safe Computing Sp. z o.o. 94.20 / 94.20 90.00 / 90.00 Prokom B2B SA w likwidacji 58.00 / 58.00

UAB „Informaciniu projektu sistemos” 50.00 / 50.00

Hakia Inc.

Amiga Inc.

• Figures in the diagram represent the percentage shares in: share capital/total vote at the General Shareholders Meeting. • Group structure – as at March 31st 2007.

19 30

.% Prokom Software SA is one of the leading providers of custom IT solutions and the largest provider of IT services on the Polish market. The IT solutions provided by the Prokom Group are used by such organizations as the Social Security Institution (ZUS), the Agency for Restructuring and Modernisation of Agriculture (ARiMR), the National Health Fund (NFZ), the Energy Regulatory Authority (URE), the Insurance Guarantee Fund (UFG), the Polish 60 Ministry of National Education, as well as many corporate clients, such as PZU SA, ppup Poczta Polska, PKO BP SA, PKO SA, Telekomunikacja Polska SA, KGHM Polska Miedź SA, Grupa Lotos SA, Koncern Energetyczny ENERGA SA, TUiR Warta SA, TELE-FONIKA Kable SA and Bioton SA.

2006

KEY EVENTS 120 90

2006 proved that Prokom Software SA’s competency translates into clents’ trust: we continued cooperation on key projects and signed new contracts for development of the implemented IT solutions. In 2006, we also took up numerous new challenges, including those in the public

administration, power and educational sectors. 1 PROKOM SOFTWARE SA

Key Events

January 2006 Prokom Software SA and Koncern Energetyczny ENERGA SA conclude a contract for roll-out of accounting and finance modules of mySAP Business Suite from the Gdańsk Branch to ENERGA SA’s remaining organisational units. The implemented system will enable the financial, economic and accounting functions of eight separate power utilities and ENERGA SA’s Head Office to operate using a uniform controlling, financial and accounting model, as well as uniform management procedures which are currently being developed (contract value: approximately PLN 5.9m).

Prokom Software SA and PTK Centertel Sp. z o.o. sign a contract for implementation of a solution supporting Centertel’s marketing activities with respect to marketing campaign planning, execution and monitoring.

PVT a.s. concludes a contract for development of an IT crisis management system. The system is to support planning and decision-making in emergency situations (contract value: CZK 288m, or approximately PLN 40m).

Prokom Software SA and KGHM Polska Miedź SA sign a contract for upgrade of the IBM z900 mainframe to z990 (contract value: PLN 4.5m).

Quality audits performed by the Department of Quality and Management Systems (ZSJM) and the Polish Centre for Testing and Certification (PCBC) confirmed the validity of granted certificates based on the ISO 9001 standard, as well as the related requirements of the Internal Audit System for Trade in Strategic Goods and AQAP standards.

February 2006 Prokom Software SA and Koncern Energetyczny ENERGA SA sign a contract for extension of functionality of the Integrated IT System (ZSI) with a view to harmonising business processes at branches and subsidiaries of ENERGA SA, which is the surviving company of a merger of eight independent power utilities using different IT systems. The current phase of development of the system based on the mySAP Business Suite technology primarily concerns development of solutions supporting electricity distribution processes (contract value: PLN 16.3m).

22 ANNUAL REPORT 2006 KEY EVENTS

The consortium of Prokom Software SA and Polnord SA signs a contract with ppup Poczta Polska for construction of a Poczta Polska hub in Pruszcz Gdański. Polnord SA will execute construction work, while Prokom Software SA will develop all electrical, technical and telecommunications installations (value of Prokom’s share in the contract: PLN 9.5m).

March 2006

Prokom Software SA and KGHM Polska Miedź SA sign a contract for maintenance of IBM hardware in 2006–2008 (contract value: PLN 5.5m).

SPIN SA and the National Health Fund (NFZ) sign a contract for delivery of hardware protecting access to applications and databases operated at the NFZ Head Office in Warsaw (contract value: PLN 1.3m).

Under a framework agreement, Telekomunikacja Polska SA orders further development of the CRM system (total value of seven months’ orders: PLN 8m).

Prokom Software SA and Polpharma SA sign a maintenance contract for a SUN platform (contract value: PLN 1.8m).

April 2006 Prokom Software SA and Multimedia Polska SA sign a framework agreement for delivery and maintenance of Cisco Systems network hardware. The agreement lays down the terms of delivery and maintenance of Cisco hardware and software, as well as the terms of training support related to the hardware. The agreement is valid until July 31st 2007, with an extension option.

The consortium of SPIN SA and KAMSOFT SA signs a contract with the NFZ for provision of maintenance services for the NFZ IT support system (contract value: PLN 14m).

As a member of a consortium with Bull Polska Sp. z o.o., ABG Ster-Projekt SA signs a contract with the Ministry of National Education for delivery of Internet laboratories for 1,093 schools (contract value: PLN 56.4m).

May 2006

Prokom Software SA and TELE-FONIKA Kable SA sign a contract for development of an Integrated IT System. The system is to be based on the mySAP Business Suite solution and the SAP NetWeaver technology. The system idea provides for integration with other systems operated at the TELE- FONIKA Group and its foreign subsidiaries (including companies in Germany and England).

23 PROKOM SOFTWARE SA

June 2006 Prokom Software SA and Grupa LOTOS SA sign a three-year Microsoft Enterprise Agreement, whereby Prokom is to deliver new suites of Microsoft software with updates.

The consortium of ABG Ster-Projekt SA, MCSI Ltd. Sp. z o.o. and Softbank Serwis Sp. z o.o. signs a contract with the Ministry of National Education for delivery, installation and integration of all elements of Internet Centres of Multimedia Information (ICIM) at school libraries, and connection of ICIMs to the schools’ intranet systems. The schools covered by the contract are located in Region II, that is the provinces of Bydgoszcz, Łódź and Warsaw (contract value: PLN 19m).

ABG Ster-Projekt SA and ppup Poczta Polska sign a two year contract for delivery of Oracle software and provision of technical assistance and maintenance services for two years from the contract date (contract value: PLN 10m).

ABG Ster-Projekt SA and Ubezpieczeniowy Fundusz Gwarancyjny (Insurance Guarantee Fund) sign a contract for technical design, delivery and implementation of a finance and accounting system (contract value: PLN 9.4m).

July 2006 SPIN SA and NFZ sign two contracts. One of them provides for extension of a database server and rebuilding of the Visio Suite server replication system at the NFZ Poznań Branch (contract value: PLN 1.5m). The other contract provides for upgrade of servers and delivery of computer hardware and software to the NFZ Bydgoszcz Branch (contract value: PLN 1m). Acting in a consortium with KAMSOFT SA, SPIN SA also concludes two major contracts with the NFZ for IT support of three socially important prevention programmes (joint value of the contracts: PLN 2.8m).

The consortium of ABG Ster-Projekt SA and SIVECO SA (Romania) signs a contract with the Romanian Agency for Payments and Intervention in Agriculture for development of an IT system for the Agency and the Integrated Administration and Control System (IACS) (contract value: PLN 4.8m).

August 2006 Prokom Software SA and TELE-FONIKA Kable SA sign a contract for delivery and implementation of an SAP-dedicated infrastructure. Under the contract, Prokom will provide comprehensive maintenance services under a Service Level Agreement, which is to ensure guaranteed level of the services provided.

24 ANNUAL REPORT 2006 KEY EVENTS

Acting in a consortium with Strabag Sp. z o.o., Prokom Software SA signs a contract with the Regional Branch of Poczta Polska in Katowice for construction of a Poczta Polska hub in Zabrze. In the new building, Prokom will develop all electrical, technical and automation installations, for a total value of PLN 16.2m.

Prokom Software SA and KGHM Polska Miedź SA sign a contract for further development of the IBM platform used by KGHM (contract value: PLN 2.4m).

September 2006 Prokom Software SA and Grupa LOTOS SA sign a contract for provision of a LAN design and implementation services, and for supply of Cisco hardware with system and tool software (contract value: PLN 4.6m).

SPIN SA and the NFZ Head Office sign a contract for further development of database processing equipment at the NFZ Head Office (contract value: PLN 1.5m).

ABG Ster-Projekt SA and the Ministry of Foreign Affairs sign a contract for development of a special computer network. Under the contract, ABG Ster-Projekt SA will deliver workstations and other IT equipment for handling of confidential information (contract value: PLN 2.7m).

October 2006

Prokom Software SA and Towarzystwo Ubezpieczeń i Reasekuracji Warta SA sign an annex to the master agreement for comprehensive computerisation of TUiR Warta SA, dated July 18th 1996. Under the annex, the term of the agreement has been extended until June 30th 2011, with an option of further extension until December 31st 2011. The annex provides for provision of IT support for the Integrated IT System developed by Prokom, services connected with the functional development of the system, and upgrading of the system hardware platform (value of the services covered by the annex: approximately PLN 69m).

November 2006 The consortium of Prokom Software SA, Siemens Sp. z o.o. and SAP Polska Sp. z o.o. signs a contract for delivery, implementation and maintenance of the Integrated IT Support System for University Management at the Warsaw University of Technology, Jagiellonian University of Kraków, Maria Curie- Skłodowska University of Lublin and Silesian University of Katowice (value of Prokom’s share in the contract estimated at approximately PLN 32m).

25 PROKOM SOFTWARE SA

Prokom Software SA and Polpharma SA sign a contract for delivery of a licence for use of an ORACLE database (contract value: PLN 1.6m).

December 2006 Prokom Software SA and KE ENERGA SA sign an annex whereby Prokom is to deliver licences for use of mySAP ERP2006 and MDM (Master Data Management) (value of the services covered by the annex: PLN 7.5m).

Softbank SA and Bank PKO BP SA sign an annex to the agreement of September 7th 2005. The annex provides for further development of the functionality of the Central Support System.

The consortium composed of SPIN SA and COMP SA signs a contract for upgrade of computing power of the telecommunications and IT system operated by the Border Guard (contract value: PLN 15.8m).

OptiX Polska Sp. z o.o. (a subsidiary of SPIN SA) and Telekomunikacja Polska SA sign two contracts for system upgrade with IBM subassemblies and re-sale of servers (joint value of the contracts: PLN 23.8m).

OptiX Polska Sp. z o.o. (a subsidiary of SPIN SA) and PZU Życie SA sign a contract for definition of terms and rules for licence granting, and for delivery of application software and its IT support (contract value: USD 4.7m).

ABG Ster-Projekt SA and the Agency for Restructuring and Modernisation of Agriculture sing a contract for development, installation and implementation of a Data Updating System for the OFSA software; for development, installation and implementation of support software for the implemen- tation of the Development Programme for Rural Areas in 2007–2013; and for technical assistance and maintenance of finance and accounting, HR and payroll, and tangible assets registration systems operated by the Agency for Restructuring and Modernisation of Agriculture (contract value: PLN 24.5m).

ABG Ster-Projekt SA and the Energy Regulatory Authority (URE) sign a contract for implementation of an interactive electronic system of IT and statistics support for energy market participants (contract value: PLN 7.8m).

January 2007 Prokom Software SA and Bioton SA sign a contract for delivery, installation and implementation of a my-SAP ERP system. The project is designed to ensure comprehensive IT support of the entire organisation of Bioton SA. The implementation will enable unification of finance-related processes first at the Head Office, and then across the Bioton Group. KPMG Sp. z o.o., a global consulting company, is a subcontractor and acts as a business advisor. The contract provides for performance

26 ANNUAL REPORT 2006 KEY EVENTS of numerous tasks, including development of a business concept, as well as delivery of an SAP licence and complete IBM infrastructure (DB2 database). The contract also provides for integration of the installed system with the legacy software used at Bioton SA, using the SAP NetWeaver technology (contract value: PLN 8.5m).

Multimedia Polska SA orders delivery of Cisco hardware as part of the contract concluded with Prokom Software SA in April 2006 (order value: PLN 6m).

Prokom Software SA and Operator Gazociągów Przesyłowych GAZ-System SA sign a contract for delivery of a licence for use of HP Asset Center and Service Center software, as well as implementation of a management system for IT and telecommunications infrastructure at the client’s Head Office and branches (contract value: PLN 1.7m).

February 2007

Prokom Software SA announces that, over the previous 12 months, the total value of contracts concluded by Prokom and its subsidiaries with ppup Poczta Polska and its subsidiaries exceeded 10% of Prokom’s equity, reaching a value of PLN 102.2m. The most important of those contracts, with a value of PLN 32.2m (VAT exclusive), was concluded by Prokom Software SA and Postdata SA on December 15th 2006. The subject matter of the contract was execution of six projects, including tasks related to development and implementation of elements of the IT systems produced by Postdata SA in support of Poczta Polska’s Finance Division; the systems support launch of new financial services at Poczta Polska, as well as the accounting processes connected with the monitoring of the enterprise’s financial liquidity.

27 30 The availability of information, as well as the ability to quickly, purposefully and accurately process it, determines the overall direction and nature of changes permeating .% our society. The utilitarian value of information affects economic growth in a broad sense and the quality of people’s lives. Building the information society is a long and complex process, one that 60 involves a number of transformations – from the creation of modern IT infrastructure, through education and inter-generation information transfer, which will enable society to take full advantage of the solutions facilitating the flow and use

of information. 90

THE INFORMATION SOCIETY

UNIQUE EXPERIENCE IN BUILDING IT 120

3% 150

2006 Drawing on its wealth of knowledge and experience, as well as state-of-the-art technologies, Prokom Software SA aims to take active part in building the information society. We develop and implement solutions which not only produce incremental economic growth but, first and foremost, are designed to deliver satisfaction and tangible benefits to end users. PROKOM SOFTWARE SA

Unique Experience in Building the Information Society

FOSTERING MODERN RELATIONS BETWEEN of settlement documents against the list obtained from STATE INSTITUTIONS AND THE PUBLIC that system. The data retrieved in this way enables employers to eliminate mistakes in employee filings BENEFICIARIES: ENTREPRENEURS and verify the settlement documents against information recorded in the relevant registers, which corresponds exactly to the knowledge possessed by ZUS. This Bilateral Information Exchange significantly streamlines the settlement of contributions System – launched for both employers and ZUS, since problems with identification of the insureds used to be the main In Q3 2006, the Social Insurance Institution (ZUS) reason for instigating explanatory proceedings. as the first state institution in Poland, launched on a mass scale a secure electronic information channel Płatnik Soon to be Open (the Bilateral Information Exchange System), which is to provide remittery of social security contributions It is of crucial importance for employers and software (entrepreneurs) with access to data in the developers that – in accordance with the requirements Comprehensive Information System (KSI ZUS). of the Electronic Signature Act and the Act on IT This development marks a landmark in the process systems of state institutions performing public tasks of building modern relations between state institutions – ZUS intends to open, as of July 21st 2007, an and the public. Prior to filing settlement documents with electronic information exchange channel for software ZUS, an employer may obtain a list of all its employees applications other than Płatnik, and to commence entered in the Central Register of Insureds (CRU). support of the data formats, as well as standards The Płatnik program is an integrated tool supporting of encryption and electronic signature used in Płatnik. retrieval of data from the KSI system and verification

The implemented solutions will allow us, employers, to integrate our communication with ZUS within our IT systems supporting all conducted business activities. What should be noted, the implemented open standards will be used not only in the document acceptance area but also in the introduced duplex communication channel with ZUS.

Mirosław Kula Entrepreneur, Kraków

30 ANNUAL REPORT 2006 UNIQUE EXPERIENCE IN BUILDING THE INFORMATION SOCIETY “LEAN STATE”

“LEAN STATE” In 2007, OFEs will start receiving requests for withdrawal from the Second Pillar of the pension system in an BENEFICIARIES: FINANCIAL INSTITUTIONS electronic format. The requests will come from the insured applying for early retirement on the terms applicable prior to the reform of the pension system. Open-End Pension Funds (OFEs) and the National Health Fund Lower Cost of Handling Pension Contributions. The Comprehensive Information System Quicker Transfer of Contributions of the Social Security Institution (ZUS) is most often viewed in the context of communication with Thanks to the use of an electronic channel, the cost employers. However, the all-electronic channel of handling pension contributions, incurred by both ZUS connecting ZUS with the Open-End Pension Funds and OFEs, are substantially lower compared with cost (OFEs) and the National Health Fund is also a good that would otherwise be incurred if paper documents example of modern communication of a state agency were used on such a large scale. What is also important with financial institutions. for both the insured and OFEs, the use of the electronic The solution, developed in 1999, is constantly being channel enables quicker transfer of contributions extended, to include new groups of information. This to the Second Pillar. The scale of the operation is best channel is used to send information on membership demonstrated by the figures: in 2006, ZUS effectively agreements concluded with OFEs and individual transferred to OFEs almost 158m individual contributions of the insured, health insurance contributions with an aggregate value of over applications and the data required for filing when PLN 15.6bn. an insured changes his/her OFE.

NEW GENERATION UNIVERSITY Pioneer Universities

BENEFICIARIES: STUDENTS AND ACADEMICS Under the contract of November 6th 2006, Prokom and its consortium partners Siemens and SAP imple- ment the Integrated University Management System Micro-Scale Information Society at four Polish universities: the Warsaw University of Technology, the Jagiellonian University, the University The students community is a natural environment of Silesia, and the Maria Curie-Skłodowska University. for creating and “practicing” information society on a micro scale. The electronic means of communication The implementation will cover all key areas of universi- used by the academic community will be inevitably ty management and provide access to the system replicated by the society at large. Each year, several for over 120 thousand students and nearly 10 thou- hundred thousand students graduate from Polish uni- sand academics. Ultimately, the system will lead versities. Those graduates will not only create a mar- to digitalization of the universities’ educational offer- ket of customers, but also a market of suppliers of IT ings, the students’ records of study, and contacts services. inside and outside the university, through the so-called “electronic dean’s office”. It will also enable online Modern institutions of higher education are required recruitment of students for all fields of study and all to quickly react to the educational needs of increas- studying systems, and win support electronic student ingly demanding students. This creates an issue cards. of flexible syllabus modification, while the constant increase in student numbers only increases the organisational challenges.

31 PROKOM SOFTWARE SA

The project’s mission is to implement a modern IT system supporting key processes at the university. This will allow us to continue their development and fulfilment of our core tasks through management at the highest level available. It will also effectively contrib- ute to the development of the academic IT community.

Krzysztof Puch IT Director, Maria Curie-Skłodowska University

The implemented system will also enable computer- Computerisation of the universities is a major step based administration of tuition fees, scholarships towards attainment of the objectives set forth and grants, allocation of places at student dormitories, in the Bologna Declaration (signed on June 19th 1999 as well as online contacts with the university health by 29 European ministers responsible for higher edu- service. It will help the universities better utilise their cation). Digitalization of the universities’ educational existing infrastructure, eliminate queues at dean’s offerings and the students’ records of study is neces- offices, improve comfort and efficiency of work sary for the student credit system, ECTS1, to become of the administration and academic staff, and provide a tool for accumulating data on students’ achieve- the university authorities with tools for strategic ments, which will allow students to keep record and effective management. of their academic achievement at different stages of their life and in different countries. Common European Educational Space The European Community programmes are designed Europe is on a path to create a common educational to help eliminate barriers to the mobility of students space. Poland becomes actively involved in the chang- and workers. In future, in a Europe built on the knowl- es, and the project carried out by Prokom will deter- edge-based society and economy, the adult educa- mine the success of the four large Polish universities, tion strategies will have to face challenges imposed which are the first to follow that path. The efficient by the need to increase competitiveness and use and faithful to the plan development of the Integrated the latest technologies to improve social coherence, University Management System should accelerate equality of opportunities and quality of life. execution of similar projects in dozens other institu- tions of higher education in Poland.

32 ANNUAL REPORT 2006 UNIQUE EXPERIENCE IN BUILDING THE INFORMATION SOCIETY INNOVATION OF KNOWLEDGE-BASED ECONOMY

INNOVATION OF KNOWLEDGE-BASED The energy is a special type of product since its con- ECONOMY sumption is inseparably connected with transmission. Under the TPA rule, customers will be allowed to ter- BENEFICIARIES: ENERGY USERS minate the existing agreements for sale and transmis- sion of energy and conclude two separate agreements with different entities. The operational Convenient Access to Information on Offerings outcome of this situation cannot be handled without of Competitive Energy Suppliers the use of special IT support.

The availability of information, including informa- tion on competitors’ offerings, also in monopolised Quick Modification of the Offering Possible sectors, exerts ever-increasing effect on economic Thanks to IT Solutions development. Through implementing state-of-the-art information and communication technologies (ICT), One of the systems currently implemented by Prokom which has become one of the priorities of the EU will enable Koncern Energetyczny ENERGA SA Innovative Economy Operating Programme, it is pos- to manage its business in a way ensuring compliance sible to optimise business operations thus making with the new law, and securing efficiency of opera- the economy more competitive and innovative. tions of the ENERGA Group on the competitive ener- gy market. Ability to Choose the Energy Supplier The solution comprises IT system functions, described The EU Directive imposed an obligation on and offered as services, which provide flexibility the Polish government to implement the Third Party in building support for ENERGA employees as they Access (TPA) rule as of July 1st 2007, whereby users participate in the business processes as part will be able to choose their energy suppliers. of the company’s operations. The flexibility of IT solu- The regulation meets the expectations of those tions does not only provide the power utilities with customers who wish to have utilities supplied a competitive edge determining their market position, to their households in a reliable manner and but also enables them to avoid infringing on the law at reasonable prices. which is to be in force as of July 1st 2007.

EFFICIENT USE Effectively, the system was implemented in Romania. OF THE EU FUNDS It was launched already in February 2007, and the Romanian Agency for Subsidies and Intervention BENEFICIARIES: FARMERS in Agriculture commenced processing applications for direct subsidies submitted by farmers. The compa- ny’s fee under the contract is EUR 4.8m (VAT inclu- IACS in Romania sive), while a further EUR 1.9m (VAT exclusive) is due under an annex executed by the consortium in Janu- On July 15th 2006, ABG Ster-Projekt SA and its ary 2007. The annex covers services related to migra- consortium partner SIVECO SA, a Romanian compa- tion and digitalization of data of the GIS system ny, concluded a contract for development of the Inte- and development of a module supporting supplementary grated Administration and Control System (IACS) direct subsidies (paid by the member state). in Romania. The principal asset which enabled ABG Ster-Projekt SA to bid for the contract was the compa- ny’s expertise acquired through the implementation of the Polish IACS system.

33 PROKOM SOFTWARE SA

As a farmer, I use direct subsidies. I am satisfied because everything has been all right, yet I have to admit that I have anticipated a few problems. The whole process however is well-organised, and thanks to the IT system I am sure I will get my subsidy on time. In my opinion IACS works well in practice.

Piotr Kudzia Farmer, Januszowice, Poland

Success Well Appreciated in Europe The implementation of IACS in Poland won ABG Ster-Projekt SA the European Medal, awarded in 2005 The systems like IACS provide society with real bene- by the Business Centre Club and Office of the Com- fits. In Poland, since 2004 the system has enabled mittee for European Integration. Also the Agency the farmers to obtain direct subsidies – in aggregate for Restructuring and Modernisation of Agriculture approximately PLN 7bn. was granted – by Computerworld Information According to the estimates, in the first year from Technology Awards Foundation Inc. – a prestigious the IACS launch, the Romanian farmers will be able Computerworld Honors Collection 2005 award to obtain direct subsidies of approximately EUR 1bn. for development of the IACS system.

SAFE COUNTRY, CEPiK – Modern Safety-Related Solutions SAFE CITIZENS In 2006, as part of the CEPiK project, the CEPiK Inter- BENEFICIARIES: MOTORISTS net Portal was created. The portal’s services include transfer of data related to vehicle overhauls to the reg- ister of vehicles, and provision of access to selected Tangible Economic Benefits information on registered vehicles. The latter functionality enables potential vehicle buyers The objective behind development of the Central to check whether the vehicles come from legal Register of Vehicles and Drivers (CEPiK) system is sources. to safeguard the public interests related to the safety of road traffic, road vehicles and their owners. The system will also significantly help prevent car- and traffic-related crimes. The register development is expected to bring tangible economic benefits, such as reduction of losses suffered by insurance compa- nies; it will also facilitate the work of public administra- tion authorities (including the police).

34 ANNUAL REPORT 2006 UNIQUE EXPERIENCE IN BUILDING THE INFORMATION SOCIETY SAFE COUNTRY, SAFE CITIZENS

Other Work Performed as Part of the Project Asseco Poland SA (then Softbank SA) and the Ministry provides for comprehensive services related to design Last year also saw completion of the following of the entire system, design and development of soft- projects: software applications for county governor ware supporting the central database, interfaces offices (starostwo) and vehicle service station, offline for data feed to the CEPiK system, authorised access provision of data over the Internet (municipal guards, interfaces and applications for the system endusers court enforcement officers), online data exchange with who deal with the public at the level of county governor the Insurance Guarantee Fund (software developed offices (starostwo). The contract provides for mainte- and implemented by Asseco Poland SA for the Minis- nance of the system in 2004–2009. try of Internal Affairs and Administration, currently implemented at the Insurance Guarantee Fund), data warehouse, analytical and reporting subsystem, esti- mation of revenue liabilities for special funds, incon- sistencies handling, automated detection and analysis of inconsistencies.

Contract with the Ministry of Internal Affairs and Administration

The contract for development of the CEPiK system with the Ministry of Internal Affairs and Administration was executed in October 2003. The contract between

I do not know much about the CEPiK system. However, based on what I know, I can be sure that the solution will enable me to buy safely a second- -hand car.

Szymon Paszko Student and driver

35 The Prokom Group has at its disposal intellectual, technological and executive resources of over 4.5 thousand employees, including almost three thou- sand IT engineers whose experience and knowledge, accumulated for years, are decisive for successful implementation of the largest IT projects in Poland. These assets are unmatched in Central Europe

30

.%

60

PROKOM SOFTWARE SA

– COMPETITIVE STRENGTHS 90

2006 Our major strengths comprise state-of-the-art technology, know-how and unparalleled experience. Reference implementations enabled Prokom to accumulate versatile knowledge, and rendered its services and solutions – both with respect to the underlying concepts behind development of IT systems (including large-scale systems handling rich data sets) and to design and construction of ICT infrastructure – stable and conducive to enhanced organisational efficiency and strengthened competitive advantage of enterprises. PROKOM SOFTWARE SA

Prokom Software SA – Competitive Strengths

SOA – PHILOSOPHY UNDERLYING DEVELOPMENT OF OUR SOLUTIONS

Delivering Solutions for the Rapidly Evolving Economy

The impending changes in the functioning ness process arrangements can be managed of the economy, characterised by increasingly and modified by technical staff, without the need widespread deregulation and progressive shortening to make costly changes in software code. of product life cycles, set the course of development of IT services. The services are meant to support SOA implementation calls for a rearrangement enterprises in response to the fast-changing business in the IT service structure. This will facilitate overcom- environment. Extremely demanding competitive ing limitations of the existing systems and help standards on the telecoms or banking market will develop new composite applications. Repeated use soon become part of the harsh competitive struggle of the same application services in varied contexts in the hitherto monopolised industries. will increase the efficiency of IT resources available to an enterprise. Through this approach we are Drawing on the experience gained from reference capable of safisfying even the most stringent IT implementations and on powerful intellectual, techno- needs by developing solutions based on the existing logical and executive resources, Prokom provides components. services oriented towards development of IT infra- structure which speedily ensures back-office support for new products and bolsters the market competitive Innovative Yet Stable edge of businesses. Prokom’s competitive advantage relies on its ability to apply the unique experience, An IT provider faces a challenge to design solutions gained on the mature markets, to sectors which are which, on the one hand, will be subject to incessant undergoing deregulation. dynamic modification and, on the other, are expected to be reliable and stable. To meet the challenge, Prokom develops its solutions on the basis of two Enabling Swift Adjustment stabilising pillars: IT standards and industry stand- to Dynamic Market Changes ards. The former constitute a guideline for selecting proper technology, and the latter serve to anticipate Our approach to design and implementation of inte- customer needs. This ensures prompt reaction grated IT solutions is based on the SOA (Service to changes on the customer’s market without any Oriented Architecture) concept. The approach gives detriment to the stability of an IT solution, and guaran- rise to IT support systems, marked by their capacity tees that trends prevailing on the IT market are taken to embrace new services and to easily adjust to chal- into account. lenges and fast-changing business conditions. SOA, when properly put to use, allows for a virtually instan- taneous response to signals in the market environ- ment and for altering existing business processes or implementing new ones. Business rules and busi-

38 ANNUAL REPORTREPORT 2006 PROKOM SOFTWARE SA – COMPETITIVE STRENGTHS SOASOA – PHILOSOPHY UNDERLYING DEVELOPMENT OF OUR SOLUTIONSSOLUTIONS

SOA – service-oriented architecture (case studystudy of KE ENERGA SA)SA)

File – XML – File Payments (Virtual Accounts) (Virtual Payments

HOMEBANKING

File – XML – File er Statements Bank

Us S

SOAP LoadInternalOrder, Load MPK Load LoadInternalOrder,

Catalogue Catalogue LDAP LDAP User SOAP LoadCashReport

h

Content

Retail Accounts Retail SOAP Repository LoadPayments

Knowledge

Management Personalisation

SELEN

SOAP LoadTransfers

SOAP LoadRaceivable

Large Accounts Large SOAP LoadPayments

lication Services (WebServices)

Application Server AXIS / II / Application Server AXIS Application Server AXIS / IIS / Application Server AXIS

ENERGOS

SOAP LoadTransfers Application ServicesApp (WebServices) DAŃSK Branc

Tools s

GDAŃSK Branch G

n SOAP

B2B Gate Group Work Group Work LoadRaceivable io Authorisation/ t Authentication

AP a

c File – XML – File

o Accounts) (Virtual Payments SOAP SO

Sending HOMEBANKING Message

Invocations XML – File Inv Bank Statements Bank

SOAP CreateBusinessPartner Partners Database Database Partners

SELEN – Central Business Central – SELEN SOAP GetBusinessPartner Desk Login – ELECTRONIC DESK CORPORATE PORTAL PORTAL CORPORATE

One-Time One-Time Composite SOAP Payments, transfers, Cash Report Cash transfers, Payments, Information Window-Bank Applications

Role Definition

and Renewal Corporate Portal – Electronic Desk Corporate Portal Cash – SELEN SOAP

LoadInternalOrder, Load MPK Load LoadInternalOrder,

Error Clarification

SOAP

Loadrecelvable, payable, transfers payable, Loadrecelvable, SELEN – Investments – SELEN

SOAP LoadInternalOrder

SELEN – Invoicing – SELEN

SOAP Histograms LoadSettlementRule

SOAP

LoadInternalOrder, Load MPK Load LoadInternalOrder,

GMT – Stock Mng. Stock – GMT

SOAP LoadGM_PL

SOAP KIP – HR and Payroll and HR – KIP LoadInternalOrder, Load MPK Load LoadInternalOrder, lication Services (WebServices) Application Server AXIS / IIS / Application Server AXIS Application Server AXIS / IIS / Application Server AXIS

pp SOAP LoadSalaryAccouringNote Application ServicesA (WebServices)

h

y

l

Retail Accounts Retail SOAP a LoadSalaryCostsDistributor tory i

onar

i SOAP

entr LoadPayments ct Central C Billing – SELEN

epos

Dictionary Di R Repository SOAP LoadTransfers

e

k

l

r

SOAP o LoadRaceivable Large Accounts Large

abas sset

t

SOAP Branch Branc PŁOCK Monitoring etw Asset A Context Formal Verification LoadPayments Centra Central

Network N

Database Da Communication

SOAP

ue LoadRaceivable

ct g

HOMEBANKING

File – XML – File odu Accounts) (Virtual Payments

atalo Product Product Pr

s s

Catalogue C File – XML – File n Statements Bank y on

i l io

t a SOAP AP AP MPK Load LoadInternalOrder, a Invoicing – FBK

c Integration Adapter Technical Connector Technical

SOAP SO

o SOAP SO

entr SOAP artner Loadrecelvable, payable, transfers payable, Loadrecelvable, nvocat Partner Partner P Central C Application ServicesApplication (WebServices) epositor Invocations I Business Business Invocations Inv

Repository R

CR – CENTRAL

e SOAP l MPK Load LoadInternalOrder, g a Payroll and HR – KIP as

in

b d SOAP Validation LoadSalaryAccouringNote Box Content entr

DATA REPOSITORIES DATA

ata C Central

Rea SOAP Reading LoadSalaryCostsDistributor h D Database Switch

Code Page Code Page Retail Accounts Billing Billing Accounts Retail SOAP

Central Repositories MPK Load LoadInternalOrder,

HANDELMAX

SOAP LoadPayments

lication Services (WebServices) SOAP IIS / Application Server AXIS Application Server AXIS / IIS / Application Server AXIS LoadTransfers

pp

Application ServicesA (WebServices)

SOAP

LoadRaceivable Large Accounts Billing Billing Accounts Large

SOAP

ENERGOS LoadInternalOrder, Load MPK Load LoadInternalOrder,

SOAP Branch Branc KOSZALIN LoadPayments

SOAP LoadTransfers

SOAP HOMEBANKING Message LoadRaceivable ) Conversion

Data Format

– XML – File S

Standardisation Accounts) (Virtual Payments

Modules Definitions

SELEN – Invoicing – SELEN

– XML – File

n Statements Bank Management

Report o

ti

SOAP a MPK Load LoadInternalOrder, Window-Bank

rm

SOAP

o transfers payable, Loadrecelvable, SELEN – Cash – SELEN

SOAP Payments, transfers, Cash Report Cash transfers, Payments,

e Inf e

ver

KIP – HR and Payroll and HR – KIP

File – XML – File

ous MPK Load LoadInternalOrder, pplication Server AXIS / II / pplication Server AXIS

Turno Turnover lication Services (WebServices A Application Server AXIS / IIS / Application Server AXIS ly

reh XML – File LoadSalaryAccouringNote a Application ServicesApp (WebServices)

a upp

h

Warehouse Information Warehouse W Supply S File – XML – File LoadSalaryCostsDistributor

Maintenance Billing Accounts Retail s

Dat

l

Subscription List SOAP

SELEN LoadCashReport

Distribution Distribution Content

Reporting

Data Warehouse g

g SAP BW

s

SOAP n

n s

Enrichment i i n LoadPayments n

Strategic Management (SEM)

o

io

EXISTING APPLICATIONS ENVIRONMENT EXISTING APPLICATIONS

t SOAP ti Billing Accounts Large AP LoadTransfers AP

a

a perationa

c

Controll Controll c

Operational Data O

Integration Adapter SZARO o SOAP SO Technical Connector Technical olders / Adapter / olders o SOAP SO

Analytical Modules SOAP Folders / Adapters / Folders F LoadRaceivable ŁUPSK Branc ŁUPSK

Integration Framework – SAP Exchange Infrastructure 3.0 Integration Framework Invocations Inv Application ServicesApplication (WebServices)

Invocations Inv

SŁUPSK Branch SŁUPSK S

File – XML – File

LoadPayments

Finance Finance

File – XML – File LoadTransfers

BI – DATA WAREHOUSE BI – DATA HOMEBANKING

File – XML – File Routing LoadRaceivable

to Application File – XML – File

Payments (Virtual Accounts) (Virtual Payments

AIES – PM. Transport PM. – AIES

File – XML – File Bank Statements Bank

“INTEGRATION FRAMEWORK” – DATA EXCHANGE ENVIRONMENT EXCHANGE FRAMEWORK”“INTEGRATION – DATA SOAP LoadInternalOrder, Load MPK Load LoadInternalOrder,

olders / Adapters / olders

Folders / Adapters / Folders F Mng. Stock – MOVEX

File – CSV – File LoadTransport

Mapping

)

– XML – File LoadInternalOrder, Load MPK Load LoadInternalOrder,

SKIP – HR and Payroll and HR – SKIP

File – CSV – File LoadGM

h

SOAP

l MPK Load LoadInternalOrder,

Switch

KOSZALIN Branch – SAP FI, AA, TR, CO TR, AA, FI, SAP – Branch KOSZALIN Context

Retail Accounts Retail

SOAP LoadSalaryAccouringNote

SOAP

LoadSalaryCostsDistributor

ENERGOS – Billing Billing – ENERGOS

SOAP

LoadInternalOrder, Load MPK Load LoadInternalOrder,

SŁUPSK Branch – SAP FI, AA, TR, CO TR, AA, FI, SAP – Branch SŁUPSK

SOAP Large Accounts Large LoadPayments lication Services (WebServices Application Server AXIS / IIS / Application Server AXIS Application Server AXIS / IIS / Application Server AXIS

LSZTYN Branc LSZTYN pp

SOAP Application ServicesA (WebServices)

LoadTransfers Branch OLSZTYN O

e operationa

Reports Multicash Files Multicash Reports

Postings SOAP LoadRaceivable

h CO TR, AA, FI, SAP – Branch OLSZTYN

.

Account Balance Account

HOMEBANKING (Homebanking) s

SOAP

Payments

File – XML – File

Payments (Virtual Accounts) (Virtual Payments

Cost Centres Cost

PŁOCK Branch – SAP FI, AA, TR, CO TR, AA, FI, SAP – Branch PŁOCK Queuing Stock Management Stock

File – XML – File Bank Statements Bank

ation at t

File – CSV – File Adapter / Folders Folders / Adapters / Folders LoadGM ll PROMIS

)

Cost Accounts Cost File – XML – File LoadInternalOrder, Load MPK Load LoadInternalOrder,

ELBLĄG Branch – SAP FI, AA, TR, CO TR, AA, FI, SAP – SYSTEMS Branch ELBLĄG

S

HR and Payroll and HR

File – XML – File LoadSalaryAccouringNote

File – XML – File

LoadSalaryCostsDistributor h

GDAŃSK Branch – SAP FI, AA, TR, CO, MM, SD MM, CO, TR, AA, FI, SAP – Branch GDAŃSK AP AP Retail Accounts Retail SOAP LoadInternalOrder, Load MPK Load LoadInternalOrder,

SOAP SO SOAP SO

SOAP

nvocations LoadPayments Invocations Invocations

Invocations I ENERGOS – Billing – ENERGOS

SOAP G Branc LoadTransfers

– SAP FI, AA, TR, CO, SD CO, TR, AA, FI, SAP – Reception Ą

STRATEGIC MANAGEMENT STRATEGIC

pplication Server AXIS / II / pplication Server AXIS Operational headquarters of ENERGA S.A. S.A. ENERGA of headquarters Operational of Messages SOAP Aggregation LoadRaceivable

lication Services (WebServices Accounts Large A Application Server AXIS / IIS / Application Server AXIS

SAP R/3 4.7 – Installation at the operational Insta headquarters of ENERGA S.A headquarters of ENERGA S.A. SOAP Application ServicesApp (WebServices) Payments, transfers, Cash Report Cash transfers, Payments, ELBL ELBLĄG Branch

39 PROKOM SOFTWARE SA

SOA AT KE ENERGA SA The next stage involved developing specifications of corporate services to be implemented by IT provid- ers in their domain systems. The implementation is not More Flexible Solution only designed to meet formal and legal requirements, but – primarily – to provide ENERGA with the ability Koncern Energetyczny ENERGA SA was estab- to compete successfully on a liberated market which lished through a merger of eight power utilities. includes foreign players. Therefore, the main challenge was to integrate eight different IT platforms in a way which would enable the new company to perform its reporting obligations SOA AT TELEKOMUNIKACJA POLSKA SA (formal consolidation) and centrally manage the compa- ny data which so far has been distributed over various branches (operational consolidation). The Service Cooperation in Development Oriented Architecture, which lay at the heart of the solu- of Integration Layer tion prepared by Prokom, was developed on the SAP NetWeaver integration platform. The application of SOA In January 2006, Prokom executed a detailed architecture provided for gradual and logical unification contract (under a framework agreement concluded of different communication and interoperation methods with TP SA) concerning the transfer of existing integra- typical for the various platforms, in which some compo- tion solutions, adopted for billing and provisioning nents were developed or replaced while some other processes, into the webMethods environment based were connected through an interface and became part on a SOA architecture which would provide for their full of the target system (either temporary or permanent). monitoring and optimisation. In a longer perspective, The following new elements of the target solution were this solution will guarantee dynamic management developed in 2006: central finance and controlling of business processes and their flexible adaptation modules, data warehouse, central repositories of data to TP SA’s changing sales offering and applied IT concerning business partners, network assets, meas- solutions. The contract also provided for ongoing ad- urements, etc. Now, for over a year, the company has aptation of the existing integration layer to new product been using the system in which the integration bus per- offerings, including special offers, necessary for main- forms such functions as data validation, code mapping taining a desirable market position (eg. DSL, PSTIN). or accounting coding. Moreover, ENERGA’s employ- The changes performed in the EAI (Enterprise Applica- ees have been trained to modify those functions single- tion Integration) area also involved timely implementa- handedly to adapt them to their changing needs. tion of any changes imposed on TP SA by the UKE (Office for Electronic Communications), including Preparation for Energy Market Liberalisation number portability and local loop unbundling (transfer- ring Internet services to another operator). The solu- Last year’s joint activities of Prokom and ENERGA tions developed by Prokom enabled TP SA to comply were focused on developing the rules and foundations with the UKE quidelines on time and thus to avoid high for the architecture which today provides the basis penalties for delays. The solutions also enabled TP SA for implementation of services required to support to introduce quickly new product offerings necessary ENERGA’s business processes after the spin-off for prompt adjustment to the market needs. Thanks of the distribution network operator. The first stage to high efficiency of the components developed of work, aimed at preparing ENERGA for statutory by Prokom, TP SA was able to provide proper services spin-off of the distribution and trade business com- to a considerably larger number of customers using prised the analysis of business, processes specified the Neostrada products. Moreover, the solution by the company employees during a due diligence ensures ongoing support of billing and provisioning session held for that purpose. The processes were processes at TP SA. broken down into stages, with subsequent description of the objects which they concern and specification of functions assigned to individual contractors.

40 ANNUAL REPORT 2006 PROKOM SOFTWARE SA – COMPETITIVE STRENGTHS SOA – PHILOSOPHY UNDERLYING DEVELOPMENT OF OUR SOLUTIONS

SOA AT PZU SA SAP BUSINESS CONSULTANCY SERVICES FOR INDUSTRY, BASED ON GRUPA LOTOS SA CASE

Business Services of the INSURER System The year 2006 was a period of continuing buildup The need to integrate the INSURER system with of Prokom’s competencies in the area of SAP busi- other systems supporting the operations of PZU SA, ness consultancy. During that period, the Company which has become increasingly urgent, inspired supported development of the Integrated IT System the concept, design and development of the applica- (ZSI) at Grupa LOTOS SA. It undertook efforts focused tion for making such integration possible in line with on three main areas: enhancement and expansion the SOA standards. The first stage involved provision of the transaction system, as well as development of services aimed at integrating the INSURER system of the Business Intelligence and SOA solutions. with the administration of claims system (SLS), which supports all tasks undertaken as part of administra- Enhancement and Expansion tion of claims – from the moment a claim is reported of the Transaction System via the call center until full closure of the administra- tion of such claim. As part of the process supported As part of the strategy assuming progressively heavier by the system, it was necessary to ensure access reliance on IT systems at Grupa LOTOS SA, work was to details of customers and their insurance policies underway to extend the SAP system coverage to ad- supported in the INSURER system, as well as com- ditional companies (including PETROBALTIC SA, plement the process with tasks related to the closure LOTOS Kolej SA and LOTOS Ochrona SA). The focus of administration of claims for financial settlement, was also on auxiliary areas supporting the company’s accounting and statistical purposes. ongoing operations, such as support of business trips and transport logistics. Speedier Work, Improved Quality of Data Business Intelligence Embarked on as early as in 2006, the project is cur- rently undergoing acceptance tests, which precede Following implementation of the ZSI system based on its operational launch scheduled for August 2007. the SAP solutions, Grupa LOTOS SA initiated a project Access to the business services layer of the INSURER aimed at achieving uniformity of the IT platform which system will ultimately help effectively integrate it with underpins the reporting and analytical functions the SLS system as regards information on the insureds, across the entire LOTOS Group. Its principal objective insurance coverage and insurance history, as well was to build a data warehouse which will facilitate as the reporting and accounting processes. Reliance generation of financial statements and reports, as well on the existing business object records will streamline as multi-level business, statistical and trend analyses, the work of operators and give them access to high- covering all areas of the company’s operations. quality data throughout the administration of a claim. The project has been divided into a number of sub- The SLS system operators will be able to access projects based on the criterion of anticipated busi- information on insurance policies directly, while claims ness benefits: financial consolidation, IFRS reporting pending administration, entered in the SLS system, and financial reports, annual planning and budgeting, will be transferred to the INSURER system. Additionally, reporting and business disclosures concerning retail the INSURER system will check information for its sales of fuel and price analyses for service stations, consistency with insurance products, process it analysis of the purchase basket at service stations. through subsequent financial and accounting stages, and finally feed it into the corporate data warehouse of PZU SA.

41 PROKOM SOFTWARE SA

SOA in Practice functions indispensable in various business scena- rios, both active (placement of orders) and passive By exploiting the benefits afforded by the SOA (receipt of information, access to historical data). architecture, a composite application was developed The project owes its viability to the earlier made up entirely of application services. The main implementation of the SAP NetWeaver integration objective behind its development was to provide platform. customers of LOTOS Paliwa SA with access to all

DATA TRANSMISSION INFRASTRUCTURE

Design, Development of Hardware and System Environment and Ensuring Security

e-POCZTA SYSTEM AT POCZTA POLSKA Extension of the Data Centre

The planned extension of the Data Centre will 30,000 Users of the e-Poczta System increase its computing power. By using the Data Centre’s computing power, Poczta Polska can In 2006, Postdata SA and Poczta Polska dynamically manage the applications. It is also (the Polish Post) executed an agreement on provision a quick and simple method of modifying the operat- of Data Centre computing power services. The services ed systems and new services without having to support pilot implementation of the e-Poczta System purchase, maintain and develop technical and at selected outlets of Poczta Polska. The e-Poczta system infrastructure. The Data Centre with a large System is dedicated to providing postal, financial computing power can serve as an implementation and commercial services. The ultimate number of its centre also for other systems used by Poczta Polska. users is expected to be almost 30,000. Thanks Thanks to this solution, Poczta Polska ranks among to central management, administration and mainte- the most modern Polish businesses equipped with nance as well as the capacity for centralised modifica- similar, in terms of design, systems and centralised tion, all units of Poczta Polska which use the e-Poczta data processing centres. System have simultaneous access to new and evolving services. In addition to obvious functional advantages, the e-Poczta System also offers a vast INSURER FOR PZU SA – DESIGN AND DEVELOPMENT application scalability for the company’s operating OF HARDWARE AND SOFTWARE ENVIRONMENT activities. FOR THE PURPOSE OF SYSTEM CENTRALISATION

The e-Poczta System is an end-to-end, centralised and integrated IT system. It uses most advanced Completed in 2006, the INSURER system centrali- solutions in the Internet technology, which provide sation project was composed of a number of related, access to the system via corporate WANs and the complex sub-projects, including development Internet. Furthermore, the e-Poczta System communi- of the Data Centre, upgrade and expansion of a WAN cates with systems supporting other segments covering all operating units of PZU SA, and construc- of Poczta Polska’s business to exchange data. tion of a central Help Desk set to handle requests These include Bank Pocztowy’s systems, a shipment from 10,000 users operating the central system. tracking system, the Electronic Transfer system, as well as management and decision-making support systems using the data warehouse.

42 ANNUAL REPORT 2006 PROKOM SOFTWARE SA – COMPETITIVE STRENGTHS DATA TRANSMISSION INFRASTRUCTURE

Upgrade of the Network Infrastructure infrastructure comprises 29 IBM P5 servers (512 RISC and Data Centre Development processors), 776 GB RAM memory and 17 TB disk space. One of the major required changes necessary to cen- tralise the processing system at PZU SA was to mod- ernise the entire network (WAN) infrastructure. Thanks BILATERAL INFORMATION EXCHANGE SYSTEM to full redundancy, the project ensures exceptionally AT ZUS – ENSURING SECURITY high reliability. The upgrading comprised a number of operations carried out over a short time, including replacement of over 420 routers, network topology Massive Encrypted Two-Way Communication modification and implementation of network security over the Płatnik System enhancement mechanisms. As part of primary and back-up data centres, a fully redundant network In the days of dynamically developing services infrastructure was developed, with the accessibility ra- provided via the electronic channels, companies’ tio of 99.999%. Installation and configuration hardware solid foundations, which draw on the capabilities infrastructure was designed and developed, ensuring of state-of-the-art and reliable technologies, provide a high level of security and efficiency sufficient to sat- the key to development of the business growth potential. isfy operating requirements of a centralised system. This is the reason why the solutions for massive Smoothly operating Data Centre and WAN, which were acceptance of electronic settlement documents put into service in an incredibly short time, enabled (signed electronically) submitted by contribution centralisation of the principal system supporting payers, which were implemented by the Polish Social INSURER insurance operations and migration of data Insurance Institution (ZUS) in 1999, were, predictably, from 304 units into a central database. modernised as new functional requirements and relat- ed needs for technology modifications emerged. Standardisation and Efficiency Enhancement In 2006, a new functionality was implemented; Along with the construction of the Data Centre, it consists in two-way exchange of data between the Company developed and implemented a set contribution payers and the Social Insurance Institu- of operating ITIL procedures and launched a central tion. Thereafter, payers who decide to transfer their Help Desk for users of processing systems at the contributions via the electronic way collect from Data Centre. Infrastructure centralisation and consoli- the Social Insurance Institution insurance data dation, as part of the Data Centre, and implementation on their employees, This year, electronic data of the central Help Desk enabled standardisation exchange will be adjusted to comply with the final and considerable improvement of efficiency of managing versions of the acts on electronic signature and IT the configuration and modifications processes. systems operated by entities executing public tasks. At the same time, they guarantee exceptionally high system stability and offer a range of services to busi- As a pioneer in the public sector, ZUS operates ness users. an electronic data exchange platform which ensures complete security both in terms of large-scale The project’s scale is best demonstrated by the fol- acceptance of documents and provision of access lowing figures: over 12.5 thousand of named users to lending of information collected in ZUS’s IT system. and 7 thousand of users who can simultaneously The platform comprises a complete set of technologies use the processing potential of the INSURER which determine the novelty and security of used solu- and FKX systems. The LDAP system authenticates tions, including electronic signature, encrypting, au- over 1m user requests on a daily basis; the average thorisation handling and open data formats. For these number of the system’s simultaneous sessions is reasons, further development of massive electronic approximately 9 thousand. The number of tasks services offered by ZUS will continue in a friendly performed by the data base system is approximately and secure technology environment integrated as part 3bn per hour. Currently, the Data Centre’s technical of the Comprehensive Information System.

43 PROKOM SOFTWARE SA

ZUS – DESIGN AND DEVELOPMENT Over 95% of the documents are transferred to the OF HARDWARE AND SYSTEM ENVIRONMENT central database electronically, which until the present FOR THE DATA CENTRE day remains the only massive implementation of the electronic signature in the Polish public adminis- tration. A scanning and automatic recognition system The development of the Comprehensive Informa- was developed to support smooth handling of paper tion System is today one of the largest IT projects documents. Effective and stable operation of such executed in Poland. To process 260 million settlement a large and complex IT environment is possible thanks documents which are annually filed with ZUS, and to reliable technologies and design. For Prokom, it also to enable over 16 thousand employees of the Institu- confirms high qualifications of its specialist staff. tion countrywide to provide an efficient service to 2 million payers and 16 million insureds, a technical and IT infrastructure was developed, which is excep- tional both in terms of size and complexity. It comprises a central computing centre, which stores a central 40 TB database. The data centre is connected over a safe WAN with all ZUS divisions, inspectorates and regional branches, whose employees have direct access to the data kept of the head office.

DEVELOPMENT OF LARGE-SCALE SYSTEMS. MANAGEMENT OF MASSIVE DATA SETS

INSURER SYSTEM FOR PZU SA – DATA MIGRATION passed transferring the distributed data of all 304 FOR THE PURPOSES OF CENTRALISATION business units of PZU SA into the central database under the INSURER system and making the central- ised INSURER system available to end-users via The project aimed at centralisation of the INSURER the WAN network. Within the migration process, system, which supports PZU SA’s insurance business, an IT part of the “Mikro” reform was executed, which comprised a number of complex and mutually related consisted in combining business units within the subprojects, including performance of users’ data central database, relying on the principle of logic. migration to the central system. “Time Is Money” Extension of the Data Centre In seeking a maximum shortening of the transition The key driver for centralisation of the INSURER period, connected with organisational changes system was the “Mikro” organisational reform, and the IT aspects of centralisation and the “Mikro” planned by PZU SA, which, among other things, reform, it was assumed that the execution phase consisted in merging parts of operational business of data migration may not extend for more than units so that the total number of the units be reduced 12 months. Concurrently, an assumption was made from 304 to around 120. The process of migrating that the INSURER system unavailability to individual data and users to the central system was a critical business units, caused by the data migration item on the agenda for ensuring IT support in per- (including physical delivery of data from units forming the “Mikro” reform. The process encom- to the Data Centre), will not be longer than one

44 ANNUAL REPORT 2006 PROKOM SOFTWARE SA – COMPETITIVE STRENGTHS DEVELOPMENT OF LARGE-SCALE SYSTEMS

working day. Ultimately, the migration process was tion. Upon execution of the migration project and oth- performed one month ahead of the schedule, thanks er subprojects within the INSURER centralisation to commitment of the Prokom team, who have an framework, PZU SA made transition from distributed unparalleled experience in centralising large systems, to centralised processing architecture over an and strong determination on the part of PZU SA. 11-month time span. Apart from dovious benefits of having a centralised IT system, some additional Complying with such strict time requirements entailed: measurable advantages were identified, including a uniform access to the system and centralisation • designing and documenting rigid procedures of mass processes, such as insurance policy renewal for data migration, exact to individual elementary process, which to a large extent are currently managed tasks, in order to standardise the process and and performed for all operational units of PZU SA ensure its full auditability; at the level of the Data Centre. Transition from distrib- • developing productive tools for efficient validation uted to centralised architecture opens up prospects of distributed data and their uploading to the cen- for further development of the INSURER system, tral database; heading towards meeting strategic challenges faced • ensuring process continuity, i.e. performing by PZU SA and progressive improvement of business the migration process throughout the entire process efficiency. project on a three-shift basis (24/7); • on-going detailed schedule management at the level of migration task groups; • on-going system tuning on the level of operating The project, which was assigned the code name system configuration, Informix database engine, of MI5 (Mission Impossible 2005), pushed PZU SA database indexing, and the INSURER application, into an entirely new era of technological development with a view to sustaining the assumed operational in no time. The scale of the project, combined with its parameters. duration, fully justifies its code name and ranks its among top projects of similar kind executed in this part of Europe. I believe that development Cost Reduction, New Development Prospects of the system itself as well as implementation of the projects fully relying on its centralised structure, One of the benefits derived by PZU SA from the will allow PZU SA to consolidate its unquestioned INSURER system centralisation is lower maintenance leading position on the insurance market. cost of the IT infrastructure, as opposed to the situa- Piotr Puczyński tion where the “Mikro” reform were implemented IT Director at PZU SA according to an alternative scenario, envisaging operation of a decentralised system and a maximum exploitation of the IT infrastructure. At the same time, the system centralisation resulted in creating an The high degree of complexity of the migration proc- organisational and technological platform, offering ess and an extraordinary nature of the entire undertak- new prospects for development of a new business ing are best evidenced by project parameters. model by PZU SA following the INSURER centralisa-

45 PROKOM SOFTWARE SA

Centralisation of the INSURER System in Figures

PROJECT PARAMETER VALUE

BASIC PARAMETERS

Operational units migrated 304

Central database size subsequent to migration over 3 TB

Final number of the centralised INSURER system users 9,000

Total number of printers within the system 3,648

EXECUTION TIME AND STAFF

Project duration 11 months

Migration team of the contractor (Prokom) 54

Night-shift staff 7

Day-shift staff 15

MIGRATION TASKS

Number of performed migration tasks per one unit 95

Total number of performed migration tasks under the project 28,880

Average number of migrated units per month over 30

Average volume of migrated data 310 GB / month

Average number of users made accessible 900 / month

PROJECT DOCUMENTATION

Weight of project documentation over 100 kg

Total number of forms and reports 13,680

OTHER PARAMETERS

Total time of uploading data to central INSURER database 65 days

Total length of physical transportation of data 91,000 km

Total number of carriers used in migration 1,200

MARKETING CAMPAIGN MANAGEMENT is centralisation and an easy access to complete FOR ORANGE POLSKA customer information, as well as high quality of data serving as a basis for business decisions. Furthermore, increasingly sophisticated customer Easy Access to Customer Data segmentation is required to arrive at a more person- alised product range. Concurrently, an issue of criti- Progress speed and trends on the telecom mar- cal importance is to ensure swift delivery ket pose new challenges to operators in the area of the offering to the customer, for instance of customer relations. The key issue to be confronted in response to actions of competitors. In view

46 ANNUAL REPORT 2006 PROKOM SOFTWARE SA – COMPETITIVE STRENGTHS DEVELOPMENT OF LARGE-SCALE SYSTEMS of the foregoing, one of the major processes in cus- Immense Size of Database tomer relations management is marketing campaign management. A particular attention should be paid to the database operated under the system. Its foundation was a data Customer Relationship Management System model, dedicated to marketing activities in the mobile telephony industry, developed jointly by specialists In February 2006, Prokom Software SA launched working for Centertel and Prokom. The database, with a project meant for PTK Centertel, operating under a storage capacity measured in terabytes, contains the “Orange” brand, one of business and technologi- multidimensional data on over 12m customers cal leaders on the telecom market, which resolved of the telecom operator, which serve the purpose to embark on a project involving an IT solution sup- of conducting efficient campaigns. The database porting the company’s marketing activities in the area consists of hundreds of millions of records and is sup- of planning, implementation and monitoring of mar- ported on a daily basis by several PTK Centertel source keting campaigns. The solution was based on an ap- systems. Additionally, the system provides a number plication developed by a global leader in the industry, of interfaces, enabling a two-way information exchange Unica Corp., a company which entered into a partner- with customers through campaign distribution channels. ship agreement with Prokom Software SA in 2005. The project encompassed both business (modelling business processes in marketing) and technology UNIQUE DATA REPOSITORY AT KE ENERGA SA elements (construction of an IT system supporting implementation of the processes). The implemented system is already in use, and work on its further Dedicated Core Data Storage Technologies extension, scheduled for the entire 2007, is under way. The system combines qualities In order to properly operate and develop distribut- of an analytical and operating CRM class system. ed-architecture-based solutions such as SOA, core data underlying the business processes of an enter- prise must be unequivocal and correct. Problems with multiple index versions of the same material or ambig- We expect to derive a number of business benefits uous descriptions of business partners are only too from the system implementation, the most significant common. To address such problems, a separate ones being: ability to prepare and carry out marketing class of IT tools was created called Master campaigns at an accelerated pace, improvement Data Management, which guarantee correctness of accuracy and effectiveness of a campaign through of source data processed by a number of applica- a more precise identification of target groups, tions, even when such applications are replaced. and more efficient coordination of undertaken Adequate speed of access to such data is achieved initiatives. We anticipate optimised use of customer thanks to the In Memory technology, while accuracy communication channels, an easier day-to-day of its identification follows from the power access to information on planned and implemented of the adopted identification algorithms. campaigns, and more useful business intelligence concerning the results of an undertaken marketing The repository of client data, developed in 2006 campaign. at Koncern ENERGA SA, is one of the largest SAP MDM implementation projects in the world. The sys- Bartosz Dobrzyński, tem manages the client data contained in twelve Deputy Marketing Director at PTK Centertel billing systems, three CRM systems, nine HR systems, four GIS systems and one ERP system. The data of 3m business partners is stored in the In Memory base, which makes the solution unique. In addition, the system manages files of material, product and service indices.

47 PROKOM SOFTWARE SA

Strength of Algorithms Customer Benefits from Lower Costs and Controlled Data Sharing The information quality management in large sets requires that automatic verification rules and data The benefits of the central core data management correction be applied. It is hard to imagine a situation include primarily cost savings, attributable to the when software processes personal data in accord- possibility of creating and updating the same core data ance with the rules known only to IT specialists in several systems, which solves the problem of data or where the rules are illegible for the company’s data inconsistency, shortens the data searching time and administrator. Therefore, these rules should be created simplifies implementation of new and centralisation in line with relevant standards (which makes them of the existing IT systems. Moreover, implementation easy to modify and develop), and must be compre- of an MDM systems allows for the controlled data shar- hensible to data administrators. ing within the group, which is of great importance in view of the fact that power utilities are required Prokom is able to meet these requirements owing to separate distribution network operators. to the SAP MDM solution, enhanced by the rule- processing engine and compliant with the JSR-94 standard. The existing, regular SAP MDM solutions were extended to include a Drools rule processing en- gine, compliant with the JSR-94 standard, which may serve as an example of how commercial applications may efficiently operate together with Open Source so- lutions (Drools – JBoss Rules). The company tested a solution for the prepared repository of data on ener- gy consumption, which are read automatically from meters every hour. The application is to collect 5bn readings a year.

48 ANNUAL REPORT 2006

Prokom Software Group – Business and Competence Centres

49 Asseco Poland SA, ABG Ster-Projekt SA (currently merging with SPIN SA), COMP SA or the special purpose companies, including Postdata SA and Combidata Poland Sp. z o.o., represent the major competence centres of the Prokom Group. Asseco Poland 30 SA’s core business comprises provision of services for the banking sector and administration of state registers. ABG Ster-Projekt SA, as one of the largest IT integrators and custom software vendors, targets its offering at the public administration and uniformed services, focusing on development of database systems. ABG Ster-Projekt SA provides solutions for both central government (including the healthcare sector) and local governments, as well as for the telecommunications, power and utilities sectors. Combidata Poland Sp. z o.o. is engaged in projects related to education, and Postdata SA provides services for Poczta Polska. Complementary to the .% above, COMP SA offers reliable solutions and services related to IT security.

60

PROKOM SOFTWARE GROUP – BUSINESS AND COMPETENCE CENTRES

2006 60 The competence centres enabled the Group to develop comprehensive and competitive offering, comprising dedicated IT solutions for the clients in all sectors. The companies specialise in particular areas, carrying out grand-scale IT projects, successfully launching their

own solutions, and implementing and integrating solutions of global technology leaders. 90 PROKOM SOFTWARE SA

Prokom Software Group – Business and Competence Centres

ASSECO POLAND SA More Flexible Solution

In 2006, implementation of the integrated def3000 IT PKO BP – conversion of the ZORBA system solution, provided by Asseco Poland SA, was to the Alnova platform completed at Deutsche Bank PBC, member of the Deutsche Bank Group, which ranks among In August 2006, 140 computer installations the largest financial institutions globally. of the ZORBA system were converted to the Alnova platform. The operation, involving over 15m clients of PKO BP, was completed successfully and was the largest operation of this kind in history The change of the system is an exceptionally complex of the Polish banking sector. process involving almost all aspects of our business. The project was executed very carefully in the last The implementation schedule for the previous year months. When preparing to this operation, we comprised development of the Integrated IT System considered proposals of several experienced vendors. (ZSI) to include the central client database, containing Eventually, we have chosen def3000, a proven IT integrated and organised addresses of all PKO BP solution created by Asseco Poland SA. The new clients. The ZSI enable data to be accessed by the system will enable the bank to meet all standards systems used by the bank so far. Following the con- connected with its functioning, both on the Polish version, all IT systems operate based on one integrat- market and within the Deutsche Bank Group, and will ed central data set which facilitated the clients’ permit the bank to continue its rapid growth. access to information and execution of transactions, both via the electronic channels as well as traditional Marek Kulczycki, customer service procedures. Thus clients become President of the Management Board the clients of the bank rather than its lead branch. Deutsche Bank PBC SA Owing to this fundamental change, the further imple- mentation work may be carried out, and the clients and their accounts, resident both in the old and the new systems, may be easily identified. The delivery and implementation of def3000 and i-Force1 The new IT system enhanced the convenience was provided for in another contract between Asseco and efficiency of the customer service at all PKO BP Poland SA and Deutsche Bank PBC. Asseco Poland branches. Moreover, the bank may offer customers SA has developed a data warehouse along with more attractive products and services, at the same the reporting system for Deutsche Bank PBC time ensuring the highest security standards. and implemented db easyNET and db powerNET e-banking systems for retail and business customers, respectively.

52 ANNUAL REPORT 2006 PROKOM SOFTWARE GROUP – BUSINESS AND COMPETENCE CENTRES

Project of E-Banking System viders. The system will enable actual deregulation for Toyota Bank Polska of the energy market. The head office of the Energy Regulatory Authority will be connected with its nine Asseco Poland SA completed implementation of regional branches via a dedicated IT network. When e-banking solutions at Toyota Bank Polska. The completed, the system will facilitate remote submis- e-banking system was launched on March 20th 2007. sion of applications and their interactive on-line Toyota Bank Polska decided to implement several processing. The project involves construction modules making up the complete def3000 system. of the necessary infrastructure (WAN network) and de- The implementation project included def3000 general velopment and implementation of the IT system soft- ledger system, Comp-Card interface for handling pay- ware – it may be considered exemplary in terms of its ment cards and two online user interfaces – SBI and complementarity. It shows that ABG Ster-Projekt SA CorpoInterComp. Both online interfaces are equipped has significant competencies in the area of software with advanced, yet user-friendly, security systems. production and supply of necessary IT infrastructure. The security systems of the SBI interface are based on a two-stage verification of the customer’s identity OFSA System for the Agency for Restructuring by means of individual passwords and electronic keys and Modernisation of Agriculture (tokens). To verify the users’ identity, CorpoInter- Comp’s employs microprocessor cards secured In December 2006, ABG Ster-Projekt SA and the with individual PIN-codes. Production launch of the Agency for Restructuring and Modernisation def3000 system took place in November 2006. of Agriculture concluded an agreement related to the OFSA system designed to support processing The representatives of Toyota Bank Polska emphasise of structural funds by the Agency, which has been that the choice of supplier of the new system was developed by ABG Ster-Projekt SA since 2004. Under contingent on comprehensiveness and flexibility the agreement, ABG Ster-Projekt SA is to modify of the solution, which allow for fast modifications the functionality of OFSA and extend the system of the products offered by the bank, the current by adding the OFSA-SAD application (Data Update number of implementations of the system coupled System). The agreement also provides for adapting with the experience of the integrator’s team, and the the OFSA system to the Rural Development Plan bank’s plans related to development of the platform (RDP) for the years 2007–2013. in the future. Moreover, the system has to comply with the stringent security requirements. During the analyti- The changes made to the system are necessary cal work attention was paid to flexibility of the new to use the funds designated for the Rural Development system and to adjusting its banking functionality to Plan for the years 2007–2013, which will facilitate the expectations of the future clients. dynamic growth of rural areas. The structural funds are one of the most significant financial mechanisms of the National Development Plan in the agricultural ABG STER-PROJEKT SA sector. The OFSA system, being a tool for distribution of funds, is one of the strategic IT systems in Poland.

Interactive Electronic Service System New Projects for NATO for the Energy Regulatory Authority In 2006, ABG Ster-Projekt SA concluded furher In December 2006, ABG Ster-Projekt SA and the contracts to be carried out for NATO, including two Energy Regulatory Authority signed an agreement contracts signed with NATO’s highest military com- providing for development and implementation mand, International Military Staff. For the period of the Interactive Electronic Service System supporting of three years, ABG Ster-Projekt SA will administer participants of the energy market. and upgrade dedicated systems supporting the tasks of NATO’s intelligence and reconnaissance forces The system and the related infrastructure will be used, for NATO Communications and Information Systems inter alia, to support the process of licensing energy pro- Services Agency (NCSA). The system is operated

53 PROKOM SOFTWARE SA

from 40 sites located in the NATO command head- Public Service Broker (PSB) for the Częstochowa quarters and the areas of operations connected Municipal Office, the Municipal Social Service by the dedicated WAN infrastructure. Both the system Centre and the County Employment Office and the project itself are highly confidential. in Częstochowa The agreement with the command of the JALLC analytical centre in Portugal relates to the extension In 2006, SPIN SA successfully completed a pilot of the system for the NATO JALLC (Joint Analysis implementation of the system called “Broker Integrating and Lessons Learned Centre) command based Administrative E-Services Based on Web Services” in Lisbon. JALLC’s tasks cover such areas as analysis at the Częstochowa Municipal Office, the Municipal of operations and missions, military exercises, train- Social Service Centre and the County Employment ings and experimentations of NATO. In 2003–2005, Office in Częstochowa. By doing so, SPIN SA com- ABG Ster-Projekt SA built the IT system supporting pleted the target project specified in the agreement the operations of the JALLC centre. concluded with the Ministry of Science and IT Technology (February 18th 2005). The project was financed with the budget funds designated for the SPIN SA support of science. The Broker system was devel- oped by SPIN SA and the Institute of Control Systems (Instytut Systemów Sterowania). IT System for Monitoring of Disease Prevention for the National Health Fund PSB is a universal solution and may be used in differ- ent areas of activities of state institutions. PSB Approximately 1,300 Polish healthcare units enables integration of IT systems in any public providing cytology and mammography services use or commercial institution. In Częstochowa, the system the central IT System for monitoring of disease has significantly improved the process of serving prevention through the Internet. The system was the recipients of social security benefits, shortened developed by SPIN SA for the National Health Fund. the time required to provide the services and limited This project is carried out under the National formalities to the to minimum. The applicants are only Programme Against Cancer supervised by the Minis- required to submit their PESEL number to receive try of Health. The agreements for the IT services a pre-completed application form for a specific to be provided in connection with both programmes: benefit. Previously, applicants had to spend a lot the population prevention programme and the of time to complete extensive questionnaires, programme for early diagnosis of cervical cancer and each application to be considered required them and early diagnosis of breast cancer were concluded to visit various institutions. The Broker system also on July 14th 2006. offers effective support for the social security workers conducting community interviews. The programmes are aimed at increasing the number of examined women, standardisation and improving Border Guard to Become Client of SPIN SA the quality of services, which consequently is to increase rates of cancer detection at an early, curable In December 2006, SPIN SA, acting as the leader stage. The system is to gather medical information of the consortium with COMP SA, concluded two related to cytology and mammography, especially test agreements with the Border Guard. The agreements results, in the central database of the National Health provide for increasing the computing power Fund. The system also supports the mailing of per- of the Border Guard’s data transmission system. sonalised invitations, indicating specific medical Moreover, in February 28th 2007, SPIN SA executed service providers to women. Data analysis helps another agreement with the Border Guard for develop- assess such elements as coverage, effectiveness ment and implementation of the Odprawa System and quality of the programmes, as well as the rate (a customs clearance system). The agreement was of response to the personalised invitations. These are signed in a consortium with ABG Ster-Projekt SA the first contracts in Poland for the provision of IT and Unicom Sp. z o.o. The project is to be executed services for medical prevention programmes, using as part of the first phase of development of the Border advanced technological and organisational solutions. Guard Central Database. 54 ANNUAL REPORT 2006 PROKOM SOFTWARE GROUP – BUSINESS AND COMPETENCE CENTRES

The project’s aim is to develop and implement a system POSTDATA SA which will support performance of the basic tasks imposed on the Border Guard under the Polish law and international agreements. The solution is to replace Provision of Security Services the functionality of the existing applications ZSE II for Poczta Polska’s IT Infrastructure (Integrated Records System) and ZE (Order Records), which support customs clearance and execution In 2006, Postdata SA completed negotiations of orders. The system is to support the processes on the agreement for provision of security services of preparation of various reports and statistics. for Poczta Polska’s IT infrastructure (the agreement The Odprawa system will operate at the Headquarters was formally signed in February 2007). Postdata’s of the Border Guard, its outlets and branches located tasks under the agreement include: development across the country and at the border crossings. Both of the concept of security monitoring, monitoring projects are financed by the Schengen Fund. network-level Security Events and Security Vulnerability for the IT Infrastructure, and the control of the employees’ access to the Internet. COMP SA The provision of mail services, including execution of financial transactions as well as processing Leader in Security and managing sensitive data, requires Poczta Polska to ensure the highest level of IT security as well COMP SA, the parent undertaking of the COMP as continuous security monitoring and management. Group, is one of the leading providers of secure data The performance of the concluded agreement will transmission systems on the Polish market. Its offering increase the security of the operations of the Poczta includes a full range of design services, such as analysis Polska’s IT systems, expand and introduce new of client needs, conceptual design, implementation, mechanism for evaluation of threats to the IT warranty and post-warranty maintenance, and training. infrastructure and its vulnerability to such threats. Comp SA uses advanced technologies, developed The agreement will also regulate the employees’ by global providers of IT and telecommunications access to the Internet in a planned manner, which will solutions, which ensure stability and reliability also increase security of the IT infrastructure. of developed solutions. IT Outsourcing Innovative Solutions Postdata SA and Poczta Polska extended the COMP SA is an established provider of data security contracts for provision of outsourcing services services. In the development of its security systems by Postdata SA to Poczta Polska, expiring of the end it relies on its proprietary CompCrypt encryption of 2006, covering the provision of comprehensive IT devices. COMP SA is the leading maker of encryption services to the Regional Operating Divisions devices in Poland and one of few manufacturers in Szczecin and Łódź. The contracts provide for of such devices in the world. Thanks to the awarded on-going technical supervision and maintenance state security certification, the CompCrypt solutions are of the computer hardware and active devices used at public administration and security institutions in the LAN and WAN networks, operational advisory as well as banks and telecommunications companies. services and routine maintenance of the computer hardware and software. Under the above agreements, Improvement and Development Postdata SA also supervises maintenance of the data transmission network, the Intrusion and Panic Alarm The dynamic development of the company is reflected Systems, CCTV, etc. in the fact that the company continues to earn high sales margin. In 2006, COMP’s profitability was 12%, which ranks it in the very top of the IT industry. Cur- rently, the company performs multiple contracts and cooperates with over 20 business partners. 55 PROKOM SOFTWARE SA

COMBIDATA POLAND SP. Z O.O. The project beneficiaries are persons employed at small, medium-sized and large enterprises, whose specific competence-related needs may be fully Postgraduate Courses for Teachers satisfied by the training provided. The project covers competence training in IT supported office work, One of the projects carried out in 2006 by Combi- advanced IT use (operating systems and computer data Poland Sp. z o.o. involved organisation of post- networks), interpersonal issues and project management. graduate courses for teachers in the field of career counselling (consortium: the Gdańsk University, Uni- Provision of Services in SAP Technology versity of Białystok, Maria Curie-Skłodowska Universi- ty in Lublin, University of Zielona Góra, Pedagogical In 2006, Combidata Poland Sp. z o.o. proceeded with University of Cracow, and Combidata Poland Sp. z o.o., the execution of a project, launched in the preceding the consortium leader) and postgraduate courses year, aimed at preparing the company to provide for teachers of a second subject (consortium: University consultancy services pertaining to the SAP system. of Warsaw, the Gdańsk University, University of Łódź, In 2006, a team of consultants was set to perform Maria Curie-Skłodowska University in Lublin, University work and commenced provision of training services of Zielona Góra, and Combidata Poland Sp. z o.o.) and implementation support for Koncern Energetyczny ENERGA SA Concurrently, preparatory steps were Both projects were co-financed with funds from taken to provide services to other Prokom Software SA the European Social Fund as part of the tender customers (Bioton SA, and post-secondary schools). initiated by the Ministry of Education. The first project aimed at building the teachers’ competence in aiding Inclusion of the SAP technology contributed to the students to choose their further education path. extension of Combidata Poland Sp. z o.o.’s product The other one was designed to help teachers range, and, on the other hand, enabled its employment gain qualifications in second subject teaching, by the company itself, through initiating conceptual prepare them to use information technology and work on implementation of selected SAP system apply it in teaching, as well as enhance their foreign functionalities, including the general ledger module, language competence. bank module, controlling module, and materials management module, whose implementation will “Through Competence be completed in 2007. to Professional Staff” Project

“Through Competence to Professional Staff” is a project co-financed with the EU resources, implemented in 2006–2007 by a consortium of KIG, CRM SA, Profirma, and Combidata Poland Sp. z o.o. It provides for enhanced competitiveness of enterprises through furnishing employers with information on competence-related needs relevant for particular positions, and initiating educational processes, which further competence by providing adequate training.

56 ANNUAL REPORT 2006

Financial results

57 PROKOM SOFTWARE SA

SELECTED FINANCIAL DATA

PLN thousand*) EUR thousand*) SELECTED FINANCIAL DATA 2006 2005 2006 2005

I. Net sales revenues 1,693,390 1,854,814 434,303 461,018

II. Operating profit (loss) 155,763 151,140 39,948 37,566

III. Profit (loss) before income tax 183,250 157,745 46,998 39,208

IV. Net profit (loss) 159,613 124,409 40,936 30,922

V. Net profit (loss) attributable to shareholders of the Parent 91,969 80,304 23,587 19,960

VI. Cash flows from operating activities 130,296 225,241 33,417 55,984

VII. Cash flows from investing activities -69,063 20,608 -17,713 5,122

VIII. Cash flows from financing activities -49,635 -215,093 -12,730 -53,462

IX. Net cash flows 11,598 30,756 2,975 7,644

X. Total assets 2,307,664 2,239,221 602,335 580,139

XI. Total liabilities 1,069,517 1,112,086 279,160 288,120

XII. Long-term liabilities 261,082 363,946 68,146 94,291

XIII. Short-term liabilities 808,435 748,140 211,014 193,829

XIV. Shareholders’ equity 1,238,147 1,127,135 323,175 292,019

XV. Shareholders’ equity attributable to shareholders of the Parent 882,934 814,356 230,459 210,984

XVI. Share capital 14,185 14,185 3,702 3,675

XVII. Number of shares 13,890,830 13,890,830 13,890,830 13,890,830

XVIII. Basic earnings per ordinary share (in PLN/EUR) 6.62 5.79 1.70 1.44

XIX. Book value per ordinary share attributable to shareholders 63.56 58.62 16.59 15.19 of the Parent (in PLN/EUR)

XX. Book value per ordinary share 89.13 81.11 23.27 21.01

XXI. Declared or paid dividend per ordinary share (in PLN/EUR) 0.00 0.25 0.00 0.06

*) The comparative data is presented as at 31 December for balance sheet items and for 12 months ended 31 December for the profit and loss account and cash flow statement items.

To translate the selected financial data from Polish zloty (PLN) to Euro (EUR), the following foreign exchange rates have been used:

• For the reporting period: • For the comparative period: – For the Balance Sheet data an average NBP rate as at – For the Balance Sheet data an average NBP rate as at the balance sheet day. The respective exchange rate the balance sheet day. The respective exchange rate as of December 31st 2006 was 1 EUR = 3.8312 PLN. as of December 31st 2005 was 1 EUR = 3.8598 PLN. – For the Income Statement and Cash flow data – For the Income Statement and Cash flow data – the average of NBP rates applicable on the last day – the average of NBP rates applicable on the last day of each month between January and December 2006 of each month between January and December 2005 (1 EUR = 3.8991 PLN). (1 EUR = 4.0233 PLN).

58 ANNUAL REPORT 2006 FINANCIAL RESULTS MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

CONSOLIDATED BALANCE SHEET CONSOLIDATED PROFIT AND LOSS ACCOUNT

Structure of assets, liabilities and shareholders’ equity Revenues and costs from operating activities

As at December 31st 2006 the total assets amounted Below analysis compares financial data of 2006 to 2005. to PLN 2,307.7m, which represents a 3.1% increase in comparison to December 31st 2005. In of 2006 the Group’s sales revenues totaled PLN 1,693.4m, and decreased by 8.7% compared to 2005, when 1. As of December 31st 2006 fixed assets amounted to PLN the revenues amounted to PLN 1,854.8m. Respectively 1,025.0 and represented 44.4% of the total assets; current the costs of sales went down by 9.7% and equaled PLN assets amounted to PLN 1,279.2m and represented 55.4% 1,155.7m, while in 2005 amounted to PLN 1,280.2m. of the total assets and long-term assets available for sale amounted to PLN 3.4m and represented 0.2%. Comparing The gross margin in 2006 equaled to 31.7% while in 2005 to December 31st 2005, this constitutes a decrease of 5.2% accounted to 31.0%. in fixed assets and an increase of 11.9% in current assets. Sales of products and services constituted 72.9% of the total 2. Shareholders’ equity and liabilities – shareholders’ equity sales and amounted to PLN 1,234.4m. This constitutes represented 53.7% of the total assets (PLN 1,238.1m) an increase of 11.0% compared to 2005 when the sales long-term liabilities represented 11.3% (PLN 261.1m) of products and services amounted to PLN 1,111.9m. and short-term liabilities represented 35.1% (PLN 808.4m). Respectively the cost of products sold amounted to PLN This constitutes an increase of 9.8% in the shareholders’ 758.8m, which is an increase of 21.0% compared to 2005 equity, and a decrease of 28.3% in long-term liabilities (PLN 627.4m). and an increase of 8.1% in short-term liabilities compared to December 31st 2005.

As at 31 December 2006 the Group’s shareholders’ equity was comprised of: • share capital PLN 14.2m • share premium PLN 238.9m • translation differences PLN (2.4)m • retained earnings PLN 632.2m • minority interest PLN 355.2m Book value per share increased by 9.8% and amounted to PLN 89.13.

59 PROKOM SOFTWARE SA

Sales of products and services structure

[PLN ‘000] [%] [PLN ‘000] [%] Change

2006 2005 [%]

Own licenses 401,673 32.5 192,609 17.3 108.5

Implementations 92,292 7.5 88,098 7.9 4.8

IT support services 354,829 28.7 308,799 27.8 14.9

General contractor services 81,877 6.6 105,410 9.5 -22.3

Network infrastructure development 53,654 4.3 48,026 4.3 11.7

System development services 88,977 7.2 75,571 6.8 17.7

Technical support and post warranty services 42,884 3.5 138,760 12.5 -69.1

Training services 39,081 3.2 15,095 1.4 158.9

Other 79,140 6.5 139,512 12.5 -43.3

Total 1,234,407 100.0 1,111,880 100.0 11.0

In 2006, the sales structure of products and services differed tutes a decrease of 38.2% compared to 2005 when the sales compared to previous year. The majority of sales of products of goods for resale and materials amounted to PLN 742.9m. and services was derived from sales of own licenses (32.5%), Respectively the cost of goods for resale and materials sold IT support services (28.7%) and implementations (7.5%). amounted to PLN 396.9m, which is a decrease of 39.2% com- Respectively in 2005 the major share in sales of products pared to 2005 (PLN 652.8m). and services was attributable to IT support services (27.8%), sales of own licenses (17.3%) and support and post warranty As a consequence the gross margin on the goods for resale services (12.5%). and materials went up from 12.1% in 2005 to 13.5% in 2006.

Sales of goods for resale and materials constituted 27.1% of the total sales and amounted to PLN 459.0m. This consti-

Sales of goods for resale and materials structure

[PLN ‘000] [%] [PLN ‘000] [%] Change

2006 2005 [%]

Hardware 347,497 75.7 570,716 76.8 -39.1

Third party software 107,531 23.4 164,599 22.2 -34.7

Other 3,955 0.9 7,619 1.0 -48.1

Total 458,983 100.0 742,934 100.0 -38.2

The structure of sales of goods for resale did not differ from The significant decrease of sale of hardware comparing the structure of the previous year. The majority of sales to 2005 resulted from the Group’s strategy, to maximize of goods for resale and materials were derived from sale the operational margins by reducing the sale of goods of hardware (75.7%) and third party software (23.4%). and materials, if the margins are not satisfactory.

60 ANNUAL REPORT 2006 FINANCIAL RESULTS MANAGEMENT DISCUSSION & ANALYSIS

The Group’s sales revenues by sectors

Sector [PLN ‘000] [%]

Industry 158,190 9.3%

Financial 593,176 35.0%

Services 355,013 21.0%

Public administration 587,011 34.7%

Total 1,693,390 100.0

Selling and distribution costs amounted to PLN 111.3m, General and administrative expenses went down by 8.3% in which constitutes a decrease of 8.1% compared to the comparison with 2005, to PLN 271.9m. Salaries and external previous year. services represented main categories of the G&A expenses.

Costs by categories

[PLN ‘000] [%] [PLN ‘000] [%] Change

2006 2005 [%]

Depreciation and amortization 59,780 5.1 75,045 7.1 -20.3

Materials and energy consumed 72,183 6.2 79,172 7.5 -8.8

External services 503,879 43.4 433,936 40.9 16.1

Taxes and charges 4,927 0.4 9,175 0.9 -46.3

Wages and salaries 376,093 32.4 362,820 34.2 3.7

Social security contributions 68,332 5.9 63,019 5.9 8.4

Other 76,111 6.6 37,406 3.5 103.5

Total 1,161,305 100.0 1,060,573 100.0 9.5

Revenues and costs from financial activities In the reporting period the Group’s operating profit amount- ed to PLN 155.8m which is an increase of 3.1% compared The financial revenues in 2006 amounted to PLN 117.1m, to 2005. which constitutes a decrease of 1.3% in comparison to the previous year when they amounted to PLN 118.6m. Respectively In 2006, the profit before tax went up to PLN 183.3, which the financial costs in 2006 amounted to PLN 105.0m which is an increase of 16.2% on 2005, when the profit before tax constitutes a decrease of 8.1% in comparison to 2005, which amounted to PLN 157.7 m. amounted to PLN 114.2m. In the reporting period the net profit attributable to the Parent Profit amounted to PLN 92.0m, presenting an increase of 14.5% compared to 2005, when the net profit equaled to PLN The gross profit of the Group in 2006 amounted to PLN 80.3m. The EPS equaled PLN 6.62 while in 2005 it equaled 537.7m. The gross margin went up by 0.8 percentage points PLN 5.79. and equaled to 31.8%.

61 PROKOM SOFTWARE SA

FACTORS AND NON-RECURRING EVENTS AFFECTING THE • Effects of restructuring carried out in the Parent Company. GROUP’S PERFORMANCE The process, which focused on marketing and general & administration costs resulted in significant reduction of employment, decrease of scale and increase in effec- Main factors affecting the Group’s 2006 net result were: tiveness of sponsoring activities run by the Company • Execution of contracts signed in the prior periods, includ- and optimization of the Company’s geographical structure ing in particular contracts signed with the following in terms of number of branches and rented office space customers: Social Security Office (development of KSI required to cover the existing and targeted client base. ZUS, exploitation and maintenance of KSI system, supple- • Effects of Capital Group reorganization that aimed mentary agreement No5), PZU Group (development of ZSI, to create new competence centers, optimize the coopera- implementation of Graphtalk A.I.A. servicing life insurances tion and exercise the synergies between the Companies products, maintenance and centralization of INSURER), operating within the Prokom Software Capital Group. TP SA (maintenance of KPX, implementation of CRM), • Increase of stake in Softbank SA (from 33% to 34%), Ministry of Internal Affairs and Administration (development in ABG Ster-Projekt SA (from 34% to 38%), in Safe and implementation of CEPiK), PKO BP SA (development Computing Sp. z o.o. (from 51% to 90%). of ZSI, deliveries of hardware and software, maintenance • Disposal of AWiM Mediabank SA by Softbank SA. and development of ZORBA, CESAR and other bank appli- • Disposal of real estate properties by ABG Ster-Projekt SA. cations – KONTAKT), Agency for Agriculture Restructuring • Issue of new shares of Asseco Slovakia a.s. resulting and Modernization (ARiMR), Grupa LOTOS SA in dilution of share held by Asseco Poland SA. and KE ENERGA SA. • Foreign exchange fluctuations (appreciation of PLN • Signing new contracts with Polish Post, TUiR Warta SA, against EUR) Universities, ARiMR, PKO BP, National Health Fund, Board Guard, KGHM Polska Miedź SA, Tele-Fonika Kable SA, Ministry of Foreign Affairs, Agriculture Property Agency, Romanian Agency of Payments and Interventions in Agriculture and others. • Delays of new significant contracts in public administration sector.

62 ANNUAL REPORT 2006 FINANCIAL RESULTS MANAGEMENT DISCUSSION & ANALYSIS

Key financial ratios for Prokom Software SA Capital Group

Item 2006 2005

ROE1 8.7% 8.6%

ROA2 4.1% 3.7%

EBIT margin3 9.2% 8.1%

EBITDA margin4 12.7% 12.2%

Sales margin5 31.8% 31.0%

Pre tax profit margin6 10.8% 8.5%

Net profit margin7 5.4% 4.3%

Pay-out ratio8 –4.3%

Current ratio9 1.6 1.5

Quick ratio10 1.5 1.5

Total debt ratio11 46.3% 49.7%

Debt-equity ratio12 86.4% 98.7%

1 ROE Net profit / [(Shareholders’ equity at beginning of period + Shareholders’ equity at end of period) / 2] 2 ROA Net profit / [(Total assets at beginning of period + Total assets at end of period) / 2] 3 EBIT margin Operating profit / Net sales revenue 4 EBITDA margin (Operating profit + Depreciation and amortization) / Net sales revenue 5 Sales margin Gross sales profit / Net sales revenue 6 Pre tax profit margin Pre tax profit / Net sales revenue 7 Net profit margin Net profit / Net sales revenue 8 Pay-out ratio Dividend / Net profit 9 Current ratio Current assets / Short term liabilities 10 Quick ratio Current assets – inventories / Short term liabilities 11 Total debt ratio Liabilities and provisions for liabilities / Total assets 12 Debt-equity ratio Liabilities and provisions for liabilities / Shareholders’ equity

63 PROKOM SOFTWARE SA

Consolidated income statement

12-month 12-month period ended period ended OPERATING ACTIVITIES 31 December 2006 31 December 2005

Sales 1 693 390 1 854 814

Sales of finished goods and services 1,234,407 1,111,880

Sales of goods for resale 458,983 742,934

Cost of finished goods, goods for resale and services sold (1,155,715) (1,280,229)

Cost of finished goods and services sold (758,846) (627,397)

Cost of goods for resale sold (396,869) (652,832)

GROSS PROFIT 537,675 574,585

Selling expenses (111,341) (121,198)

General and administrative expenses (271,871) (296,607)

Other operating income 22,002 17,316

Other operating expenses (20,702) (22,956)

OPERATING PROFIT 155,763 151,140

Finance income 117,099 118,582

Finance costs (104,973) (114,176)

Share in the net profit of associates 15,474 3,734

Loss on sale of shares in subsidiaries (113) (1,535)

PROFIT BEFORE INCOME TAXES 183,250 157,745

Corporate income tax (23,637) (33,336)

NET PROFIT FOR THE YEAR 159,613 124,409

Attributable to the shareholders of the Parent Company 91,969 80,304

Attributable to the minority shareholders 67,644 44,105

Basic and diluted earnings per share (attributable to the shareholders of the Parent Company) 6.62 5.78

• All figures in PLN ‘000s.

64 ANNUAL REPORT 2006 FINANCIAL RESULTS CONSOLIDATED BALANCE SHEET

Consolidated balance sheet

ASSETS 31 December 2006 31 December 2005

Non-current (long-term) assets 1,024,996 1,081,139

Property, plant and equipment 315,351 340,969

Intangible assets 49,406 47,662

Goodwill on consolidation 361,938 324,536

Investment properties 1,140 1,004

Investments in associates accounted for using the equity method 137,234 120,044

Deferred tax assets 38,384 28,778

Long-term available-for-sale financial assets 20,751 15,905

Long-term held-to-maturity investments – 83,856

Long-term financial assets at fair value through profit or loss 917 3,575

Other long-term investments 424 316

Long-term receivables 90,233 97,677

Long-term prepayments and deferred costs 9,218 16,817

Current (short-term) assets 1,279,218 1,143,279

Inventories 43,791 45,532

Prepayments and deferred costs 66,634 43,535

Trade debtors 448,658 478,400

State receivables 3,953 6,108

Other receivables 81,947 78,678

Amounts due from customers for IT contracts work 141,728 153,414

Short-term held-to-maturity investments 240,904 133,276

Short-term financial assets at fair value through profit or loss 95,879 60,210

Cash and cash equivalents and short-term deposits 155,724 144,126

Non-current assets held-for-sale 3,450 14,803

TOTAL ASSETS 2,307,664 2,239,221

• All figures in PLN ‘000s.

65 PROKOM SOFTWARE SA

Consolidated balance sheet (continued)

EQUITY AND LIABILITIES 31 December 2006 31 December 2005

Equity 1,238,147 1,127,135

Share capital 14,185 14,185

Share premium 238,970 238,970

Cumulative translation adjustment [from translation of subsidiaries] (2,434) 122

Retained earnings 632,213 561,079

Equity (attributable to the shareholders of the Parent Company) 882,934 814,356

Minority interest 355,213 312,779

Non-current (long-term) liabilities 261,082 363,946

Long-term interest bearing bank loans, credits and debt securities 14,760 108,143

Long-term finance lease 121,935 124,078

Other long-term financial liabilities 103,185 99,978

Other long-term liabilities 1,557 6,598

Long-term provisions 9,417 8,517

Deferred tax liability 1,099 –

Long-term accrued expenses 70 5

Long-term deferred income 9,059 16,627

Current (short-term) liabilities 808,435 748,140

Short-term interest bearing bank loans, credits and debt securities 256,491 182,587

Short-term finance lease 3,359 2,740

Other short-term financial liabilities 32,818 21,725

Trade creditors 245,136 304,189

Corporate income tax payables 15,674 17,369

Other current state liabilities 46,017 59,371

Other current liabilities 27,160 16,687

Amounts due to customers for IT contracts work 70,047 36,543

Short-term provisions 21,126 24,843

Short-term accrued expenses 51,779 52,880

Short-term deferred income 38,828 29,206

TOTAL LIABILITIES 1,069,517 1,112,086

TOTAL EQUITY AND LIBILITIES 2,307,664 2,239,221

• All figures in PLN ‘000s.

66 ANNUAL REPORT 2006 FINANCIAL RESULTS CONSOLIDATED CASH FLOW STATEMENT

Consolidated cash flow statement 12-month 12-month period ended period ended CASH FLOW FROM OPERATING ACTIVITIES 31 December 2006 31 December 2005

Profit before income taxes 183,250 157,745

Adjustments for:

Share in the net profit of associates (15,474) (3,734)

Depreciation/ Amortisation 59,780 75,045

Loss on dilution of shares in a subsidiary (113) 1,535

Change in working capital (192) 54,695

Interest expense 14,214 15,815

Foreign exchange (gains)/ losses (21,233) (8,506)

Investment (gains)/ losses (20,166) (4,818)

Other adjustments (5,327) (2,178)

Interest paid (31,481) (45,940)

Corporate income tax paid (32,962) (14,418)

Net cash flow from operating activities 130,296 225,241 CASH FLOW FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through profit or loss and of financial assets available-for-sale 602 11,669

Disposal of property, plant and equipment and intangible assets 30,894 13,308

Redemption of financial assets held-to-maturity 114,650 151,021

Disposal of other financial assets 3,380 9,160

Repaid loans and credits 3,091 9,117

Inflow from forward transactions 26,933 21,518

Interest received 15,046 21,537

Dividends received 2,250 1,388

Disposal of subsidiaries after deduction of cash returned – 19,878

Disposal of investment property – 1,700

Purchase of property, plant and equipment and intangible assets (51,653) (57,054)

Purchase of financial assets at fair value through profit or loss and financial assets available-for-sale (17,047) (55,355)

Purchase of financial assets held-to-maturity (140,610) (53,523)

Purchase of associates – (28,791)

Purchase of subsidiaries and minority interest in subsidiaries, after deduction of cash (48,773) (14,692) and cash equivalents taken over

Loan granted (6,580) (31,683)

Other items (1,246) 1,410

Net cash flow from investing activities (69,063) 20,608 CASH FLOW FROM FINANCING ACTIVITIES Issuance of shares in subsidiary – 32,539

Proceeds from issuance of debt securities and loans 366,805 326,505

Redemption of debt securities and repayment of loans (379,894) (559,679)

Repayment of finance lease liabilities (1,865) (5,520)

Dividends paid to the shareholders of the Parent Company (20,834) (3,473)

Dividends paid to the minority shareholders (14,079) –

Other 232 (5,465)

Net cash flow from financing activities (49,635) (215,093)

Net change in cash and cash equivalents 11,598 30,756

Cash and cash equivalents at the beginning of the period 144,126 113,370

Cash and cash equivalents at the end of the period 155,724 144,126

67 • All figures in PLN ‘000s. Contact Data

Registered Office Operational Headquarters

Al. Jerozolimskie 65/79 tel. (+48 22) 630-39-90 ul. Podolska 21 tel. (+48 58) 628-66-66 00-697 Warszawa fax (+48 22) 630-39-94 81-321 Gdynia fax (+48 58) 628-66-77

Offices Regional Branch

Gdynia Lublin ul. Podolska 21 tel. (+48 58) 628-66-66 ul. T. Zana 39 tel. (+48 81) 524-11-91 81-321 Gdynia fax (+48 58) 628-66-77 20-601 Lublin fax (+48 81) 525-31-92

Warszawa ul. Grójecka 127 tel. (+48 22) 574-82-00 02-383 Warszawa fax (+48 22) 574-82-82 Press Office

Katowice Warszawa Al. W. Korfantego 83A tel. (+48 32) 604-44-00 Al. Jerozolimskie 65/79 tel. (+48 22) 630-39-90 40-161 Katowice fax (+48 32) 604-44-01 00-697 Warszawa fax (+48 22) 630-39-94

Wrocław ul. R. Traugutta1/7 tel. (+48 71) 370-70-00 50-449 Wrocław fax (+48 71) 370-70-01 Investor Relations Department

Bydgoszcz Warszawa ul. Gdańska 47 tel. (+48 52) 327-48-00 Al. Jerozolimskie 65/79 tel. (+48 22) 574-80-72 85-674 Bydgoszcz fax (+48 52) 327-48-10 00-697 Warszawa fax (+48 22) 630-39-94

Łódź Al. J. Piłsudskiego 3 tel. (+48 42) 639-64-00 90-954 Łódź fax (+48 42) 639-64-11 Website

Szczecin www.prokom.pl ul. J. Matejki 22 tel. (+48 91) 480-41-41 70-530 Szczecin fax (+48 91) 480-41-42

Rzeszów ul. K. Hoffmanowej 19 tel. (+48 17) 865-83-00 35-016 Rzeszów fax (+48 17) 865-86-77 Annual Report 2006 copyright © 2007 Prokom Software SA

PROKOM SOFTWARE SA ANNUAL REPORT 2006