CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
PREPARED IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS
INCLUDING OPINION OF INDEPENDENT CERTIFIED AUDITORS
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED FINANCIAL STATEMENTS OF THE ASSECO POLAND GROUP FOR THE YEAR ENDED 31 DECEMBER 2007 INCLUDING OPINION OF INDEPENDENT CERTIFIED AUDITORS
Table of contents Page
OPINION OF INDEPENDENT CERTIFIED AUDITORS ...... 3 CONSOLIDATED PROFIT AND LOSS ACCOUNT...... 5 CONSOLIDATED BALANCE SHEET ...... 6 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY ...... 8 CONSOLIDATED STATEMENT OF CASH FLOWS ...... 9 SUPPLEMENTARY INFORMATION AND EXPLANATIONS...... 10 I. GENERAL INFORMATION...... 10 II. ACCOUNTING PRINCIPLES APPLIED WHEN PREPARING THE CONSOLIDATED FINANCIAL STATEMENTS ...... 26 III. INFORMATION ON BUSINESS SEGMENTS...... 46 IV. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...... 48
These financial statements comprise 123 pages numbered consecutively from 1 to 123.
These consolidated financial statements were approved by the Management Board of Asseco Poland SA on 22 April 2008.
Management Board:
Adam Góral President of the Management Board
Przemysław Borzestowski Vice President of the Management Board
Piotr Jeleński Vice President of the Management Board
Marek Panek Vice President of the Management Board
Zbigniew Pomianek Vice President of the Management Board
Adam Rusinek Vice President of the Management Board
Przemysław Sęczkowski Vice President of the Management Board
Robert Smułkowski Vice President of the Management Board
Tadeusz Dyrga Vice President of the Management Board
Krzysztof Kardaś Vice President of the Management Board
Włodzimierz Serwiński Vice President of the Management Board
Person responsible for maintaining the accounting books:
Danuta Stec Chief Accountant
2 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765
OPINION OF INDEPENDENT CERTIFIED AUDITORS
For the Supervisory Board of Asseco Poland SA
1. We have audited the attached consolidated financial statements of the Asseco Poland Group (the "Group"), the parent company of which is Asseco Poland SA (the "Company") with the registered seat at Al. Armii Krajowej 80, Rzeszów, Poland, for the year ended 31 December 2007, including: • Consolidated Balance Sheet made as at 31 December 2007, which equates the total assets with the shareholder's equity and liabilities at PLN 3,256,111 thousand, • Consolidated Profit and Loss Account for the period from 1 January 2007 to 31 December 2007, which shows the net profit of PLN 190,690 thousand, • Consolidated Statement of Shareholders Equity for the period from 1 January 2007 to 31 December 2007, which reveals an increase in shareholders' equity by the amount of PLN 1,777,018 thousand, • Consolidated Statement of Cash Flows for the period from 1 January 2007 to 31 December 2007, which discloses a net increase in cash and cash equivalents by the amount of PLN 194,160 thousand, and • Supplementary information and explanations (collectively the "attached consolidated financial statements"). 2. The Management Board of the Company is responsible for reliability, accuracy and fairness of the attached consolidated financial statements as well as for accuracy of the accounting evidence for consolidation. Our assignment was to audit the attached consolidated financial statements and, on the basis of such audit, to express an opinion on their reliability, accuracy and fairness in all material aspects. 3. We have conducted our audit of the attached consolidated financial statements, except for the issue described in item 4 below, in compliance with the regulations legally binding in Poland: • Chapter 7 of the Accounting Act of 29 September 1994 (the "Accounting Act"), • the professional standards for auditors set forth by the National Council of Statutory Auditors, and in such a way as to obtain reasonable and sufficient confidence that the financial statements do not contain any material faults. In particular, the audit included checking, mostly at random, of the accounting records and book entries supporting the amounts and disclosures revealed in the attached consolidated financial statements. Furthermore, the audit comprised assessment of correctness of the accounting principles adopted and applied by the Group, verification of significant estimates performed by the Company's Management Board as well as an overall evaluation of presentation of the attached consolidated financial statements. We believe that our audit provided a reasonable basis to issue an opinion on the attached consolidated financial statements treated as a whole.
3 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765
4. As described in item 10 of the explanatory notes to the attached consolidated financial statements, in 2007 the Company merged with the company Asseco Poland SA. Under this merger, where the Company acted as the taking-over party, certain assets were recognized and their fair values were determined, including the trademark "Asseco" measured at PLN 137,600 thousand. In our opinion the method of valuation of this trademark differs from the practices adopted in the market; hence, we are neither able to determine whether the trademark value is accurate nor to assess the impact of such valuation on the attached consolidated financial statements. 5. In our opinion, except for the potential impact of the matter described in item 4 above, the attached consolidated financial statements, in all material aspects: • present true and fair information which is essential for assessing the Group's financial result on business activities in the period from 1 January 2007 to 31 December 2007, as well as property and financial position of the Group as at 31 December 2007; • were prepared correctly, this is in accordance with the International Financial Reporting Standards adopted by the European Union; • comply with the legal regulations pertaining to preparation of financial statements, inclusive of form and contents. 6. We have examined the Management Board report on the Group's operations conducted in the period from 1 January 2007 to 31 December 2007 and on the principles for preparation of the annual consolidated financial statements (the "report on the Group's operations"), and deemed it was consistent with the information provided in the attached consolidated financial statements. The contents of the report on the Group's operations comply with relevant provisions of the Regulation of the Minister of Finance on current and periodic information to be submitted by issuers of securities dated 19 October 2005 (Journal of Laws No. 209, entry 1774).
On behalf of Ernst & Young Audit Sp. z o.o. Rondo ONZ 1, 00-124 Warsaw Registry no. 130
Sebastian Łyczba Jacek Hryniuk Certified Auditor No. 9946/7392 Certified Auditor No. 9262/6958
Warsaw, 22 April 2008
4 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED PROFIT AND LOSS ACCOUNT THE ASSECO POLAND GROUP
Number of 12 months ended 12 months ended note to financial 31 December 2007 31 December 2006 statements (audited) (audited) Continued operations Sales revenues 1 1,282,399 497,687
Cost of sales ( ) 2 (848,381) (381,237)
Gross profit on sales 434,018 116,450 Selling expenses ( ) 2 (88,075) (15,522) General administrative expenses ( ) 2 (114,283) (52,653)
Net profit on sales 231,660 48,275 Other operating income 3 9,586 1,263 Other operating expenses ( ) 3 (4,695) (4,340)
Operating profit 236,551 45,198
Financial income 4 64,915 79,067 Financial expenses ( ) 4 (81,157) (60,729)
Share in profits of associated companies (3,028) 11,258 Gain (loss) on disposal and dilution of shareholdings 4 18,157 0 in associated companies
Pre tax profit 235,438 74,794 Corporate income tax (current and deferred portions) 5 (44,748) (3,606)
Net profit (loss) on ordinary activities 190,690 71,188 Discontinued operations Profit (loss) on discontinued operations for the financial 6 0 4,119 year Net profit for the period reported 190,690 75,307
Attributable to: 190,690 75,307 Shareholders of the Parent Company 160,913 74,565 Minority Shareholders 29,777 742 Consolidated earnings per share attributable to Shareholders of Asseco Poland SA (in PLN)
Earnings per share from consolidated net profit on continued operations for the period reported attributable 7 3.48 2.96 to Shareholders of Asseco Poland SA (in PLN) – basic
Earnings per share from consolidated net profit on continued operations for the period reported attributable to 7 3.48 2.96 Shareholders of Asseco Poland SA (in PLN) – diluted
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 5 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED BALANCE SHEET THE ASSECO POLAND GROUP
Number of note 31 December 2007 31 December 2006
to financial (audited) (audited) statements ASSETS Fixed assets 2,298,214 289,510
Property, plant and equipment 9 92,963 29,315 Intangible assets 10 1,132,664 5,727 Consolidation goodwill 11 567,351 74,050 Investments in associated undertakings valued under 12 337,104 97,360 the equity method Financial assets available for sale 13 236 0 Financial assets held to maturity 14 394 0 Financial assets valued at fair value through profit or loss 15 791 917 Long term loans granted 16 778 0 Long term receivables 20 42,328 54,932 Restricted cash 21 86,289 0 Deferred income tax assets 5 35,377 25,975 Long term deferred expenses 17 1,939 1,234
Current assets 957,897 392,607
Inventories 18 36,615 16,900 Deferred expenses 17 25,692 15,564 Trade accounts receivable 20 344,955 146,179 Corporate income tax recoverable 20 1,435 238 Receivables from the State budget 20 3,180 143 Other receivables 20 216,856 47,625 Financial assets available for sale 13 22 0 Financial assets held to maturity 14 15,668 34,313 Loans granted 16 767 210 Financial assets valued at fair value through profit or loss 15 71,192 84,080 Cash and short term deposits 21 241,515 47,355
Assets classified as held for sale 6 0 3,450
TOTAL ASSETS 3,256,111 685,567
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 6
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED BALANCE SHEET THE ASSECO POLAND GROUP
Number of note 31 December 2007 31 December 2006
to financial (audited) (audited) statements SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY (ATTRIBUTABLE TO 1,923,068 340,283 SHAREHOLDERS OF THE PARENT COMPANY)
Share capital 22 51,090 25,175 Share premium 22 1,651,371 253,151 Capital from bonds convertible to shares issued due to share 22 0 2,498 based payments Foreign currency translation differences on subsidiary and 22 (14,761) (3,118) associated companies Prior years' retained earnings (deficit) and current net profit 235,368 62,577
MINORITY INTERESTS 22 197,624 3,391
TOTAL SHAREHOLDERS' EQUITY 2,120,692 343,674
Long term liabilities 492,110 107,245
Interest bearing bank credits, loans and debt securities 24 202,071 0 Deferred income tax reserves 5 494 0 Long term reserves 25 2,087 645 Long term financial liabilities 23 283,473 103,185 Long term deferred income 26 2,979 3,415 Other long term liabilities 26 1,006 0
Current liabilities 643,309 234,648
Interest bearing bank credits, loans and debt securities 24 61,116 7,186 Trade accounts payable 26 188,605 61,235 Corporate income tax payable 26 37,835 5,207 Liabilities to the State budget 26 42,310 13,447 Financial liabilities 23 131,204 32,236 Other liabilities 26 96,530 81,037 Reserves 25 11,018 3,880 Accrued expenses 26 45,009 19,841 Deferred income 26 29,682 10,579
TOTAL LIABILITIES 1,135,419 341,893
TOTAL SHAREHOLDERS' EQUITY AND 3,256,111 685,567 LIABILITIES
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 7
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY THE ASSECO POLAND GROUP Capital from Prior years' Foreign currency Unrealized net bonds retained translation Total for 12 months ended 31 December 2007 (audited) and profit on financial convertible earnings Minority Share capital Share premium differences on Total shareholders' assets available to shares issued (deficit) and interests for 12 months ended 31 December 2006 (audited) subsidiary and equity for sale due to share current associated companies based payments net profit As at 1 January 2007 25,175 253,151 0 2,498 (3,118 ) 62,577 340,283 3,391 343,674 Net profit for the period from 160,913 160,913 29,777 190,690 1 January 2007 to 31 December 2007 Dividend for the year 2006 (18,578) (18,578) (18,578) Merger with Asseco Poland SA 3,219 9,890 13,109 77,736 90,845 Revaluation of net assets of Asseco Poland SA to fair value 38,775 38,775 38,775 as at the merger date Issuance of shares due to the merger with Asseco Poland SA 17,736 957,734 975,470 975,470 Issuance of shares due to acquisition of non cash contributions 3,210 117,807 121,017 121,017 Expenses related directly to issuance of shares due to the merger
with Asseco Poland SA (3,332) (3,332) (3,332) Issuance of shares due to conditional increase of share capital
(sale of warrants) 295 12,712 (4,310) 8,697 8,697 Issuance of shares due to conversion of bonds convertible to 30 1,399 (1,407) 22 22 shares Issuance of shares of series E 4,644 320,476 325,120 325,120 Expenses directly related to issuance of series E shares (8,576) (8,576) (8,576) Increase of other capitals of the subsidiary company 806 806 806 Changes in the Group structure (19,015) (19,015) 97,430 78,415 Dividends for minority shareholders 0 (12,356) (12,356) Foreign currency translation differences on subsidiary companies (11,643) (11,643) 1,646 (9,997) As at 31 December 2007 51,090 1,651,371 0 0 (14,761) 235,368 1,923,068 197,624 2,120,692
As at 1 January 2006 25,175 253,151 0 801 475 4,123 283,725 2,649 286,374 Net profit for the period from 74,565 74,565 742 75,307 1 January 2006 to 31 December 2006 Foreign currency translation differences on subsidiary companies (3,593 ) (3,593) 0 (3,593) Cost of employee benefits in the form of own shares 1,091 1,091 1,091 recognized by the associated company Cost of employee benefits in the form of own shares 606 606 606 Dividend paid out for the year 2005 (16,111) (16,111) (16,111) As at 31 December 2006 25,175 253,151 0 2,498 (3,118 ) 62,577 340,283 3,391 343,674
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 8 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
CONSOLIDATED STATEMENT OF CASH FLOWS THE ASSECO POLAND GROUP
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited) Cash flows operating activities Pre tax profit on continued operations and profit (loss) on discontinued operations 235,438 78,913 Total adjustments: (159,977) (43,634) Gain on dilution of shares in the subsidiary company (18,157) 0 Share in net profit of companies valued under the equity method 3,419 (11,258) Depreciation and amortization 37,859 12,768 Change in inventories (2,001) 3,230 Change in receivables (167,764) 33,219 Change in liabilities 31,403 (51,016) Change in deferred and accrued expenses 20,273 (3,408) Change in reserves (6,899) 4,025 Interest income and expense (7,203) 1,354 Gain (loss) on foreign exchange differences (39,728) (28,430) Gain (loss) on investing activities (6,940) (4,137) Other items (4,239) 19 Net cash generated from operating activities 75,461 35,279 Interest paid (4,815) (2,438) Income tax paid (21,626) (5,219) Net cash provided by operating activities 49,020 27,622 Cash flows investing activities Disposal of tangible fixed assets 5,341 930 Disposal of intangible assets 69 0 Proceeds from redemption of financial assets held to maturity 193,160 9,597 Disposal of financial assets available for sale 31 0 Disposal of financial assets valued at fair value through profit or loss 0 547 Disposal of other financial assets 524 0 Acquisition of tangible fixed assets (31,505) (6,975) Acquisition of intangible assets (7,555) (1,874) Acquisition of financial assets held to maturity (169,055) (28,773) Acquisition of other financial assets (122) 0 Acquisition of subsidiary companies less cash taken over (120,016) (82) Acquisition of associated companies (338,177) 0 Loans collected 4,317 0 Interest received 4,276 1,004 Dividends received 0 1,245 Other items 0 67 Cash provided by forward transactions 36,646 26,933 Net cash provided by (used in) investing activities (422,066) 2,619 Cash flows financing activities Issuance of shares 383,205 0 Finance lease commitments paid (2,922) 0 Bank credits and loans paid back (20,088) (23,877) Bank credits and loans taken out 228,394 5,509 Dividends paid to Shareholders of the Parent Company (18,578) (16,111) Dividends paid out to minority shareholders (15,642) 0 Redemption of debt securities issued 0 (10,547) Other items 20,791 0 Net cash provided by (used in) financing activities 575,160 (45,026) Net increase (decrease) in cash and cash equivalents 202,114 (14,785) Net foreign currency differences on translation of foreign subsidiaries (7,954) 0 Cash and cash equivalents as at 1 January 47,355 62,140 Cash and cash equivalents as at 31 December 241,515 47,355
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 9
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
SUPPLEMENTARY INFORMATION AND EXPLANATIONS
I. GENERAL INFORMATION The parent company of the Asseco Poland Group (the "Asseco Group", "Group") is Asseco Poland SA (the "Parent Company", "Company", "Issuer") with the registered seat at Al. Armii Krajowej 80, Rzeszów, Poland. The Company was established on 18 January 1989 as a limited liability company, and subsequently under notary deed of 31 August 1993 it was transformed into and since than has operated as a joint stock company with registered office at ul. 17 Stycznia 72a, Warsaw, Poland. The Company is entered in the Register of Entrepreneurs of the National Court Register under the number KRS 33391 (previously it was entered in the Commercial Register maintained by the District Court of the Capital City of Warsaw, Commercial Court, XVI Commercial and Registration Department, under the number RHB 17220). On 4 January 2007 the Issuer changed its name from Softbank SA to Asseco Poland SA, and moved its headquarters from ul. 17 Stycznia 72a, Warsaw to Al. Armii Krajowej 80, Rzeszów. Since 1998, the Company's shares have been listed on the main market of the Warsaw Stock Exchange SA. The Company has been assigned the statistical identification number REGON 010334578. The period of the Company's operations is indefinite. Asseco Poland SA is the parent company of the Asseco Group. As at the end of 2007 Prokom Software SA was a major investor in Asseco Poland SA, likewise Asseco Poland SA was a major investor in Prokom Software SA. This resulted from substantial mutual influence exerted by both the companies on their business operations. As at 31 December 2007, Prokom Software SA held 22.73% of shares in Asseco Poland SA which entitled them to the proportional voting interest at the Asseco's General Meeting of Shareholders; whereas, Asseco Poland SA held 10.96% of shares in Prokom Software SA representing 13.69% of the total votes at the Prokom's General Meeting of Shareholders. The Company exerted substantial influence over the operations of Prokom Software SA because as at 31 December 2007 certain members of the Management Board of Asseco Poland SA served also as members of the Management Board of Prokom Software SA, hence they were able to make decisions affecting the operations Prokom Software SA as well as to participate in creating its business policy. The business profile of Asseco Poland SA includes software and hardware consultancy, production of software as well as supply of software and hardware. According to the Polish Classification of Business Activities, the Company's core business is "software consultancy and supply" (PKD 7222Z). This category includes analysing, developing, and programming ready to use IT systems. According to the classification adopted by the Warsaw Stock Exchange, the Issuer's business activity is classified as "information technology". Other undertakings of the Group conduct similar operations. In addition to comprehensive IT services, the Group also sells goods including mainly computer hardware. The conducted sale of goods is to a large extent connected with the provision of software implementation services. These consolidated financial statements provide a description of the Asseco Group’s core business broken down by relevant segments. These consolidated financial statements cover the period of 12 months ended 31 December 2007 and contain comparable data for the period of 12 months ended 31 December 2006.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 10
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Company draws up its financial statements in accordance with the International Financial Reporting Standards ("IFRS") approved by the European Union for the current and comparable period. Asseco Poland SA has begun to apply the IFRS since the year 2005. In 2007 the Company paid out to its shareholders a dividend for the year 2006. By decision of the Ordinary General Meeting of Shareholders, 32% of net profit for the year 2006 was allocated to payment of a dividend of PLN 0.40 per share. The remaining part of net profit for the year 2006 was appropriated for increasing the Company's reserve capital.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 11 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Structure of the Asseco Group The table below presents the Asseco Group structure as well as its associated companies, along with respective equity interests. % of share capital Country of held as at Company Business profile registration 31 December 31 December 2007 2006 Subsidiary companies ADH Soft Sp. z o.o Poland Supply and implementation of software for leasing companies 55.00% n/a Asseco Business Solutions SA (1) Poland Implementation and offering of e Learning platforms, implementation of competence management systems, design, 54.27% 100% construction, management and implementation of BPC and DRP, IT outsourcing, ERP systems Anica System SA (2) Poland Mobile, integration and analytical systems for enterprises with business largely based on networks of field sales force 32.87% n/a Asseco Germany SA Poland Capital investments and provision of IT services in Germany 93.00% n/a AP Automation + Productivity AG (3) Germany Provision of ERP solutions for small and middle–sized enterprises in Germany in the sectors of production industry, autos, 74.40% n/a retail trade, and services AP Automation + Productivity GmbH (3) Austria Provision of ERP solutions for small and middle–sized enterprises in Germany in the sectors of production industry, autos, 55.80% n/a retail trade, and services Asseco Slovakia a.s. Slovakia Creation of IT integration systems, payment card transaction systems, e commerce solutions and call centers for the public 41.67% n/a finance sector Datalock a.s. (5) Slovakia Provision of ERP software 21.27% n/a Datalock Tatry s.r.o. (5) Slovakia Distribution of Datalock products, no proprietary software 12.76% n/a Datalock Zilina s.r.o. (5) Slovakia Distribution of Datalock products, no proprietary software 21.27% n/a Datalock Puchov s.r.o. (5) Slovakia Distribution of Datalock products, no proprietary software 12.97% n/a MPI Slovakia s.r.o. (5) Slovakia SAP implementation and consulting services 21.25% n/a Slovanet a.s. (5) Slovakia Provision of internet services, internet telephony, and VPN (Virtual Private Networks) services 21.25% n/a Kryha spol. s.r.o. (5) Slovakia Local provider of internet services 10.84% n/a Disig a.s. (5) Slovakia Accredited certification services concerning the electronic signature 21.25% n/a Asseco Czech Republic a.s. (4) Czech Republic Development and execution of the largest IT projects for the public finance sector 42.92% n/a Berit a.s. (5) Czech Republic Provision of IT technologies and services in the field of geographic information systems (GIS) and operating technical 13.18% n/a information systems (TIS) Berit Services s.r.o. (5) Czech Republic Distribution of Berit products 13.18% n/a Berit AG (5) Switzerland Distribution of Berit products in Switzerland 13.18% n/a Berit GmbH (5) Germany Distribution of Berit products in Germany 13.18% n/a LCS International a.s. (5) Czech Republic Implementation, maintenance as well as development of IT systems for the enterprises sector 13.09% n/a LCS Slovensko (5) Slovakia Distribution of LCS International products in Slovakia 13.09% n/a LCS Deutschland (5) Germany Distribution of LCS International products in Germany 13.09% n/a Asseco Systems SA Poland Maintenance of software and hardware, outsourcing of IT systems 100.00% 100% Koma Nord Sp. z o.o. Poland Supply of hardware, local and wide area network systems, as well as business management support software 100.00% 100%
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 12
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Bezpieczeństwo.pl Sp. z o.o. Poland Construction and implementation of IT systems supporting and coordinating the activities of rescue services 100.00% 100% Bielpolsoft j.v. Belarus No information available 85.00% 85% Gladstone Consulting Limited (6) Cyprus Provision of consulting services within IT systems for financial institutions 51.00% 51% Asseco Romania SA Poland Provision of IT services and capital investments in Romania 93.00% n/a FIBA Software S.r.l. (7) Romania Provision of IT solutions for the banking sector 65.10% n/a Net Consulting S.r.l. (7) Romania Integration services and IT solutions for the financial, industrial, and public administration sectors 65.10% n/a Sawan SA Poland Provision of IT solutions for management (data warehouses, reporting systems, CRM systems) 100.00% 100% Sintagma UAB Sp. z o.o. Lithuania Integration services and information solutions for the financial and public administration sectors. Solutions dedicated to 56.24% n/a management of documents, libraries, and life insurance ZUI Novum Sp. z o.o. Poland Creation of banking applications and provision of comprehensive IT systems for cooperative banks 51.00% 51% Asseco South Eastern Europe SA (8) Poland Provision of IT services and capital investments in the Balkan Republics 93.00% n/a Pexim d.o.o. (9) Serbia The business profile of the Pexim Group includes development of financial applications and provision of comprehensive 55.80% n/a Pexim DOOEL Skopljev (9) Macedonia IT systems for financial institutions 55.80% n/a Pexim Sofia (9) Bulgaria 28.46% n/a Pexim Solution Banja Luka (9) Bosnia & 55.80% n/a Herzegovina DOO Servisni centar za elektronsko Montenegro 36.27% n/a poslovanja E mon (9) Pexim CMS DOO Kragujevac (9) Serbia 50.22% n/a eMS DOO Beograd (9) Serbia 50.22% n/a
Associated companies Prokom Software SA Poland Design and integration of IT systems, provision of comprehensive post implementation IT services, training services 10.96% n/a ABG SPIN SA Poland The business profile of the ABG SPIN Group includes design, development and integration of complex IT systems along 4.70% n/a DRQ Sp. z o.o. Poland with infrastructure mainly for the public administration sector, telecommunication, healthcare, and energy sectors as well 4.70% n/a as for uniformed services DRQ Serwis Sp. z o.o. Poland 4.70% n/a Radcomp SA Poland 4.70% n/a Optix Polska Sp. z o.o. Poland 4.70% n/a Kom Pakt Piw Sp. z o.o. Poland 4.70% n/a IliSI Sp. z o.o. Poland 4.70% n/a KKI BCI Sp. z o.o. Poland 4.60% n/a SK Galcom Sp. z o.o. Poland 4.11% n/a Serum Software Sp. z o.o. Poland 3.01% n/a PIW Postinfo Sp. z o.o. Poland 2.82% n/a Sapen Sp. z o.o. Poland 2.35% n/a CryptoTech Sp. z o.o. Poland 2.40% n/a
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 13 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Ready Sp. z o.o. Poland Business activities within the scope of other Prokom Group companies described in the table 10.96% n/a ZETO Sp. z o.o. Poland Data processing, rental of office space 10.32% n/a Combidata Poland Sp. z o.o. Poland Organization, preparation and conduct of conventional and electronic trainings, production of software for handling of 9.18% n/a trainings, and running a non public post secondary information technology school UAB "Informaciniu projektu sistemos" Lithuania Business activities within the scope of other Prokom Group companies described in the table 5.48% n/a RUM IT SA Poland Business activities within the scope of other Prokom Group companies described in the table 5.48% n/a C2 System Polska SA Poland Business activities within the scope of other Prokom Group companies described in the table 5.48% n/a Postdata SA Poland IT services dedicated mainly to the Polish Post 5.37% n/a TETRA System Polska SA Poland Business activities within the scope of other Prokom Group companies described in the table 3.29% n/a D.Trust Certifikacna Autorita a.s. (5) ( DTCA Czech Republic Provision of comprehensive services of issuance and management of certifications 5.93% n/a a.s.) Prvni Certifikacni Autorita a.s. (5) (I.CA a.s). Czech Republic Provision of comprehensive services of issuance and management of certifications 3.07% n/a Datalock s.r.o. (5) Czech Republic Distribution of Datalock products, no proprietary software 10.63% n/a Tedis (5) Slovakia Services related to the electronic transfer of data 7.23% n/a Crystal Consulting (5) Slovakia Consulting services within information technology, ERP systems, IT system infrastructure, internet and intranet 6.43% n/a Soft Technologies Sp. z o.o. (10) Poland Business activities within the scope of other Group companies described in the table 45.00% 45% (1) As a result of acquisition of the increase in share capital of Asseco Business Solutions SA (entered in the National Court Register on 27 November 2007) by the companies other than the Parent Company, the shareholding of Asseco Poland SA in Asseco Business Solutions SA dropped from 67.47% to 54.27%. (2) Stake of shares held indirectly through Asseco Business Solutions SA. (3) Stake of shares held indirectly through Asseco Germany SA. (4) Direct shareholding in Asseco Czech Republic a.s. As a result of acquiring the increase in share capital of Asseco Czech Republic by Asseco Slovakia on 10 October 2007, the direct shareholding of the Parent Company in Asseco Czech Republic decreased from 60.7% to 42.92%. The Parent Company holds 23.79% in Asseco Czech Republic indirectly through Asseco Slovakia a.s. (5) Stake of shares held indirectly through Asseco Slovakia a.s. or indirectly through Asseco Slovakia a.s. and its subsidiaries. (6) Despite Asseco Poland SA formally owns 51% in share capital of Gladstone, the Company consolidates 100% of this undertaking financial results. (7) Stake of shares held indirectly through Asseco Romania SA. (8) On 11 February 2008 there was registered a change in the company's corporate name, from Asseco Adria SA to Asseco South Eastern Europe SA. (9) Stake of shares held indirectly through Asseco South Eastern Europe SA and its subsidiaries. (10) An undertaking controlled jointly by Asseco Systems SA. In 2005 Asseco Systems SA lost its ability to exert influence over this undertaking.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 14 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
As at 31 December 2007 and 31 December 2006, voting interests the Group was entitled to exercise in its subsidiary companies were proportional to the Group's equity holdings in these undertakings. The Parent Company maintains control over Asseco Slovakia a.s. despite holding less than 50% (i.e. 41.67%) of its common stock. According to the Articles of Association of Asseco Slovakia a.s., three out of the total five members of the Supervisory Board of that company shall be appointed by Asseco Poland SA. As at 31 December 2007 the Group owned shares in the companies of Bielpolsoft j.v. and Soft Technologies, which were excluded from these consolidated financial statements because the Asseco Group has no influence upon them whatsoever. During the year 2007 the following changes in the Group composition were observed: Merger of Softbank SA with Asseco Poland SA (the acquired company) On 4 January 2007, the companies of Softbank SA and Asseco Poland SA merged. Under that merger the Asseco (former Softbank) Group was extended with the following companies: Asseco Poland SA, Asseco Slovakia a.s., Slovanet a.s., Softlab Sp. z o.o., Softlab Trade Sp. z o.o. and Wapro Sp. z o.o. Concurrently with the merger related increase of share capital, the Company increased its share capital by issuing shares which were allocated in exchange for the non cash contribution of 100% equity interest in Asseco Czech Republic a.s. based in Prague, Czech Republic. Acquisition of shares in the newly established Asseco Romania SA On 17 April 2007 the District Court in Rzeszów registered the company Asseco Romania SA seated in Rzeszów. The share capital of the newly established undertaking amounts to PLN 500,000 and is divided into 5,000,000 ordinary shares with a par value of PLN 0.10 each. Asseco Poland SA acquired a stake of 4,650,000 shares in Asseco Romania SA with a par value of PLN 0.10 each, representing 93% of share capital of Asseco Romania SA as well as 93% of total votes at the general meeting of shareholders of that company. For the acquired shares the Company paid the amount of PLN 465 thousand in cash. The remaining shareholders of Asseco Romania SA became the key staff of Asseco Poland SA, inclusive of members of the Company's management. Acquisition of shares in FIBA Software S.r.l. and Net Consulting S.r.l. On 26 April 2007 Asseco Romania SA concluded agreements for acquisition of shares in two Romanian IT companies. For the total amount of EUR 5,849 thousand, Asseco Romania SA purchased 70 shares of FIBa Software S.r.l. representing 70% of share capital of that company. The shares in FIBA Software S.r.l. were acquired from its four shareholders, namely Ansua Consulting Limited, Grigore Remus Dorabantu, Catalin Radu Georgian, and Adriana Gratziela Bailescu. Whereas, for the total amount of EUR 9,782 thousand, Asseco Romania SA purchased 700 shares of Net Consulting S.r.l. representing 70% of share capital of that company. The shares in Net Consulting S.r.l. were purchased from its three shareholders, namely Dragos Serban Stan, Ion C. Coltan, and Alexandru Visan. Acquisition of shares in Datalock a.s. On 8 January 2007 Asseco Slovakia SA signed an agreement for acquisition of 51.04% shares of the company Datalock a.s. The acquired shares represent 51.04% of share capital and the same voting interest at the general meeting of Datalock a.s. The total cost of acquisition of shares depended on the amounts of net profit achieved by Datalock a.s. for the years 2006 and 2007. As part of the acquisition of shares in Datalock a.s. the Asseco Group also took over the Datalock's subsidiary companies (Datalock Tatry s.r.o., Datalock Zilina s.r.o. and Datalock Puchov s.r.o.) Acquisition of shares in ADH Soft Sp. z o.o. On 28 May 2007 there was signed an agreement for acquisition of shares in ADH Soft Sp. z o.o. The Agreement was concluded between Asseco Poland SA and the partner in the company ADH Soft,
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 15
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise a natural person. For the total price of PLN 3,300 thousand, Asseco Poland SA acquired 55 shares in ADH Soft Sp. z o.o. representing 55% of share capital and the same voting interest at the general meeting of that company. Merger of Asseco Business Solutions SA with Softlab Sp. z o.o., Softlab Trade Sp. z o.o., Wapro Sp. z o.o. and Safo Sp. z o.o. The companies of Asseco Business Solutions SA, Softlab, Softlab Trade, Wapro and Safo merged on 1 June 2007. The taking over company was Asseco Business Solutions SA. As a consequence of this merger the Parent Company's interest in share capital of Asseco Business Solutions SA dropped from 100% to 67.47%. Acquisition of shares in the newly founded Asseco Adria SA (at present Asseco South Eastern Europe SA) On 11 July 2007 the District Court in Rzeszów registered the company Asseco Adria SA seated in Rzeszów. Share capital of the newly established undertaking amounts to PLN 500 thousand and is divided into 5,000,000 shares with a par value of PLN 0.10 each. Asseco Poland SA acquired a stake of 4,650,000 shares in Asseco Adria SA representing 93% of share capital of Asseco Adria SA as well as the same percentage of total votes at the general meeting of shareholders of that company. For the acquired shares the Company paid the amount of PLN 465 thousand in cash. Acquisition of shares in the newly founded Asseco Germany SA On 6 September 2007 the District Court in Rzeszów registered the company Asseco Germany SA seated in Rzeszów. Share capital of the newly established undertaking amounts to PLN 500 thousand and is divided into 5,000,000 shares with a par value of PLN 0.10 each. Asseco Poland SA acquired a stake of 4,650,000 shares representing 93% of share capital of Asseco Germany SA as well as the same percentage of total votes at the general meeting of shareholders of that company. For the acquired shares Asseco Poland SA paid the amount of PLN 465 thousand in cash. Acquisition of shares in AP Automation + Productivity AG On 10 September 2007 Asseco Germany SA signed an agreement for acquisition of the IT company, namely AP Automation + Productivity AG with the seat in Karlsruhe, Germany. Asseco Germany SA purchased 490,799 shares of AP Automation + Productivity AG, constituting an 80% shareholding in the share capital of that company. The total transaction value amounted to EUR 10 million for the acquired 80% stake of shares plus an additional amount of EUR 1.5 million due to taking over the company's liability to pay back a loan to its former shareholders. By taking over AP Automation + Productivity AG, the Asseco Group was also extended with its subsidiary AP Automation + Productivity GmbH based in Austria, in which AP Automation + Productivity AG holds 75% of shares. Acquisition of shares in Sintagma UAB Sp. z o.o. On 14 September 2007, Asseco Poland SA signed with 7 partners in the company Sintagma UAB Sp. z o.o. based in Vilnius, Lithuania, an agreement for acquisition of 56.24% of shares in that company, entitling to the proportional voting interest at the General Meeting. The acquisition price consists of the fixed amount of LTL 11,340,515 and a variable price component depending on net profit and operating profit achieved by Sintagma UAB for the financial year 2007. Acquisition of shares in Berit a.s. On 19 June 2007, Asseco Slovakia signed an agreement for acquisition of 55.43% shares of the company Berit a.s. The acquired shares represent 55.43% of share capital and the same voting interest at the general meeting of shareholders of Berit a.s. Under the agreement, Asseco Slovakia a.s. acquired 485 shares with a par value of CZK 100 thousand each. The total cost of this acquisition will depend upon the amounts of consolidated net profit achieved by BERIT a.s. for the fiscal years 2006/2007 and 2007/2008. By taking over Berit a.s. the Asseco Group was also extended with its subsidiaries, namely Berit Services s.r.o., Berit AG and Berit GmbH.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 16 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of shares in LCS International a.s. On 4 May 2007, Asseco Slovakia a.s. signed an agreement for acquisition of 55.03% shares in the company LCS International a.s. The acquired shares represent 55.03% of share capital and the same voting interest at the general meeting of shareholders of LCS International a.s. Under the agreement, Asseco Slovakia a.s. acquired 117,000 shares with a par value of CZK 50 each. By taking over LCS International a.s. the Asseco Group was also extended with its subsidiaries, namely LCS Slovensco s.r.o. and LCS Deutschland. Sale of shares in Berit a.s. and LCS International a.s. by Asseco Slovakia a.s. to Asseco Czech Republic a.s. On 22 October 2007 Asseco Slovakia a.s. signed an agreement for sale of 485 shares in Berit a.s. with a par value of CZK 100,000 each, representing 55.43% of share capital of that company. The total value of sale of 485 shares in BERIT a.s. exceeded SKK 96 million. Furthermore, on 22 October 2007 Asseco Slovakia a.s. signed an agreement for sale of 117,000 shares in LCS International a.s. with a par value of CZK 50 each, representing 55.03% of share capital of that company. The total value of sale of 117,000 shares in LCS International exceeded SKK 145 million. The shares of Berit a.s. and LCS International a.s. were acquired by Asseco Czech Republic a.s. Acquisition of shares in MPI Slovakia s.r.o. On 6 July 2007, Asseco Slovakia a.s. concluded an agreement for acquisition of a 51% stake of shares in MPI Slovakia s.r.o seated in Bratislava. The agreement was concluded between Asseco Slovakia, a.s. and two natural persons being the partners in MPI Slovakia, s.r.o.: 25.5% of shares were purchased from Mr. Ing. Juraj Zelenay, and another 25.5% of shares were purchased from Mr. Juraj Bocz. The acquired shares represent 51% of share capital and the same voting interest at the general meeting of partners of that company. Acquisition of shares in Anica System SA and their subsequent sale to Asseco Business Solutions SA On 4 October 2007 Asseco Poland SA concluded agreements with the shareholders of Anica System SA with the objective to acquire further shares in that company. Asseco Poland SA purchased 135,000 ordinary bearer shares from the company NiezaleŜni Eksperci Majątkowi SA (Independent Property Experts SA) seated in Warsaw, and 1,205,515 shares, including 327,240 registered shares, from four natural persons. The shares acquired on 4 October 2007 represented ca. 26.7% of the share capital of Anica System SA, whereas together with the shares purchased on 28 September 2007 from Pekao Capital Fund Ltd. seated in Warsaw, they represented ca. 60.6% of the share capital of Anica System SA. The total cost of acquisition of all 2,732,415 shares which constituted a 60.56% share capital interest and a 31.24% voting interest in Anica System SA amounted to PLN 54,779,456. On 30 November 2007 Asseco Poland SA received from Anica System SA a decision taken by the District Court in Lublin, on registration of changes to the Anica System's articles of association with the subject to cancel the voting privileges on shares of Anica System. In effect Asseco Poland SA held 60.56% of the share capital and the same percentage of total votes at the General Meeting of Shareholders of Anica System SA. On 30 September 2007 Asseco Poland SA signed an agreement for sale of its entire shareholding in Anica System SA to Asseco Business Solutions SA for the total price of PLN 56,064,022. Sale of shares in Asseco Czech Republic a.s. by Asseco Poland SA and acquisition of the increase in share capital of Asseco Czech Republic a.s. by Asseco Slovakia a.s. On 24 April 2007 Asseco Poland signed an agreement for sale of 329 registered shares of Asseco Czech Republic a.s. seated in Prague to Asseco Slovakia. The sold shares represent 25.06% of share capital of Asseco Czech Republic, a.s. The sale price of 329 shares of Asseco Czech Republic a.s. amounted to PLN 21,412,987.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 17 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
On 7 September 2007, Asseco Poland SA signed with Asseco Slovakia a.s. an agreement for sale of 187 registered shares of Asseco Czech Republic, a.s. seated in Prague, with a par value of CZK 100 thousand each. The sold shares represent 14.24% of share capital of Asseco Czech Republic, a.s. The sale price of 187 shares of Asseco Czech Republic a.s. amounted to PLN 12,170,908. In order to come into effect the agreement needed to be approved by the Antimonopoly Office of Slovakia, and Asseco Slovakia received such approval on 5 October 2007. After selling 187 shares in Asseco Czech Republic by Asseco Poland SA, its interest in the share capital of Asseco Czech Republic dropped from 74.06% to 60.70%. On 14 September 2007 the Municipal Court in Prague entered in the Commercial Register the resolution of the Extraordinary General Meeting of Shareholders of 6 September 2007 on increasing the share capital of Asseco Czech Republic by the amount of CZK 54,400,000, this is from CZK 131,300,000 to CZK 185,700,000 through issuance of 544 registered shares with a par value of CZK 100,000 each. On 8 October 2007, Asseco Slovakia a.s. and Asseco Poland SA signed an agreement, whereby Asseco Poland SA agreed to acquisition of shares of the increased share capital of Asseco Czech Republic a.s. by Asseco Slovakia a.s. As Asseco Slovakia a.s. acquired a new issuance of shares of Asseco Czech Republic a.s., the direct shareholding of Asseco Poland SA in Asseco Czech Republic a.s. decreased from 60.7% to 42.92%. Therefore the Asseco Poland Group lost its direct control over Asseco Czech Republic a.s. in favour of Asseco Slovakia a.s. Acquisition of shares in Disig a.s. On 26 October 2007 Asseco Slovakia a.s. signed with FOMAX a.s. seated in Bratislava, an agreement for acquisition of 102 shares in Disig a.s. with a par value of SKK 10,000 each, representing 51% of share capital of that company. The total cost of acquisition was PLN 927 thousand (equivalent of SKK 8,508 thousand) and it depended on the amount of net profit achieved by Disig a.s. in 2007. Acquisition of shares in Kryha spol s.r.o. Following conclusion of an agreement for transfer of shares, on 4 December 2007 Slovanet a.s. acquired a 51% stake of shares in the company Kryha spol. s r.o. The acquisition price amounted to SKK 8,785 thousand. Disposal of shares in NetPower SA On 24 October 2007 Asseco Poland SA signed with Investment Consulting & Management – Poland Sp. z o.o. as the buyer, an agreement for sale of 940,000 shares in NetPower SA, representing 100% of share capital of that company. The sale price amounted to PLN 114,025. Acquisition of shares in Pexim d.o.o. On 18 December 2007 Asseco Adria SA concluded an agreement for acquisition of a 60% stake of shares in Pexim d.o.o. with the seat in Belgrade. The sellers were one natural person and the company I4 INVENTION d.o.o. based in Belgrade. The remaining 40% of shares are owned by the founders of Pexim d.o.o. The total value of transaction amounted to EUR 18,000,000. The above mentioned purchase of shares was financed with the funds raised from the issuance of bonds conducted Asseco Adria SA. As a result of taking over Pexim d.o.o. the Asseco Group was also extended with its subsidiaries, namely Pexim DOOEL Skopje, Pexim Sofia, Pexim Solution Banja Luka, DOO Servisni centar za elektronsko poslovanja E mon, Pexim CMS DOO Kragujewac, and eMS DOO Belgrade. The diagram below presents the structure of the Asseco Group, inclusive of the Prokom Software Group, as at 31 December 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 18 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The numbers provided in the diagram correspond to the equity interest / voting interest as at 31 December 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 19
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Composition of the Management Board and Supervisory Board of the Parent Company During the period reported and till the date of approval of these consolidated financial statements, the Company's Management Board was composed of the following persons: First name and surname Position Adam Góral (1) President of the Management Board Krzysztof Korba (2) President of the Management Board Przemysław Borzestowski Vice President of the Management Board (4) Piotr Jeleński Vice President of the Management Board (4) Marek Panek (3) Vice President of the Management Board (4) Zbigniew Pomianek (3) Vice President of the Management Board (4) Adam Rusinek (3) Vice President of the Management Board (4) Przemysław Sęczkowski Vice President of the Management Board (4) Robert Smułkowski Vice President of the Management Board (4) Tadeusz Dyrga (5) Vice President of the Management Board Krzysztof Kardaś (5) Vice President of the Management Board Włodzimierz Serwiński (5) Vice President of the Management Board (1) appointed as President of the Management Board on 4 January 2007 (2) dismissed from the position of President of the Management Board on 4 January 2007 (3) appointed as Member of the Management Board on 4 January 2007 (4) since 19 June 2007 the function of Member of the Management Board was substituted by Vice President of the Management Board (5) appointed as Vice President of the Management Board on 1 January 2008 During the period reported and till the date of approval of these consolidated financial statements, the Company's Supervisory Board was composed of the following persons: First name and surname Position Jacek Duch (1) Chairman of the Supervisory Board Ryszard Krauze (2) Chairman of the Supervisory Board Grzegorz Maciąg (3) Member of the Supervisory Board Dariusz Górka (4) Member of the Supervisory Board Adam Noga (5) Member of the Supervisory Board Marek Jakubik (6) Member of the Supervisory Board Maria Zagrajek (6) Member of the Supervisory Board Stanisław Janiszewski (7) Member of the Supervisory Board Piotr Mondalski (8) Member of the Supervisory Board Jarosław Adamski (9) Member of the Supervisory Board Bo Denysyk (10) Member of the Supervisory Board Andrzej Szukalski (10) Member of the Supervisory Board (1) appointed as Member of the Supervisory Board on 4 January 2007, and subsequently as Chairman of the Supervisory Board on 9 October 2007 (2) dismissed from the position of Chairman of the Supervisory Board on 1 October 2007 (3) appointed as Member of the Supervisory Board on 4 January 2007. On 19 February 2008 the Company received a resignation letter from Grzegorz Maciąg resigning as Member of the Supervisory Board of Asseco Poland SA with effect from 1 April 2008. (4) appointed as Member of the Supervisory Board on 4 January 2007. On 20 February 2008 the Extraordinary General Meeting of Shareholders dismissed Dariusz Górka from the position of Member of the Supervisory Board. This resolution shall come into effect on 1 April 2008. (5) appointed as Member of the Supervisory Board on 4 January 2007 (6) dismissed from the position of Member of the Supervisory Board on 4 January 2007 (7) dismissed from the position of Member of the Supervisory Board on 20 February 2008 (8) dismissed from the position of Member of the Supervisory Board on 20 February 2008 (9) appointed as Member of the Supervisory Board on 1 October 2007 (10) appointed as Member of the Supervisory Board on 20 February 2008
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 20
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Major Shareholders and Changes in the Ownership of Significant Stakes of Shares According to the best knowledge of the Management Board of Asseco Poland SA, the shareholders who as at 31 December 2007, either directly or through their subsidiary companies, held at least a 5% voting interest at the Company's General Meeting of Shareholders were as follows:
Number of shares % of share capital owned Name of shareholder and votes at GMS and voting interest at GMS Prokom Software 11,611,450 22.73% Adam Góral 8,083,000 15.82% ING TFI SA 4,105,000 8.03% Pioneer TFI 3,004 156 5.88% ING NN OFE 2,381,911 4.66% Other shareholders 21,904,867 42.88% 51,090,384 100.00%
As at 31 December 2007, the share capital of Asseco Poland SA amounted to PLN 51,090,384 and it was divided into 51,090,384 ordinary shares with a par value of PLN 1 each, which entitled to 51,090,384 votes at the General Meeting of Shareholders of Asseco Poland SA. According to the best knowledge of the Company's Management Board, the shareholders who as at 31 December 2006, either directly or through their subsidiary companies, held at least a 5% voting interest at the Company's General Meeting of Shareholders were as follows:
Number of shares % of share capital owned Name of shareholder and votes at GMS and voting interest at GMS Prokom Software SA 8,624,791 34.26% ING TFI SA 1,570,000 6.24% Pioneer Pekao Investment Management SA 1,324,711 5.26% Other shareholders 13,655,211 54.24% 25,174,713 100.00%
Changes in the numbers of Asseco Poland SA shares held by the Company's management and supervisory staff Number of shares Supervisory Board Members as at as at as at 22 April 2008 31 December 2007 31 December 2006 Ryszard Krauze n/a n/a 0 Jacek Duch 0 0 n/a Dariusz Górka n/a 0 n/a Marek Jakubik n/a 0 0 Stanisław Janiszewski n/a 1,600 1,600 Grzegorz Maciąg n/a 0 n/a Piotr Mondalski n/a 0 0 Adam Noga 0 0 0 Maria Zagrajek n/a 0 0 Jarosław Adamski 0 0 n/a Bo Denysyk 0 n/a n/a Andrzej Szukalski 0 n/a n/a
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 21 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Number of shares Management Board Members as at as at as at 22 April 2008 31 December 2007 31 December 2006 Adam Góral 8,030,000 8,083,000 n/a Tadeusz Dyrga 21,525 n/a n/a Krzysztof Korba n/a 0 0 Przemysław Borzestowski 0 0 0 Piotr Jeleński 0 0 0 Marek Panek 0 0 n/a Zbigniew Pomianek 0 0 n/a Adam Rusinek 0 0 n/a Przemysław Sęczkowski 0 0 0 Robert Smułkowski 2,212 1,955 1,500
Merger of Softbank SA with Asseco Poland SA On 4 January 2007 the District Court of the Capital City of Warsaw, XIII Commercial Department of the National Court Register entered in the register of entrepreneurs the Company's (former Softbank SA) merger with Asseco Poland SA (the acquired company), seated in Rzeszów, entered in the register of entrepreneurs of the National Court Register under the number KRS 00000104838. The Merger was executed pursuant to article 492 § 1 item 1 of the Polish Commercial Companies Code, this is by transferring all the assets of Asseco Poland SA (the acquired company) to the Company in exchange for the Company's shares, which were assigned to the then existing shareholders of Asseco Poland SA (merger by acquisition). The Company's shares were assigned to shareholders of Asseco Poland SA (the acquired company) proportionally to the number of shares owned in the acquired company, applying the exchange parity of 5.9 shares for 1 share of Asseco Poland SA (the acquired company). In connection with the registration of merger, the Company's share capital was increased by the amount of PLN 17,736 thousand, through issuance of 17,735,815 ordinary bearer shares of series C, with a par value of PLN 1 each, which were assigned to the then existing shareholders of the acquired company. The merger process was initiated in May 2006, when the Management Boards of both the companies signed the agreement concerning the merger and determined preliminary conditions of such transaction. Subsequently to that agreement, on 14 August 2006 the Company's Management Board obtained consent of the Office of Competition and Consumers Protection to merge the companies. On 31 August 2006, the Management Boards of both the companies signed the merger plan, in which the final merger conditions were determined and which was opinioned without reservations by independent certified auditors on 6 October 2006. Afterwards, on 24 October 2006, the Company concluded with Mr. Adam Góral the agreement for conditional termination of the option agreement for purchase of the Asseco Poland SA (the acquired company) shares, by which the Company was bound. The agreement concerned 268,000 shares in the acquired company that were owned by Mr. Adam Góral. The condition precedent for termination of the above mentioned agreement was the registration of the companies' merger. On 14 November 2006, the Company's Extraordinary General Meeting of Shareholders passed resolutions on the merger, on acceptance of non cash contributions, on conditional changes to the composition of the Management Board and Supervisory Board, as well as on conditional increase of the Company's share capital. The companies' merger was registered in the National Court Register on 4 January 2007. Asseco Poland SA (the acquired company) conducted business activities including development of software and provision of IT services for the banking sector and miscellaneous companies. The shares of Asseco Poland SA (the acquired company) were listed on the Warsaw Stock Exchange until 2 January 2007. Afterwards, since 3 January 2007, the quotations of the acquired company shares were suspended. The Company underwent a number of changes related to the merger, of which the most important were: Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 22 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
• Change of the Company's name from Softbank SA to Asseco Poland SA, • Moving the Company's headquarters from Warsaw, ul.17 Stycznia 72a, to Rzeszów, Al. Armii Krajowej 80, • Changes to the composition of the Management Board: o Mr. Krzysztof Korba was replaced by Mr. Adam Góral at the position of President of the Management Board, o the composition of the Management Board was supplemented with the following persons, in the capacity of members of the Management Board: Mr. Marek Panek, Mr. Zbigniew Pomianek, Mr. Adam Rusinek. • Changes to the composition of the Supervisory Board: o the following persons were dismissed as members of the Supervisory Board: Mrs. Maria Zagrajek, Mr. Marek Jakubik. o the following persons were appointed as members of the Supervisory Board: Mr. Jacek Duch, Mr. Dariusz Górka, Mr. Grzegorz Maciąg, Mr. Adam Noga. • Changes to the Company's Articles of Association, as presented in the current report no. 3/2007 of 4 January 2007. Take over of Asseco Czech Republic a.s. (former PVT a.s.) and the Building Automation Department from Prokom Software SA Concurrently with the merger related increase of share capital, the Company increased its share capital by issuing Series B shares allocated in exchange for the non cash contributions including 100% equity interest in Asseco Czech Republic a.s. (former PVT a.s.) based in Prague, Czech Republic, as well as an organized part of the Prokom Software SA enterprise operating as the Building Automation Department. In order to acquire the above mentioned non cash contributions, the Company issued 3,210,000 shares which were acquired entirely by Prokom Software SA (the parent company of Asseco Poland SA (former Softbank SA) as at the merger date). The issue price of 1 share equalled PLN 37.70, and total issuance value amounted to PLN 121,017 thousand. The 100% equity interest in Asseco Czech Republic a.s. was paid up with 2,140,000 shares, representing PLN 80,678 thousand in terms of the issuance value. For contribution of the organized part of the Prokom Software SA enterprise, namely the Building Automation Department (DAB), the Company assigned 1,070,000 shares, representing PLN 40,339 thousand of the issuance value. According to the Group's development strategy, in February 2007 the Building Automation Department was shifted within the Group structure – from Asseco Poland SA to Asseco Systems SA (former Softbank Serwis Sp. z o.o.) in order to supplement the business offer of the later. Subscription warrants Furthermore, concurrently with the merger, on 4 January 2007, there was also registered a conditional increase of the Company's share capital, excluding pre emptive rights of the existing shareholders, by the amount of PLN 295 thousand through issuance of 295,000 ordinary bearer shares of series D, with a par value of PLN 1 each and the issue price of PLN 29.51. The objective of such conditional increase of share capital was to vest the right to acquire the Company's (former Softbank SA) series D shares in the holders of registered subscription warrants of Asseco Poland SA (the acquired company), which were be issued by the Company. Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 23 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
To the best of Management Board knowledge, at the moment of merger the Company's major shareholders were as follows: Shareholders of Asseco Poland SA (former Softbank SA) Number of shares % of share capital owned as at 4 January 2007 and votes at GMS and voting interest at GMS Prokom Software SA 11,834,791 25.66% Adam Góral 8,083,000 17.53% ING TFI SA (investment funds) 4,154,579 9.00% Other shareholders 22,048,158 47.81% 46,120,528 100% Merger of Asseco Poland SA with Prokom Software SA On 1 April 2008 the District Court in Rzeszów, XII Commercial Department of the National Court Register, made an entry in the register of entrepreneurs of the Company's merger with Prokom Software SA seated in Warsaw, entered in the register of entrepreneurs of the National Court Register under the number KRS 0000041559. The Merger was executed pursuant to article 492 § 1 item 1 of the Polish Commercial Companies Code, this is by transferring all the assets of Prokom Software SA to the Company in exchange for the Company's shares which were assigned to the existing shareholders of Prokom Software SA. The shares of Asseco Poland SA were assigned to Prokom shareholders proportionally to the numbers of shares owned in the acquired company, applying the exchange parity of 1.82 shares for 1 share of Prokom Software SA. In connection with the registration of merger, the Company's share capital was increased by the amount of PLN 19,848 thousand, through issuance of 19,847,748 ordinary bearer shares of series E, with a par value of PLN 1 each, which were assigned to the then existing shareholders of the acquired company. The merger process has been already initiated in September 2007, when Asseco Poland SA concluded with Prokom Software SA a memorandum of understanding on the merger in which the preliminary terms of transaction were determined. Additionally, as Mr. Ryszard Krauze and Prokom Investments SA accepted the Asseco's offer made on 11 September 2007 for acquisition of all their shareholdings in Prokom Software SA and in order to enable execution of the memorandum of understanding, Asseco Poland SA concluded with Prokom Investments SA and Mr. Ryszard Krauze a conditional agreement for acquisition of 2,985,474 shares of Prokom, with a par value of PLN 1 each, for the total amount of PLN 580 million. The acquired shares constituted all the Prokom shares held by Mr. Ryszard Krauze and Prokom Investments SA and they represented 21.49% of the share capital of Prokom Software SA and entitled to 23.69% of total votes at the Prokom's General Meeting of Shareholders. Under the above mentioned conditional shares acquisition agreement, Asseco Poland SA purchased the shares of Prokom Software SA from Mr. Ryszard Krauze and Prokom Investments SA in the following portions: on 11 October 2007 – 120,120 registered shares of Prokom Software SA preferred as to voting rights (5 votes per share) and 860,000 ordinary bearer shares of Prokom Software SA, in total representing 7.1% of the share capital of Prokom Software SA and entitling to 1,460,600 votes or 9.98% voting interest at the general meeting of shareholders of that company; on 11 December 2007 – 543,000 ordinary bearer shares of Prokom Software SA which, in aggregate with Prokom shares already held by Asseco Poland SA, represented 10.96% of the share capital of Prokom Software SA and entitled to 2,003,600 votes or 13.69% voting interest at the general meeting of shareholders of that company; on 11 February 2008 – 1,462,352 ordinary bearer shares of Prokom Software SA which, in aggregate with Prokom shares already held by Asseco Poland SA, represented 21.49% of the share capital of Prokom Software SA and entitled to 3,465,952 votes or 23.69% voting interest at the general meeting of shareholders of that company;
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 24 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
on 19 February 2008 – 2 ordinary bearer shares of Prokom Software SA. That purchase completed the execution of the conditional shares acquisition agreement. As Mr. Ryszard Krauze and Prokom Investments SA sold all their shares in Prokom Software SA, they ceased to be shareholders in Prokom Software SA and thus lost their personal entitlements, as conferred to each of them by the Articles of Association of Prokom Software SA, to appoint one member of the Supervisory Board of Prokom Software SA. Following the above mentioned acquisition, as at the merger date Asseco Poland SA held 120,120 registered shares of Prokom Software SA preferred as to voting rights (5 votes per share) and 2,865,354 ordinary bearer shares of Prokom Software SA, in total representing 21.49% of the share capital of Prokom Software SA and entitling to 3,465,954 votes or 23.69% voting interest at the general meeting of shareholders of that company. On 29 November 2007 the companies Asseco Poland SA and Prokom Software SA signed the plan of their merger, in which the final merger conditions were determined and which was opinioned without reservations by an independent certified auditor on 20 December 2007. Concurrently with signing the merger plan, on 29 November 2007 Asseco Poland SA concluded with Prokom Software SA a memorandum of understanding concerning execution of the arrangement agreement entered into on 29 November 2007 between Prokom Software SA, Nihonswi AG of Switzerland, and Mr. Krzysztof Wilski. According to the merger plan, the preferred shares owned by Nihonswi AG and Mr. Krzysztof Wilski were supposed to be exchanged for shares of Asseco Poland SA issued under the merger process, applying the determined exchange ratio. Asseco Poland SA passed a resolution on issuance of 353,152 subscription warrants in favour of Nihonswi AG as well as 3,363 subscription warrants in favour of Mr. Krzysztof Wilski. Each subscription warrant carries the right to acquire 1 (one) ordinary share of Asseco Poland SA with priority over the remaining shareholders of Asseco Poland SA. The issue price per share of the additional issuance is PLN 83.67. On 17 April 2008 the Company submitted an application to the National Depository for Securities for registration of 356,515 ordinary bearer shares of series G with a par value of PLN 1 each, allocated from the conditional share capital to the holders of subscription warrants. The increase of share capital resulting for the exchange of subscription warrants to shares was registered in 18 April 2008. Following that registration the Parent Company's share capital amounts to PLN 71,292,980. The Company's intention is that the first quotation of series G shares takes place on 28 April 2008. On 22 January 2008 the Company's Management Board obtained consent of the Office of Competition and Consumers Protection to merge the companies. On 20 February 2008 the Extraordinary General Meeting of Shareholders of Asseco Poland SA passed the resolutions, among others, on the merger, on conditional increase of the Company's share capital as well as on amendment to the Company's Articles of Association. The companies' merger was registered in the National Court Register on 1 April 2008. The quotation of Prokom Software SA shares on the Warsaw Stock Exchange were suspended on 31 March 2008. Furthermore, on 11 April 2008 shares of Prokom Software SA were excluded from public trading. The merger shares of series F were for the first time quoted on 11 April 2008. In connection with the Company's merger with Prokom Software SA, Asseco Poland SA acquired 11,611,450 own shares representing 22.727% of the Company's shares capital.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 25 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
II. ACCOUNTING PRINCIPLES APPLIED WHEN PREPARING THE CONSOLIDATED FINANCIAL STATEMENTS
Basis for Preparation of Consolidated Financial Statements The consolidated financial statements were prepared in accordance with the historical cost principle, except for derivative financial instruments and financial assets available for sale that were disclosed at their fair value. The currency of the consolidated financial statements is zloty (PLN), and all the figures are presented in thousands of zlotys (PLN ’000), unless stated otherwise. These consolidated financial statements were prepared on the going concern basis. These consolidated financial statements were prepared on a going concern basis, assuming the Company and its subsidiaries will continue their business activities in the foreseeable future. Till the date of approving these financial statements, there have been observed no circumstances indicating a threat to continuing business activities by the Group. Compliance Statement These consolidated financial statements were prepared in compliance with the International Financial Reporting Standards ("IFRS") adopted by the European Union ("EU"). IFRS include standards and interpretations accepted by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC"). The Group has for the first time applied the International Financial Reporting Standards (IFRS) in preparing its financial statements for the fiscal years started after 1 January 2006. As at the date of approving publication of these financial statements, given the ongoing process of implementing the IFRS standards in the EU as well as the Group's operations, in the scope of accounting principles applied by the Group there is no difference between the IFRS that came into force and the IFRS approved by the European Union. Some of the Group's companies maintain their accounting books in accordance with the accounting policy (principles) set forth in their respective local regulations. The condensed consolidated financial statements include adjustments not disclosed in the accounting books of the Group's companies, which were introduced to adjust the financial statements of those companies to the IFRS. Estimates Preparing consolidated financial statements in accordance with IFRS requires making estimates and assumptions which impact the data disclosed in such financial statements. Despite the estimates and assumptions have been adopted based on the Group's management best knowledge on the current activities and occurrences, the actual results may differ from those anticipated. Below are presented the main areas, which in the process of applying the accounting principles (policy) were subject to accounting estimates and the management's professional judgement, and whose estimates, if changed, could significantly affect the Group's future results. Operating cash flows assumed for valuation of IT contracts as well as measurement of their progress The Group executes a number of contracts for construction and implementation of information technology systems. Additionally, some of those contracts are denominated in foreign currencies. Valuation of IT contracts requires that future operating cash flows are determined in order to arrive at the fair value of sales revenues and costs and to provide the fair value of the embedded currency derivatives, as well as it requires measurement of the progress of contract execution. The progress of contract execution shall be measured as a relation of costs already incurred (provided such costs contribute to the progress of work) to the total costs planned, or as a portion of man days worked out of the total work effort required.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 26
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The assumed operating cash flows are not always consistent with the agreements with customers or suppliers due to modifications of the implementation schedules of IT projects involved. As at 31 December 2006, receivables from the valuation of IT contracts amounted to PLN 20,319 thousand, while liabilities due to such valuation equalled PLN 63,333 thousand. As at 31 December 2007, the results of valuation of embedded financial derivatives were disclosed under financial liabilities and financial assets, which amounted to PLN 129,586 thousand and PLN 1, 513 thousand, respectively. In the case of the contracts denominated in foreign currencies deemed to be functional currencies, embedded financial derivatives are not separately disclosed. Revenues and expenses relating to such contracts are determined on the basis of spot exchange rates. Rates of depreciation and amortization The level of depreciation and amortization rates is determined on the basis of anticipated period of useful economic life of the components of tangible and intangible assets. The Group verifies the adopted periods of useful life on an annual basis, taking into account the current estimates. Deferred income tax assets (net of deferred income tax reserve) In 2007, the Group did not recognise the entire balance of deferred income tax assets (net of deferred income tax reserve). This resulted from the verification of estimates of the planned taxable income to be achieved in the future. Based on the current financial budget and the provisions of the Law on corporate income tax, the Group's management believes that future realization of deferred tax assets recognized in the amount of PLN 36,899 thousand is very likely. Goodwill – impairment test At the end of 2007, the Management Board of the Parent Company performed an impairment test on goodwill that resulted from acquisition of subsidiary companies. This task required making estimates of the value in use of cash generating units, which include goodwill. The value in use is estimated by determination of the future cash flows expected to be generated from the cash generating unit and selection of a discount rate to be used in order to calculate the net present value of those cash flows. At the balance sheet date, goodwill resulted from acquisition of subsidiary companies amounted to PLN 557,313 thousand. Liabilities to pay for the remaining stakes of shares in Gladstone Consulting Ltd., UAB Sintagma Sp. z o.o., Pexim d.o.o., AP Automation + Productivity AG, Net Consulting S.r.l. and FIBA S.r.l. Both as at 31 December 2007 and 31 December 2006, the Group recognized liabilities by virtue of future payments to the minority shareholders in the companies Gladstone Consulting Ltd., UAB Sintagma Sp. z o.o., Pexim d.o.o., AP Automation + Productivity AG, Net Consulting S.r.l. and FIBA S.r.l. Determination of the amounts payable under these liabilities required an estimate of the companies' financial results and applying a discount rate on such liabilities. As at 31 December 2007, such liabilities equalled PLN 202,111 thousand, while as at 31 December 2006 they were PLN 22,949 thousand. Professional judgement The Group concluded a number of contracts for leasing of transportation vehicles which, depending upon the contractual terms, are classified either as operating lease agreements and finance lease agreements. In case of operating lease, the lessor retains all the material risks and benefits incidental to ownership of the leased assets; whereas, in case of finance lease a substantial portion of risks and benefits resulting from ownership of those assets are transferred to leaseholder. The embedded derivatives, which are strictly related to the principal agreements, are accounted for separately as other derivatives, not classified as securing instruments. Profits/losses resulting from changes in fair value of financial derivatives are included in the profit and loss account for the period in which they occur.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 27 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
In case of some types of transactions, embedded derivatives are not detached from the principal agreement and are not accounted for separately, especially if those transactions are carried out in the currency deemed as applied customarily in such type of transactions in the given economic environment. Such, commonly Euro denominated agreements, include contracts for rent of property and, starting from 1 January 2005, also contracts for IT services due to the increasing popularity and scale of dealing in Euro. The principles of determining the impact exerted on subsidiary, jointly controlled and associated companies were presented in further section of the accounting principles used for preparation of the consolidated financial statements. Changes in accounting principles applied In the year 2007 there were no changes to the accounting principles applied by the Group. In 2007 the Group decided to change the method for presentation of its sales revenues and operating costs. Until the end of 2006, sales revenues were classified as sales of products or merchandise. From the beginning of 2007, sales revenues are no longer categorized this way. Likewise cost of sales is not divided into cost of products and services sold and value of merchandise sold. Such modification resulted from the changing the Company's business profile into an enterprise providing comprehensive information technology solutions based on proprietary products. This modification resulted in changing the comparable data for the year 2006 as presented in Notes 1 and 2. The above described change did not affect the amounts of profits at particular levels of the profit and loss account. During the year 2007 the following new standards, interpretation and amendments to the existing standards came into force: IAS 1 Presentation of Financial Statements – Capital Disclosures The Group has applied the amended regulations of IAS 1. New disclosures are presented in Note 32 Equity management. IFRS 7 Financial Instruments: Recognition and Measurement The Group has applied IFRS 7. The most essential changes are presented in Note 32 Objectives and principles of financial risk management IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies Application of this interpretation has no effect upon the Group's financial statements. IFRIC 8 Scope of IFRS 2 Application of this interpretation has no effect upon the Group's financial statements. IFRIC 9 Reassessment of Embedded Derivatives The Group has applied the regulations of IFRIC 9. The Interpretation requires an entity, when it first becomes a party to a contract, to assess whether there are any embedded derivatives contained in the contract. Reassessment should be possible only when there are changes in the terms of the contract that significantly modify the cash flows under the contract. Application of this interpretation did not result in any significant changes concerning the recognition of embedded derivatives held by the Group. IFRIC 10 Interim Financial Reporting and Impairment The Group has applied the interpretation IFRIC 10. The interpretation prohibits the reversal of impairment losses recognized in a previous interim period in respect of goodwill or investments in equity instruments classified as available for sale. Application of this interpretation did not result in changes to these financial statements.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 28 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Application of all the above mentioned amendments to the accounting standards affected neither the Group's operating profit nor its financial position. New standards and interpretations published but not in force yet The following standards and interpretations were issued by the International Accounting Standards Council and International Financial Reporting Interpretations Committee, but have not come into force: IFRS 8 Operating Segments effective for annual periods beginning on or after 1 January 2009 not adopted by the EU till the date of approval of these financial statements; IAS 1 Presentation of Financial Statements (revised in September 2007) effective for annual periods beginning on or after 1 January 2009 not adopted by the EU till the date of approval of these financial statements; IAS 23 Borrowing Costs (revised in March 2007) effective for annual periods beginning on or after 1 January 2009 not adopted by the EU till the date of approval of these financial statements; Interpretation IFRIC 11 Share based Payment within a Group and Treasury Share Transactions effective for annual periods beginning on or after 1 March 2007; Interpretation IFRIC 12 Service Concession Arrangements effective for annual periods beginning on or after 1 January 2008 not adopted by the EU till the date of approval of these financial statements; Interpretation IFRIC 13 Customer Loyalty Programmes effective for annual periods beginning on or after 1 July 2008 not adopted by the EU till the date of approval of these financial statements; Interpretation IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction effective for annual periods beginning on or after 1 January 2008 not adopted by the EU till the date of approval of these financial statements; IFRS 3 Business Combinations (revised in January 2008) effective for annual periods beginning on or after 1 July 2009 not adopted by the EU till the date of approval of these financial statements; IAS 27 Consolidated and separate financial statements (revised in January 2008) effective for annual periods beginning on or after 1 July 2009 not adopted by the EU till the date of approval of these financial statements; IFRS 2 Share based Payment: Vesting Conditions and Cancellations (revised in January 2008) effective for annual periods beginning on or after 1 January 2009 not adopted by the EU till the date of approval of these financial statements; Amendment of IAS 32 and IAS 1 Financial Instruments Puttable at Fair Value (revised in February 2008) effective for annual periods beginning on or after 1 January 2009 not adopted by the EU till the date of approval of these financial statements. The Management Board of Asseco Poland SA conducts an analysis of if and how the introduction of the above mentioned standards and interpretations affected the accounting principles (policy) applied by the Group. Corrections of material errors None.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 29 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Changes of estimates None. Consolidation rules These consolidated financial statements include the financial statements of the Parent Company – Asseco Poland SA as well as financial statements of its subsidiary companies in each case prepared for the year ended on 31 December 2007. Annual financial statements of subsidiary companies are prepared for the same reporting period as adopted by the Parent Company, with the use of coherent accounting principles for similar transactions and economic activities. The subsidiary companies are companies where the Group owns more than a half of votes at the general meeting of shareholders or is able to manage the financial and operating policy of such undertakings in any other way. Assessment whether the Group controls other companies is made considering existence and influence of potential votes, which may be used at the general meeting of shareholders of those undertakings. Annual financial statements and interim financial figures of subsidiary companies are prepared for the same reporting period as in the case of the Parent Company, with the use of coherent accounting principles for similar transactions and economic activities. If needed, accounting principles of subsidiary companies are modified in order to assure their compliance with the principles adopted by the Group. In order to determine any divergent accounting principles, adjustments have to be made. Subsidiary companies are consolidated for the period in which they were controlled by the Group (from the beginning of such control to its end). Should the Group lose control over a subsidiary company, the consolidated financial statements shall include the results of such subsidiary for the part of the year during which it was controlled by the Group. Acquisitions of subsidiary companies are entered in the accounting books using the purchase method. The purchase price comprises the fair value of assets acquired, shares issued and liabilities assumed as at the acquisition date as well as expenses directly related to the transaction. The surplus of the purchase price over the fair value of acquired assets, liabilities and contingent liabilities of the subsidiary company is accounted for as goodwill. All balances and transactions between the Group’s companies, including unrealized profits resulting from transactions within the Group, are fully eliminated during the consolidation. Investments in associated companies The Group's investments in associated companies are valued under the equity method. Associated companies are entities in which the Group holds between 20 and 50% of votes at the general meeting of shareholders and on which the Group exerts a significant influence, however, without the ability to control them. This means they are neither subsidiary companies nor joint ventures. Financial statements of associated companies, adjusted to compliance with the IFRS, constitute the basis for valuation of shares in these companies owned by the Group using the equity valuation method. The balance sheet dates of associated companies correspond to those applied by the Group. Investments in associated companies are presented on the balance sheet at purchase price increased by any subsequent changes of the Group's share in net assets of these entities, and decreased by any eventual impairment write downs. The profit and loss account reflects the Group's share in the results of associated companies. In the case of changes booked directly in equity of associated companies, the Group presents its share in each change and, if necessary, discloses this in its statement of changes in equity. Unrealized profits/losses on transactions carried out between the Group and its associated companies are subject to consolidation eliminations, to the equivalent of the Group's stake in associated companies. Unrealized losses are also eliminated unless it is obvious from transactions that impairment of transferred assets took place. Investment in an associated company comprises goodwill created at the acquisition date. Should the Group's participation in losses of an associated company equal or
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 30 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise exceed the investment value, the Group does not recognise any further losses unless it committed itself to settle the liabilities of or to make payments to such associated company. Goodwill Goodwill shall be defined as a positive difference between the purchase price and fair value of the Group’s share in identifiable net assets of subsidiary or associated companies at the acquisition date. Goodwill relating to subsidiary companies is presented on the Balance Sheet in a separate item of fixed assets, whereas goodwill relating to associated companies is disclosed as investments in associated companies valued under the equity method. Having been initially entered into the accounting books, goodwill is reported at the purchase price less any accumulated impairment charges. At every balance sheet date, the Group verifies goodwill concerning possible impairment. Impairment charges shall be made if the book value exceeds recoverable value. Irrespective of any indications of goodwill impairment, a test on goodwill impairment has to be made once a year. Impairment write downs are accounted for as operating expenses. Disposal of subsidiary and associated companies Gain/loss on disposal of a subsidiary and/or associated company is the difference between the selling price and the net value of assets/investments plus goodwill of the involved entity. Participation in a joint venture The Group's participation in joint ventures is accounted for under the proportionate consolidation method whereby a venturer's share in each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venturer's consolidated financial statements. Before the financial data of a joint venture are entered in the consolidated financial statements, they are subject to appropriate adjustments in order to bring such financial data to compliance with the IFRS as applied by the Group. Treatment of put options held by minority interests in consolidated financial statements An entity’s contractual obligation to purchase its own equity instruments gives rise to a financial liability for the present value of the redemption amount even if the obligation to purchase is conditional on the counterparty exercising a right to redemption, e.g. in situation where minority shareholders are entitled to put shares of a subsidiary to be purchased by the parent company. If contractual terms do not include an obligation to deliver to the parent company of any benefits incidental to ownership of the equity instrument subject to a put option, then at each balance sheet date minority interests (to which a portion of net profit attributable to minority shareholders is still allocated) are reclassified as a financial liability, as if such puttable equity instrument was redeemed on that date. A change in the amount of such reclassified items is recognized under goodwill. Restatement of items expressed in foreign currencies The currency of measurement applied to the Parent Company as well as the reporting currency used in these consolidated financial statements is the Polish zloty (PLN). The functional currencies of the Group's foreign subsidiaries are the Romanian lei, Lithuanian lit, euro, Slovak crown, Czech crown, and Croatian kuna. Transactions denominated in foreign currencies are first recognized at the functional currency exchange rate of the transaction date. Assets and liabilities expressed in foreign currencies are restated at the functional currency exchange rate of the balance sheet date. Foreign currency non cash items valued at historical cost are restated at the exchange rate as at the initial transaction date. Foreign currency non cash items valued at fair value are restated using the exchange rate as of the date when such fair value is determined.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 31 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
As at the balance sheet date, assets and liabilities denominated in currencies other than Polish zloty are translated to Polish zlotys at the mid exchange rates of such currencies as published by the National Bank of Poland and in effect on the last day of the period reported. Foreign currency differences resulting from such restatement are reported respectively as financial income (expenses) or in shareholders' equity, but they may also be capitalized as assets in case it is provided for in the adopted accounting principles (policy). The following exchange rates were applied for the purpose of valuation in the balance sheet:
Currency 31 December 2007 31 December 2006 USD 2.4350 3.8312 EUR 3.5820 2.9105 SKK 0.1066 n/a RON 0.9979 n/a LTL 1.0374 n/a As at the balance sheet date, assets and liabilities of those foreign subsidiary companies have been restated in the reporting currency of the Asseco Group using the exchange rate of the balance sheet date, and their profit and loss accounts have been restated at the average weighted exchange rate for the financial year. Foreign currency differences resulting from such restatement are reported directly under own equity, as a separate component thereof. On the date of disposal of a foreign company, the accumulated deferred exchange rate differences carried under own equity and relating to that foreign company, shall be recognized in the profit and loss account. Average weighted exchange rates for the specified reporting periods were as follows:
year ended year ended Currency 31 December 2007 31 December 2006 USD 2.7484 3.0898 EUR 3.6542 n/a CZK 0.1362 n/a SKK 0.1117 n/a RON 1.1247 n/a LTL 1.0938 n/a Property, plant and equipment Property, plant and equipment are disclosed at the purchase price/production cost decreased by accumulated depreciation and any impairment write downs. Any costs incurred after a tangible asset has been commissioned to use, such as costs of repairs and technical inspections, or operating fees, are expensed in the reporting period in which they were incurred. At the time of purchase tangible assets are divided into components of significant value for which separate periods of useful life may be adopted. General overhaul expenses constitute a component of assets as well. Tangible fixed assets are depreciated using the straight line method over their expected useful lives, which are:
Type Period of useful life
Buildings and structures 12 60 years Machinery and technical equipment 2 12 years Transport vehicles 3 12 years Computer hardware 2 12 years Investments in third party tangible assets 10 years
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 32 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Appropriateness of the applied periods of useful life and terminal values is subject to annual verification which results in relevant adjustments to depreciation charges to be made in the next years. Should there be any events or changes indicating that the book value of property, plant and equipment may not be recovered, such assets will be reviewed for their possible impairment. If there any indications of a possible impairment and the book value exceeds the expected recoverable value, the value of these assets or cash generating centres shall be reduced to the recoverable value. The recoverable value of property, plant and equipment is the greater of their fair value (decreased by any related selling expenses) and their value in use. In order to determine the value in use, estimated future cash flows shall be discounted to the present value by applying a pre tax discount rate that reflects current market assessments of the value of money in time and the risks related to the asset. In case of an asset which does not generate cash independently, the recoverable value shall be determined for the cash generating centre, to which such asset belongs. Impairment write downs are accounted for as operating expenses in the profit and loss account. A tangible asset may be derecognized from the balance sheet after it is disposed or when no economic benefits are expected from its further use. Gain/loss on disposal of a tangible fixed asset shall be assessed by comparing the proceeds from such disposal against the present book value of such asset, and it shall be accounted for as an operating income/expense. Any gains or losses resulting from removal of a given item of property, plant and equipment from the balance sheet (calculated as a difference between the net cash obtained from sales and the book value of this item) are recognized in the profit and loss account in the period in which such derecognition from the accounting books was made. Investments in progress relate to tangible assets under construction or during assembly and are recognized at purchase price or production cost, decreased by any eventual impairment write downs. Tangible assets under construction are not depreciated until their construction is completed and they are commissioned to use. Costs of external financing Borrowing costs are recognized as expenses in the period in which they are incurred as prescribed by IAS 23. Investment property Investment property is initially recognized at the purchase price including any transaction related expenses. Subsequently to such initial recognition, an investment property is accounted for in accordance with the requirements applicable to tangible fixed assets, this is at purchase price or production cost decreased by accumulated depreciation and accumulated impairment write downs, except for the investment property that meets the criteria to be qualified as held for sale or is disclosed in the group of assets classified as held for sale. An investment property shall be removed from the balance sheet after it is disposed or definitely withdrawn from use, when no future economic benefits are expected from its sale. Any gain or loss resulting from removal of an investment property from the balance sheet shall be disclosed in the profit and loss account for the period in which such derecognition was effected. Investment property assets are depreciated using the straight line method over their expected useful lives, which are:
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 33 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Type Period of useful life
Buildings and structures 12 60 years Machinery and technical equipment 2 12 years Appropriateness of the applied periods of useful life is subject to annual verification which results in relevant adjustments to depreciation charges to be made in the next years. Intangible assets Purchased separately or as a result of merger of companies Intangible assets purchased in a separate transaction shall be capitalized at purchase price. Intangible assets acquired as a result of a company take over shall be capitalized at fair value as at the take over date. The period of useful life of an intangible asset shall be assessed and classified as definite or indefinite. Intangible assets with a definite period of useful life are amortized using the straight line method over the expected useful life, and the amortization charges are expensed adequately in the profit and loss account. The periods of useful life, being the basis for determination of amortization rates, are subject to annual verification and, if needed, they are adjusted starting from the next financial year. Except for development work, intangible assets produced by the company on its own shall not be capitalized, but the expenditure on their production shall be expensed in the profit and loss account for the period in which they were incurred. Impairment tests shall be performed every year for intangible assets with an indefinite period of useful life and those which are no longer used. The remaining intangible assets shall be tested for impairment if there are indications of a possible impairment in value. If the balance sheet value exceeds the estimated recoverable value (the greater of net selling price or value in use), the value of such assets shall be reduced to the recoverable amount. Research and development work Intangible assets created as a result of development work (or completion of a development stage of a project executed by the company on its own) may be capitalized only if the company is able to demonstrate: • the technical ability to finish the construction of such intangible asset so that it could be used or sold, • the intention of finishing the construction of such intangible asset and the intention to use or sell the item, • the ability to use or sell such intangible asset, • how such intangible asset is going to generate probable future economic benefits; first of all the company should demonstrate there is a market for products made with the use of the given intangible asset, or that such intangible asset may itself be sold, or that such intangible asset is useful if it is to be used by the company, • the availability of relevant technical, financial and other resources required to finish the development work and to make the intangible asset ready for use or sale, • the possibility of reliable determination of expenditure for the development work allocated to such intangible asset. Costs of development work which do not satisfy the above criteria shall be expensed in the profit and loss account. Costs of development work that fulfil the above criteria shall be capitalized at the purchase price less any accumulated amortization and accumulated impairment charges. All the expenditures carried forward to future periods shall be subject to amortization during the estimated period in which
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 34 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise the related project generates income. The costs of development work shall be amortized over the period of economic use of an intangible asset, but not longer than for 5 years. The costs of development work are reviewed concerning a possible impairment on an annual basis – if the related asset has not been commissioned to use, or more frequently – if during the reporting period there is an indication of impairment, as a result of which the book value may not be recovered. All the intangible assets subject to amortization are amortized under the straight line method. Below are presented the periods of useful life adopted for intangible assets:
Type Period of useful life
Cost of development work 2 5 years Computer software 2 5 years Patents and licences 2 5 years Other items 3 10 years Any gain or loss resulting from removal of an intangible asset from the balance sheet (calculated as the difference between the net cash obtained from sales and the book value of such item) shall be disclosed in the profit and loss account for the period in which such derecognition was effected. Impairment of non financial assets At every balance sheet date, the Group carries out valuation of its assets concerning any possible impairment. Should there be any indications of the impairment, the Group estimates the recoverable value. Should the book value of the given item of assets exceed its recoverable value, impairment charges are made reducing the book value to the recoverable value. The recoverable value is the higher of the following two values: fair value of an asset or cash generating centre less selling expenses, or value in use determined for an asset if such asset generates cash flows significantly independent from cash flows generated by other assets, groups of assets or cash generating centres. Financial instruments Financial instruments are divided into the following categories: • financial assets held to maturity, • financial instruments valued at fair value through profit and loss, • Loans and receivables, • Financial assets available for sale, and • Financial liabilities All the financial assets are initially recognized at the purchase price equal to fair value of the effected payment, including the costs related to the purchase of a financial asset, except for financial instruments valued at fair value through profit and loss. Financial assets held to maturity are investments with payments specified or which may be specified and with a fixed repayment date (maturity), which the Company intends to and may held to maturity. Financial assets held to maturity are valued at amortized cost using the effective interest rate.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 35 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Financial instruments acquired in order to generate profits owing to short term price fluctuations shall be classified as financial instruments valued at fair value through financial result. Financial instruments valued at fair value through financial result are measured at fair value taking into account their market value as at the balance sheet date. Changes in these financial instruments are recognized as financial income or expenses. Loans and receivables are carried at amortized cost. Loans granted and receivables are financial assets, not classified as derivative instruments, with identified or identifiable payments which are not quoted on an active market. They are recognized as current assets unless their maturity periods are longer than 12 months from the balance sheet date. Loans granted and receivables with maturity periods longer than 12 months from the balance sheet date are recognized as fixed assets. Any other financial assets constitute financial assets available for sale. Financial assets available for sale are carried at fair value, without deducting the transaction related costs, taking into consideration their market value as at the balance sheet date. If financial instruments are not quoted on an active market and if it is impossible to determine their fair value in a reliable way using any alternative methods, such financial assets available for sale shall be valued at the purchase price adjusted by impairment charges. Provided financial instruments have a market price determined in a regulated active market or it is possible to determine their fair value in other reliable way, the positive and negative differences between the fair value and the purchase price of such assets available for sale (after deducting any deferred tax liabilities) shall be disclosed in the revaluation capital. A decrease in the value of assets available for sale, resulting from their impairment, shall be disclosed as a financial expense in the profit and loss account. Financial assets held to maturity shall be classified as fixed assets if their maturity exceeds 12 months from the balance sheet date. Financial assets valued at fair value through profit and loss shall be classified as current assets, provided the Management Board intends to dispose them within 12 months from the balance sheet date. This does not apply to currency forward contracts that need to be classified as short term items irrespectively of their term of maturity. Purchases or disposals of financial assets are recognized in the accounting books at the transaction date. At the initial recognition they are valued at purchase price, this is at fair value plus the transaction related costs. Financial liabilities other than financial instruments valued at fair value through financial result are measured at amortized cost using the effective interest rate. A financial instrument shall be derecognized from the balance sheet if the Company no longer controls the rights arising from such instrument; this usually takes place when the instrument is sold or when an independent third party is entitled to all cash flows generated by the instrument. Impairment of financial assets At each balance sheet date, the Group determines if there are any objective indications of impairment of a financial asset or group of financial assets. Financial assets carried at amortized cost If there is objective evidence that an impairment loss on loans or receivables valued at amortized cost has been incurred, the amount of the impairment write down is measured as the difference between the asset's book value and the present value of estimated future cash flows (excluding future bad debt losses that have not been incurred yet) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of such assets shall be reduced either directly or by establishing an impairment write down. The amount of the loss shall be recognized in the profit or loss account.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 36 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in the collective assessment of a group of assets for impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed. Such reversal of the impairment write down shall be recognized in profit or loss to the extent that the carrying amount of the financial asset does dot exceed its amortized cost at the date the impairment is reversed. Financial assets carried at cost If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative instrument that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for similar financial assets. Financial assets available for sale When there is objective evidence that a financial asset available for sale is impaired, then the amount of difference between the purchase cost of such asset (net of any principal repayment and amortization) and its current value decreased by any impairment loss on that financial asset as previously recognized in profit or loss, shall be removed from equity and recognized in the profit and loss account. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available for sale shall not be reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, then the amount of such impairment loss shall be reversed in the profit and loss account. Inventories Inventories are valued at the lower of the following two values: purchase price/production cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The Company measures the cost of consumed inventories by using specific identification method. Impairment write downs on inventories shall be recognized as other operating expenses. Deferred expenses Deferred expenses comprise expenses incurred before the balance sheet date that relate to future periods. In particular, deferred expenses may include the following items: • rent paid in advance, • insurances, • subscriptions, • prepaid third party services which shall be provided in future periods, • expenses for purchase of investment items prior to a formal acquisition of shares, which shall increase the value of such shares after their purchase is completed, • other incurred expenses that relate to future periods.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 37 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Deferred income (unearned revenues) relate mainly to prepayments received for provision of maintenance services in future periods. The Group applies deferred expenses or deferred income accounts if such income or expenses relate to future reporting periods. Whereas, accrued expenses are disclosed in the amount of probable liabilities relating to the present reporting period. Revenues and expenses related to completion of implementation contracts Sales of services executed under a contract, which as at the balance sheet date are not completed but provided to a considerable extent, shall be recognized at the balance sheet date proportionally to the progress of completion of such services, on condition the amount of revenue can be determined in a reliable way. The progress of contract execution shall be measured as a percentage of the total estimated contract execution costs incurred from the date of contract conclusion till the day when the related revenues are being determined, or as a portion of work completed out of the total work effort required. When determining the contract execution costs incurred till the balance sheet date, any expenses for future activities related to the contract shall not be taken into account. These are disclosed as deferred expenses. Should it be impossible to reliably estimate the progress of service execution as at the balance sheet date, sales revenues shall be recognized in the amount of costs incurred in the reporting period, which should however be limited to the amount of costs that are likely to be paid by the ordering party. In case it is probable that the total contract execution costs exceed the total contract revenues, the anticipated loss shall be recognized as cost in the reporting period in which it has been detected. Production costs of unfinished services shall comprise the costs incurred since the effective date of relevant agreement till the balance sheet date. Production costs that have been incurred prior to concluding the agreement and are related to the subject matter thereof, shall be capitalized, provided they are likely to be covered with future revenues received from the ordering party. Should the progress of costs incurred deducted by expected losses and increased by profits included in the profit and loss account exceed the progress of invoiced sales, the amount of non invoiced sales constituting this difference shall be presented as other receivables. On the other hand, if the progress of invoiced sales exceeds the proportion of costs incurred, decreased by expected losses and increased by profits included in the profit and loss account, future related (unearned) revenues resulting from such difference shall be disclosed as other liabilities. Trade accounts receivable Trade accounts receivable, usually with payment terms ranging from 14 and 90 days, are recognized and disclosed at the amounts initially invoiced, less any allowances for uncollectible receivables. Such allowance for doubtful accounts shall be determined if it is no longer probable that the entire amount receivable will be collected. Doubtful accounts shall be expensed in the profit and loss account at the time when they are deemed uncollectible. Where the effect of the value of money in time is material, the value of accounts receivable shall be measured by discounting the expected future cash flows to their present value, using a pre tax discount rate that reflects current market assessments of the value of money in time. Should the discounting method be used, the increase in receivables over time shall be booked as financial income.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 38 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Cash and cash equivalents, reserved cash Cash and cash equivalents presented in the balance sheet consist of cash kept in banks and on hand by the Company, short term cash deposits with a maturity not exceeding 3 months, and other highly liquid instruments. The balance of cash and cash equivalents disclosed in the consolidated cash flow statement consists of the above defined cash and cash equivalents. For the purposes of the cash flow statement, the Group decided not to present current account credits (used as an element of financing) and restricted cash in the balance of cash and cash equivalents. Restricted cash is presented in a separate position of the balance sheet. Interest bearing bank credits and loans All the bank credits, loans and debt securities are initially recognized at their purchase price, this is at fair value of cash received less the costs related to obtaining a credit or loan, or issuing a debt security. Subsequently to such initial recognition, bank credits, loans and debt securities are measured at amortized purchase price using the effective interest rate. Determination of the amortized purchase price shall take into account the costs related to obtaining a credit or loan, or issuing a debt security, as well as the discounts or bonuses obtained on repayment of the liability. The difference between the cash received (net of costs related to obtaining a credit or loan, or issuing a debt security) and the repayment amount shall be disclosed in the profit and loss account during the term of the liability involved. Gains and losses shall be recognized in the profit and loss account after the liability has been removed from the balance sheet, but also when impairment is detected or depreciation charges are made. All expenses relating to bank credits, loans or debt securities issued, shall be recognized in the profit and loss account for the period they relate to. Trade accounts payable Trade accounts payable relating to operating activities are recognized and disclosed at the amounts stated on the received invoices, and are recognized in the reporting periods which they relate to. Other liabilities to a significant extent also relate to operating activities yet, in contrast to trade accounts payable, they were not invoiced. Reserves A reserve should be recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the Group expects that the expenditure required to settle a reserve is to be reimbursed, e.g. under an insurance contract, this reimbursement should be recognized as a separate asset when, and only when, it is virtually certain that such reimbursement will be received. The expense relating to such reserve shall be presented in the profit and loss account, net of the amount of any reimbursements. The Group recognizes provisions for onerous contracts in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. Where the effect of the value of money in time is material, the amount of a provision shall be determined by discounting the expected future cash flows to their present value, using a pre tax discount rate that reflects current market assessments of the value of money in time and the risks related to the liability. Where discounting method is used, the increase in a provision due to the passage of time is recognized as borrowing costs.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 39 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Retirement benefits, other post employment benefits and provision for unused holiday leaves The Group establishes a provision for the present value of liabilities relating to future payments of termination benefits. According to the remuneration plans applied by the Group companies, employees are entitled to receive a one time termination benefit when going retired. The amount of such payment depends upon the length of service and average monthly remuneration. Furthermore, the Group recognizes a provision for unused holiday leaves, which relate to the periods prior to the balance sheet date and which will be used in future periods. Here the amount of related payment depends on the average monthly remuneration and the number of due but untaken leave days as at the balance sheet date. Costs of both termination benefits and untaken leaves are based on estimates and recognized in accordance with the accrual accounting. Leasing Finance lease agreements, under which substantially all the risks and rewards incidental to ownership of the leased asset are transferred to the Group, at the commencement of the lease term are recognized as assets and liabilities in the balance sheet at the amounts equal to the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding lease liability so as to obtain a constant periodic rate of interest on the remaining balance of the liability. Financial expenses charged directly as expenses in the profit and loss account. Property, land and equipment used under finance lease agreements are subject to depreciation over the estimated useful life or the leasing period, whichever is shorter. Leasing agreements, whereby the lessor retains substantially all the risks and rewards incidental to ownership of the leased asset, are shall be treated as operating leasing. Lease payments under an operating leasing shall be recognized as expenses in the profit and loss account on a straight line basis over the leasing period. Shareholders' equity Shareholders' equity shall be disclosed at nominal value. Shareholders' equity comprises the following items: • share capital, disclosed in the amount of capital contributions made and paid up, • share premium from the sale of shares over their par value, • own shares in treasury, held either for sale or retirement, disclosed as a negative amount under equity, • unrealized net profits on valuation of financial assets available for sale, • foreign currency translation differences on subsidiary companies, • capital component of bonds convertible to shares, • prior years' retained earnings (deficit) and current net profit, • minority interests. Capital component of convertible bonds constitutes the surplus of fair value of unrealized payments for acquisition of assets or services over the face value of bonds. Minority interests represent the value of the Group's assets attributable to its minority shareholders, according to their respective equity stakes in individual companies of the Group, limited to the amounts guaranteed thereby. The Group may increase the stake of share capital held in any of its subsidiary companies and this shall not be deemed a merger of companies. Assets and liabilities of the subsidiary company shall not be valued at fair value as at the date at which Group increased its share in share capital of the subsidiary company. The difference between the purchase price of minority interests and book value of net assets taken over shall be capitalized as goodwill in the consolidated financial statements of the Group.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 40 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Share based payments Employee benefits Employees of the Parent Company receive the Company's own shares as bonuses, i.e. they provide services in exchange for shares or rights to shares. The costs of transactions with employees settled in equity instruments is are determined in relation to fair value as at the date such rights are granted. Valuation of equity settled transactions does not take into account any conditions relating to productivity/effects other than those related to the price of Company's shares. The costs of transactions settled in equity instruments are recognized including the increase in own equity over the period in which vesting conditions relating to productivity/effects are fulfilled. The vesting period shall end when certain employees become fully entitled to the benefits (the "rights vesting date"). At every balance sheet date prior to the rights vesting date, accumulated costs relating to equity–settled transactions shall reflect the portion of the right vesting period that has already passed, and the number of equity instruments the rights to which will be finally vested (in the Management Board opinion based on the best estimates of the number of equity instruments). No costs shall be actually recognized for equity bonuses the rights to which will not finally vested, except for equity bonuses that shall be granted depending on the market conditions, which shall be treated as vested irrespective of whether the market conditions are fulfilled, yet provided all other conditions relating to productivity are satisfied. Acquisition of assets Acquisitions of assets by the Company are often settled with its own shares. The costs of such acquisitions shall be determined in relation to fair value of the assets acquired. The difference between the issue price of shares or convertible bonds and the fair value of acquired assets shall result in adjustment of the surplus of issuance value over the par/face value of those shares/bonds. Should shares (or convertible bonds) be granted subsequent to the date when the right to control the acquired assets is obtained, the difference between the issue price of shares (or convertible bonds) and the fair value of acquired assets shall be recognized in other reserve capital until the time those shares (or convertible bonds) are allocated. Fixed assets held for sale and discontinued operations In line with IFRS 5, any activities shall be classified as discontinued operations, if these activities satisfy the criteria to be classified as held for sale or if the Issuer actually abandoned these activities. Any operations or assets shall be appropriated for sale in case the book value of such operations or assets may be recovered as a result of a sale transaction, but not through continuation of such operations. Sales revenues Accounting principles relating to recognition of sales revenues from execution of IT contracts have been already described above in this additional information. Sales revenue shall be recognized in the amount reflecting probable economic benefits associated with the transaction to be obtained by the Group and when the amount of revenue can be measured reliably. The Group presents its revenues from sale products and services only. Such presentation appropriately reflects the business profile of the Group that is engaged in provision of comprehensive information technology solutions based on proprietary products. Those revenues are generated from the execution of information technology projects, which include development of IT systems and maintenance services. While recognizing sales revenues the following criteria are also taken into account: Sales revenues Revenues shall be recognized if the significant risks and benefits resulting from ownership of products have been transferred to the buyer and when the amount of revenue can be measured reliably. Sales of computer software licenses are recognized systematically during the term of relevant contracts. Whereas, revenues from sale of implementation services are recognized based on the percentage of their
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 41 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise completion. Sales of services executed under a contract, which as at the balance sheet date are not completed but provided to a considerable extent, shall be recognized at the balance sheet date proportionally to the progress of completion of such services, on condition the amount of revenue can be determined in a reliable way. The progress of contract execution shall be measured as a percentage of the total estimated contract execution costs incurred from the date of contract conclusion till the day when the related revenues are being determined, or as a portion of work completed out of the total work effort planned. Should it be impossible to estimate reliably the result of the contract, the revenues shall only be recognized in the amount of costs incurred which the Group expects to recover. Revenues relating to licensing fees shall be recognized when invoiced. Interest income Interest income shall be recognized on a time proportion basis (taking into account the effective yield the interest rate which accurately discounts future cash flows during the estimated period of use of a financial instrument to the net book value of such financial asset). Interest income comprises interest on loans granted, investments in securities held to maturity, bank deposits and other items, as well as the discounts of costs (liabilities) according to the method of the effective interest rate. Dividends Dividends shall be recognized when the shareholders' right to receive payment is vested. Operating costs The Group companies maintain accounting for costs both by cost nature and function. Cost of sales comprises the costs resulted directly from purchases of merchandise sold and generation of services sold. Selling expenses include the costs of distribution activities. General administrative expenses include the costs of the Company's management and administration activities. Income tax and value added tax For the purpose of financial reporting, deferred income tax is calculated applying the balance sheet liability method to all temporary differences that exist, at the balance sheet date, between the tax base of an asset or liability and its carrying amount in the balance sheet. Deferred tax reserve is recognized in relation to all positive temporary differences, except for situations when deferred income tax reserve arises from initial recognition of goodwill or initial recognition of an asset or liability on a transaction other than combination of companies, which at the time of its conclusion has no influence on pre tax profit, taxable profit or tax loss, and when positive temporary differences arise from investments in subsidiary or associated companies and from participation in joint ventures – except for situations when the investor is able to control the timing of the reversal of such temporary differences and when it is probable that such temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized in relation to all negative temporary differences, as well as unutilized deferred tax assets or unutilized tax losses carried forward to subsequent years, in such amount that it is probable that future taxable profits will be sufficient to allow the above mentioned temporary differences, assets or losses to be utilized – except for situations when deferred tax assets related to negative temporary differences arise from initial recognition of an asset or liability on a transaction other than combination of companies, which at the time of its conclusion has no influence on pre tax profit, taxable profit or tax loss, and when negative temporary differences arise from investments in subsidiary or associated companies and from participation in joint ventures, in which cases deferred tax assets are recognized in the balance sheet in such amount only that it is probable that the above mentioned temporary differences will reverse in the foreseeable future and that sufficient taxable profits will be available to offset such negative temporary differences.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 42 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The book value of an individual deferred tax asset shall be verified at every balance sheet date and shall be adequately decreased or increased in order to reflect any changes in the estimates of achieving taxable profit sufficient to utilize such deferred tax asset partially or entirely. Deferred tax assets and deferred tax reserves shall be valued using the future tax rates anticipated to be applicable at the time when a deferred tax asset is realized or a deferred tax reserve is reversed, the basis for which shall be the tax rates (and tax regulations) legally or factually in force at the balance sheet date. Income tax relating to items that are directly recognized in equity shall be disclosed under equity and not in the profit and loss account. Revenues, expenses and assets shall be disclosed in the amounts excluding value added tax unless: • value added tax paid at the purchase of merchandise or services is not recoverable from tax authorities; in such event the value added tax paid shall be recognized as a part of the purchase price of an asset or as an expense, and • receivables and liabilities are presented including value added tax. Net amount of value added tax which is recoverable from or payable to tax authorities shall be included in the balance sheet as a part of receivables or liabilities. Derivative financial instruments The Group operations are exposed to different kinds of financial risk – including the risk of changes in market prices of debt and equity instruments, fluctuations of currency exchange rates and official interest rates. The Group's general risk management program concentrates on unpredictability of financial markets and attempts to minimise their potential negative influence on the financial performance of the Group. To some extent, the Group uses financial derivatives, such as currency forward contracts in order to minimise its financial risks. Financial derivatives are initially recognized at the purchase price, and subsequently measured at fair value. Changes in fair value of financial derivatives are immediately recognized in the profit and loss account, because the Group does not use instruments which could be classified as hedging instruments in line with IAS 39. Derivative financial instruments are disclosed in the balance sheet, as financial assets or financial liabilities, and are measured at fair value. Fair value of financial derivatives quoted on regulated markets and fair value of securities available for sale shall be determined on the basis of quoted market prices as at the balance sheet date. Fair value of currency forward contracts shall be determined on the basis of future market exchange rates as at the balance sheet date. In order to evaluate the fair value of financial derivatives which are not quoted on regulated markets, and other financial instruments, the Group uses various methods and assumptions based on market conditions as at the balance sheet date. Market quotations and quotations of dealers for certain or similar instruments are usually applied. Other techniques, such as models for valuation of options or discounted value of future estimated cash flows, are used to determine fair value of other financial instruments.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 43 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
For the purpose of presentation in the financial statements, the fair value of financial liabilities is estimated by discounting future contractual cash flows using interest rates available for the Group for similar financial instruments. Embedded financial derivatives shall be detached from the principal agreements and presented separately in the accounting books as financial derivatives valued at fair value through profit and loss, if the following conditions are jointly met: • economic nature of the embedded instrument and the related risks are not closely connected with the nature of the principal agreement and the risks resulting therefrom, • the separated instrument, which has the nature of an embedded financial derivative, would meet the definition of a derivative financial instrument, • the hybrid (joint) instrument including the embedded financial derivative is not valued at fair value through profit and loss for the reporting period. Embedded financial derivatives shall be recognized in the accounting books similarly to other financial derivatives not classified as hedging instruments. For some types of transactions, embedded derivatives, which are not strictly related to the principal agreements, are accounted for just as other derivative instruments. Gains/losses on changes in fair value of derivatives are reflected in the profit and loss account for the period in which they actually occurred. For some types of transactions, embedded derivatives are not detached from the principal agreement and are not accounted for separately, especially if the transaction is carried out in the currency deemed as applied customarily in such type of transactions in the given economic environment. The contracts of such type include, among others, real estate lease agreements and, as from 1 January 2005, also IT services contracts because applying Euro rates becomes more and more common. In case of an agreement denominated in a foreign currency deemed to be the functional currency of one of the transacting parties, embedded financial derivatives are not disclosed separately. Revenues and expenses relating to such agreements are determined on the basis of the current spot exchange rate. Fair value of currency forward contracts is determined on the basis of the forward exchange rates available currently for contracts with similar maturity, as the Group believes they are the best approximation of the future currency exchange rates. Fair value of interest rate swap contracts is determined in relation to the market value of similar instruments. In 2007 as well as in the comparable period, the Group did not apply accounting principles related to hedging instruments. Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial liabilities due to any guarantees issued are initially recognized and measured at fair value. Subsequently to such initial recognition, all the financial liabilities shall be measured at amortized cost using the effective interest rate.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 44 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Net profit (loss) attributable to minority interests This item represents the Group's net profit for the period reported, attributable to its minority shareholders. Earnings per share (basic and diluted) Basic earnings per share for each reporting period shall be computed by dividing the net profit on continued operations for the period reported, attributable to shareholders of the Parent Company, by the average weighted number of shares outstanding in the given reporting period. Diluted earnings per share for each reporting period shall be calculated by dividing the net profit on continued operations for the period reported by the total of average weighted number of shares outstanding in the given reporting period and all shares of potential new issues.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 45 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
III. INFORMATION ON BUSINESS SEGMENTS
For the current period Slovak German Romanian Lithuanian Serbian 12 months of 2007 and Polish market Czech market Eliminations Total market market market market market as at 31 December 2007 operations operations operations operations operations operations operations operations
(audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited) Sales revenues For 12 months ended 31 December 2007 Sales to external customers 878,681 202,511 72,251 16,919 104,094 7,943 1,282,399 Intersegment sales 17,547 3,734 (21,281) 0 Total segment's revenue 878,681 220,058 75,985 16,919 104,094 7,943 (21,281) 1,282,399 Profits Segment's profit 182,295 27,462 11,707 (871) 11,374 (307) 231,660 Other net operating income (expenses) 3,927 980 (576) 534 26 4,891 Net financial income (expenses) (16,629) 2,113 (886) (745) (115) 20 (16,242) Share in profits of associated companies (3,180) 56 96 (3,028) Gain (loss) on disposal and dilution of shares in associated companies 18,157 18,157 Pre tax profit 184,569 30,612 10,341 (1,083) 11,285 (286) 235,438 Corporate income tax (tax expense) (33,646) (6,229) (2,510) (351) (1933) (79) (44,748)
Net profit (loss) for the financial year 150,923 24,383 7,831 (1,434) 9,352 (365) 190,690 Assets and liabilities As at 31 December 2007 Segment's assets 2,757,806 260,334 98,408 31,851 46,311 11,242 50,159 3,256,111 Investments in associated companies 334,897 170 2,037 337,104 Segment's liabilities 859,925 120,501 55,092 30,244 30,368 6,701 22,588 1,135,419
Capital expenditures (503,275) (115,453) (1,427) (292) (1,037) (454) (621,938) Depreciation and amortization (26,034) (8,499) (1,641) (318) (1,065) (302) (37,859)
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 46
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Polish Media Total For 12 months ended 31 December 2006 market operations – operations and as at 31 December 2006 operations discontinued (audited) (audited) (audited) Sales revenues For 12 months ended 31 December 2006 Sales to external customers 497,687 4,992 502,679 Intersegment sales 0 0 0 Total segment's revenue 497,687 4,992 502,679
Profits Segment's profit 48,275 (1,475) 46,800 Other net operating income (expenses) (3,077) 64 (3,013) Net financial income (expenses) 18,338 (17) 18,321 Share in profits of associated companies 11,258 0 11,258 Gain on disposal of media operations 5,546 Pre tax profit 0 78,913 Corporate income tax (tax expense) (3,606) Net profit (loss) for the period reported 75,307
Assets and liabilities As at 31 December 2006 Segment's assets 588,207 0 588,207 Investments in associated companies 97,360 0 97,360 Segment's liabilities 341,893 0 341,893
Other information on business segments For 12 months ended 31 December 2006 Capital expenditures (8,837) (234) (9,071)
Depreciation and amortization (12,786) (123) (12,891) Until the end of 2006, the Asseco Group did not report separately any geographical segments, nor industrial segments. The only segment of continuing operations were the "Implementation activities". Since the beginning of 2007, as the Company's business was extended as a result of merger with Asseco Poland SA and acquisition of the non cash contribution of Asseco Czech Republic a.s., geographical regions became the main criterion of segmentation of the Company's operations. Geographic segments may be determined by the regions in which the Group conducts its business operations. The Asseco Group performed its geographic division by location of conducted business activities and it recognized the following main regions: • operations in the Polish IT market, • operations in the Slovak IT market, • operations in the Czech IT market, • operations in the Romanian IT market, • operations in the German IT market, • operations in the Lithuanian IT market, • operations in the Serbian IT market. Since 2007 the Group has abandoned segmenting its operations by industry because it is only engaged in information technology activities, which include provision of own software, licences, and services as well as supply of computer hardware. In 2006 the Group disposed its media activities, whereas during the twelve months of 2007 no operations were discontinued.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 47
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
IV. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Breakdown of sales revenues
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Proprietary software and services 553,351 174,448 Third party software and services 218,925 175,887 Computer hardware and infrastructure 305,228 118,869 Outsourcing 129,149 28,213 IT telecommunications 68,230 0 Other sales 7,516 270 1,282,399 497,687 In 2007 the Group's officers decided to change the method for presentation of sales revenues. Until the end of 2006, sales revenues were classified as sales of products or merchandise. From the beginning of 2007, sales revenues are no longer categorized this way. Such modification resulted from the changing the Company's business profile into an enterprise providing comprehensive information technology solutions based on proprietary products. Subsequently, presentation of sales revenues generated in the last year's corresponding period needed to be adjusted appropriately.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 48
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
2. Breakdown of operating costs
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Materials and energy used ( ) (40,203) (20,585) Third party work ( ) (334,194) (129,415) Salaries ( ) (289,494) (105,005) Employee benefits, of which: ( ) (31,772) (14,033) Social security contributions ( ) (31,089) (12,321) Depreciation and amortization ( ) (37,859) (12,768) Taxes and charges ( ) (2,257) (1,600) Business trips ( ) (8,690) (2,650) Other ( ) (8,187) (7,166) Cost of hardware and software purchased for implementation of IT systems ( ) (299,780) (158,870) (1,052,436) (451,092)
Changes in inventories, products and deferred expenses (1,697) (1,680) Selling expenses ( ) (88,075) (15,522) General administrative expenses ( ) (114,283) (52,653) Cost of products, merchandise and materials sold ( ) (848,381) (381,237)
12 months ended 12 months ended Selected items recognized under own costs 31 December 2007 31 December 2006
(audited) (audited)
Third party work, of which: ( ) (334,194) (129,415) Rental of vehicles and other assets ( ) (7,075) (1,285) Rental of office and storage space ( ) (25,796) (9,481) Rental of other space ( ) (1,966) (679) Consulting services ( ) (23,084) (24,451) Telecommunication services and charges ( ) (37,877) (4,420) Transportation services ( ) (5,967) (919) Auditing and legal services ( ) (5,442) (2,648) Other third party work ( ) (62,229) (8,564) IT services ( ) (164,758) (74,315) In 2007 the Group made a number of revaluation write downs. The most important ones included: • write downs on receivables for the amount of PLN 4,597 thousand, and concurrent cost reducing reversal of those write downs for the amount of PLN 2,600 thousand, • write downs on inventories for the amount of PLN 4,345 thousand, and concurrent cost reducing reversal of those write downs for the amount of PLN 2,167 thousand. Also in 2006 the Group reduced its allowances for accounts receivable by the amount of PLN 711 thousand. The aforementioned impairment write downs have been included under other costs by nature.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 49
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
3. Other operating income and expenses
Other operating income
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Gain on disposal of tangible fixed assets 3,906 293 Reversal of a reserve 2,036 0 Reimbursement of taxes overpaid 0 129 Other items 3,644 841 9,586 1,263
Other operating expenses
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Loss on disposal of tangible fixed assets ( ) (332) 0 Charitable contributions for unrelated companies ( ) (663) (334) Reserves for tax arrears ( ) 0 (413) Restructuring reserve ( ) 0 (2,866) Contractual penalties on withdrawal from agreements ( ) (803) 0 Other ( ) (2,897) (727) (4,695) (4,340)
4. Financial income and expenses
Financial income 12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Interest income on loans granted, debt securities and bank deposits 7,937 1,640 Other interest income 6,384 5,602 Gain on foreign exchange differences 0 2,724 Gain on valuation of capital investments 0 257 Gain on disposal of other investments 76 0 Gain on foreign exchange differences 0 0 Dividends received from related companies 0 0 Other financial income 2,990 81 Financial income (at historical value) 17,387 10,304
Gain on change in fair value of embedded currency derivatives 4,360 6,308
Gain on change in fair value of currency derivatives forward contracts 6,857 24,246 Gain on exercise of currency derivatives 36,311 26,933 Change in valuation of the call option for shares in Asseco Poland SA 0 11,276 64,915 79,067
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 50
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Financial expenses 12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Interest expense on bank credits and current account credits ( ) (5,130) (1,146) Other interest expenses ( ) (12,531) (5,154) Interest on short term commercial papers ( ) 0 (200) Loss on foreign exchange differences ( ) (37,790) (25,768) Loss on valuation of capital investments ( ) 0 (134) Other financial expenses ( ) (230) (308) Financial expenses (at historical cost) (55,681) (32,710)
Loss on change in fair value of embedded currency derivatives ( ) (20,765) (21,601) Loss on exercise of currency derivatives forward contracts ( ) (59) 0
Loss on change in fair value of currency derivatives forward contracts ( ) (4,652) (6,418) (81,157) (60,729) Both in 2007 and 2006, the Group held a number of concluded forward contracts for purchase or sale of Euro or US dollars. As at 31 December 2007, the fair value of the related financial assets equalled PLN 70,100 thousand, while as at 31 December 2006 it amounted to PLN 69,077 thousand. In 2007 valuation of the concluded forward contracts increased the Group's financial income by the amount of PLN 6,857 thousand, and concurrently it increased the financial expenses by PLN 4,652 thousand. In 2006 valuation of the forward contracts increased the Group's financial income by the amount of PLN 24,246 thousand, and concurrently it increased the financial expenses by PLN 6,418 thousand. In 2007 gain on exercise of the concluded forward contracts amounted to PLN 36,311 thousand up from PLN 26,933 thousand a year ago. Just as in the prior year, in 2007 the Group held a number of embedded financial derivatives under the commercial agreements denominated in Euro or US dollars. As at 31 December 2007, the value of the related short and long term financial liabilities equalled PLN 129,586 thousand, while as at 31 December 2006 they amounted to PLN 112,472 thousand. Whereas, the value of current and fixed financial assets due to valuation of the embedded financial derivatives amounted to PLN 1,513 thousand and PLN 887 thousand as at the end of 2007 and 2006, respectively. In the period reported valuation of the embedded financial derivatives increased the Group's financial income by the amount of PLN 4,360 thousand, and concurrently it increased the financial expenses by PLN 20,765 thousand. Whereas, in 2006 the valuation of embedded currency derivatives increased the Group’s financial income by the amount of PLN 6,308 thousand, and concurrently it increased the financial expenses by PLN 21,601 thousand.
Gain on disposal and dilution of shareholdings in associated companies
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Gain on disposal and dilution of shareholdings in associated companies 18,157 0 18,157 0 On 1 June 2007 there was registered the merger of Asseco Business Solutions SA with the companies Safo Sp. z o.o., Softlab Sp. z o.o., Softlab Trade Sp. z o.o. and Wapro Sp. z o.o. Before the merger the Parent Company held 100% of shares in Asseco Business Solutions SA. Because the remaining shareholders of the taken over companies acquired a portion of shares in Asseco Business Solutions SA, Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 51
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise the equity interest of Asseco Poland SA in that company dropped from 100% to 67.47%. Gain on dilution of shareholding resulted from the companies' merger was PLN 2,183 thousand. In the period from 31 October – 12 November 2007 Asseco Business Solutions SA conducted the public offering of newly issued 5,600,000 ordinary bearer shares of series C as well as the existing 1,792,843 ordinary bearer shares of series B. As the newly issued shares were acquired by entities other than Asseco Poland SA, the Parent Company's equity interest in Asseco Business Solutions SA decreased from 67.47% to 54.27%. Gain on dilution of shareholding resulted that transaction amounted to PLN 15,794 thousand. In total the Parent Company gained PLN 18,157 thousand on dilution of its shareholding in Asseco Business Solutions SA.
5. Corporate income tax (current and deferred)
The main charges on the pre tax profit due to corporate income tax (current and deferred portions): 12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Corporate income tax current portion (48,861) (8,324) Corporate income tax deferred portion 4,113 4,718 Related to occurrence or reversal of temporary differences 4,113 4,718 Income tax expense as disclosed in the Profit and Loss Account, of which: (44,478) (3,606) Corporate income tax attributable to continued operations (44,478) (3,606) Corporate income tax attributable to discontinued operations 0 0 Regulations applicable to the value added tax, corporate income tax, personal income tax or social security contributions are subject to frequent amendments, thereby often depriving the taxpayers of a possibility to refer to well established regulations or legal precedents. Also the current regulations in force include ambiguities giving rise to different opinions and legal interpretations on the taxation regulations either between companies and public administration, or between the public administration bodies themselves. Taxation and other settlements (for instance customs duty or currency payments) may be controlled by administration bodies that are entitled to impose considerable fines, and the amounts of so determined liabilities must be paid with high interest. Such circumstances lift the tax related risk in Poland above the level characteristic to countries with better developed taxation systems. Settlement of tax liabilities may come under control in the period of five years. In effect the amounts disclosed in the financial statements may be later changed, after the taxes payable are finally determined by the taxation authorities. Reconcilement of the corporate income tax payable on pre tax profit according to the statutory tax rates with the corporate income tax computed at the Group's effective tax rate.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 52
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Pre tax profit on continued operations 235,438 74,794 Pre tax profit on discontinued operations 0 4,119 Pre tax profit 235,438 78,913 Statutory corporate income tax rate 19% 19% Corporate income tax computed at the statutory tax rate 44,733 (14,993) Non taxable financial income and non tax deductible financial expenses (11,978) 1,582 Other non taxable income and non tax deductible expenses 5,653 960 Difference between tax depreciation and accounting depreciation 1,487 (210)
Difference due to another rate of corporate income tax paid abroad 771 850 Taxable income and tax deductible expenses 7,220 0 Other items (2,603) 225 Change in assets due to deferred income tax not recognized in the Balance Sheet 777 8,637
Deferred income tax asset due to goodwill not recognized in the prior periods (1,342) (657) Corporate income tax at the effective tax rate (44,478) (3,606) of 18% in 2007 and 4% in 2006
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Corporate income tax disclosed in the Profit and Loss Account (44,478) (3,606) Corporate income tax disclosed directly in shareholders' equity 0 0 (44,478) (3,606) As at 31 December 2007, the total value of potential deferred income tax assets, as computed by the Group, amounted to PLN 57,522 thousand, and net of deferred income tax reserve it equalled PLN 37,105 thousand. As at 31 December 2006, the total value of potential deferred income tax assets, as computed by the Group, amounted to PLN 52,077 thousand, and net of deferred income tax reserve it equalled PLN 28,275 thousand. Both in the reported year and the prior year, the major items of deferred income tax assets (net of reserves) included: • the balances relating to valuation of IT (implementation) contracts, and • the surplus of unrealized financial expenses over unrealized financial income. As at 31 December 2007, the Group made an estimation of the planned taxable income to be achieved in the future, and concluded that the value of deferred income tax assets (net of reserves) will make it possible to recover the amount of PLN 36,879 thousand. Based on the forecasts of taxable income for the years 2008–2009 and the corporate income tax regulations in force, the Management believes the Group will be able to realize the deferred income tax assets recognized in the above mentioned amount. The Group Management is not in the position to predict the financial results that will be achieved after the forecast period, hence there is no certainty about realization of the total deferred income tax assets. Therefore, a revaluation write down of PLN 1,523 thousand was made.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 53
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Balance Sheet Profit and Loss Account Merger with Asseco Poland 12 months 12 months 31 December 31 December SA (the ended ended 2007 2006 acquired 31 December 31 December (audited) (audited) company) and 2007 2006
company (audited) (audited) take overs Deferred income tax reserve Difference between tax depreciation and accounting depreciation ( ) (1,192) (648) (87) (457) 11
Deferred profits on currency contracts ( ) (13,611) 0 (13,293) (318) (3,536)
Financial income due to accrued interest ( ) (1,065) (13) (110) (942) (46) Profits due to the balance sheet valuation of long term IT contracts ( ) (2,572) (1,645) (6,916) 5,873 1,282 Difference between accounting value and tax value of tangible assets ( ) 0 0 (471) 471 13 Other financial income (expenses) (553) 2,920 (2,925) (548) (2,366) Other ( ) (2,093) 352 0 (2,236) 34 Deferred income tax reserve, gross (21,086) 966 (23,802) Deferred income tax assets Difference between tax depreciation and accounting depreciation 458 109 1,419 (1,036) (1,459)
Financial expenses due to accrued interest 434 0 2 432 (165) Accrued expenses, reserves and other liabilities 6,406 1,581 4,260 686 1,627 Revaluation write downs on receivables 480 3 1,300 (823) 475 Revaluation write downs on investments 5,171 (54) 3,220 2,006 (2,184) Other items 3,932 3,577 102 2,047 (295) Losses deductible against future taxable income 1,238 73 4,480 (3,293) (5,256) Revaluation write downs on non financial current assets 665 154 135 376 (249) Revaluation write downs on non financial fixed assets 646 8 912 (274) 912 Income (expenses) due to the balance sheet valuation of long term IT contracts 12,310 743 14,629 (2,760) 5,320 Embedded financial derivatives 24,621 0 21,369 3,252 3,053 Unrealized financial expenses (income) 1,130 0 249 881 (433) Deferred income tax assets, gross 57,492 6,295 52,077 Write down due to impossibility to realize a deferred income tax asset (1,532) (2,300) Deferred income tax assets, net 55,969 49,777 Deferred income tax expense 4,113 4,718
Deferred income tax assets, net of deferred income tax reserve 35,377 25,975 Deferred income tax reserve, net of deferred income tax assets (494)
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 54
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
6. Discontinued operations and fixed assets held for sale
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audit ed)
Sales revenues 0 4,992 Operating costs 0 ( 6,402) Operating loss 0 ( 1,410) Gain on disposal of the company Mediabank SA 0 5,546 Pre tax profit (loss) on discontinued operations 0 4,119 Net profit (loss) attributable to discontinued operations 0 4,119
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Net cash provided by (used in) operating activities 0 (1,338) Net cash provided by (used in) investing activities 0 (234) Net cash provided by (used in) financing activities 0 1,602 Total net cash provided (used) 0 30 Earnings (loss) per share: Basic and diluted earnings (loss) per share on discontinued operations (in PLN) 0 0.16 In 2006 the Management Board of Asseco Poland SA (former Softbank SA) decided to dispose the shares of AWiM Mediabank SA. On 28 April 2006 the Company concluded the agreement for sale of 100,265 shares of AWiM Mediabank SA, owner of the radio station PiN 102 FM. The disposed shares constituted 100% of share capital and voting interest at the General Meeting of Shareholders of AWiM Mediabank SA. The buyer was Prokom Investments SA based in Gdynia, Poland. The sale price equalled PLN 4,500 thousand.
7. Earnings per share Basic earnings per share are computed by dividing net profit for the financial period by the average weighted number of ordinary shares outstanding during that financial period. Diluted earnings per share are computed by dividing net profit for the financial period by the adjusted (due to diluting impact of potential shares) average weighted number of ordinary shares outstanding during that financial period, adjusted by the factor of conversion of bonds convertible to ordinary shares. The below tables present net profits and numbers of shares used for calculation of basic and diluted earnings per share: 12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Net profit attributable to Shareholders of Asseco Poland SA 160,913 74,565 Net profit (loss) on discontinued operations attributable to Shareholders of Asseco Poland SA 0 4,119 Net profit on continued operations attributable to Shareholders of the Parent 160,913 70,446 Company, used for calculation of basic and diluted earnings per share
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 55
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Average weighted number of ordinary shares outstanding, used for calculation of basic earnings per share 46,250,808 25,174,713 Diluting impact of the convertible bonds issued 0 30,276 Adjusted average weighted number of ordinary shares, 46,250,808 25,204,989 used for calculation of diluted earnings per share The Group's calculation of the average weighted number of ordinary shares during 2007 includes 46,250,808 shares.
8. Dividends By resolution of the General Meeting of Shareholders of Asseco Poland SA, 32% (PLN 18,578 thousand) of the net profit for the year 2006 was allocated to payment of a divided which amounted to PLN 0.40 per share, while the remaining amount (PLN 39,184 thousand) was transferred to reserve capital.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 56
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
9. Property, plant and equipment Computers and Tangible assets Land and Transport Other tangible other office under Total 31 December 2007 buildings vehicles assets equipment construction
As at 1 January 2007, less depreciation and impairment write downs 14,508 10,247 3,551 1,009 0 29,315
Additions, of which: 8,969 48,360 20,120 8,424 8,689 94,562 Purchases 991 16,302 7,152 808 7,347 32,600 Merger of the Company with Asseco Poland SA (the acquired company) 277 15,440 5,181 3,026 740 24,664 Taking control over subsidiaries 3,863 13,953 5,915 1,803 231 25,765 Other changes 3,838 2,665 1,872 2,787 371 11,533
Reductions, of which: 939 (17,923) (5,863) (1,721) (4,628) (29,196) Depreciation charge for the period reported ( ) (1,463) (17,174) (5,343) (1,243) 0 (25,223) Impairment write downs ( ) 0 0 0 0 0 0 Other changes ( ) 2,402 (749) (520) (478) (4,628) (3,973)
Foreign currency differences on translation of foreign subsidiaries (+/ ) (133) (922) (397) (138) (128) (1,718) As at 31 December 2007, less depreciation 24,283 39,762 17,411 7,574 3,933 92,963
As at 1 January 2007 Gross value 20,555 41,718 8,760 4,333 0 75,366 Depreciation and impairment write downs ( ) (6,047) (31,471) (5,209) 3,324 0 (46,051) Net book value as at 1 January 2007 14,508 10,247 3,551 1,009 0 29,315
As at 31 December 2007 Gross value 31,839 83,752 26,030 11,387 4,061 157,069 Depreciation and impairment write downs ( ) (7,423) (43,068) (8,222) (3,675) 0 (62,388) Foreign currency differences on translation of foreign subsidiaries (+/ ) (133) (922) (397) (138) (128) (1,718) Net book value as at 31 December 2007 24,283 39,762 17,411 7,574 3,933 92,963
As at 31 December 2007, tangible fixed assets with the book value of PLN 4,096 thousand served as security for the bank credits taken out. Liabilities under the credits secured with those assets as at 31 December 2007 amounted to PLN 13,463 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 57
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Computers and Tangible assets Land and Transport Other tangible 31 December 2006 other office under Total buildings vehicles assets equipment construction
As at 1 January 2006, less depreciation and impairment write downs 18,889 13,410 3,432 1,442 42 37,215
Additions, of which: 308 5,525 1,595 30 0 7,458 Purchases 308 5,480 1,595 21 0 7,404 Other changes 0 45 0 9 0 54
Reductions, of which: (4,689) (8,725) (1,476) (426) (42) (15,358) Depreciation charge for the period reported ( ) (985) (5,985) (1,278) (391) 0 (8,639) Reclassification to assets held for sale ( ) (3,450) 0 0 0 0 (3,450) Sale of the company AWiM Mediabank SA ( ) (163) (266) (2) (17) 0 (448) Reclassification of leasing ( ) 0 (2,033) 0 0 0 (2,033) Other changes ( ) (91) (441) (196) (18) (42) (788) As at 31 December 2006, less depreciation 14,508 10,210 3,551 1,046 0 29,315
As at 1 January 2006 Gross value 25,095 42,439 8,954 6,363 42 82,893 Depreciation and impairment write downs ( ) (6,206) (29,029) (5,522) (4,921) 0 (45,678) Net book value as at 1 January 2006 18,889 13,410 3,432 1,442 42 37,215
As at 31 December 2006 Gross value 18,953 46,755 9,537 5,888 0 81,133 Depreciation and impairment write downs ( ) (4,445) (36,545) (5,986) (4,842) 0 (51,818) Net book value as at 31 December 2006 14,508 10,210 3,551 1,046 0 29,315
As at 31 December 2006, tangible fixed assets with the book value of PLN 7,829 thousand served as security for the bank credits taken out. Liabilities under those credits as at 31 December 2006 amounted to PLN 2,446 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 58
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
10. Intangible assets
Cost of Software, patents 31 December 2007 development Goodwill Other items Total and licenses work
Purchase price as at 1 January 2007, less amortization 56 5,662 0 9 5,723
Additions, of which: 874 86,177 910,789 144,144 1,141,984 Purchases 0 4,560 36,679 1,905 43,144 Merger of the Company with Asseco Poland SA (the acquired company) 594 66,970 768,244 138,256 974,064 Taking control over subsidiaries 280 9,448 25,487 2,010 37,225 Other changes 0 5,199 80,379 1,973 87,551
Reductions, of which: ( ) (271) (12,336) 0 (259) (12,866) Amortization charge for the period reported ( ) (271) (12,134) 0 (232) (12,637) Impairment write downs ( ) 0 0 0 0 0 Other changes ( ) 0 (201) 0 (27) (228)
Foreign currency differences on translation of foreign subsidiaries (+/ ) 0 (559) (1,433) (190) (2,182) As at 31 December 2007, less amortization 659 78,945 909,356 143,704 1,132,664
As at 1 January 2007 Purchase price 222 29,689 438 4,834 35,183 Amortization and impairment write downs ( ) (166) (24,027) (438) (4,829) (29,460) Net book value as at 1 January 2007 56 5,662 0 5 5,723
As at 31 December 2007 Purchase price 1,096 114,286 910,789 148,949 1,175,120 Amortization and impairment write downs ( ) (437) (34,782) 0 (5,055) (40,274) Foreign currency differences on translation of foreign subsidiaries (+/ ) 0 (559) (1,433) (190) (2,182) Net book value as at 31 December 2007 659 78,945 909,356 143,704 1,132,664
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 59
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
In 2007 the Group made no impairment write downs on intangible assets. As at 31 December 2007 the Group carried out an impairment test on goodwill with the book value of PLN 768,244 thousand that resulted in 2007 from the Company's merger with Asseco Poland SA (the acquired company), constituting a cash generating centre. This item was measured at the discounted cash flows expected over a 5 year period supplemented with the residual value determined assuming no growth in the coming years (the discount rate applied was 11%). The model assumed future cash flows were determined taking into account the latest financial forecasts approved by the Management, which reflect the existing and prospective orders portfolio. The test indicated there is no need to make impairment write downs on goodwill. The Group also conducted a sensitivity analysis in connection with the impairment test on goodwill arising from the Company's merger with Asseco Poland SA (the acquired company). In the sensitivity analysis different discount rates were used in order to determine their impact on the recoverable value of the cash generating centre. When the terminal discount rate of 14.63% is applied, the value resulting from discounted future cash flows is equal to the analyzed goodwill increased by the balance sheet value of the logo, fixed assets and current assets. As the terminal break even point was higher than weighted average cost of capital applicable to the Company, no impairment write downs were made on goodwill arising from the companies' merger. In 2006 the Group made impairment write downs on intangible assets in the amount of PLN 5,426 thousand. Subject to such revaluation write downs were mainly licences and software utilized when implementing outside IT projects as well as for internal purposes of the Group. Merger of Softbank SA with Asseco Poland SA (the acquired company) On 4 January 2007 the Company merged with Asseco Poland SA (the acquired company) which is further explained in section the Merger of Softbank SA with Asseco Poland SA. Under the merger transaction, shareholders of the acquired company received 17,735,815 shares of the Company. Fair value of the issuance amounted to PLN 975,470 thousand and was calculated based on the Issuer's stock quote of 4 January 2007, which equalled PLN 55 per share. The Issuer purchased shares of the acquired company in the years 2004 and 2005, hence, as at 4 January 2007, it already held a 21.92% stake in acquired company's share capital. Therefore, the above mentioned transaction was accounted for as a gradual merger of business entities. Asseco Poland SA (former Softbank SA) purchased the shares in the acquired company successively: • on 30 September 2004 17.54% stake, • on 31 December 2005 additional 4.38% stake, and • on 4 January 2007, when Softbank SA merged with Asseco Poland SA (the acquired company). The below presented assessment of financial effects of the merger with Asseco Poland SA (the acquired company) was based on the determined fair values of identifiable assets, liabilities and contingent liabilities. The resulted goodwill was determined at PLN 768,244 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 60
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Book values Book values as Book values as Book values as as at the date at the date of at the date of at the date of of acquisition acquisition of acquisition of acquisition of of 78.08% 78.08% stake 6.21% stake 17.54% stake stake
Fixed assets 306,673 129,773 77,896 6,628 Property, plant and equipment 23,235 23,235 9,138 5,385 Intangible assets 205,709 29,542 26,693 411 Consolidation goodwill 66,583 66,583 32,133 0 Financial assets valued at fair value through profit or 52 52 7,811 383 loss Long term receivables 8,512 8,512 583 0 Deferred income tax assets 2,549 1,816 1,500 412 Long term deferred expenses 33 33 38 37 Current assets 224,810 224,752 154,602 70,989 Inventories 2,933 2,933 979 1,353 Deferred expenses 18,570 18,512 13,358 2,275 Receivables 62,227 62,227 51,025 51,906 Loans granted 6,330 6,330 1,838 216 Cash and short term deposits 134,750 134,750 87,402 15,239 TOTAL ASSETS 531,483 354,525 232,498 77,617
Shareholders' equity 367,931 190,644 139,712 71,350 Minority interests 77,536 77,536 13,302 627 Long term liabilities 13,761 13,750 1,936 208 Deferred income tax reserves 2,356 2,345 1,423 68 Long term reserves 63 63 54 140 Long term financial liabilities 11,342 11,342 459 0 Current liabilities 72,265 72,595 77,548 5,432 Liabilities 55,390 55,390 62,689 3,424 Reserves 7,160 7,500 11,759 808 Deferred expenses 9,705 9,705 3,100 1,200 TOTAL SHAREHOLDERS' EQUITY AND 531,483 354,525 232,498 77,617 LIABILITIES
Net value of assets 367,931 190,644 139,712 71,350 Percentage of net assets purchased 78.08% 6.21% 17.54% Net value of assets purchased 287,281 8,676 12,515 Purchase price 990,117 28,741 56,907 Purchase related expenses 291 50 610 Total cost of purchase 990,408 28,791 57,517
Goodwill 703,127 20,115 45,002
Total goodwill 768,244 The costs behind recognition of goodwill on the Company's merger with Asseco Poland SA (the acquired company) are substantiated by the synergy effects including: a) possibility of using the Company's management information systems enabling more accurate planning and control of the conducted business activities, b) possibility of cost optimization thanks to combination of the back office supporting the Company's operations, c) possibility of cost reduction thanks to optimization and coordination of sales force activities of both the companies, d) limitation of mutual competition in the domestic market thanks to closer cooperation, Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 61 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise e) promotional benefits arising from being a member of the Asseco Group, wider recognition in the market, higher credibility for the customers. As part of identification of assets and determination of their fair values, the trademark "Asseco", with an indefinite period of use, was treated separately and measured at PLN 137,600 thousand. The indefinite period of use was adopted on the basis of factors that are usually analyzed when determining the useful life of intangible assets, inter alia the expected use of an asset by the Group, stability of the industry a given asset is utilized in, changes in demand for services provided using a given asset, anticipated period of maintaining control over such asset. Also taking into account that, as at the trademark valuation date, the Group's long term strategy assumes conducting business operations under the trademark of "Asseco" both in the domestic and foreign markets, adopting an indefinite period of useful life that logo was justified. Acquisition of the Building Automation Department (DAB) On 1 January 2007 the Company acquired a non cash contribution in the form of an organized part of the Prokom Software SA enterprise – the Building Automation Department (DAB), which is also described in section the Merger of Softbank SA with Asseco Poland SA. In return for the DAB contribution, the Company assigned 1,070,000 shares with the issuance price of PLN 37.70 per share, making up the total issuance fair value of PLN 40,339 thousand. On 1 March 2007 Asseco Poland SA sold the Building Automation Department to Asseco Systems SA. The below presented assessment of financial effects of the DAB acquisition was based on the determined fair values of identifiable assets, liabilities and contingent liabilities. Book value Fair value as at the as at the acquisition date acquisition date
Property, plant and equipment 135 364 Inventories 396 396 Trade accounts receivable 744 607 Other assets 4,230 4,537 TOTAL ASSETS 5,505 5,904
Trade accounts payable 304 252 Reserves 0 472 Accrued expenses 309 309 Other liabilities 116 949 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 731 1,983
Net value of assets 4,774 3,921 Purchase price 40,339 Purchase related expenses 100 Total cost of purchase 40,439
Goodwill 36,518 Merger of Asseco Business Solutions SA with the companies Softlab, Softlab Trade, Wapro and Safo On 29 March 2007 the Management Boards of the companies Asseco Business Solutions SA, Safo Sp. z o.o., Softlab Sp. z o.o., Softlab Trade Sp. z o.o. and Wa Pro Sp. z o.o. signed a merger plan. The merger was effected by increasing the share capital of Asseco Business Solutions SA by the amount of PLN 65,069,570 through issuance of 6,506,957 shares of series B with a par value of PLN 10 each. The merger shares were allocated to the partners in the companies of Safo Sp. z o.o., Softlab Trade Sp. z o.o., Softlab Sp. z o.o. and Wapro Sp. z o.o., proportionally to their respective equity interests.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 62 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The merger was registered on 1 June 2007 by the District Court of the Capital City of Warsaw, XIII Commercial Department of the National Court Register. The presented assessment of financial effects of the companies' merger was based on provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. Provisional Provisional Provisional Provisional value of value of value of value of net assets of net assets of net assets of net assets of Softlab Sp. z Softlab Trade Wapro Sp. z Safo Sp. z o.o. o.o. Sp. z o.o. o.o.
Fixed assets 4,656 233 771 2,268 Property, plant and equipment 3,789 208 508 820 Intangible assets 22 9 167 1,321 Deferred income tax assets 726 16 96 104 Long term deferred expenses 119 0 0 23 Current assets 11,085 1,683 5,485 2,804 Inventories 150 0 43 84 Receivables 5,647 1,580 4,824 588 Cash and short term deposits 3,968 62 301 1,108 Other assets 1,320 41 317 1,024 TOTAL ASSETS 15,741 1,916 6,256 5,072
Shareholders' equity 6,933 1,467 1,920 3,344 Liabilities 8,808 449 4,336 1,728 Bank credits and loans 0 0 0 151 Liabilities 8,808 449 4,336 1,577 TOTAL SHAREHOLDERS' EQUITY AND 15,741 1,916 6,256 5,072 LIABILITIES
Net value of assets 6,933 1,467 1,920 3,344 Percentage of net assets purchased 100% 100% 100% 100% Net value of assets purchased 6,933 1,467 1,920 3,344 Cost of purchase 49,389 27,685 4,016 13,335 Goodwill 42,456 26,218 2,096 9,991
Goodwill recognized by ABS SA 80,761 Adjustment in goodwill made at the level of the Asseco Poland Group 382
Goodwill after the consolidation adjustment 80,379 Merger of Asseco Poland SA with Prokom Software SA On 1 April 2008 the Company merged with Prokom Software SA which is described in more detail in section the Merger of Asseco Poland SA with Prokom Software SA. Under the merger transaction, shareholders of the acquired company received 19,847,748 ordinary bearer shares of series F. Fair value of the issuance amounted to 1,446 PLN 901 thousand and was calculated based on the Issuer's stock quote of 1 April 2008, which equalled PLN 72.90 per share. As a result of earlier purchases of stakes of shares in the acquired company, as at 1 April 2008 the Issuer already held a 21.49% equity interest in the acquired company; therefore, the above mentioned transaction was accounted for as a gradual merger of business entities.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 63 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Because until the date of publication of these consolidated financial statements, financial figures on the consolidated net assets of the Prokom Software Group as at the merger date are not available, for the time being it is not possible to present a reconciliation of financial effects of the merger with Prokom Software SA. However, goodwill at the unconsolidated level has been initially estimated at PLN 1,178,720 thousand and presented in the Non Consolidated Annual Report of Asseco Poland SA for the year 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 64 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Software, patents Cost of development work Other items Total 31 December 2006 and licenses
Purchase price as at 1 January 2006, less amortization 733 12,513 960 14,206 Additions, of which: 0 1,964 7 1,971 Purchases 0 1,847 7 1,854 Other changes 0 117 0 117 Reductions, of which: ( ) (613) (8,875) (962) (10,450) Amortization charge for the period reported ( ) (286) (3,823) (20) (4,129) Impairment write downs ( ) (327) (4,926) (173) (5,426) Sale of the company AWiM Mediabank SA ( ) 0 (126) 0 (126) Other changes ( ) 0 0 (769) (769) As at 31 December 2006, less amortization 120 5,602 5 5,727
As at 1 January 2006 Purchase price (gross book value) 3,946 29,611 1,027 34,584 Amortization and impairment write downs ( ) (3,213) (17,098) (67) (20,378)
Net book value as at 1 January 2006 733 12,513 960 14,206
As at 31 December 2006 Purchase price (gross book value) 829 27,947 266 29,042 Amortization and impairment write downs ( ) (709) (22,345) (261) (23,315)
Net book value as at 31 December 2006 120 5,602 5 5,727
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 65
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
11. Consolidation goodwill
31 December 2007 31 December 2006
(audited) (audited)
Gladstone Consulting Ltd 43,816 49,888 Asseco Systems SA 14,224 14,224 Asseco Slovakia Group 129,084 0 Asseco Business Solutions SA 2,575 6,962 Sawan SA 2,714 2,714 ZUI Novum Sp. z o.o 262 262 FIBA Software S.r.l. 37,876 0 Net Consulting S.r.l. 52,830 0 ADH Soft Sp. z o.o. 4,225 0 AP Automation + Productivity Group 67,792 0 Sintagma UAB Sp. z o.o. 50,496 0 Anica System SA 43,723 0 Pexim Group 117,734 0 567,351 74,050 Under the agreements for acquisition of shares in Gladstone Consulting Limited, UAB Sintagma Sp. z o.o., Pexim d.o.o., AP Automation + Productivity AG, Net Consulting S.R.L., FIBA S.R.L. and LCS International a.s., the Group holds call options for the remaining shares in those companies. The goodwill on acquisition of shares in the above mentioned companies, disclosed as at the balance sheet date, has been increased by the respective amounts of goodwill that would arise from purchasing the remaining equity interests, as if such purchases were made by the Group as at the balance sheet date. As at the balance sheet date the Parent Company estimated the value of future payment for the minority interests, which was recognized as the cost of acquisition and accounted for as a financial liability, as further described in Note 24 to these consolidated financial statements. Impairment tests of consolidation goodwill Consolidation goodwill is subject to impairment testing on an annual basis. Goodwill resulting from acquisition of subsidiaries was tested for impairment of value as at 31 December 2007. Recoverable value of the cash generating centres (to which goodwill was allocated) was determined on the basis of their value in use by applying the DCF model. The calculations were based on the following uniform assumptions: • for each subsidiary there were analyzed the so called business units which, when put together, comprise the budget and forecasts of the whole subsidiary company; • detailed forecasts covered the period of 5 years, for which increasing cash flows were assumed, while for further time of each subsidiary operations the residual value was computed assuming no growth in cash flows; • the assumed increases in cash flows depended upon the strategy of the entire Group, tactical plans of individual companies, they accounted for the conditions in particular markets by geography and sector, and at the same time they reflected the present and potential order portfolios. The potential orders portfolio presumes gaining new clients while keeping the present ones; • the first year cash flow forecast was based on the annual budget for the whole Group as approved by the Management Board of the Parent Company; • the forecasts for foreign subsidiaries assumed growth denominated in PLN; • the discount rate applied corresponded to weighted average cost of capital which equals 11%. The performed impairment test indicated that none of the recognized consolidation goodwill items shall be subject to an impairment write down as at 31 December 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 66
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Parent Company also conducted a sensitivity analysis in connection with the conducted impairment tests on goodwill arising from acquisition of shares in its subsidiary companies. In the sensitivity analysis different discount rates were used in order to determine their impact on the recoverable value of the cash generating centre. The percentage values presented below correspond to the terminal discount rates, the application of which would bring the discounted future cash flow values down to the analyzed goodwill increased by the net value of assets of a given subsidiary company. As the terminal break even points were higher than weighted average cost of capital applicable to individual subsidiary companies, no impairment write downs were made on goodwill arising from acquisition of shares in those companies. Terminal discount rate of investment profitability Gladstone Consulting Ltd 21.6% Asseco Systems SA 23.5% Asseco Slovakia Group 24.5% Asseco Business Solutions Group 14.5% Sawan SA 66.3% ZUI Novum Sp. z o.o 61.4% FIBA Software S.r.l. 16.5% Net Consulting S.r.l. 12.0% ADH Soft Sp. z o.o. 25.6% AP Automation + Productivity Group 17.1% Sintagma UAB Sp. z o.o. 11.2% Pexim Group 16.2% In 2006 a write down of PLN 7,000 thousand was made due to the merger of Asseco Systems SA and Koma SA. During the period reported and corresponding period, the consolidation goodwill changed as follows: 31 December 2007 31 December 2006
(audited) (audited)
Consolidation goodwill at the beginning of period (excluding impairment 81,050 84,715 write downs) AWiM Mediabank SA 0 51 ZUI Novum Sp. z o.o. 262 262 Sawan SA 2,714 2,714 Asseco Systems SA 21,224 21,224 Asseco Business Solutions SA 6,962 7,619 Gladstone Consulting Limited 49,888 52,845
Increase in consolidation goodwill due to acquisition of shares 244,650 0 FIBA Software S.r.l. 22,893 0 Net Consulting S.r.l. 32,734 0 ADH Soft Sp. z o.o. 4,225 0 Asseco Slovakia Group: Datalock a.s. 13,266 0 LCS International a.s. 13,195 0 MPI Slovakia s.r.o. 1,864 0 Berit a.s. 5,943 0 Disig a.s. 370 0 Kryha spol. s.r.o. 111 0 Sintagma UAB Sp. z o.o. 13,410 0 AP Automation + Productivity Group 44,098 0 Pexim Group 48,818 0 Anica System SA 43,723
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 67 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Increase in consolidation goodwill arising from the Company's merger 85,762 0 with Asseco Poland SA (the acquired company): Merger with the Asseco Slovakia Group 30,274 0 Acquisition of Asseco Czech Republic a.s. 55,488 0 (in the form of a non cash contribution)
Increase in consolidation goodwill due to call options 175,269 0 under the concluded agreements FIBA Software S.r.l. 15,038 0 Net Consulting S.r.l. 20,778 0 Sintagma UAB Sp. z o.o. 37,228 0 Pexim d.o.o. 68,916 0 AP Automation+Productivity AG 24,283 0 LCS International a.s. 9,026
Decrease in goodwill due to impairment write downs ( ) (7,000) (7,000) Asseco Systems SA (7,000) (7,000)
Decrease in goodwill due to disposal of companies ( ) 0 0
Decrease in goodwill due to reclassification to assets held for sale ( ) 0 (51) AWiM Mediabank SA 0 (51)
Decrease in goodwill due to dilution of shareholdings (3,046) 0 in associated companies ( ) Asseco Business Solutions SA (3,046) 0
Decrease in goodwill due to recognizing deferred income tax (1,341) (657) not disclosed in the prior periods ( ) Asseco Business Solutions SA (1,341) (657)
Decrease in goodwill on consolidation of Gladstone Consulting Ltd. (2,396) 0 due to revaluation of financial liability under the put option held
Foreign currency differences on translation of goodwill (5,597) (2,957) arising from foreign subsidiaries (+/ ) Gladstone Consulting Ltd. (3,676) (2,957) FIBA Software S.r.l. (55) 0 Net Consulting S.r.l. (682) 0 Sintagma UAB Sp. z o.o. (142) 0 AP Automation + Productivity Group (589) 0 Asseco Czech Republic a.s. 824 0 Asseco Slovakia Group (1,277) 0
Total book value at the end of period 567,351 74,050
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 68 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of shares in Asseco Czech Republic a.s. On 1 January 2007 the Issuer acquired a non cash contribution in the form of 100% equity interest in Asseco Czech Republic a.s. In return for this contribution, the Company assigned 2,140,000 shares with the issuance price of PLN 37.70 per share, making up the total issuance fair value of PLN 80,678 thousand, whereas expenses related directly to the acquisition of Asseco Czech Republic a.s. amounted to PLN 300 thousand. The goodwill arising from the purchase of Asseco Czech Republic a.s. amounted to PLN 55,488 thousand and it was recognized on the basis of estimated fair values (equal to book vales) of identifiable assets, liabilities and contingent liabilities. The fair values of identifiable assets and liabilities of Asseco Czech Republic a.s. as at the acquisition date are provided below: Fair value as at
the acquisition date
Fixed assets 22,857 Property, plant and equipment 8,275 Intangible assets 9,530 Investments in associated undertakings valued under the equity method 1,089 Long term receivables 1,890 Deferred income tax assets 2,073 Current assets 60,467 Inventories 3,563 Receivables 35,534 Cash and short term deposits 19,302 Other assets 2,068 TOTAL ASSETS 83,325
Shareholders' equity 25,490 Long term liabilities 14,734 Interest bearing bank credits, loans and debt securities 14,712 Other long term liabilities 22 Current liabilities 43,102 Interest bearing bank credits, loans and debt securities 7,067 Liabilities 31,383 Reserves 2,904 Other liabilities 1,748 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 83,326
Net value of assets 25,490 Percentage of net assets purchased 100% Net value of assets purchased 25,490 Purchase price 80,978
Goodwill 55,488 The costs behind recognition of goodwill on the acquisition of shares in Asseco Czech Republic a.s. are substantiated by the synergy effects including: a) possibility of using the Asseco's management information systems enabling more accurate planning and control of the conducted business activities, b) possibility of cost reduction thanks to optimization and coordination of sales force activities of both the companies, c) limitation of mutual competition in the local market thanks to closer cooperation, Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 69 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise d) access to the sources of financing enabling faster development and geographical coverage, lower cost of financing, e) access to information of the neighbouring markets, including information on the competition as well as potential cooperation partners, f) opportunity to expand the Group's offer in the market that company operates on with the solutions of the Asseco Group portfolio, g) promotional benefits arising from being a member of the Asseco Group, wider recognition in the market, higher credibility for the customers. Acquisition of Pexim d.o.o. On 18 December 2007 Asseco Adria SA concluded an agreement for acquisition of a 60% stake in Pexim d.o.o. The total value of transaction amounted to PLN 64,567 thousand. The goodwill arising from the purchase of shares in Pexim d.o.o. amounted to PLN 48,818 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of Pexim d.o.o. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 7,505 Property, plant and equipment 5,133 Intangible assets 1,648 Deferred income tax assets 724 Current assets 42,653 Inventories 6,247 Receivables 26,761 Cash and short term deposits 9,184 Other assets 461 TOTAL ASSETS 50,158
Shareholders' equity 26,248 Minority interests 1,322 Liabilities 22,588 Bank credits and loans 21 Liabilities 21,564 Reserves 347 Other liabilities 656 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 50,158
Net value of assets 26,248 Percentage of net assets purchased 60% Net value of assets purchased 15,749 Purchase price 64,567
Goodwill 48,818
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 70 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of FIBA Software S.r.l. On 26 April 2007, Asseco Romania SA concluded an agreement for acquisition of shares in the company FIBA Software S.r.l. seated in Bucharest. Subsequently, there were purchased 70 shares in FIBA Software S.r.l. representing 70% of share capital of that company. The cost of this acquisition was PLN 23,339 thousand. The goodwill arising from the purchase of shares in FIBA amounted to PLN 22,893 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of FIBA Software S.r.l. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 794 Property, plant and equipment 787 Intangible assets 7 Current assets 2,263 Deferred expenses 11 Trade accounts receivable 19 Cash and short term deposits 2,232 TOTAL ASSETS 3,057
Shareholders' equity 637 Liabilities 2,420 Liabilities 2,378 Deferred income tax reserve 10 Other liabilities 32 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 3,057
Net value of assets 637 Percentage of net assets purchased 70% Net value of assets purchased 446 Purchase price 19,339 Purchase related expenses 4,000 Total cost of purchase 23,339
Goodwill 22,893
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 71 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of Net Consulting S.r.l. On 26 April 2007, Asseco Romania SA concluded an agreement for acquisition of shares in the company Net Consulting S.r.l. seated in Bucharest. Subsequently, there were purchased 700 shares in Net Consulting S.r.l. representing 70% of share capital of that company. The cost of this acquisition was PLN 38,234 thousand. The goodwill arising from the purchase of shares in Net Consulting amounted to PLN 32,734 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of Net Consulting S.r.l. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 2,081 Property, plant and equipment 1,912 Intangible assets 134 Deferred income tax assets 34 Current assets 17,219 Inventories 2,998 Deferred expenses 270 Receivables 8,674 Cash and short term deposits 5,253 Other assets 25 TOTAL ASSETS 19,300
Shareholders' equity 7,856 Liabilities 11,444 Liabilities 9,482 Reserves 293 Other liabilities 1,668 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 19,300
Net value of assets 7,856 Percentage of net assets purchased 70% Net value of assets purchased 5,499 Purchase price 31,302 Purchase related expenses 6,932 Total cost of purchase 38,233
Goodwill 32,734
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 72 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of ADH Soft Sp. z o.o. On 28 May 2007, the Issuer acquired 55 shares in the Warsaw based company ADH Soft Sp. z o.o. The shares represent 55% of share capital and the same voting interest at the General Meeting of that company. The cost of this acquisition was PLN 3,333 thousand. The goodwill arising from the purchase of shares in ADH Soft amounted to PLN 4,225 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of ADH Soft Sp. z o.o. as at the acquisition date are provided below: Provisional value as at the acquisition date
Fixed assets 709 Property, plant and equipment 628 Intangible assets 59 Deferred income tax assets 22 Current assets 833 Inventories 19 Deferred expenses 37 Receivables 525 Cash and short term deposits 252 TOTAL ASSETS 1,542
Shareholders' equity (892) Liabilities 2,434 Liabilities 2,092 Other liabilities 342 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,542
Net value of assets (892) Percentage of net assets purchased 55% Net value of assets purchased (491) Purchase price 3,300 Purchase related expenses 33 Total cost of purchase 3,333 Goodwill attached to the acquired share in net assets 3,824
Goodwill attributable to the Group as at the control take over date 4,225
Acquisition of Anica System SA On 30 September 2007 Asseco Poland SA signed an agreement for sale of its entire shareholding in Anica System SA to Asseco Business Solutions SA for the amount of PLN 56,064,022. These shares were previously purchased by the Company on 28 September 2007 and 4 October 2007. In the period from 4 October 2007 to 30 November 2007, Anica System SA was an associated company of Asseco Poland SA. The Asseco Poland Group took control over Anica System SA from the day Anica System SA received the court decision on registration of changes to the Anica System's articles of association with the subject to cancel the voting privileges on shares of Anica System. From that moment Asseco Poland SA (and subsequently Asseco Business Solutions SA) held 60.56% of the share capital and the same voting interest at the General Meeting of Shareholders of Anica System SA. The total acquisition price paid by Asseco Business Solutions SA for the shares in Anica System SA equalled PLN 56,625 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 73 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The goodwill arising in the Asseco Poland Group from the purchase of shares in Anica System SA amounted to PLN 43,617 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of Anica System SA as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 8,385 Property, plant and equipment 7,575 Intangible assets 448 Long term loans granted 52 Deferred income tax assets 310 Current assets 17,575 Inventories 1,562 Receivables 7,209 Cash and short term deposits 8,594 Other assets 210 TOTAL ASSETS 25,960
Shareholders' equity 20,010 Liabilities 5,950 Liabilities 4,377 Reserves 266 Other liabilities 1,307 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 25,960
Net value of assets 20,010 Percentage of net assets purchased 60.56% Net value of assets purchased 12,118 Acquisition price paid by Asseco Business Solutions SA 56,625 Goodwill arising in Asseco Business Solutions SA 44,507 Adjustment in goodwill by the Asseco Poland gain on sale of shares in Anica System, and the amount of Anica System profit attributable to the Asseco Group for the period it maintained significant influence over Anica System (784)
Goodwill in the Asseco Poland Group 43,723
Acquisition of Disig a.s. On 26 October 2007 Asseco Slovakia acquired a 51% stake in the company Disig a.s. When determining the goodwill, Asseco Slovakia a.s. took into account the acquisition cost of PLN 927 thousand (equivalent of SKK 8,508 thousand). The acquisition cost included also a variable price component depending on the level of net profit achieved by Disig, a.s. for the financial year 2007, estimated at PLN 272 thousand (equivalent of SKK 2,500 thousand). The goodwill arising from the purchase of shares in Disig a.s. amounted to PLN 370 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 74 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The provisional values of identifiable assets and liabilities of Disig a.s. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 981 Property, plant and equipment 316 Intangible assets 665
Current assets 1,148 Inventories 18 Receivables 234 Cash and short term deposits 121 Other assets 775 TOTAL ASSETS 2,129
Shareholders' equity 1,092 Liabilities 1,037 Bank credits and loans 27 Liabilities 878 Deferred income tax reserve 132 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2,129
Net value of assets 1,092 Percentage of net assets purchased 51% Net value of assets purchased 557 Purchase price 927
Goodwill 370
Acquisition of Kryha s.r.o. On 4 December 2007 Slovanet a.s. signed an agreement for acquisition of shares in Kryha spol. s.r.o. representing 51% of its share capital. The transaction value amounted to PLN 955 thousand (equivalent of SKK 8,785 thousand) and it was taken into account in the determination of goodwill. The goodwill arising from the purchase of shares in Kryha spol. s.r.o. amounted to PLN 111 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of Kryha s.r.o. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 1,379 Intangible assets 1,358 Deferred income tax assets 21 Current assets 275 Receivables 275 TOTAL ASSETS 1,654
Shareholders' equity 1,654 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,654 Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 75 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Net value of assets 1,654 Percentage of net assets purchased 51% Net value of assets purchased 844 Purchase price 955
Goodwill 111
Acquisition of Datalock, a.s. On 8 January 2007, Asseco Slovakia SA signed an agreement for acquisition of 51.04% shares of the company Datalock, a.s. On 15 March 2007, the Slovak Antimonopoly Office gave its permission to effect this transaction. The goodwill arising from the purchase of shares in Datalock a.s. amounted to PLN 13,266 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The total cost of acquisition of shares depended on the amounts of net profit achieved by Datalock a.s. for the years 2006 and 2007, and amounted to PLN 15,427 thousand. The provisional values of identifiable assets and liabilities of Datalock a.s. as at the acquisition date are provided below: Provisional value as at the acquisition date
Fixed assets 2,131 Property, plant and equipment 1,827 Intangible assets 179 Long term investments 125 Deferred income tax assets 0 Current assets 10,239 Inventories 398 Receivables 5,869 Cash and short term deposits 3,710 Other assets 262 TOTAL ASSETS 12,370
Shareholders' equity 4,235 Liabilities 8,135 Liabilities 7,916 Reserves 0 Deferred income tax reserve 219 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 12,370
Net value of assets 4,235 Percentage of net assets purchased 51.04 % Net value of assets purchased 2,161 Purchase price 15,427
Goodwill 13,266
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 76 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Acquisition of LCS International a.s. On 4 May 2007, Asseco Slovakia a.s. concluded an agreement for acquisition of a 55.03% stake of shares in LCS International a.s. The Group has exercised control over the company LCS International a.s. since 26 July 2007, after satisfying the conditions under the shares acquisition agreement, i.e. having obtained permissions of the Antimonopoly Office of Slovakia and the Antimonopoly Office of Czech Republic for acquisition of shares in the said company by Asseco Slovakia a.s. The total value of transaction amounted to PLN 16,731 thousand. The goodwill arising from the purchase of shares in LCS International a.s. amounted to PLN 13,195 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The provisional values of identifiable assets and liabilities of LCS International a.s. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 1,344 Property, plant and equipment 985 Intangible assets 95 Long term investments 32 Deferred income tax assets 232 Current assets 10,836 Inventories 69 Receivables 5,373 Cash and short term deposits 5,351 Other assets 43 TOTAL ASSETS 12,180
Shareholders' equity 6,425 Liabilities 5,755 Bank credits and loans 5,283 Liabilities 472 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 12,180
Net value of assets 6,425 Percentage of net assets purchased 55.03% Net value of assets purchased 3,536 Purchase price 16,731
Goodwill 13,195
Acquisition of MPI Slovakia s.r.o. On 6 July 2007 Asseco Slovakia purchased 51% of shares in MPI Slovakia s.r.o. The total price of this acquisition amounted to PLN 1,115 thousand and it depended upon the amount of net profit achieved by MPI Slovakia for the year 2007. On 27 July 2007 there was signed an agreement for transfer of shares that finalized the process of acquiring 51% of shares in MPI Slovakia s.r.o. The goodwill arising from the purchase of shares in MPI Slovakia s.r.o. amounted to PLN 1,060 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 77 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
For determination of goodwill the Group took into account the acquisition cost of PLN 1,147 thousand. The provisional values of identifiable assets and liabilities of MPI Slovakia s.r.o. as at the acquisition date are provided below: Provisional value as at the acquisition date
Fixed assets 1,330 Property, plant and equipment 885 Intangible assets 445 Current assets 938 Inventories 13 Receivables 840 Cash and short term deposits 67 Other assets 18 TOTAL ASSETS 2,268
Shareholders' equity 271 Liabilities 1,997 Bank credits and loans 681 Liabilities 1,315 Deferred income tax reserve 1 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2,268
Net value of assets 271 Percentage of net assets purchased 51% Net value of assets purchased 138 Purchase price 2,003
Goodwill 1,864
Acquisition of Berit a.s. On 19 June 2007, Asseco Slovakia purchased 55.43% of shares in Berit a.s. The acquisition price will be determined between PLN 10,704 thousand and PLN 19,736 thousand, among others depending upon the amount of net profit achieved by Berit in the years 2006–2008. The Group has exercised control over the company Berit a.s. since 21 August 2007, after satisfying the conditions under the shares acquisition agreement, i.e. having obtained permissions of the Antimonopoly Office of Slovakia and the Antimonopoly Office of Czech Republic for acquisition of shares in the said company by Asseco Slovakia a.s. For determination of goodwill the Group took into account the acquisition cost of PLN 11,048 thousand. The goodwill arising from the purchase of shares in Berit a.s. amounted to PLN 5,860 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 78 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The provisional values of identifiable assets and liabilities of Berit a.s. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 9,035 Property, plant and equipment 2,568 Intangible assets 5,829 Deferred income tax assets 638 Current assets 6,951 Inventories 186 Receivables 3,250 Cash and short term deposits 2,219 Other assets 1,296 TOTAL ASSETS 15,986
Shareholders' equity 9,494 Liabilities 6,492 Bank credits and loans 246 Liabilities 6,246 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 15,986
Net value of assets 9,494 Percentage of net assets purchased 55.43% Net value of assets purchased 5,263 Purchase price 11,205
Goodwill 5,943
Acquisition of AP Automation + Productivity AG On 10 September 2007 Asseco Germany SA signed an agreement for acquisition of the IT company, namely AP Automation + Productivity AG with the seat in Karlsruhe, Germany. Asseco Germany SA purchased 490,799 shares of AP Automation + Productivity AG, constituting an 80% shareholding in the share capital of that company. The total value of transaction amounted to PLN 37,972 thousand. The goodwill arising from the purchase of shares in AP Automation + Productivity Group amounted to PLN 43,872 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 79 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The provisional values of identifiable assets and liabilities of AP Automation + Productivity Group as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 20,012 Property, plant and equipment 579 Intangible assets 18,695 Other assets 739 Current assets 16,688 Inventories 499 Receivables 10,939 Cash and short term deposits 4,767 Other assets 484 TOTAL ASSETS 36,700 Shareholders' equity (6,126) Minority interests 369 Liabilities 42,457 Bank credits and loans 21,825 Liabilities 10,566 Reserves 2,722 Other liabilities 7,345 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 36,700
Net value of assets (6,126) Percentage of net assets purchased 80% Net value of assets purchased (4,901) Purchase price 37,972 Goodwill attached to the acquired share in net assets 42,873
Goodwill attributable to the Group as at the control take over date 44,098 Acquisition of Sintagma UAB Sp. z o.o. On 14 September 2007 there was signed an agreement for acquisition of shares in Sintagma UAB Sp. z o.o. with the seat in Vilnius, Lithuania. Asseco Poland SA purchased 50,616 shares of Sintagma UAB, constituting a 56.24% shareholding in the share capital of that company. The goodwill arising from the purchase of shares in Sintagma UAB Sp. z o.o. amounted to PLN 13,288 thousand and it was recognized on the basis of provisional values of identifiable assets, liabilities and contingent liabilities. This is a temporary allocation only, the final determination of fair value of net assets is being prepared, hence the disclosed goodwill may be subject to change. The acquisition cost adopted for determination of goodwill included also a variable price component depending on the levels of net profit and operating profit achieved by Sintagma UAB Sp. z o.o. for the financial year 2007, which was measured at PLN 3,676 thousand. In the event the forecasted levels of profit are not attained or are exceeded, the presently measured goodwill shall be adjusted accordingly.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 80 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The provisional values of identifiable assets and liabilities of Sintagma UAB Sp. z o.o. as at the acquisition date are provided below: Provisional value as at
the acquisition date
Fixed assets 678 Property, plant and equipment 503 Intangible assets 170 Current assets 8,989 Inventories 558 Receivables 7,259 Cash and short term deposits 1,034 Other assets 138 TOTAL ASSETS 9,667
Shareholders' equity 5,140 Liabilities 4,527 Liabilities 4,167 Other liabilities 360 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 9,667
Net value of assets 5,140 Percentage of net assets purchased 56.24% Net value of assets purchased 2,891 Purchase price 16,301
Goodwill 13,410
12. Investments in associated companies As at 31 December 2007 the Parent Company's associated companies are Prokom Software SA, D. Trust Certifikacna Autorita, a.s., Prvni Certifikacni Autorita, a.s., Datalock s.r.o., Tedis a.s. and Crystal Consulting s.r.o. Whereas, as at 31 December 2006 the Issuer's only associated company was Asseco Poland SA (the acquired company). The above mentioned investments are valued at their cost of purchase. On 11 December 2007, as a result of partial execution of the agreement, Asseco Poland SA acquired 543,000 ordinary bearer shares of Prokom Software SA which, in aggregate with Prokom shares already held by Asseco, represent 10.96% of the share capital of Prokom Software SA and entitle to 2,003,600 votes or 13.69% voting interest at the Prokom's general meeting of shareholders. As at the balance sheet date shares in Prokom Software SA were carried at purchase cost which amounted to PLN 338,187 thousand. The market value of the stake of shares owned in that company equalled PLN 278,467 thousand as at 31 December 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 81 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The table below presents condensed information on the investments held by the Asseco Poland Group. 31 December 2007 31 December 2006
(audited) (audited)
Fixed assets 1,101,187 128,976 Current assets 883,494 211,432 Long term liabilities 131,645 13,749 Current liabilities 596,629 72,596 Net assets 1,256,408 189,847 Sales revenues 1,938,053 315,357 Net profit 246,625 52,874 Book value of investment 337,104 97,360 Both as at the end of 2007 and 2006, the shares held in associated companies did not serve as security for any contracted bank credit; however, until 31 December 2006 the registered pledge established on shares in Asseco Poland SA (the acquired company) was not released. By court decision, the pledge established on shares of Asseco Poland SA was deleted from the register on 25 January 2007.
13. Financial assets available for sale
31 December 2007 31 December 2006 Long term (audited) (audited)
Shares 236 0 236 0
31 December 2007 31 December 2006 Short term (audited) (audited)
Shares 22 0 22 0
14. Financial assets held to maturity
31 December 2007 31 December 2006 Long term (audited) (audited)
Bonds 394 0 394 0
31 December 2007 31 December 2006 Short term (audited) (audited)
Bonds 10,628 34,313 Cash deposits 5,040 0 15,668 34,313 When it comes to investing spare cash, short term corporate bonds and Treasury bonds characterized by high liquidity are an alternative to bank deposits.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 82 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
As at 31 December 2007, financial assets held to maturity served, within the limit of PLN 9,685 thousand, as security for guarantees (of due performance of contracts and tender deposits) issued by the bank maintaining the Parent Company's account. As at 31 December 2006, they served as security limited to PLN 7,980 thousand for bank guarantees (of due performance of contracts and tender deposits) extended by the bank maintaining the Parent Company's account. The above mentioned securities are valued using the amortized cost method, as at 31 December 2007 the fair value of bonds does not diverge from their balance sheet value.
15. Financial assets carried at fair value
31 December 2007 31 December 2006 Long term (audited) (audited)
Treasury bonds 240 298 Financial instruments embedded in trade contracts 551 499 Other items 0 120 791 917
31 December 2007 31 December 2006 Short term (audited) (audited)
Treasury bonds 53 509 Forward contracts for purchase of EUR and USD 70,100 69,077 Financial instruments embedded in trade contracts 962 388 Call option for purchase of Asseco Poland SA shares 0 14,106 Other items 77 0 71,192 84,080 As at 31 December 2007, the Parent Company held a number of concluded forward transactions for purchase or sale of foreign currencies – EUR and USD. These instruments are valued at fair value at each balance sheet date. Valuation of the aforementioned assets as at 31 December 2007 equalled PLN 70,100 thousand. Whereas, as at 31 December 2006 the valuation of concluded forward transactions amounted to PLN 69,077 thousand. As at 31 December 2007 the short and long term Treasury bonds served as security for bank guarantees (of due performance of contracts and tender deposits) up to the amount of PLN 9,685 thousand. Whereas, as at 31 December 2006 the short and long term Treasury bonds served as security for bank guarantees (of due performance of contracts and tender deposits) up to the amount of PLN 807 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 83 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The table below presents the timing distribution of foreign currency cash flows under the currency derivatives and forward contracts.
Embedded currency derivatives Currency forward contracts Maturity EUR ’000 PLN ’000 USD ’000 PLN ’000 USD ’000 PLN ’000 EUR ’000 PLN ’000 EUR ’000 PLN ’000 SKK ’000 PLN ’000 USD ’000 PLN ’000 USD ’000 PLN ’000 Receivable Receivable Receivable Receivable Payable Payable Buy Buy Sell Sell Sell Sell Buy Buy Sell Sell 2008 01 690 3 582 2 157 8 005 (155) (517) 2 700 9 765 2 983 8 753 2008 02 690 3 588 2 157 8 012 (121) (402) 1 700 6 212 (6 100) (18 169) 8 977 28 354 2008 03 690 3 595 6 002 21 347 (1 899) (6 607) 2 500 12 163 60 044 6 446 (200) (608) 2 623 8 050 2008 04 690 3 601 3 499 13 563 (806) (3 243) 800 3 221 (1 000) (3 018) 5 187 16 010 2008 05 690 3 607 3 875 15 141 (943) (3 837) 1 650 6 355 0 0 3 932 12 432 2008 06 690 3 613 4 039 15 831 (979) (3 986) (6 650) (31 106) 8 300 39 593 (800) (2 445) 3 024 9 263 2008 07 690 3 619 3 936 15 407 (920) (3 737) 2 490 9 665 (860) (2 624) 4 113 12 747 2008 08 690 3 625 2 567 9 693 (269) (1 017) 840 3 400 (5 000) (15 363) 10 376 32 583 2008 09 930 4 895 5 278 19 667 (1 440) (5 328) (7 780) (31 355) 9 500 46 734 (300) (916) 2 918 9 101 2008 10 930 4 903 3 232 13 052 (882) (3 582) 840 3 414 0 0 3 127 9 738 2008 11 930 4 909 5 537 21 032 (1 996) (7 474) 910 3 700 (200) (609) 3 569 10 910 2008 12 930 4 916 1 920 7 522 (294) (1 113) (1 700) (6 776) 2 600 12 800 (300) (916) 4 059 12 864 2009 01 1 001 5 299 6 193 22 172 (2 244) (7 794) 920 3 718 (1 000) (2 959) 6 237 17 642 2009 02 1 001 5 306 3 096 12 375 (809) (3 264) 920 3 721 (1 000) (2 959) 2 697 8 557 2009 03 1 001 5 313 3 120 12 478 (797) (3 226) 920 3 725 (1 440) (4 274) 2 737 8 683 2009 04 1 001 5 320 3 242 (847) (3 433) 1 520 6 047 (2 200) (6 508) 4 367 12 969 2009 05 5 327 6 095 23 089 (2 158) (8 069) 920 3 733 0 0 2 777 8 826 2009 06 1 001 5 334 3 244 12 958 (832) (3 361) 920 3 737 (440) (1 344) 2 957 9 390 2009 07 1 001 5 340 4 963 20 126 (1 610) (6 608) 920 3 741 0 0 5 196 2009 08 1 001 5 347 3 366 13 395 (872) (3 499) 920 3 745 0 0 1 561 4 744 2009 09 1 001 5 353 3 469 13 893 (807) (3 363) 910 3 697 (500) (1 529) 2 025 6 551 2009 10 1 001 5 359 1 843 7 062 (44) (172) 910 3 700 0 0 1 741 5 141 2009 11 1 001 5 366 1 843 7 063 (28) (115) 910 3 705 0 0 1 541 4 535 2009 12 1 011 5 428 1 843 7 064 (369) (1 413) 910 3 710 (2 030) (6 209) 5 000 17 062 2010 01 1 843 7 065 (369) (1 413) 2 870 8 676 2010 02 1 843 7 065 (369) (1 413) 1 250 3 776 2010 03 1 843 7 065 (369) (1 413) 1 250 3 775 2010 04 1 843 7 065 (369) (1 413) 1 260 3 709 2010 05 1 843 7 065 (369) (1 413) 1 240 3 642 2010 06 1 843 7 065 (369) (1 413) 1 500 4 391 2010 07 1 843 7 064 (369) (1 413) 1 500 4 248 2010 08 1 843 7 063 (369) (1 413) 1 500 4 249 Total 21 259 112 544 101 265 389 449 (25 071) (96 464) (16 130) (69 237) 46 430 203 999 60 044 6 446 (23 370) (70 448) 102 525 316 568
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 84
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
16. Loans granted
31 December 2007 31 December 2006 Long term (audited) (audited)
Loans, of which: 778 0 granted to associated companies 774 0 778 0
31 December 2007 31 December 2006 Short term (audited) (audited)
Loans, of which: 767 210 granted to associated companies 433 0 767 210 The above mentioned loans are valued using the amortized cost method.
17. Long and short term deferred expenses
31 December 2007 31 December 2006 Long term (audited) (audited)
Maintenance services 996 1,216 Discount of guarantees settled according to the percentage of completion of relevant contracts 416 0 Other items 527 18 1,939 1,234
31 December 2007 31 December 2006 Short term (audited) (audited)
Maintenance services 9,205 9,624 Discount of guarantees settled according to the percentage of completion of relevant contracts 604 1,226 Pre paid insurance 937 136 Pre paid subscriptions 297 12 Pre paid rents 1,394 91 Pre paid subcontractor services 2,045 0 Pre paid consulting services 1,221 0 Costs of issuances, merger and acquisition of non cash contributions 4,392 2,776 Sponsoring for sport activities 0 1,250 Other items 5,597 449 25,692 15,564 At the end of 2007 and 2006, deferred expenses consisted mainly of: • costs of maintenance services that will be successively incurred in future periods, • costs of merger with Prokom Software SA and issuance of shares, • pre paid subcontractor services.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 85
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
18. Inventories
31 December 2007 31 December 2006
(audited) (audited)
Computer hardware and software licenses for resale 36,615 16,900 36,615 16,900 In 2007 the Group increased revaluation write downs on inventories by the amount of PLN 4,345 thousand; such write downs resulted from periodic verification of the value of merchandise in inventory. Whereas, in 2006 revaluation allowances for inventories were increased by PLN 757 thousand. In 2007 sales of merchandise and materials aggregated at PLN 294,779 thousand, as compared with PLN 112,108 thousand in 2006. No inventories were used to secure bank credits or loans neither during 2007 nor 2006.
19. Implementation contracts Both in 2007 and 2006, the Asseco Group executed a number of so called IT implementation contracts, such as the Integrated Information System (ZSI) for the bank PKO BP SA, Central Register of Vehicles and Drivers (CEPiK) for the Ministry of Internal Affairs and Administration and many other smaller contracts. In line with IAS 11, sales generated from such contracts are recognized according to the percentage of completion of relevant contracts. In 2007 and 2006, the Group assessed the percentage of completion of the executed IT implementation contracts using the "cost" method (this is by determining the relation of costs incurred to overall project costs) or according to the "work effort" method. The following table includes basic data on realized IT implementation contracts.
31 December 2007 31 December 2006
(audited) (audited)
Costs incurred due to execution of IT contracts ( ) (425,616) (399,076) Profit (loss) on execution of IT contracts 262,846 145,483 Invoiced sales revenues from execution of IT contracts 731,384 582,940 Receivables relating to valuation of IT contracts 21,958 34,058 Liabilities relating to valuation of IT contracts ( ) (63,333) (72,439) Foreign currency differences on translation of foreign subsidiaries 93 0
20. Long term and short term receivables
31 December 2007 31 December 2006 Long term receivables (audited) (audited)
Trade accounts receivable 28,618 42,465 Receivables from guarantees of due performance of contracts 3,599 10,545 Deposits 2,529 0 Receivables due to acquisition of shares 7,899 0 Other receivables 1,255 1,922 Revaluation write down ( ) (1,572) 0 42,328 54,932 Long term trade accounts receivable and receivables from non invoiced deliveries are not interest bearing and were valued at the present (discounted) value.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 86 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
As at 31 December 2007, other long term receivables did not serve as security for any bank guarantees (of due performance of contracts and tender deposits). As at 31 December 2006, other long term receivables secured bank guarantees (of due performance of contracts and tender deposits) up to the amount of PLN 202 thousand.
Short term receivables
31 December 2007 31 December 2006 Trade accounts receivable (audited) (audited)
Trade accounts receivable including: 357,367 149,062 Receivables from related companies, of which: 13,264 5,513 from the parent company of Asseco Poland SA and from subsidiaries of the parent company 0 5,513 from associated companies 13,264 0 Receivables from other companies 344,103 143,549 Revaluation write down on doubtful accounts receivable ( ) (12,413) (2,883) 344,955 146,179 Trade accounts receivable are not interest bearing. The Group has a relevant policy based on selling its products to reliable clients only. Owing to that in the management's opinion the credited sales risk would not exceed the level covered by allowances for doubtful accounts as established by the Company. Ageing of trade accounts receivable, as at 31 December 2007 Amount Structure Receivables not yet due 304,766 81.6% Receivables past due up to 3 months 47,508 12.7% Receivables past due over 3 months 21,298 5.7% 373,572 100%
Ageing of trade accounts receivable, as at 31 December 2006 Amount Structure Receivables not yet due 163,035 86.4% Receivables past due up to 3 months 23,903 12.7% Receivables past due over 3 months 1,706 0.9% 188,644 100% The conditions for transactions with related companies are presented in Note 28 to these consolidated financial statements. As at 31 December 2007, receivables and future receivables in the amount of PLN 183,372 thousand served as security for the contracted bank credits. Liabilities under those credits as at 31 December 2007 amounted to PLN 200,962 thousand. As at 31 December 2006, receivables in the amount of PLN 13,174 thousand served as security for the contracted bank credits. Liabilities by virtue of those credits as at 31 December 2006 amounted to PLN 4,710 thousand. As at 31 December 2006, future receivables provided for in the concluded trade agreements served as security for the contracted bank credits with the limit up to PLN 72,182 thousand. As at 31 December 2006, there were no liabilities by virtue of those credits. Both as at the end of 2007 and 2006, trade accounts receivable did not serve as security for any bank guarantees (of due performance of contracts and tender deposits).
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 87 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Taxes and import tariffs recoverable, receivables from social security 31 December 2007 31 December 2006 and other regulatory benefits (audited) (aud ited)
Value added tax 2,637 0 Corporate income tax 1,435 238 Other items 543 143 4,615 381
31 December 2007 31 December 2006 Other receivables (audited) (audited)
Receivables from book valuation of IT contracts 21,958 34,058 Receivables from non invoiced deliveries 4,012 7,402 Receivables from guarantees of due performance of contracts 10,652 778 Advance payments to other suppliers 14,961 155 Other receivables 165,952 5,799 Revaluation write down on other doubtful receivables ( ) (679) (567) 216,856 47,625 Receivables from valuation of IT contracts (implementation contracts) result from the surplus of the progress in execution of implementation contracts over invoices issued. Receivables relating to non invoiced deliveries are connected with the sale of third party licenses and maintenance services, for which invoices have not yet been issued for the whole period of licensing or provision of maintenance services. Receivables relating to guarantees of due performance of contracts constitute a security in cash transferred to customers in order to compensate for any possible losses should the company not fulfil its contractual obligations. Other receivables, as at 31 December 2007, included mainly the payment of PLN 135,995 thousand made by the Parent Company before the balance sheet date, for acquisition of shares in Prokom Software SA, the ownership of which was transferred in 2008 after the conditions precedent agreed between the parties have been satisfied. In 2007 and 2006, revaluation write downs on trade accounts receivable and other receivables were as follows:
Increase due to Foreign As at the Company's merger currency As at 1 January with Asseco Poland SA differences on 31 December Established Reversed ( ) Applied ( ) 2007 (the acquired company) translation of 2007 (audited) and company take foreign (audited) overs subsidiaries (+/ )
3,450 6,485 8,745 (3,434) (222) (360) 14,664
As at As at 1 January 2007 Established Reversed ( ) Applied ( ) 31 December 2006 (audited) (audited)
2,547 2,069 (806) (360) 3,450
21. Cash and cash equivalents, restricted cash
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 88 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
31 December 2007 31 December 2006
(audited) (audited)
Cash in bank 117,633 29,182 Cash on hand 798 25 Short term deposits 123,084 18,148 241,515 47,355
31 December 2007 31 December 2006
(audited) (audited)
Restricted cash 86,289 0 86,289 0 The interest on cash in bank is calculated with variable interest rates which depend on bank overnight deposit rates. Short term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group and earn interest at the respective short term deposit rates. Restricted cash, disclosed as at 31 December 2007, included mainly the amount of PLN 85,609 thousand deposited in a separate current account, restricted until the date the acquisition of shares by Asseco Adria SA is entered in the register, which has already taken place in 2008. As at 31 December 2007, short term deposits did not serve as security for any bank guarantees (of due performance of contracts and tender deposits). As at 31 December 2006, short term deposits secured bank guarantees (of due performance of contracts and tender deposits) up to the amount of PLN 977 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 89 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
22. Share capital and reserve capitals
31 December 2007 31 December 2006
Share capital (audited) (audited)
Par value Number of Value of Number of Value of Shares Series on 1 share shares shares shares shares Ordinary shares – series A 1.00 25,174,713* 25,175 2,000,000 2,000 Ordinary shares – series B 1.00 3,210,000 3,210 98 0 Ordinary shares – series C 1.00 17,735,815 17,736 102 0 Ordinary shares – series R 1.00 30,276 30 0 0 Ordinary shares – series D 1.00 295,000 295 98 0 Ordinary shares – series E 1.00 4,644,580 4,644 102 0 Ordinary shares – series F 1.00 0 0 9,800 10 Ordinary shares – series G 1.00 0 0 10,200 10 Ordinary shares – series H 1.00 0 0 2,940,000 2,940 Ordinary shares – series I 1.00 0 0 3,030,000 3,030 Ordinary shares – series J 1.00 0 0 30,000 30 Ordinary shares – series K 1.00 0 0 1,964,998 1,965 Ordinary shares – series L 1.00 0 0 2,025,202 2,025 Ordinary shares – series M 1.00 0 0 20,000 20 Ordinary shares – series N 1.00 0 0 4,000,000 4,000 Ordinary shares – series P 1.00 0 0 526,940 527 Ordinary shares – series P 1.00 0 0 687,542 688 Ordinary shares – series P 1.00 0 0 104,830 105 Ordinary shares – series O 1.00 0 0 49,080 49 Ordinary shares – series O 1.00 0 0 5,200 5 Ordinary shares – series O 1.00 0 0 2,080 2 Ordinary shares – series O 1.00 0 0 7,720 8 Ordinary shares – series S 1.00 0 0 3,200,000 3,200 Ordinary shares – series O 1.00 0 0 336,520 337 Ordinary shares – series U1 1.00 0 0 1,459,646 1,459 Ordinary shares – series U2 1.00 0 0 1,367,854 1,368 Ordinary shares – series T 1.00 0 0 1,396,701 1,397 51,090,384 51,090 25,174,713 25,175 * the disclosed shares were combined as at the merger date of Softbank SA and Asseco Poland SA
Par value on shares All the issued shares have the par value of PLN 1 per share and have been fully paid up. During the year 2007 the following changes in the Parent Company share capital and share premium account were observed: following the merger with Asseco Poland SA (the acquired company), the Parent Company share capital was raised by PLN 17,735,815 through issuance of 17,735,815 ordinary bearer shares of series C, with a par value of PLN 1 each, which were assigned to the then existing shareholders of the acquired company. The premium of the shares issuance price over their par value amounted to PLN 957,734 thousand. in January 2007, as a result of acquiring a non cash contribution in the form of 100% equity interest in Asseco Czech Republic a.s. as well as a non cash contribution in the form of an organized part of the Prokom Software SA enterprise – the Building Automation Department (DAB), the Parent Company share capital was increased by PLN 3,210 thousand through issuance of 3,210,000 ordinary bearer shares of series B, with a par value of PLN 1 each. The premium of the shares issuance price over their par value amounted to PLN 117,807 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 90
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Company incurred expenses of PLN 3,332 thousand related directly to the issuance of shares under the merger with Asseco Poland SA as well as to the acquisition of non cash contributions of Asseco Czech Republic and DAB, which decreased the amount of share premium achieved. as a consequence of sale of subscription warrants, the Parent Company share capital was increased by PLN 295 thousand through issuance of 295,000 ordinary bearer shares of series D, with a par value of PLN 1 each. The premium of the shares issuance price over their par value amounted to PLN 12,712 thousand. following the exercise of convertible bonds issued under the incentive plan, the Parent Company share capital was increased by PLN 30 thousand through issuance of 30,276 ordinary bearer shares of series R, with a par value of PLN 1 each. The premium of the shares issuance price over their par value amounted to PLN 1,399 thousand. as a result of issuance of 4,644,580 ordinary bearer shares with a par value of PLN 1 each, according to resolution passed by the Extraordinary General Meeting of Shareholders on 15 November 2007, the Parent Company share capital was increased by PLN 4,644 thousand. The premium of the shares issuance price over their par value amounted to PLN 311,900 thousand. The public offering was addressed exclusively to the qualified investors on 10 December 2007. The offered shares were subscribed by 32 qualified investors. As at 31 December 2007, the Parent Company's share capital amounted to PLN 51,090,384 and it was divided into 51,090,384 ordinary shares with a par value of PLN 1 each, which entitled to 51,090,384 votes at the General Meeting of Shareholders of Asseco Poland SA. Reserve capital In accordance with the Polish Commercial Companies Code (PCCC), the reserve capital was established from the premium of the shares issuance price over their par value, less the shares issuance expenses of PLN 1,651,371 thousand. Furthermore, by decisions of the general meetings of shareholders of the Parent Company, the reserve capital was adjusted by the prior years' profits and losses in the total amount of PLN 69,412 thousand. As at 31 December 2007, pursuant to the PCCC, the reserve capital value equalled PLN 1,720,783 thousand, as compared with PLN 283,830 thousand a year ago. According to the provisions of the Polish Commercial Companies Code, one third of the Company's reserve capital, cannot be distributed to shareholders, because it may only serve to cover any potential losses. Reconciliation of equity components to the reserve capital value: Adjustments Merger with Profit for Equity due to Asseco Poland Reserve 31 December 2007 12 months components adoption of (the acquired capital of 2007 IFRS company)
Prior years' retained earnings (deficit) and current 239,063 (105,693) 28,570 (92,528) 69,412 net profit The premium of the shares issuance price over their par 1,651,371 0 0 0 1,651,371 value
1,890,434 (105,693) 28,570 (92,528) 1,720,783
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 91 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Adjustments Profit for Equity due to Reserve 31 December 2006 12 months components adoption of capital of 2006 IFRS
Prior years' retained earnings (deficit) and current net profit 59,420 (57,761) 28,570 30,229 The premium of the shares issuance price over their par value 253,151 0 0 253,151
312,571 (57,761) 28,570 283,380 In 2007 the reserve capital increased due to allocation of a part of the 2006 net profit in the amount of PLN 39,183 thousand as well as due to issuance of shares of series B, C, R, D and E. Whereas, in 2006 the reserve capital increased only due to allocation of a portion of the net profit for the year 2005. Shareholders of Asseco Poland SA have been presented in the General Information section of these consolidated financial statements. Capital from bonds convertible to shares issued due to share based payments The balance of capital from bonds convertible to shares originated from a partial payment for shares in the companies Multinet SA and Polbox SA in the form of shares of Asseco Poland SA (former Softbank SA) with the intention to be transferred at their par value. On 3 July 2000, Asseco Poland SA (former Softbank SA) concluded agreements for acquisition of shares in companies Multinet SA, Pik Net Sp. z o.o. and Polbox Sp. z o.o., under which it committed itself to provide a motivational program for the managerial staff of those companies. The incentive program assumed issuing 32,748 bonds convertible to shares and it was subject to achieving the specified target results by those companies. The expected results were not achieved. With regard to the above, the bonds convertible to shares have not been and will not be given out to the managerial staff of Multinet SA, Pik Net Sp. z o.o. and Polbox Sp. z o.o. According to the said agreement for acquisition of shares in those undertakings, in such event half of the bonds convertible to shares, this is 16,374 bonds, shall be transferred to the entities which sold those undertakings on the day when the motivational program expires. The purchase price of shares in the above undertakings, as disclosed by the Company, corresponded to the fair value of convertible bonds transferred in return. In November 2005, the Management Board of Asseco Poland SA (former Softbank SA) made a decision to award 16,392 convertible bonds to selected employees of Asseco Poland SA (former Softbank SA). The awarding rules and incentive program criteria were established in March 2006 and they include job seniority, opinion of immediate superiors, competence level and qualifications acquired. The bonds were awarded in October 2006 and they were accounted for at their fair value of PLN 606 thousand as salaries expense in 2006. The fair value of convertible bonds transferred to the Company's employees was determined on the basis of the Company's stock quote as at the date when the decision on allocation of those bonds was taken. In 2006, pursuant to the conditions of the convertible bonds issuance program, the holders of the above mentioned bonds submitted requests for conversion of 30,276 bonds in total. The remaining 2,472 convertible bonds, conversion of which was not applied for, were redeemed and retired. In 2007 those bonds were converted to shares with the total par value of PLN 30 thousand. Reserve capital from foreign currency differences The balance of reserve capital from foreign currency differences is adjusted by foreign currency differences resulting from translation of financial statements of the Group's foreign subsidiary and associated companies.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 92 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Minority interests 31 December 2007 31 December 2006
(audited) (audited)
At the beginning of the period 3,391 2,649 Share in profits of subsidiary companies 29,777 742 Dilution of shareholding in Asseco Business Solutions SA (21,202) 0 Minority interest attributable to Asseco Czech Republic a.s. 19,015 0 Other changes in the Group composition 99,616 0 Dividends for shareholders / minority shareholders (12,356) 0 Foreign currency differences on translation of foreign subsidiaries 1,646 0 Merger of the Company with Asseco Poland SA (the acquired company) 77,736 0 At the end of the period 197,624 3,391
23. Long term and current financial liabilities
31 December 2007 31 December 2006 Long term (audited) (audited)
Financial instruments embedded in trade contracts 74,264 80,236 Liabilities due to acquisition of shares in Gladstone Consulting Ltd 18,228 22,949 Liabilities due to acquisition of shares in Pexim d.o.o. 79,417 0 Liabilities due to acquisition of shares in FIBA 16,228 0 Liabilities due to acquisition of shares in Net Consulting 24,740 0 Liabilities due to acquisition of shares in AP AG 24,283 0 Liabilities due to acquisition of shares in Sintagma UAB Sp. z o.o. 39,215 0 Finance lease commitments 7,098 0 283,473 103,185
31 December 2007 31 December 2006 Short term (audited) (audited)
Financial instruments embedded in trade contracts 55,322 32,236 Finance lease commitments 3,872 0 Liabilities due to acquisition of shares in LCS 11,526 0 Liabilities due to future payments for shares acquired in companies 60,178 0 Other items 306 0 131,204 32,236 As at 31 December 2007, the Group held a number of embedded financial derivatives. They resulted chiefly from the denomination of payments under the concluded trade agreements in EUR or USD. As at 31 December 2007, liabilities due to embedded currency derivatives amounted to PLN 129,586 thousand, whereas such assets equalled PLN 1,513 thousand. As at 31 December 2006, the derivative related liabilities amounted to PLN 112,472 thousand, while the assets equalled PLN 887 thousand. As at 31 December 2005 the Group reported a financial liability in the amount of PLN 23,940 thousand, which reflects the estimated present value of the future payment for the remaining 49% stake of shares in Gladstone. The above liabilities are presented at fair (discounted) value and are accounted for under the amortized cost method. The average discount rate equals ca. 7%. As at 31 December 2007, such liabilities equalled PLN 18,228 thousand, while as at 31 December 2006 they were PLN 22,949 thousand.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 93 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Group agreed to issue stock put options to the minority shareholders of the acquired companies, namely UAB Sintagma, Pexim d.o.o., AP Automation + Productivity AG, Net Consulting S.r.l., FIBA S.r.l. and LCS. Such liabilities correspond to the estimated present value of future payments for the additional stakes of shares in the above mentioned companies. Determination of fair value of liabilities resulting from the possible exercise of stock put options was based on the following assumptions. The Group assumes the stock put options will be exercised by all the minority shareholders, and in consequence the Group will become the owner of 100% of shares in every company mentioned above. Each of the concluded stock options agreements stipulates that the future payment shall be equal to the amount audited net profit for certain, known period of time preceding the option exercise date, multiplied by a predefined fixed rate. Net profit assumed for determining the amount of liability is derived fro the shareholders agreement, under which the company management is obliged to achieve sufficient growth of net earnings. Liabilities originally denominated in foreign currencies have been restated in Polish zlotys at the exchange rate provided by the National Bank of Poland on 31 December 2007. The Group's total exposure to such liabilities amounts to PLN 183,883 thousand, of which:
Earliest stock option Name of company exercise date Assumptions concerning net earnings as per the agreement Net profit achieved for the year preceding Sintagma UAB Sp. z o.o. 2011 04 30 the exercise of the stock option Average net profit achieved for 2 years preceding Pexim d.o.o. 2011 01 01 the exercise of the stock option AP Automation + Net profit achieved for the year preceding 2010 01 01 Productivity AG the exercise of the stock option Average net profit achieved for 2 years preceding Net Consulting S.r.l 2011 01 01 the exercise of the stock option Average net profit achieved for 2 years preceding FIBa S.r.l. 2011 01 01 the exercise of the stock option
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 94 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
24. Interest bearing bank credits and debt securities issued
31 Maximum debt Maximum debt 31 December Effective interest Date of December Short term Name of institution as at as at 2007 rate % maturity 2006 31 December 2007 31 December 2006 (audited) (audited)
WIBOR 1M + Current account credit ING Bank Śląski SA 10,000 10,000 margin not specified 0 0 WIBOR 1M + Current account credit PKO BP SA 100,000 70,000 margin 2007 07 31 0 2,446 WIBOR 1M + Current account credit BPH SA 0 50,000 margin 2007 09 29 0 0 WIBOR 1M + Current account credit Raiffeisen Bank Polska SA 10,000 10,000 margin 2008 10 31 0 0 WIBOR 3M + Current account credit Deutsche Bank 30,000 0 margin 2007 08 29 0 0 WIBOR 1M + Current account credit Bank Millennium 10,000 5,000 margin 2008 04 13 412 4,710 Current account credit SEB VB bankas 1,556 0 VILIBOR + margin 2008 04 17 0 0 Current account credit ČSOB 213 0 BRIBOR + margin not specified 164 0 Current account credit Tatra banka 2,132 0 BRIBOR + margin 2007 03 30 0 0 Current account credit Tatra banka 2,132 0 BRIBOR + margin 2007 11 15 0 0 Current account credit Tatra banka 533 0 BRIBOR + margin 2008 01 31 0 0 Current account credit UniCredit Bank 1,348 0 PRIBOR + margin 2008 06 13 1,006 0 Current account credit UniCredit Bank 1,460 0 PRIBOR + margin 2008 12 15 447 0 Current account credit BW Bank 6,089 0 8.75% not specified 5,720 0 Current account credit Commerzbank 5,015 0 12% not specified 4,764 0 WIBOR 1M + Current account credit Bank Handlowy Citibank 2,000 0 margin 2008 02 28 0 0 WIBOR 1M + Current account credit BPH SA 2,000 0 margin 2007 11 30 0 0 EURIBOR + Current account credit BancPost 944 0 2.10% not specified 944 0 185,422 145,000 13,457 7,156
Other credits:
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 95
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Investment credit ČSOB 13,271 0 EURIBOR + margin 2012 12 31 1,896 0 EURIBOR 1M + 2008 09 30 Current account credit Tatra banka 35,820 0 margin 35,820 0 Loan Sparkasse OÖ 108 0 4.38% 2010 06 30 29 0 Loan AXA 326 0 6.19% not specified 326 0 Loan SüdFactoring 3,718 0 8.50% not specified 3,718 0 Loan ČSOB Leasing, a.s. 24 0 8.10 % 2009 09 06 24 0 PRIBOR 3M + Loan ČSOB Czech Republic 16,176 0 margin 2010 06 30 5,386 0 Loan MPI Partners 439 0 3.00% 2008 12 31 439 0 Loan Banca Intesa A.D. 35,820 3.36% 2008 07 17 21 105,702 0 47,659 0 As at 31 December 2007, the Asseco Poland Group had open credit facilities in current accounts enabling to raise funds of around PLN 185,422 thousand in aggregate. As at the end of period reported, the Group had drawn PLN 13,457 thousand. At the end of the previous year the financing available under credit facilities was PLN 145,000 thousand, and the liabilities thereunder stood at PLN 7,156 thousand. Funds available under other short term credits and loans amounted to PLN 105,702 thousand as at 31 December 2007, of which the Group used PLN 47,659 thousand as at the end of period reported.
31 Maximum debt Maximum debt 31 December Effective interest Date of December Long term Name of institution as at as at 2007 rate % maturity 2006 31 December 2007 31 December 2006 (audited) (audited) Other credits: Loan Sparkasse OÖ 107 0 4.38% 2010 06 30 43 0 Investment credit ČSOB 13,272 0 EURIBOR + margin 2012 12 31 7,583 0 Loan ČSOB Czech Republic 16,176 0 PRIBOR + margin 2010 06 30 8,078 0 PLN 280 mil. till 2008 10 01 580,000 0 186,367 0 WIBOR 1M + PLN 300 mil. Investment credit BPH SA margin till 2012 10 01 609,555 0 202,071 0 As at 31 December 2007, the Asseco Group’s total liabilities under credits contracted and debt securities issued aggregated at PLN 263,187 thousand, and it increased from the level of PLN 7,186 thousand reported at 31 December 2006. Such an increase in liabilities resulted from a dynamic expansion of the Group in 2007 – the merger of Softbank SA with Asseco Poland SA as well as taking out a credit in order to finance the acquisition of shares in Prokom Software SA. In the period reported, margins realized by the lenders to the Asseco Group ranged from 0.5% to 2.8% (vs. 1% to 3% in 2006).
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 96
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
As at 31 December 2007, tangible fixed assets with the book value of PLN 4,096 thousand served as security for the bank credits taken out. Liabilities under the credits secured with those assets as at 31 December 2007 amounted to PLN 13,463 thousand. As at 31 December 2006, tangible fixed assets with the book value of PLN 7,829 thousand served as security for the bank credits taken out. Liabilities under those credits as at 31 December 2006 amounted to PLN 2,446 thousand. As at 31 December 2007, shares in subsidiary companies with the book value of PLN 61,834 thousand as well as shares in subsidiary and associated companies with the total market value of PLN 686,625 thousand served as security for the contracted bank credits, liabilities under which amounted to PLN 195,845 thousand. As at 31 December 2006, shares of Asseco Poland SA (the acquired company) did not serve as security for any contracted bank credit; however, until 31 December 2006 the registered pledge established on those shares was not released. By court decision, the pledge established on shares of Asseco Poland SA was deleted from the register on 25 January 2007. As at 31 December 2007, receivables and future receivables in the amount of PLN 183,372 thousand served as security for the contracted bank credits. Liabilities under those credits as at 31 December 2007 amounted to PLN 200,962 thousand. As at 31 December 2006, receivables in the amount of PLN 13,053 thousand served as security for the contracted bank credits. As at 31 December 2006, there were no liabilities by virtue of those credits. As at 31 December 2006, future receivables provided for in the concluded trade agreements served as security for the contracted bank credits with the limit up to PLN 72,000 thousand. As at 31 December 2006, there were no liabilities by virtue of those credits. As at 31 December 2007, the credits were also secured with a registered pledge on cash receivables gathered on accounts indicated in the credit agreement subject to the limits specified therein. Bonds convertible to shares In November 2005, the Management Board of Asseco Poland SA (former Softbank SA) made a decision to award 16,392 convertible bonds to selected employees of Asseco Poland SA (former Softbank SA). The fair value of convertible bonds transferred to the Company's employees was determined on the basis of the Company's stock quote as at the date when the decision on allocation of those bonds was taken. In the first half of 2007 those bonds were converted to shares with the total par value of PLN 30 thousand.
31 December 2007 31 December 2006
(audited) (audited)
Liability due to issuance of bonds convertible to shares 0 30 0 30
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 97
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
25. Long term and short term reserves for liabilities
Reserve for Reserve for Costs related to Reserve for post Restructuring liabilities under Other warranty on going court employment Total process managerial reserves repairs proceedings benefits contracts
As at 1 January 2007 782 280 2,866 326 0 271 4,525 Reserves established during the financial 4,998 92 0 410 4,167 2,092 11,759 year Merger with Asseco Poland (the acquired company) 351 0 0 69 1,892 148 2,460 Taking control over subsidiaries 639 421 0 599 0 4,874 6,533 Reserves reversed ( ) (212) (77) (518) (44) (1,821) (129) (2,801) Reserves applied ( ) (2,442) (354) (1,438) (528) (1,906) (2,131) (8,799) Foreign currency differences on translation of foreign subsidiaries (+/ ) (114) (24) 0 (22) (93) (319) (572) As at 31 December 2007 4,002 338 910 810 2,239 4,806 13,105 Short term reserves 31 December 2007 3,110 338 498 77 2,239 4,756 11,018 Long term reserves 31 December 2007 892 0 412 733 0 50 2,087
As at 1 January 2006 998 100 67 489 0 11 1,665 Reserves established during the financial year 223 245 2,866 0 0 260 3,594 Reserves reversed ( ) (439) (65) (67) (163) 0 0 (734)
As at 31 December 2006 782 280 2,866 326 0 271 4,525 Short term reserves 31 December 2006 417 280 2,866 46 271 3,880 Long term reserves 31 December 2006 365 0 0 280 0 645
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 98
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Reserve for warranty repairs The provision for costs of warranty repairs relates to handling of the guarantee maintenance service provided by the producers of hardware that was sold to the Group's customers in the years 2007 and 2006. Restructuring reserve Following the merger with Asseco Poland SA (the acquired company), the Parent Company initiated a restructuring process with the main objective to reduce the job positions that were doubled within the merging companies. Reserve for post employment benefits The provision for benefits after the employment period relates entirely to pension benefits which are to be paid to the Group’s employees when they go into retirement. Reserve for liabilities under managerial contracts This reserve is intended for motivation bonuses for our managerial staff for successful performance in the current period. Other reserves Other reserves include, among others, a reserve for contractual penalties payable on delayed execution of the Group's obligations under contracts. As at 31 December 2007 such reserve amounted to PLN 2,525 thousand.
26. Long term and short term trade accounts payable and other liabilities
31 December 2007 31 December 2006 Short term trade accounts payable (audited) (audited)
Accounts payable to related companies, of which: 1,350 12,784 to the parent company of Asseco Poland SA and to the parent company's subsidiary and associated companies 0 12,771 to associated companies 1,350 13 Accounts payable to other companies 187,255 48,451 188,605 61,235 Trade accounts payable are not interest bearing. The conditions for transactions with related companies are presented in Note 28 to these consolidated financial statements.
Liabilities due to taxes, import tariffs, social security and other 31 December 2007 31 December 2006 regulatory benefits payable (audited) (audited)
Value added tax 22,650 10,558 Corporate income tax 37,835 5,207 Personal income tax (from employees) 4,423 1,108 Social Insurance Institution (ZUS) 9,036 1,709 Other items 6,201 72 80,145 18,654 The amount resulting from the difference between VAT payable and VAT recoverable is paid to competent tax authorities on a monthly basis.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 99
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
31 December 2007 31 December 2006 Other long term liabilities (audited) (audited)
Liabilities due to guarantees of due performance of contracts 185 0 Other liabilities 821 0 1,006 0
31 December 2007 31 December 2006 Other short term liabilities (audited) (audited)
Liabilities to employees relating to salaries and wages 9,280 213 Liabilities relating to valuation of IT contracts 63,333 72,439 Liabilities due to non invoiced deliveries 8,789 5,221 Trade prepayments received 4,602 0 Other liabilities 10,526 3,164 96,530 81,037 Other liabilities relate mainly to items resulting from valuation of implementation contracts and non invoiced deliveries. Other liabilities are not interest bearing.
31 December 2007 31 December 2006 Short term accrued expenses (audited) (audited)
Provision for unused holiday leaves 10,262 4,942 Provision for the employee bonuses 17,845 9,830 Provision for non invoiced costs 12,463 5,069 Other items 4,439 0 45,009 19,841 Accrued expenses comprise mainly provisions for unused holiday leaves, provisions for salaries and wages of the current period to be paid out in future periods, which result from the bonus systems applied by the Asseco Group, as well as provisions for current operating expenses of the Group.
31 December 2007 31 December 2006 Long term deferred income (audited) (audited)
Maintenance services 2,869 3,415 Prepayments received 110 0 2,979 3,415
31 December 2007 31 December 2006 Short term deferred income (audited) (audited)
Maintenance services 20,871 10,564 Prepayments received 8,638 0 Other items 173 15 29,682 10,579 The balance of deferred income relates mainly to prepayments for provision of services such as maintenance and IT services.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 100
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
27. Transactions with related companies
Asseco Group sales Asseco Group purchases Asseco Group Asseco Group to related companies from related companies receivables as at liabilities as at in the period of in the period of Name of company 12 months 12 months 12 months 31 31 31 31 ended ended ended 12 months ended December December December December 31 Dec. 2007 31 Dec. 2006 31 Dec. 2007 31 Dec. 2006 2007 2006 2007 2006 (audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited)
Transactions with associated companies Asseco Poland SA (1) 5,368 1,050 0 13 Prokom Software SA 32,660 21,983 7,786 6,496 10,663 5,100 637 581 Comp Soft Sp. z o.o. 6 0 105 0 0 D.Trust Certificana Autorita, a.s. (2) n/a n/a 14 n/a n/a Prvini Certifikacani Autorita, a.s. (2) (2) 849 n/a 100 n/a n/a 39 n/a Comp SA 14 147 8,214 5,415 0 9,502 Postdata SA 11 13 0 1 0 0 Enigma Systemy Ochrony Informacji Sp. z o.o. 0 2 0 0 0 Safe Computing Sp. z o.o. 0 18 400 0 22 488 Novitus SA Transactions with related companies of Prokom Software SA Prokom Investments SA (3) 0 636 563 4,500 71 76 Transactions with subsidiary companies of Prokom Software SA ABG Spin SA 976 17,417 1,436 5,667 105 579 163 SK Galkom Sp. z o.o. 707 4 298 Combidata Poland Sp. z o.o. 2,828 1,116 9 126 2,183 308 2 23 WiedzaNet Sp. z o.o. 107 3,349 0 1,938 38,045 46,157 18,205 23,066 13,264 10,013 1,350 12,784 (1) The company Asseco Poland SA ceased to be an associated company since 4 January 2007 when Softbank SA (the taking over company) and Asseco Poland SA (the acquired company) merged. (2) An associated company of Asseco Czech Republic a.s. (3) As at 31 December 2007 Prokom Investments SA was no longer a company related to Prokom Software SA.
The above presented transactions with the related companies were executed at arm's length and were carried out as part of the statutory business activities of particular companies of the Asseco Poland Group.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 101
WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
28. Related companies The structure of the Asseco Group as at 31 December 2007 is presented in General Information section. Financial results of the Asseco Poland Group companies* The consolidated financial results of the Asseco Group in 2007 comprise the results of Asseco Poland SA and those of the consolidated companies. Below are presented the key financial data of companies subject to consolidation in the 2007 financial statements. Sales revenues Name of company Sales revenues Net profit (loss) 12 months ended 12 months ended 12 months ended 12 months ended
31 December 2007 31 December 2006 31 December 2007 31 December 2006
Asseco Poland SA 443,434 301,117 105,693 57,761 Parent Company www.asseco.pl ADH Soft Sp. z o.o. 1) 4,553 n/a 177 n/a www.adh.com.pl Asseco Adria SA 0 n/a (727) n/a Asseco Business Solutions SA 2) 95,977 29,438 14,305 3,069 www.assecobs.pl Asseco Germany SA 0 n/a 398 n/a Grupa AP Automation + 16,919 n/a (1,308) n/a Productivity AG 3) www.ap ag.com Asseco Slovakia Group 4) 277,030 n/a 25,664 n/a www.asseco.sk Asseco Systems SA 166,437 105,541 7,080 (12,257) www.asseco systems.eu AWiM Mediabank SA 5) n/a 4,992 n/a (1,445) www.mediabank.pl Koma Nord Sp. z o.o. 43,618 38,351 1,314 1036 www.komanord.pl Asseco Romania SA 0 n/a (3,113) n/a FIBA Software S.r.l. 6) 10,084 n/a 4,150 n/a www.fiba.ro Net Consulting S.r.l. 7) 123,692 n/a 7,504 n/a www.netconsulting.ro Net Power SA 8) n/a 0 n/a (90) bezpieczeństwo.pl Sp. z o.o. 9) 0 8 (17) (15) Gladstone Consulting Limited 23,559 22,463 6,250 8,559 Sawan SA 0 136 (238) (213) Sintagma UAB Sp. z o.o. 10) 25,077 n/a 2,843 n/a ZUI Novum Sp. z o.o. 17,789 16,776 2,468 1,515 www.novum.pl 11) Pexim d.o.o. n/a n/a n/a n/a *) Data before consolidation eliminations. The stakes of shares held are disclosed as at 31 December 2007. 1) For the period of being under the Group's control (i.e. since June 2007) the company generated sales revenues of PLN 3,030 thousand and a net profit of PLN 526 thousand. 2) Financial results of Asseco Business Solutions SA include financial results of ABS SA till 31 May 2007 and financial results of the merged companies: ABS, Safo, Softlab, Softlab Trade and Wa Pro for the period from 1 June 2007 to 31 December 2007. The presented figures do not include financial results achieved by the companies merged with ABS: Softlab (sales: PLN 2,261 thousand, net profit: PLN 609 thousand), Softlab Trade (sales: PLN 9,359 thousand, net profit: PLN 8 thousand), Wa Pro (sales: PLN 4,829 thousand, net profit: PLN 1,136 thousand), Safo (sales: PLN 11,472 thousand, net profit: PLN 1,126 thousand) in the period from 1 January 2007 to 31 May 2007. 3) The presented figures include the consolidated sales revenues of the AP Automation + Productivity Group and net profit attributable to shareholders of the parent company of that Group for the period from September to December 2007.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 102
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4) The presented figures include the consolidated sales revenues of the Asseco Slovakia Group and net profit attributable to shareholders of the parent company of that Group. 5) In 2006 the company Mediabank SA was disposed. 6) For the period of being under the Group's control (i.e. since May 2007) FIBA S.r.l. generated sales revenues of PLN 8,402 thousand and a net profit of PLN 3,842 thousand. 7) For the period of being under the Group's control (i.e. since May 2007) Net Consulting S.r.l. generated sales revenues of PLN 97,187 thousand and a net profit of PLN 7,129 thousand. 8) Asseco Poland SA sold the shares in that company in October 2007. 9) The company bezpieczeństwo.pl Sp. z o.o. does not conduct any operating activities. 10) For the period of being under the Group's control (i.e. since 30 September 2007) Sintagma UAB Sp. z o.o. generated sales revenues of PLN 7,942 thousand and incurred a net loss of PLN 366 thousand. 11) The control over Pexim d.o.o. was taken by the Group on 31 December 2007 and therefore sales revenues and earnings generated by that company in 2007 were not included in sales revenues and earnings of the Asseco Group for 2007.
Off balance sheet liabilities concerning related companies As at 31 December 2007, the guarantees and sureties issued by Asseco Poland SA as security for credits contracted by its related companies were as follows: • surety for Asseco Systems SA due to a short term credit in the current account, up to the amount of PLN 15,000 thousand. As at 31 December 2007 the outstanding amount of the investment credit was PLN 412 thousand. As at 31 December 2006 Asseco Poland SA did not have any liabilities due to guarantees and sureties extended to secure credits contracted by its related companies. As at 31 December 2007, sureties issued by Asseco Poland SA to secure other liabilities were as follows: • surety to the contract for construction of a structural network concluded between Asseco Systems SA and Tyco Sp. z o.o. on 26 February 2004. The surety value as at 31 December 2007 was estimated at PLN 6,448 thousand; • surety granted to Bank Millennium SA for liabilities of Asseco Systems SA by virtue of bank guarantees, which were extended by the bank on behalf of that company. The surety value as at 31 December 2007 amounted to PLN 4,500 thousand. As at 31 December 2007 guarantees extended in order to secure due performance of the Group's commercial contracts covered the amount of PLN 49,783 thousand. As at 31 December 2007 the Group's off balance sheet liabilities arising from bank guarantees granted to secure payments and tender deposits equalled PLN 3,515 thousand. As at 31 December 2006, sureties issued by Asseco Poland SA to secure other liabilities were as follows: • surety to the contract for construction of a structural network concluded between Asseco Systems SA and Tyco Sp. z o.o. on 26 February 2004. The surety value as at 31 December 2006 was estimated at PLN 6,896 thousand; • surety granted to Bank Millennium SA for liabilities of Asseco Systems SA by virtue of bank guarantees, which were extended by the bank on behalf of that company. The surety value as at 31 December 2006 amounted to PLN 4,500 thousand. As at 31 December 2007 guarantees and sureties issued by Asseco Slovakia a.s. were as follows: • guarantee granted to the company SNET a.s. on 26 October 2006, in order to secure payment of the acquisition price for the shares in Slovanet a.s. The surety value as at 31 December 2007 was estimated at PLN 8,966 thousand; • bank guarantee issued by Ceskoslovenska obchodni banka a.s., valid till 11 August 2008, for the amount of CZK 71 million due to acquisition of the remaining shares in LCS International a.s. The surety value as at 31 December 2007 was estimated at PLN 9,570 thousand; As at 31 December 2007 guarantees and sureties issued by Slovanet a.s. were as follows: • bank guarantee for execution of the project Internet for Education, issued in the amount of SKK 3 million by Tatrabank in favour of the Ministry of Transportation, Post and Telecommunication of the Slovak Republic, valid till 11 December 2008. The surety value as at 31 December 2007 was estimated at PLN 320 thousand;
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 103 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
• bank guarantee issued by Tatra banka, valid till 31 December 2008, covering the liabilities of Slovanet a.s. towards T Mobile by virtue of services made available. The surety value as at 31 December 2007 was estimated at PLN 213 thousand.
29. Employment
12 months ended 12 months ended Average Group workforce in the reporting period 31 December 2007 31 December 2006 (audited) (audited) Management Board of the Parent Company 8 5 Management Boards of the Group companies 82 10 Production departments 2,667 593 Maintenance departments 731 234 Sales departments 381 70 Administration departments 508 146 Other departments 149 0 Total 4,526 1,058
31 December 2007 31 December 2006 The Group workforce as at (audited) (audited) Management Board of the Parent Company 8 5 Management Boards of the Group companies 105 7 Production departments 2,747 597 Maintenance departments 705 233 Sales departments 391 69 Administration departments 488 130 Other departments 165 0 4,609 1,041
31 December 2007 31 December 2006 Numbers of employees in the Group companies as at (audited) (audited)
Asseco Poland SA 1,135 642 Asseco Slovakia Group 1,785 0 Asseco Systems SA 263 275 Asseco Business Solutions SA 641 77 Asseco Adria SA (at present Asseco South Eastern Europe SA) 1 0 Asseco Germany SA 1 0 ZUI Novum Sp. z o.o. 41 38 Koma Nord Sp. z o.o. 9 9 Sawan SA 0 0 ADH Soft Sp. z o.o. 26 0 Asseco Romania SA 2 0 FIBA Software S.r.l. 25 0 Net Consulting S.r.l. 125 0 Gladstone Consulting Ltd. 1 0 Bezpieczeństwo.pl Sp. z o.o. 0 0 AP Automation + Productivity Group 105 0 Sintagma UAB Sp. z o.o. 124 0 Pexim d.o.o. 325 0 4,609 1,041
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 104 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
30. Off balance sheet liabilities to other companies As at 31 December 2007 and 31 December 2006, the Group was a party to a number of leasing and tenancy contracts or other contracts of similar nature, resulting in the following future liabilities:
31 December 2007 31 December 2006 Liabilities under lease of space (audited) (audited)
Up to 1 year 19,534 4,105 From 1 to 5 years 50,284 11,365 Over 5 years 4,593 1,183 74,411 16,653
31 December 2007 31 December 2006 Liabilities under operating lease of property, plant and equipment (audited) (audited)
Up to 1 year 6,870 674 From 1 to 5 years 12,119 1,182 Over 5 years 36 0 19,025 1,856
31. Objectives and principles of financial risk management The Asseco Group is exposed to a number of risks arising either from the macroeconomic situation of the countries the Group companies operate in as well as from microeconomic situation in individual companies. The main external factors that may have an adverse impact on the Group's financial performance are: (i) fluctuations in foreign currency exchange rates versus the Polish zloty, and (ii) changes in official interest rates. The financial results are also indirectly affected by the pace of GDP growth, value of the public orders for IT solutions, level of capital expenditures made by enterprises, and the inflation rate. Whereas, the internal factors with potential negative bearing on the Group's performance are: (i) risk related to the increasing cost of work, (ii) risk arising from underestimation of the project costs when entering into contracts, and (iii) risk of concluding a contract with a dishonest customer. Foreign currency exposure risk The currency used for presentation of the Group results is Polish zloty, however, many contracts, including the largest ones (CEPiK and ZSI) executed by the Parent Company are denominated in foreign currencies (EUR and USD). With regard to the above the Group is exposed to potential losses resulting from fluctuations in foreign currency exchange rates versus the Polish zloty in the period from concluding a contract till invoicing. Furthermore, the functional currencies of foreign subsidiaries of the Asseco Group are the currencies of the countries they are legally registered in. Consequently, the assets and financial results of such subsidiaries need to be converted to the Polish zlotys and their values presented in the Group financial statements remain under the influence of foreign currency exchange rates. Identification: According to the Group's procedures pertaining to entering into commercial contracts, each agreement that is concluded or denominated in a foreign currency different from the functional currency of the Company or its subsidiary shall be entered into a detailed record. Owing to such solution, any currency risk involved is detected automatically. Measurement: The foreign currency risk exposure is measured by the amount of an embedded financial instrument on one hand, and on the other by the amount of currency derivative instruments concluded in the financial market. All the changes in the value of exposure are closely monitored on a fortnight basis. The procedures applicable to the execution of IT projects require making systematic updates of the project implementation schedules as well as the cash flows generated under such projects.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 105 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Objective : The purpose of counteracting the risk of fluctuations in foreign currency exchange rates is to mitigate their negative impact on the contract margins. Measures: In order to hedge the contracts settled in foreign currencies, the Group concludes simple currency derivatives such as forward contracts, and in case of the embedded instruments under foreign currency denominated contracts – non deliverable forward contracts. Whereas, forward contracts with delivery of cash are applied for foreign currency contracts. Matching the measures to hedge against the foreign currency risk means selecting suitable financial instruments to offset the impact of changes in the risk causing factor on the Group's financial performance (the changes in embedded instruments and concluded instruments are balanced out). Nevertheless, because the project implementation schedules and cash flows generated thereby are characterized by a high degree of changeability, the Group companies are prone to changes in their exposure foreign exchange risk. Therefore, the companies dynamically transfer their existing hedging instruments or conclude new ones with the objective to ensure the most effective matching. It has to be taken into account that the valuation of embedded instruments changes with the reference to the parameters as at the contract signature date (spot rate and swap points), while transferring or conclusion of new instruments in the financial market may only be effected on the basis of current rates available. Hence, it is possible that the value of financial instruments will not be matched and the Group's financial result will be potentially exposed to the foreign currency risk. Interest rate risk Changes in the market interest rates may have a negative influence on the financial results of the Group. The Group is exposed to the risk of interest rate changes primarily in two areas of its business activities: (i) change in value of the interest charged on credit facilities granted by external financial institutions to the Group companies, which are based on a variable interest rate, and (ii) change in valuation of the concluded and embedded derivative instruments, which are based on the forward interest rate curve. More information of the factor (ii) may be found in the description of the currency risk management. Identification: The interest rate risk arises and is recognized by individual companies of the Group at the time of concluding a transaction or financial instrument based on a variable interest rate. All such agreements are subject to analysis by the appropriate departments within the Group companies, hence the knowledge of that issue is complete and acquired directly. Measurement : The Group companies measure their exposure to the interest rate risk by preparing statements of the total amounts resulting from all the financial instruments based on a variable interest rate. Additionally, the Group companies maintain records of debt planned to be incurred during the next 12 months, and in case of long term instruments – for the period of their maturity. Objective : The purpose of reducing such risk is to eliminate incurrence of higher expenses due to the concluded financial instruments based on a variable interest rate. Measures: In order to reduce their interest rate risk, the Group companies may: (i) try to avoid taking out credit facilities based on a variable interest rate or, if not possible, (ii) conclude forward rate agreements. Matching: The Group gathers and analyzes the current market information concerning present exposure to the interest rate risk. For the time being the Group companies do not hedge against changes of interest rates due to a high degree of unpredictability of their credit repayment schedules. Risk of increasing cost of work Salaries account for over 70% of costs related to the implemented projects. Taking into account such high human resource requirements, an increase in salaries may squeeze the margins achieved on the projects and consequently have an unfavourable impact on the Group's results. Identification: Each project that involves personnel employed by the Group is subject to such risk.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 106 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Measurement: The companies analyze the average salaries at particular levels of competence, paying attention to the historical changes and market trends. Objective: The purpose is to keep the costs of products manufactured at the level that ensures achievement of the assumed margins on each project as well as to maintain the position of a competitive provider of IT solutions. Measures: The Group applies a number of measures in order to reduce the risk of negative effects form the rising salaries: (i) employs people in many geographical regions aiming to diversify that risk, (ii) continually monitors the level of salaries in the market not to be taken by surprise, (iii) tries to maintain an appropriate structure of employment within particular levels of competence. Matching: It is difficult to discuss this element of risk management in the context of increasing cost of work. Risk of underestimation of the project cost Most of the Group companies' income is derived from execution of complex information technology projects carried out under long term agreements with a predefined remuneration. Implementation of such projects requires very good planning both in terms of the schedule of work and the resources needed to provide the promised scope of the contract. Here the Group companies follow the complex procedures which facilitate the process of preparation of reliable plans and on the other hand prevent the incurrence of unexpected costs. Identification: The risk of underestimation of the project work effort is identified each time during the analysis of contracts with the customers. The process of information content circulation, either before entering into a contract and during its implementation, is based on the ISO system requirements and guarantees complete transparency of every project. Measurement: In order to determine such risk, the Group companies use a special measure called a register of risks which lists all the potential risks along with their quantification and valuation. The appropriate register entries are updated by the control committees appointed for each larger project. The Asseco companies systematically keep track of the two ratios, CPI and SPI, which enable monitoring of the project performance compatibility with the original plans. Objective : The purpose of avoiding underestimation of the project cost is to prevent against entering into unprofitable contracts. Measures that may be applied by the Group companies in this respect include application of methods (either based on the world recognized standards or proved by own experience) for the estimation of project costs, preparation of work schedules and determination of risks which may hinder due performance, meeting the deadlines or financial terms of the contract. Matching: It is difficult to discuss this element of risk management in the context of underestimation of the project cost. Risk of concluding a contract with a dishonest customer The Group is exposed to the risk of defaulting contractors. This risk is connected firstly with the financial credibility and goodwill of the contractors to whom the Group companies provide their IT solutions, and secondly with the financial credibility of the contractors with whom supply agreements are concluded. Identification: The risk is identified each time when concluding contracts with the customers, and afterwards during the settlement of payments. Measurement: Determination of this type of risk requires the knowledge of complaints or pending judicial proceedings against the client already at the time of signing an agreement. Every two weeks the companies are obliged to control the settlement of payments under the concluded contracts, inclusive of an analysis of the profit and loss accounts for individual projects.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 107 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Objective: The Group strives to minimize this risk in order to avoid financial losses resulting from the commencement and partial implementation of IT solutions as well as sustain the margins adopted for the executed projects. Measures: As the Group operates primarily in the banking and financial sector, its customers do care about their good reputation. Here the engagement risk control is usually limited just to monitoring the timely execution of bank transfers and, if needed, to sending a reminder for an outstanding payment. Yet in case of smaller clients, it is quite helpful to monitor their industry press as well as to analyze earlier experiences of the Group itself and of its competitors. The Group companies conclude financial transaction with reputable brokerage housed and banks. Matching: It is difficult to discuss this element of risk management in such case. Financial liquidity risk The Group monitors the risk of funds shortage using the tool for periodic planning of liquidity. This solution takes into account the maturity deadlines of both investments and financial assets (e.g. accounts receivable, other financial assets) as well as the anticipated cash flows from operating activities. The Group's objective is to maintain a balance between continuity and flexibility of financing by using various sources of funds. The tables below reveal the Group's trade accounts payable as at 31 December 2007 and 31 December 2006, by the maturity period based on the contractual undiscounted payments. Trade accounts payable as at 31 December 2007 Amount Structure Liabilities not yet due 143,132 75.9% Liabilities falling due within 3 months 23,316 12.4% Liabilities falling due within 3 to 12 months 4,841 2.6% Liabilities falling due within 1 to 5 years 17,316 9.1% 188,605 100%
Trade accounts payable as at 31 December 2006 Amount Structure Liabilities not yet due 44,082 72% Liabilities falling due within 3 months 7,581 12.4% Liabilities falling due within 3 to 12 months 123 0.2% Liabilities falling due within 1 to 5 years 9,449 15.4% 61,235 100% The tables below present the aging structure of Group's other financial liabilities as at 31 December 2007 and 31 December 2006. Liabilities Liabilities Liabilities falling due falling due falling due 31 December 2007 Total within within within 3 months 3 to 12 months 1 to 5 years Current account credit 37,685 11,592 49,277 Investment credit 3,482 60,207 171,480 235,170 Loans 460 17,604 18,064 Financial derivatives embedded in IT contracts 9,789 62,101 99,729 171,619 9,789 149,466 275,551 434,806
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 108 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Liabilities Liabilities Liabilities falling due falling due falling due 31 December 2006 Total within within within 3 months 3 to 12 months 1 to 5 years Current account credit 2,476 4,710 7,186 Investment credit Loans Financial derivatives embedded in IT contracts 11,815 59,416 139,468 210,699 11,815 61,892 144,178 217,885
Effects of reducing the foreign currency risk The Group companies try to conclude contracts with their clients in the primary currencies of the countries in which they operate in order to avoid exposure to the risk arising from fluctuations in foreign currency exchange rates versus their own functional currency. The analysis of sensitivity of valuation and settlement of the embedded and concluded derivatives to fluctuations in foreign currency exchange rates versus the Polish zloty (such assets are only held by the Parent Company, hence only changes in the exchange rates of EUR and USD versus PLN were analyzed) shows a potential negative impact of PLN 797 thousand on the Group's financial results in the event of assumed appreciation of PLN versus USD by 10.9% (see: the methods adopted for conducting the sensitivity analysis). Whereas, if PLN gains 4.8% versus EUR, the Group will recognize a negative result of PLN 1,546 thousand. In aggregate, such depreciation of the said foreign currencies against the Polish zloty would decrease the Group's financial result by PLN 2,343 thousand. On the other hand, the analysis of sensitivity conducted assuming the Polish zloty depreciates versus foreign currencies indicates a potential gain to be achieved by the Group on settlement and valuation of the financial derivatives held. If PLN loses 9.2% vs. USD, the Group will recognize a gain of PLN 676 thousand. While a 3.6% increase in the exchange rate of EUR from the base price as of the balance sheet date, would have a positive effect on valuation and settlement of the currency contracts in the amount of PLN 1,158 thousand. In total, the assumed depreciation of the Polish zloty would increase the Group's financial result by PLN 1,834 thousand. Impact on financial result
of the Group Amount USD Book value 10.9% 9.2% exposed to risk Financial assets Forward contracts for purchase of foreign currencies 70,100 46,248 (20,136) 17,032 Long term financial instruments embedded in trade contracts 551 551 (214) 181 Short term financial instruments embedded in trade contracts 962 962 (331) 280
Financial liabilities Long term financial instruments embedded in trade contracts 74,264 54,469 (10,841) 9,169 Short term financial instruments embedded in trade contracts 55,244 42,217 (9,043) 7,648 Balance (797) 676
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 109 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Impact on financial result
of the Group Amount EUR Book value 4.8% 3.6% exposed to risk Financial assets Forward contracts for purchase of foreign currencies 70,100 23,851 (5,042) 3,779 Long term financial instruments embedded in trade contracts 551 0 0 0 Short term financial instruments embedded in trade contracts 962 0 0 0
Financial liabilities Long term financial instruments embedded in trade contracts 74,264 19,614 (1,940) 1,454 Short term financial instruments embedded in trade contracts 55,322 13,105 (1,556) 1,167 Balance (1,546) 1,158 The analysis of sensitivity of trade accounts payable and receivable to fluctuations in the exchange rates of the dollar and euro against the functional currencies of the Group companies, indicates a potential gain of PLN 324 thousand in case the dollar loses 8.1% and 9.3% versus the Romanian lei (RON) and the Serbian dinar (CSD), respectively. The analysis was performed for those currencies because only the Romanian company Net Consulting and the Serbian Pexim hold assets which are settled in foreign currencies and may affect the Group's financial result. In both the companies trade liabilities exceed their trade receivables, hence a weaker dollar would bring favourable effects as those subsidiaries would pay their suppliers at a lower exchange rate. Likewise, if the euro loses 6.6% versus the Romanian lei and 4.8% versus the Serbian dinar, the Group will potentially earn PLN 1,135 thousand. Liabilities in the euro are disclosed by the Romanian company Net Consulting and Asseco Adria, therefore the analysis was conducted for those currencies. Hence, the cumulative effect of the weaker dollar and euro against the functional currencies of the above mentioned companies would increase the Group's financial results by PLN 1,459 thousand. On the other hand, if the dollar appreciates versus the lei and dinar by 8.5% and 9.3% respectively, the Group will potentially recognize an increase of PLN 347 thousand in the balance of trade liabilities over trade receivables settled in the American dollars. Likewise, if the euro gains 6.7% versus the Romanian lei and 3.6% versus the Serbian dinar, the balance of trade liabilities over trade receivables settled in the euro will increase by PLN 936 thousand. Hence, the cumulative effect of the stronger dollar and euro will deteriorate the Group's financial results by PLN 1,283 thousand.
Impact on financial result
of the Group Amount Trade accounts payable and receivable Book value min* max* exposed to risk EUR: Trade accounts receivable 344,956 5,748 (193) 182 Trade accounts payable 188,596 25,786 (1,328) 1,118 Balance (1,135) (936) USD: Trade accounts receivable 344,956 4,038 (348) 348 Trade accounts payable 188,596 7,613 (672) 695 Balance 324 (347) * as described above The foreign currency risk involved in other items of financial assets and liabilities is not substantial.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 110 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Effects of reducing the interest rate risk The Asseco companies generally try to avoid taking out credit facilities based on a variable interest rate. The Parent Company lends money to its subsidiaries by purchasing their zero coupon bonds based on a fixed interest rate, and thereby it reduces taking loans from third party lenders. In case it is necessary to conclude a credit agreement based on a variable interest rate, the Group companies do not really have a strategy for hedging against the rate risk involved. The investment credit taken by the Parent Company, which is based on a variable interest rate and amounts to PLN 186,367 thousand as at the balance sheet date, is the main factor causing interest rate exposure that may have unfavourable impact on the Group's financial results. In aggregate with other companies of the Group, the total amount of outstanding credits based on the WIBOR variable interest rate is PLN 187,367 thousand. Should the underlying interest rate increase by 9.6%, i.e. by 50 basis points (see: the methods adopted for conducting the sensitivity analysis), in 2008 the Group will incur an additional interest expense of PLN 1,016 thousand. On the other hand, if the interest rate falls by 5.5% (i.e. by 34 basis points), in 2008 the Group's interest expense will decrease by PLN 604 thousand in comparison with those projected at the balance sheet date. The sensitivity analysis performed on the credit taken by Asseco Slovakia, based on the PRIBOR variable interest rate, with the amount of PLN 14,917 thousand exposed to the rate risk, shows that if PRIBOR falls by 14.6% (i.e. by 68 basis points) the interest expense will decrease by PLN 79 thousand and will be favourable to the Group's results. To the contrary, if the underlying interest rate increases by 17% (i.e. by 59 basis points), the interest expense will grow by the amount of PLN 92 thousand. Asseco Slovakia also took a credit with the value equivalent to PLN 35,820 thousand. The analysis of sensitivity of the interest expense to changes in the underlying EURIBOR rate indicates that in case of the interest rate falls by 2.1% (i.e. by 9 basis points), the interest expense will decrease by PLN 32 thousand. In contrast, if the underlying EURIBOR rate increases by 3.4% (i.e. by 14 basis points), the Group's financial result will deteriorate by PLN 52 thousand. To sum up, a decrease in the underlying interest rates would improve the Group's financial results by PLN 714 thousand, while an increase in those interest rates would deteriorate the Group's financial results by PLN 1,160 thousand. Impact on financial result
of the Group Credit facilities based on a variable Amount Book value min* max* interest rate exposed to risk
Bank credits based on the WIBOR variable interest rate 263,187 186,367 604 (1,016) Bank credits based on the PRIBOR variable interest rate 263,187 14,917 79 (92) Bank credits based on the EURIBOR variable interest rate 263,187 35,820 32 (52) 714 (1,160) The interest rate risk involved in other items of financial assets and liabilities is not substantial. Other risks Other risks are not analyzed for sensitivity due to their nature and impossibility of absolute classification.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 111 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Methods adopted for conducting the sensitivity analysis The reference values used in the analysis of sensitivity to fluctuations in foreign exchange rates, with potential impact on the Group's financial result, were determined on the basis of historical currency exchange rates fixed by the Central Banks (of the countries in which the Group companies operate) for the foreign currencies in which the given companies held assets or liabilities in 2007. The applied method involved determination of the average annual exchange rate of a foreign currency versus the functional currency, and subsequently calculation of the percentage deviations from the maximum and minimum values determined using the normal distribution based on the sample of annual exchange rates, so that the probability of such occurrence was higher than four one hundredths. For the EUR / PLN pair those deviations equalled 4.8% and 3.6%; whereas, for the USD / PLN pair the deviations were 10.9% and 9.2%. The volatility adopted for the SKK / EUR pair ranged from 2.9% to 3.2%. The sensitivity analysis for the Serbian dinar (CSD) / USD pair was conducted assuming the dollar's depreciation by 9.3% and appreciation by 9.3%. Deviations adopted for the Romanian lei (RON) / EUR pair were 6.6% and 6.7%, and for the RON / USD pair the analysis adopted the dollar's depreciation by 8.1% and appreciation by 8.5%. The reference values used in the analysis of sensitivity to changes in the interest rates, with potential impact on the Group's financial result, were determined on the basis of historical levels of those interest rates during the second half of 2007. The applied method involved determination of the average levels of the interest rate in the second half of 2007, and subsequently calculation of the percentage deviations from the maximum and minimum levels. In case of interest rates it was not necessary to make the normal distribution in order to determine the scope of sensitivity analysis, because the interest rates are characterized by lower volatility. Fair value As at 31 December 2007 and 31 December 2006, the fair values of financial assets and liabilities held by the Group did not significantly differ from their book values, except for the investment in Prokom Software SA as described in Note 12 to these consolidated financial statements.
32. Equity management The main objective of the Group's equity management is to maintain favourable credit rating and safe level of equity ratios that would support the Group's operating activities and increase the value for our shareholders. The Group manages its equity structure which is altered in response to changing economic conditions. In order to maintain or adjust its equity structure, the Group may change its dividend payment policy, return some capital to its shareholders or issue new shares. During the financial years ended 31 December 2007 and 31 December 2006, the Group did not introduce any changes to its objectives, principles and processes adopted in this area. The Group consistently monitors the balance of its capitals using the leverage ratio, which is calculated as a relation of net liabilities to total equity increased by net liabilities. It is the Group's principle to keep this ratio below 35%. Net liabilities include interest bearing credits and loans, trade accounts payable and other liabilities, decreased by cash and cash equivalents. The equity comprises convertible preferred shares, own equity attributable to shareholders of the Parent Company, decreased by reserve capitals from unrealized net profits.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 112 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
12 months ended 12 months ended 31 December 2007 31 December 2006 (audited) (audited)
Interest bearing credits and loans 263,187 7,186 Trade accounts payable and other liabilities 780,963 88,377 Minus cash and cash equivalents ( ) (327,804) (47,355) Net liabilities 716,346 48,208
Convertible preferred shares 0 0 Shareholders' equity 1,923,068 340,283 Reserve capitals from unrealized net profits 0 0 Total equity 1,923,068 340,283 Equity plus net liabilities 2,639,414 388,491 Leverage ratio 27.1% 12.41%
33. Remuneration paid or payable to the Members of the Management Board and Supervisory Board of the Parent Company and the Group's subsidiary companies
12 months ended 12 months ended Remuneration payable for 2007 31 December 2007 31 December 2006 (audited) (audited)
Management Board 9,821 8,155 Adam Góral – President of the Management Board 560 0 Krzysztof Korba – President of the Management Board 0 3,360 Robert Smułkowski – Vice President of the Management Board 1,530 1,081 Piotr Jeleński – Vice President of the Management Board 1,300 1,312 Przemysław Borzestowski – Vice President of the Management Board 1,330 1,201 Przemysław Sęczkowski – Vice President of the Management Board 1,400 1,201 Marek Panek – Vice President of the Management Board 1,060 0 Zbigniew Pomianek – Vice President of the Management Board 1,550 0 Adam Rusinek – Vice President of the Management Board 1,091 0
Supervisory Board 462 276 Jacek Duch – Chairman of the Supervisory Board 89 0 Ryszard Krauze – Chairman of the Supervisory Board 0 0 Stanisław Janiszewski – Member of the Supervisory Board 71 69 Piotr Mondalski – Member of the Supervisory Board 71 69 Maria Zagrajek – Member of the Supervisory Board 0 69 Marek Jakubik – Member of the Supervisory Board 0 69 Maciej Grelowski – Member of the Supervisory Board 0 0 Adam Noga – Member of the Supervisory Board 71 0 Dariusz Górka – Member of the Supervisory Board 71 0 Grzegorz Maciąg – Member of the Supervisory Board 71 0 Jarosław Adamski – Member of the Supervisory Board 18 0 10,283 8,431
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 113 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
12 months ended 12 months ended Remuneration paid in 2007 31 December 2007 31 December 2006 (audited) (audited)
Management Board 9,242 8,155 Adam Góral – President of the Management Board 374 0 Krzysztof Korba – President of the Management Board 0 3,360 Robert Smułkowski – Vice President of the Management Board 1,552 1,081 Piotr Jeleński – Vice President of the Management Board 1,328 1,312 Przemysław Borzestowski – Vice President of the Management Board 1,344 1,201 Przemysław Sęczkowski – Vice President of the Management Board 1,379 1,201 Marek Panek – Vice President of the Management Board 723 0 Zbigniew Pomianek – Vice President of the Management Board 1,386 0 Adam Rusinek – Vice President of the Management Board 1,157 0
Supervisory Board 462 276 Jacek Duch – Chairman of the Supervisory Board 89 0 Ryszard Krauze – Chairman of the Supervisory Board 0 0 Stanisław Janiszewski – Member of the Supervisory Board 71 69 Piotr Mondalski – Member of the Supervisory Board 71 69 Maria Zagrajek – Member of the Supervisory Board 0 69 Marek Jakubik – Member of the Supervisory Board 0 69 Maciej Grelowski – Member of the Supervisory Board 0 0 Adam Noga – Member of the Supervisory Board 71 0 Dariusz Górka – Member of the Supervisory Board 71 0 Grzegorz Maciąg – Member of the Supervisory Board 71 0 Jarosław Adamski – Member of the Supervisory Board 18 0 9,705 8,431 The remuneration paid to Members of the Company's Supervisory Board, who were also Members of the Management Board of Prokom Software SA, in 2007 amounted to PLN 54 thousand, as compared with PLN 69 thousand in the corresponding period of 2006.
34. Capital expenditures In 2007, the Group incurred capital expenditures of PLN 621,938 thousand, of which PLN 32,400 thousand were spent for non financial fixed assets. The capital expenditures planned for 2008 shall aggregate at approx. PLN 490,559 thousand, of which PLN 47,466 thousand for non financial fixed assets. In 2006, the Group incurred capital expenditures of PLN 9,460 thousand, of which PLN 9,331 thousand were spent for non financial fixed assets.
35. Seasonal and cyclical nature of business The Group's activities are subject to seasonality in terms of uneven distribution of turnover in individual quarters of the year. Because bulk of sales revenues are generated from the IT services contracts executed for large companies and public institutions, the fourth quarter turnovers tend to be considerably higher than in the remaining periods. Such phenomenon occurs for the reason that the above mentioned entities close their annual budgets for implementation of IT projects and carry out investment purchases of hardware and licences usually in the last quarter.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 114 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
36. Significant events after the balance sheet date Share acquisition agreements signed in the 4 th quarter of 2007 concerning companies that the Asseco Poland Group took over or will take over in 2008 Acquisition of shares in UNIQUARE Software Development GmbH On 19 November 2007 Asseco Slovakia a.s. signed with Genesis Liegenschaftsverwaltungs GmbH an agreement for acquisition of a 60% stake in UNIQUARE Software Development GmbH with the seat in Austria. The acquired shares represent 60% of share capital and the same voting interest at the general meeting of partners of UNIQUARE Software Development GmbH. The total cost of acquisition will range between EUR 12 million and EUR 17.8 million and will depend on the amount of net profit achieved by UNIQUARE Software Development in 2008. /Current report of Asseco Slovakia a.s. no. 42/2007 of 19 November 2007/ In these consolidated financial statements the Group has not presented any initial recognition of goodwill arising from the above transaction because the acquired company currently undergoes the process of implementation of IAS/IFRS standards as well as determination of fair value of its net assets. Acquisition of shares in Arbor Informatika d.o.o. On 20 December 2007 Asseco Adria SA (at present Asseco South Eastern Europe SA) concluded an agreement for acquisition of a 70% stake in Arbor Informatika d.o.o. based in Croatia. The remaining 30% shareholding shall be kept by that company's shareholders and founders. The company provides its products and services to over 25 large financial institutions and corporations of Croatia and the region. The total value of transaction amounted to EUR 10,800,000. The acquisition process was completed on 22 January 2008. /Current report no. 1/2008 of 7 January 2008/ In these consolidated financial statements the Group has not presented any initial recognition of goodwill arising from the above transaction because the acquired company currently undergoes the process of implementation of IAS/IFRS standards as well as determination of fair value of its net assets. Acquisition of shares in Logos d.o.o. On 20 December 2007 Asseco Adria SA (at present Asseco South Eastern Europe SA) concluded an agreement for acquisition of a 60% stake in Logos d.o.o. based in Croatia. The remaining 40% shareholding shall be kept by that company's shareholders and founders. The total value of transaction amounted to EUR 7,400,000. The company conducts business activities in the sectors of banks, financial services, insurance and large companies. The acquisition process has not been completed until the date of publication of this quarterly report. Take over of the Croatian IT leaders, Arbor Informatika d.o.o. i Logos d.o.o., was a part of the business strategy of Asseco South Eastern Europe SA which assumes expansion in the countries of South Eastern Europe, which is the most dynamic IT marketplace in Europe with an annual growth of 20%. The purchase of shares in both the companies was financed with the funds raised from the issuance of bonds conducted by Asseco South Eastern Europe SA. /Current report no. 1/2008 of 7 January 2008/ In these consolidated financial statements the Group has not presented any initial recognition of goodwill arising from the above transaction because the acquired company currently undergoes the process of implementation of IAS/IFRS standards as well as determination of fair value of its net assets.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 115 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
Other significant events after the balance sheet date On 3 January 2008 as a result of acquisitions of shares of Asseco Poland SA, Commercial Union Open Pension Fund BPH CU WBK (CU OFE) surpassed the threshold of 5% of voting interest in the Company. Before the above mentioned transactions, as at 2 January 2008, CU OFE held 2,512,727 shares in Asseco Poland SA, which represented 4.92% of the Company's share capital and entitled to 2,512,727 votes or 4.92% of the total number of votes at the Company's General Meeting of Shareholders. Following execution and settlement of the above mentioned transactions, this is as at 3 January 2008, CU OFE held 2,562,727 shares in Asseco Poland SA, which represented 5.02% of the Company's share capital and entitled to 2,562,727 votes or 5.02% of the total number of votes at its General Meeting of Shareholders. /Current report no. 3/2008 of 8 January 2008/ On 11 January 2008 Asseco Germany SA signed with Bank Pekao SA seated in Warsaw (legal successor of Bank BPH SA seated in Cracow) an annex to the agreement for issuance of bonds dated 10 September 2007. The subject of the annex was to increase the total face value of issued ordinary bearer bonds, dematerialized and not admitted to public trading, from PLN 100 million to PLN 200 million. The bonds constitute an entitlement to receive cash benefits only; they are unsecured discount bonds with a fixed interest rate; they are neither privileged nor associated with any kind of additional benefits. The issuance price of individual tranches of bonds shall be equal to their face value decreased by a discount rate that shall be each time agreed between the Management Board of Asseco Germany SA and Bank Pekao SA. The objective of the increased issuance of bonds is to secure funds for bridge financing of successive investment plans of Asseco Germany SA. /Current report no. 6/2008 of 12 January 2008/ On 15 January 2008 Asseco Germany SA acquired a 97.53% stake of shares in the company matrix42 AG, seated in Neu Isenburg, Germany, the world's leading provider of software solutions to support product lifecycle management. The remaining 2.47% shares shall be held by the founders of matrix42 AG. Besides the parties agreed, that as a form of payment against the previous liabilities of matrix42 AG, Asseco Germany SA will sell 0.7% shares in matrix42 AG to its management team. The total acquisition price (including the transaction related costs) shall not exceed EUR 26.2 million. matrix42 AG offers comprehensive IT solutions designed for product lifecycle management. Solutions developed by matrix42 AG enable companies to manage their computer environment (servers, desktops, laptops and mobile devices) in a totally automated and efficient way. The solutions support computer hardware and applications, license management, installation and migration of operating systems, software distribution and upgrades, data recovery, etc. Acquisition of matrix42 AG is a part of the long term strategy of Asseco Germany SA to expand its business in the West Europe, one of the largest IT markets in the world. After 15 years of its international operations, the company has got almost 1000 clients and 3.6 million installed licenses. matrix42 operates mainly in Germany, Austria and Switzerland, but also in the United States and Canada (through its 100% owned subsidiary matrix42 USA, Inc.) At present among the company's largest customers are: Deutsche Telecom (using matrix42 products on 152,000 workstations, as well as Lufthansa Systems, Thomas Cook, BMW Financial Services, Volkswagen Financial Services and others. matrix42 AG employs 131 persons. In 2008 the company plans to generate sales exceeding EUR 20 million and to achieve an operating profit of approx. EUR 3 million. /Current report no. 8/2008 of 16 January 2008/ In these consolidated financial statements the Group has not presented any initial recognition of goodwill arising from the above transaction because the acquired company currently undergoes the process of implementation of IAS/IFRS standards as well as determination of fair value of its net assets.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 116 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
On 22 January 2008 the Company received a decision of the Polish Office of Competition and Consumer Protection which, having conducted an antimonopoly proceeding, granted permission to effect the concentration by merger of Asseco Poland SA with Prokom Software SA. /Current report no. 9/2008 of 22 January 2008/ On 31 January 2008 the Company signed an agreement for sale of its 4,650,000 shares held in subsidiary Asseco Romania SA representing 93% of the share capital of Asseco Romania SA and the same voting interest at the general meeting of shareholders of that company. The buyer was Asseco Adria SA (at present Asseco South Eastern Europe SA). The sale price amounted to PLN 465,000. /Current report no. 12/2008 of 9 February 2008/ On 5 February 2008 Asseco Poland SA entered with Asseco Adria SA into an agreement for acquisition of shares in Asseco Adria SA. Under the Agreement, Asseco Poland SA acquired 4,650,000 ordinary bearer shares of series B at the issuance price equal to the par value on shares that amounted to PLN 465,000 which shares were issued pursuant to the resolution on increasing the share capital of Asseco Adria SA passed by its Extraordinary General Meeting of Shareholders on 4 February 2008. Acquisition of shares by Asseco Poland SA shall become effective upon registration of the said increase of share capital by the competent registry court. Asseco Poland SA concluded the above mentioned agreements, for sale of shares in Asseco Romania SA and acquisition of new shares in Asseco Adria SA, strictly in connection with the planned merger of the companies of Asseco Adria SA and Asseco Romania SA which shall be executed pursuant to article 492 § 1 item 1) and art. 515 § 1 of the Polish Commercial Companies Code (without an increase of share capital), this is by transferring all the assets of Asseco Romania SA to Asseco Adria SA. The planned amalgamation is a part of the common policy of Asseco Poland SA and its subsidiaries Asseco Adria SA and Asseco Romania SA, both of which are holding type entities owning foreign companies engaged in supply of software, computer hardware, data bases as well as other IT related activities. The said policy assumes streamlining and simplification of the Group's legal and organizational structure and establishing one financially strong, holding company gathering subsidiary undertakings operating in the sector of information technology, which are based in the countries of South Eastern Europe. /Current report no. 12/2008 of 9 February 2008/ On 5 February 2008 the Company was notified by ING Investment Funds SA with the seat in Warsaw, ING Umbrella Specialized Fund, ING Equity Fund, ING Balanced Fund, ING Sustainable Growth Fund, ING Medium and Small Cap Companies Fund, and ING Specialized Equity Fund 2, that the number of shares held together by the above mentioned institutions represented over 10% of the total votes at the general meeting of shareholders of Asseco Slovakia a.s. The funds' aggregate voting interest increased as a result of acquisition of the company's shares on 1 February 2008. /Current report no. 4/2008 of 6 February 2008/ On 8 February 2008 Asseco Poland SA signed an agreement with the partners in SINTAGMA UAB Sp. z o.o. seated in Vilnius, under which Asseco Poland SA acquired 4,860 shares representing 5.4% of share capital and the same voting interest at the general meeting of that company, for the price comprising the fixed amount of LTL 1,088,883 and a variable price component depending on the level of net profit and operating profit achieved by SINTAGMA UAB for the financial year 2007. Assuming the company meets its net profit forecast of LTL 2,921,767 the said variable price component shall equal LTL 354,177.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 117 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
In aggregate with the shares purchased by the Company on 14 September 2007, at present the Company holds 55,476 shares in SINTAGMA UAB representing 61.64% of share capital and the same voting interest at the general meeting of that company. The acquisition of shares was financed with own funds of Asseco Poland SA. /Current report no. 11/2008 of 8 February 2008/ On 11 February 2008 the District Court in Rzeszów, XII Commercial Department of the National Court Register, made a decision on registration of the increase in share capital of Asseco Adria SA by the amount of PLN 500 thousand, through issuance of 5,000,000 ordinary bearer shares of series B with a par value of PLN 0.1 each. Furthermore, there was registered a change in the company's name, from Asseco Adria SA to Asseco South Eastern Europe SA (Asseco SEE). As the increase in share capital of Asseco South Eastern Europe SA has been registered, the acquisition of new shares in the increased share capital of Asseco SEE by Asseco Poland SA became effective. Consequently Asseco holds 9,300,000 shares in Asseco SEE representing 93% of the share capital and entitling to 93% of votes at the general meeting of shareholders of Asseco SEE. /Current report no. 15/2008 of 12 February 2008/ On 11 February 2008 , as a result of partial execution of the agreement for acquisition of shares in Prokom Software SA concluded on 29 September 2007 between Asseco Poland SA, Prokom Investments SA and Mr. Ryszard Krauze, the Company acquired 1,462,352 ordinary bearer shares of Prokom Software SA, and Prokom Investment SA paid off its liabilities towards Prokom Software SA in the amount of PLN 100 million. Following the above mentioned acquisition, Asseco Poland SA holds 120,120 registered shares of Prokom Software SA preferred as to voting rights (5 votes per share) and 2,865,352 ordinary bearer shares of Prokom Software SA, in total representing 21.49% of the share capital of Prokom Software SA and entitling to 3,465,952 votes or 23.69% voting interest at the general meeting of Prokom Software SA. /Current report no. 13/2008 of 11 February 2008/ On 11 February 2008 the Management Board of Asseco Poland SA informed about releasing of the pledges on the shares in Asseco Romania SA, Asseco Adria SA and Asseco Czech Republic a.s. that had been established in favour of the Lender under the credit agreement concluded by Asseco on 1 October 2007. /Current report no. 14/2008 of 11 February 2008/ On 12 February 2008 the Extraordinary General Meeting of Shareholders of Asseco Slovakia a.s. passed a resolution on increasing the share capital of Asseco Slovakia a.s. from SKK 1,584,000 to SKK 1,780,000. The share capital was increased through issuance of 196,000 ordinary bearer shares with a par value of SKK 1 each, which shall be entirely paid up with a non cash contribution. The non cash contribution shall be made by Asseco Poland SA. The deadline to make the whole non cash contribution is 30 business days from the date of shares issuance. The subject of the non cash contribution are 7,970,000 ordinary bearer shares of Asseco Czech Republic a.s. with a par value of CZK 10 each. The value of non cash contribution was determined on the basis of a statement prepared by experts, namely Ing. Jan Piško, Ing. Radowan Piško and Ing. Zuzana Gonova (ZNALEKON, s.r.o.) and as at 21 December 2007 it amounted to SKK 484,120,000. The Extraordinary General Meeting of Shareholders Asseco Slovakia a.s. approved the subject of the non cash contribution. The issue price of new shares shall be SKK 2,470 per share. The total non cash contribution value of SKK 484,120,000 will be accounted for as payment for the new issue shares, of which the amount of SKK 196,000 shall be recognized as par value on shares, whereas the remaining portion (in excess of SKK 196,000) shall constitute the share premium. Furthermore, the Extraordinary General Meeting of Shareholders authorized the Management Board of Asseco Slovakia a.s. so that, pursuant to the provisions of the Commercial Companies Code, within two years it took a decision to adopt a resolution on increasing the share capital of Asseco Slovakia by the maximum amount of SKK 19,580,000.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 118 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The Extraordinary General Meeting of Shareholders of Asseco Slovakia a.s. decided on the split of all 1,780,000 ordinary founder shares with a par value of SKK 10 per share, whereby each share of Asseco Slovakia with a par value of SKK 10 shall be divided into 10 shares of Asseco Slovakia with a par value of SKK 1. As a result of such change the share capital of Asseco Slovakia amounting to SKK 17,800,000 shall be comprised of 17,800,000 shares with a par value of SKK 1 each. The resolution shall take effect after the increase of share capital of Asseco Slovakia is conducted and becomes legally binding. /Current report of Asseco Slovakia a.s. no. 6/2008 of 12 February 2008/ On 15 February 2008 Mr. Adam Góral – President of the Company's Management Board and concurrently a shareholder holding 8,083,000 shares representing 15.82% of the Company's share capital and entitling to 15.82% of votes at the General Meeting of Shareholders of Asseco Poland SA – submitted a statement in which he waived his personal entitlement to appoint and dismiss one member of the Supervisory Board of Asseco Poland SA. With regard to the above mentioned statement made by Mr. Adam Góral, the Management Board passed a resolution on modifying the proposed changes of the Articles of Association in the following way: (i) §13 sec. 13 of the Articles of Association, included in the draft resolution, shall read as follows: "The Supervisory Board shall be appointed and dismissed by the General Meeting of Shareholders."; (ii) instead of the initially proposed change of existing § 19 sec. 4 of the Articles of Association: "The personal entitlements referred to in § 13 section 3 point 2) vested in Mr. Adam Góral shall expire in the event when Adam Góral ceases to own shares representing at least 8% (eight percent) of the Company's share capital." It is now proposed to delete § 19 sec. 4 of the Articles of Association entirely. Furthermore, in order to ensure that the changes to § 5 of the Articles of Association, concerning the scope of the Company's business operations, comply with the Polish Classification of Business Activities (PKD) 2007, the Management Board passed a resolution on modifying the initially proposed change to supplement § 5 with the following additional two items 1.24 and 1.25: "1.24 Service activities related to the installation, repair and maintenance of electrical equipment not elsewhere classified (PKD 31.62.B); 1.25 Installation of central heating and ventilation equipment (PKD 45.33.A)" by changing the contents of items 1.24 and 1.25 and adding item 1.26 which shall now read as follows: "1.24 Repair of electrical equipment (PKD 2007 33.14.Z); 1.25 Installation of industrial machinery and equipment (PKD 2007 33.20.Z); 1.26 Plumbing, heat and air conditioning installation (PKD 2007 43.22.Z)". /Current report no. 18/2008 of 15 February 2008/ On 19 February 2008 the Management Board of Asseco Business Solutions SA passed a resolution on entering into negotiations with the shareholders of Anica System SA with the objective to acquire further 39.44% of shares in the share capital of Anica System SA; as well as on starting negotiations with Asseco Poland SA in order to take over 100% of shares of Asseco Systems SA. According to the received preliminary valuations, the acquisition of a 39.44% stake of shares in Anica System SA, with the total value not higher than PLN 64,316,064, would be settled by issuance of not more than 5,359,672 shares of Asseco Business Solutions SA. Whereas, the acquisition of 100% stake of shares in Asseco Systems SA, with the total value not higher than PLN 146,765,897, would be effected through issuance of not more than 12,230,491 shares of Asseco Business Solutions SA. /Current report of Asseco Business Solutions SA no. 3/2008 of 19 February 2008/ On 6 March 2008 acting on the basis of the companies' valuation prepared by the advisor UniCredit CA IB Polska SA, and as a result of the negotiation process conducted as well as in connection with its resolution of 19 February 2008, the Management Board of Asseco Business Solutions SA passed a resolution (i) on acquisition of a 39.44% stake of shares in Anica System SA with the value of PLN 57,651,348 to be contributed by shareholders of Anica System SA in exchange for the issuance of 4,804,279 ordinary bearer shares of series D, and (ii) on acquisition of 100% of shares in Asseco Systems SA with the value of PLN 100,000,008 to be contributed by Asseco Poland SA in exchange for the issuance of 8,333,334 ordinary bearer shares of series D. /Current report of Asseco Business Solutions SA no. 4/2008 of 6 March 2008/
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 119 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
On 19 February 2008 , as a result of partial execution of the agreement for acquisition of shares in Prokom Software SA concluded on 29 September 2007 between Asseco Poland SA, Prokom Investments SA and Mr. Ryszard Krauze, the Company acquired 2 ordinary bearer shares of Prokom Software SA. In effect of the above mentioned purchase, execution of the Agreement has been completed. As Mr. Ryszard Krauze and Prokom Investments SA sold all their shares in Prokom Software SA, they ceased to be shareholders in Prokom Software SA and thus lost their personal entitlements, as conferred to each of them by the Articles of Association of Prokom Software SA, to appoint one member of the Supervisory Board of Prokom Software SA. Following the above mentioned acquisition, Asseco Poland SA holds 120,120 registered shares of Prokom Software SA preferred as to voting rights (5 votes per share) and 2,865,354 ordinary bearer shares of Prokom Software SA, in total representing 21.49% of the share capital of Prokom Software SA and entitling to 3,465,954 votes or 23.69% voting interest at the general meeting of Prokom Software SA. /Current report no. 20/2008 of 19 February 2008/ On 20 February 2008 the Extraordinary General Meeting of Shareholders of Asseco Poland SA passed a resolution on the merger of Asseco Poland SA (as the taking over company) with Prokom Software SA (as the acquired company) to be effected pursuant to art. 492 § 1 item 1 of the Polish Commercial Companies Code, this is by transferring all the assets of Prokom Software SA to Asseco Poland SA in exchange for new shares to be issued by Asseco Poland SA and allocated to shareholders of the acquired company. In connection with the Merger, the share capital of Asseco will be increased by the amount not higher than PLN 19,847,748 through issuance of up to 19,847,748 ordinary bearer shares of series F with a par value of PLN 1 each. The Merger Shares will be allocated to shareholders of Prokom proportionally to the number of Prokom shares owned, applying the exchange ratio of 1.82 Merger Shares for 1 share of Prokom Software SA. Furthermore, the Extraordinary General Meeting of Shareholders of Asseco Poland SA passed a resolution on conditional increase of the Company's share capital by the amount not higher than PLN 356,515 through issuance of not more than 356,515 ordinary bearer shares of series G with a par value of PLN 1 each. The objective of such conditional increase of share capital is to vest the right to acquire series G shares in the holders of registered subscription warrants, which will be issued by Asseco Poland SA. A resolution on issuance of up to 356,515 registered subscription warrants was also passed. The objective of the issuance of subscription warrants is to fulfil the obligation provided for in art. 511 § 1 of the Polish Commercial Companies Code. The parties eligible for acquisition of the subscription warrants shall be Nihonswi AG and Mr. Krzysztof Wilski. One subscription warrant will carry the right to acquire one share of series G. The Extraordinary General Meeting of Shareholders of Asseco Poland SA authorized the Management Board to apply for admission and introduction of the shares of series F and G to public trading on the regulated market and for dematerialization of the shares of series F and G, as well as to conclude an agreement with the National Depository for Securities. Additionally, the EGMS passed resolutions on amendment of the Company's the Articles of Association, on authorizing the Company's Supervisory Board to determine the unified text thereof as well as some other resolutions. /Current report no. 22/2008 of 20 February 2008/ On 25 February 2008 Asseco Poland SA signed an agreement for making a non cash contribution and acquisition of shares in the increased share capital of Asseco Slovakia a.s. Under this Agreement Asseco Poland SA agreed to make a non cash contribution in the form of 7,970,000 ordinary bearer shares in materialized form, with a par value of CZK 10 each issued by Asseco Czech Republic a.s. in return for the acquisition of 196,000 ordinary bearer shares in dematerialized form, with a par value of SKK 1 each, which shall be issued by Asseco Slovakia, a.s following a resolution of its Extraordinary General Meeting of Shareholders of 12 February 2008 and shall constitute an increase in the share capital of Asseco Slovakia a.s from the existing amount of SKK 1,584,000 up to SKK 1,780,000.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 120 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
The issue price of new shares shall be SKK 2,470 per share. The total value of the new issuance of 196,000 shares of Asseco Slovakia a.s. amounts to SKK 484,120,000 which shall be entirely paid up with the non cash contribution. The fact of making the non cash contribution was certified by the Non Cash Contribution Delivery/Receipt Protocol executed on the Agreement date. Concurrently with the execution of the Agreement, Asseco Poland SA signed the subscribers list and thus confirmed the acquisition of 196,000 dematerialized ordinary bearer shares, with a par value of SKK 1 each. Making the non cash contribution as well as signing the subscribers list by the acquirer of the new issuance shares constitute conditions necessary to submit a motion to the registry court in Bratislava for registration of the increase in share capital of Asseco Slovakia a.s. conducted following the resolution passed by its Extraordinary General Meeting of Shareholders on 12 February 2008. Asseco Poland SA will acquire 196,000 new shares after the above mentioned increase in the share capital of Asseco Slovakia a.s. is recorded by the registry court. Hence, the equity interest held by Asseco Poland SA in Asseco Slovakia, a.s. will increase to 48.09% from 41.67% before the transaction. /Current report no. 25/2008 of 25 February 2008/ On 28 February 2008 Asseco Poland SA and Polnord Warszawa Wilanów III Sp. z o.o. entered into a preliminary agreement for rental of ca. 18,000 m2 of office space and 630 parking lot places at the office centre that will be built within the first stage of the developer's project called "Technological Park" located in the area of Wilanów Town in Warsaw, the implementation of which is due to start in 2008. The parties decided that the final rental agreement shall be concluded not later than on 1 February 2011. /Current report no. 26/2008 of 29 February 2008/ On 28 February 2008 the District Court Bratislava I registered an increase of the share capital of Asseco Slovakia a.s. in connection with issuance of 196,000 shares with a par value of SKK 1 each, representing 11.01% of the company's increased share capital. The issuance of new shares was entirely paid up with a non cash contribution as part of execution of the resolution passed by the Extraordinary General Meeting of Shareholders of Asseco Slovakia a.s. on 12 February 2008. The non cash contribution was made by Asseco Poland SA. The subject of the non cash contribution are 7,970,000 ordinary bearer shares of Asseco Czech Republic a.s. with a par value of CZK 10 each. The non cash contribution value amounted to SKK 484,120,000 which corresponded to SKK 2,470 per share of the new issuance. In the company's accounting books, the assets being subject of the non cash contribution are carried at SKK 484,120,000. Following the said registration, the share capital of Asseco Slovakia a.s. amounts to SKK 1,780,000 and is divided into 1,780,000 shares with a par value of SKK 1 each, entitling to the total of 1,780,000 votes at the general meeting of shareholders of Asseco Slovakia a.s. /Current report of Asseco Slovakia a.s. no. 11/2008 of 28 February 2008/ On 4 March 2008 the Management Board of Asseco Slovakia a.s. was notified by Asseco Poland SA that the equity interest held by Asseco Poland SA in Asseco Slovakia a.s. increased from 41.67% to 48.09%. This was a consequence of registration of an increase of the share capital of Asseco Slovakia a.s. Asseco Poland SA acquired 196,000 shares of the share capital increase and at present it holds 856,000 shares of Asseco Slovakia a.s. conferring the right to 48.09% of total votes at the general meeting of shareholders of Asseco Slovakia a.s. /Current report of Asseco Slovakia a.s. no. 12/2008 of 5 March 2008/ On 5 March 2008 Slovanet a.s., a subsidiary of Asseco Slovakia a.s., signed an agreement for acquisition of 100% of shares in the company CATV Tekov s.r.o. with the seat in Zlate Moravce, Slovakia. The agreement was concluded between Asseco Slovakia a.s. and five natural persons. The share capital of CATV Tekov s.r.o. amounts to SKK 2,780,000. The acquired shares represent 100% of the share capital and the same voting interest at the general meeting of partners of CATV Tekov s.r.o. The total cost of acquisition of shares will not exceed SKK 19,000,000. /Current report of Asseco Slovakia a.s. no. 13/2008 of 6 March 2008/
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 121 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
In these consolidated financial statements the Group has not presented any initial recognition of goodwill arising from the above transaction because the acquired company currently undergoes the process of implementation of IAS/IFRS standards as well as determination of fair value of its net assets. On 18 March 2008 Asseco Czech Republic a.s. signed an agreement for disposal of all 45 shares it held in D. Trust Certifikačna Autorita, a.s., with a par value of SKK 100 thousand each, representing 45% of share capital of that company. The buyer was DITEC a.s. seated in Bratislava and the selling price amounted to SKK 2,000 thousand. /Current report of Asseco Slovakia a.s. no. 22/2008 of 2 April 2008/ On 19 March 2008 Slovanet a.s., a subsidiary of Asseco Slovakia a.s., signed a significant credit agreement with Tatra banka for the total amount of SKK 450 million. The credit interest rate has been determined based on the 1 month BRIBOR rate plus a margin of 1.10 percentage points per annum. The funds raised from the bank shall be spent for investments in technology as well as for acquisitions following the business strategy adopted by Slovanet a.s. /Current report of Asseco Slovakia a.s. no. 18/2008 of 20 March 2008/ On 31 March 2008 , with reference to the resolutions passed by the Extraordinary General Meeting of Shareholders of Asseco Slovakia a.s. on 12 February 2008, the company's Management Board made a decision on increasing the company's share capital by the amount of SKK 16,020,000. The share capital increase shall be paid up with the company's own reserve capital resulting from the sale of shares above their par value. /Current report of Asseco Slovakia a.s. no. 21/2008 of 31 March 2008/ On 1 April 2008 the District Court in Rzeszów, XII Commercial Department of the National Court Register, made an entry in the register of entrepreneurs of the merger between Asseco Poland SA and Prokom Software SA. The Merger was executed pursuant to article 492 § 1 item 1 of the Polish Commercial Companies Code, this is by transferring all the assets of Prokom Software SA to the Company in exchange for the Company's shares to be assigned to shareholders of Prokom Software SA. In connection with registration of the merger, there was also registered an increase in the Company's share capital by the amount not higher than PLN 19,847,748 which is covered by the assets of Prokom evaluated for the merger purposes, through issuance of up to 19,847,748 ordinary bearer shares of series F with a par value of PLN 1 each. The final number of merger shares shareholders of Prokom Software SA are eligible for shall be determined only after the date serving as the reference day pursuant to applicable regulations. Concurrently with the merger, on 1 April 2008 there was also registered a conditional increase of the Company's share capital, excluding pre emptive rights of the existing shareholders, by the amount of PLN 356,515 through issuance of not more than 356,515 ordinary bearer shares of series G. The objective of such conditional increase of share capital is to vest the right to acquire series G shares in the holders of registered subscription warrants issued by the Company. Furthermore the merger required registration of an amendment to the Company's Articles of Association. /Current report no. 30/2008 of 1 April 2008/ On 2 April 2008 the Management of the National Depository for Securities, by its resolution no. 189/08, decided (i) to register up to 19,847,748 ordinary bearer shares of series F of Asseco Poland SA, with a par value of PLN 1 each, subject to registration following the allocation of the Company's shares carried out in accordance with § 153 of the Detailed Rules of Procedure of the National Depository for Securities, by exchanging shares of Prokom Software SA to shares of Asseco Poland SA, applying an exchange ratio of 1:1.82, and (ii) to designate them with the code PLSOFTB00016 on condition the Warsaw Stock Exchange decides to introduce these shares to public trading on the same regulated market to which other Asseco shares designated with the code PLSOFTB00016 have been introduced. /Current report no. 32/2008 of 2 April 2008/ On 8 April 2008 the District Court Bratislava I registered an increase of the share capital of Asseco Slovakia a.s. by the amount of SKK 16,020,000. Following the said registration, the share capital of that company amounts to SKK 17,800,000 and is divided into 1,780,000 shares with a par value of
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 122 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765 THE ASSECO POLAND GROUP Consolidated Financial Statements for the Year Ended 31 December 2007 All figures in PLN thousands, unless stated otherwise
SKK 10 each, entitling to the total of 1,780,000 votes at the general meeting of shareholders of Asseco Slovakia a.s. Additionally, on 8 April 2008 became effective the resolution of the company's Extraordinary General Meeting of Shareholders of 12 February 2008, on the split of all 1,780,000 founder (bearer) shares with a par value of SKK 10 per share, whereby each share shall be divided into 10 shares with a par value of SKK 1 each. As a result of such split, the share capital of Asseco Slovakia a.s. amounting to SKK 17,800,000 shall be comprised of 17,800,000 shares with a par value of SKK 1 each. The above mentioned change in the par value on shares was subsequently registered by the District Court Bratislava I on 12 April 2008. /Current reports of Asseco Slovakia a.s. no. 23/2008 of 8 April 2008 and no. 24/2008 of 15 April 2008/ On 11 April 2008 the Management Board of Asseco Business Solutions SA disclosed in public the approved Management Board report on increasing the company's share capital in exchange for a non cash contribution in the form of 779,420 shares of Anica System SA. The Extraordinary General Meeting of Shareholders of Asseco Business Solutions SA was convened to be held on 22 April 2008, among other things, with the objective to pass a resolution on increasing the company's share capital by the amount of PLN 24,021,395 through issuance of series D shares, which shall be allocated in exchange for the non cash contribution. /Current report of Asseco Business Solutions SA no. 10/2008 of 11 April 2008/ On 18 April 2008 the District Court in Rzeszów, XII Commercial Department of the National Court Register, registered an increase of the Company's share capital in connection with issuance of 356,515 ordinary bearer shares of series G, being assigned from the conditional share capital to the holders of subscription warrants. With regard to the above after the registration the Company's share capital amounts to PLN 71,292,980 and the total number of votes, resulting from all the issued Company shares, equals 71,292,980. /Current report no. 40/2008 of 18 April 2008/ In connection with the registration of an increase of the Company's share capital to the amount of PLN 71,292,980 made on 18 April 2008 as a result of issuance of series G shares, Asseco Poland SA holds in total 11,611,450 of its own ordinary bearer shares which now represent 16.29% of the Company’s share capital, and entitle to 11,611,450 votes or 16.29% voting interest at the Company's General Meeting of Shareholders; nevertheless, according to art. 364 § 2 of the Polish Commercial Companies Code, the Company does not exercise any shareholding rights from own shares held. /Current report no. 42/2008 of 22 April 2008/ On 22 April 2008 the Company was notified by Mr. Adam Góral about a change of his share in the total number of votes at the General Meeting of Shareholders in connection with the registration of an increase of the Company's share capital to the amount of PLN 71,292,980 made on 18 April 2008 as a result of issuance of series G shares. As a consequence Mr. Adam Góral holds in total 8,083,000 ordinary bearer shares of the Company which now represent 11.34% of the Company’s share capital, and entitle to 8,083,000 votes or 11.34% voting interest at the Company's General Meeting of Shareholders. /Current report no. 41/2008 of 22 April 2008/
37. Significant events related to prior years
Until the date of preparing these consolidated financial statements for the year ended 31 December 2007, this is until 22 April 2008, there occurred no significant events related to prior years, which have not but should be included in the accounting books.
Supplementary information and explanations to the Consolidated Financial Statements presented on pages 10 to 123 constitute an integral part thereof 123 WorldReginfo - fc0af969-b88b-4101-ba28-16f1134d0765