ASSECO GROUP SEMI-ANNUAL REPORT FOR THE PERIOD OF 6 MONTHS ENDED 30 JUNE 2011 Asseco Group Semi-Annual Report for 6 months ended 30 June 2011 SEMI-ANNUAL REPORT OF THE ASSECO GROUP FOR THE PERIOD OF 6 MONTHS ENDED 30 JUNE 2011 Table of contents Page FINANCIAL HIGHLIGHTS OF THE ASSECO GROUP .......................................................... 3 SEMI-ANNUAL MANAGEMENT'S REPORT ON BUSINESS OPERATIONS OF THE ASSECO GROUP ........................................................................................................ 5 STATEMENTS BY THE MANAGEMENT BOARD OF ASSECO POLAND S.A. TO THE SEMI-ANNUAL REPORT OF THE ASSECO GROUP ........................................................... 56 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE ASSECO GROUP ................................................................................................. 59 INTERIM CONDENSED FINANCIAL STATEMENTS OF ASSECO POLAND S.A. .................... 120 2 FINANCIAL HIGHLIGHTS OF THE ASSECO GROUP Asseco Group Semi-Annual Report for 6 months ended 30 June 2011 FINANCIAL HIGHLIGHTS OF THE ASSECO GROUP Financial highlights of the Asseco Group are presented in the following table. 6 months 6 months 6 months 6 months ended ended ended ended 30 June 2011 30 June 2010 30 June 2011 30 June 2010 PLN millions PLN millions EUR millions EUR millions Sales revenues 2,340.2 1,452.4 589.9 362.7 Operating profit 341.7 253.8 86.1 63.4 Pre-tax profit and share in profits 336.7 239.3 84.9 59.8 of associated companies Net profit 272.7 229.1 68.7 57.2 Net profit attributable to Shareholders of 182.7 205.4 46.1 51.3 the Parent Company Net cash provided by (used in) operating 175.7 214.5 44.3 53.6 activities Net cash provided by (used in) investing (149.2) (168.9) (37.6) (42.2) activities Net cash provided by (used in) financing (209.5) 121.8 (52.8) 30.4 activities Cash and cash equivalents at the end of 635.1 510.1 159.3 123.0 period Basic earnings per ordinary share attributable to Shareholders of the Parent 2.36 3.08 0.59 0.77 Company (in PLN/EUR) Diluted earnings per ordinary share attributable to Shareholders of the Parent 2.36 3.08 0.59 0.77 Company (in PLN/EUR) The financial highlights disclosed in these consolidated financial statements were translated into Euro in the following way: . items of the consolidated profit and loss account and consolidated statement of cash flows were translated into Euro at the arithmetic average of mid exchange rates as published by the National Bank of Poland and in effect on the last day of each month. These exchange rates were as follows: o for the period from 1 January 2011 to 30 June 2011: EUR 1 = PLN 3.9673 o for the period from 1 January 2010 to 30 June 2010: EUR 1 = PLN 4.0042 . the Group's cash and cash equivalents as at the end of period reported and the corresponding period of the previous year have been translated into Euro at daily mid exchange rates as published by the National Bank of Poland. These exchange rates were as follows: o exchange rate effective on 30 June 2011: EUR 1 = PLN 3.9866 o exchange rate effective on 30 June 2010: EUR 1 = PLN 4.1458 Wszystkie kwoty wyrażono w milionach złotych (PLN), chyba że stwierdzono inaczej 4 SEMI-ANNUAL MANAGEMENT'S REPORT ON BUSINESS OPERATIONS OF THE ASSECO GROUP Asseco Group Semi-Annual Report for 6 months ended 30 June 2011 SEMI-ANNUAL MANAGEMENT'S REPORT ON BUSINESS OPERATIONS OF THE ASSECO GROUP Table of contents Page I. GENERAL INFORMATION ..................................................................................................... 8 II. IT MARKET IN THE FIRST HALF OF 2011 AND ITS FUTURE OUTLOOK........................................ 9 1. Development prospects of the IT market .......................................................................... 9 2. IT Market in Poland ...................................................................................................... 10 3. Banking and financial sector .......................................................................................... 15 4. Enterprise Resource Planning (ERP) market..................................................................... 15 5. Outlook summary ........................................................................................................ 16 III. ASSECO POLAND AND THE ASSECO GROUP POSITION IN THE INFORMATION TECHNOLOGY SECTOR ...................................................................................................... 16 IV. PRODUCT PORTFOLIO OF THE ASSECO GROUP .................................................................... 21 1. Banking and finance sector ........................................................................................... 21 2. Public administration sector .......................................................................................... 23 3. Industry, trade and services .......................................................................................... 24 4. Sector-independent solutions ........................................................................................ 25 V. SUMMARY AND ANALYSIS OF THE ASSECO GROUP FINANCIAL RESULTS FOR THE FIRST HALF OF 2011 ........................................................................................... 26 VI. FACTORS AND MAJOR EVENTS WITH IMPACT ON OUR FINANCIAL PERFORMANCE ................... 28 1. Polish market .............................................................................................................. 28 2. Israeli market (Formula Systems Group) ........................................................................ 32 3. Central European market (Asseco Central Europe Group) .................................................. 35 4. South Eastern European market (Asseco South Eastern Europe Group) .............................. 37 5. Other European markets ............................................................................................... 39 VII. ONE-TIME EVENTS WITH IMPACT ON OUR FINANCIAL PERFORMANCE .................................... 40 VIII. CORPORATE OFFICERS OF ASSECO POLAND S.A. ................................................................. 41 IX. ASSECO POLAND SHARES HELD ITS MANAGEMENT AND SUPERVISORY STAFF ........................ 42 X. SHAREHOLDER STRUCTURE OF ASSECO POLAND S.A. .......................................................... 42 XI. ISSUANCE, REDEMPTION AND REPAYMENT OF NON-EQUITY AND EQUITY SECURITIES .................................................................................................................... 43 XII. EFFECTS OF CHANGES IN THE ORGANIZATIONAL STRUCTURE .............................................. 43 XIII. ORGANIZATION AND CHANGES IN THE ASSECO GROUP STRUCTURE, INCLUDING SPECIFICATION OF ENTITIES SUBJECT TO CONSOLIDATION ................................................. 44 XIV. INFORMATION ON PENDING LEGAL PROCEEDINGS CONCERNING LIABILITIES OR RECEIVABLES OF ASSECO POLAND S.A. OR ITS SUBSIDIARY COMPANIES .............................. 54 XV. TRANSACTIONS WITH RELATED COMPANIES ....................................................................... 54 XVI. BANK LOANS, BORROWINGS, SURETIES, GUARANTEES AND OFF-BALANCE-SHEET LIABILITIES ..................................................................................................................... 54 XVII. OPINION ON FEASIBILITY OF THE MANAGEMENT BOARD FINANCIAL FORECASTS FOR THE YEAR 2011 ......................................................................................................... 54 All figures in millions of PLN, unless stated otherwise 6 Asseco Group Semi-Annual Report for 6 months ended 30 June 2011 XVIII. FACTORS WHICH IN THE MANAGEMENT'S OPINION MAY AFFECT FINANCIAL PERFORMANCE AT LEAST TILL THE END OF THIS FINANCIAL YEAR ........................................ 54 XIX. OTHER FACTORS SIGNIFICANT FOR ASSESSMENT OF THE HUMAN RESOURCES, ASSETS, AND FINANCIAL POSITION ................................................................................... 55 All figures in millions of PLN, unless stated otherwise 7 Asseco Group Semi-Annual Report for 6 months ended 30 June 2011 I. GENERAL INFORMATION The Parent Company of the Asseco Group ("Group", "Asseco Group") is Asseco Poland S.A. ("Asseco", "Company"). Asseco is the number one information technology company in Poland that has operated in the domestic IT market for over 20 years. Since 2004 the Asseco Group business has gone international. Asseco Poland S.A. is the largest IT company listed on the Warsaw Stock Exchange, in terms of market capitalization. Asseco is also the 8th largest European software vendor in terms of revenues generated from production of software (according to the Truffle 100 ranking published by Truffle Capital on 28 September 2010). Asseco Poland S.A. is a leader in creation of the international Asseco Group that gathers numerous, directly or indirectly, subsidiary entities whose operating activities are related to those conducted by the Company. Asseco Poland S.A. and the Asseco Group companies are focusing on the production of proprietary software solutions. The Group is specialized in complex information technology undertakings, integration projects as well as consulting services. The Asseco Group provides its products for most sectors of the economy. Our mission is to build a reliable and profitable global information technology powerhouse providing high quality software and services. At present the Asseco Group incorporates companies from over a dozen European countries as well as from Israel, United States,