Asseco South Eastern Europe S A : Consolidated Quarterly Report for the 3rd Quarter of 2023

Quarterly Report

of Asseco South Eastern Europe Group

for the period of 9 months ended 30 September 2023

Present in	PLN 1,153.9 million
23 countries	in sales revenues

3,827	PLN 154.6 million
highly committed	of net profit
Employees	for Shareholders
	of the Parent Company

Quarterly Report of Asseco South Eastern Europe Group
for the period of 9 months ended 30 September 2023
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ASSECO SOUTH EASTERN EUROPE
GROUP FOR THE PERIOD OF 9 MONTHS ENDED 30 SEPTEMBER 2023	1
FINANCIAL HIGHLIGHTS	5
INTERIMCONDENSEDCONSOLIDATEDSTATEMENT OFPROFIT ANDLOSS ANDOTHERCOMPREHENSIVEINCOME	6
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION	7
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	9
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	12
EXPLANATORY NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	13
I. GENERAL INFORMATION	13
II. BASIS FOR THE PREPARATION OF INTERIM CONDENSED FINANCIAL STATEMENTS	14
2.1.	Basis for preparation	14
2.2.	Compliance statement	14
2.3.	Functional currency, presentation currency and hyperinflation	15
2.4.	Professional judgement and estimates	15
2.5.	Accounting policies applied	15
2.6.	New standards and interpretations published but not in force yet	16
2.7.	Changes in the presentation methods applied	16
2.8.	Correction of errors	16
2.9.	Changes in the comparable data	16
2.10.	Accounting effects of Turkey's status as a hyperinflationary economy	21
III. ORGANIZATION AND CHANGES IN THE STRUCTURE OF ASSECO SOUTH EASTERN EUROPE GROUP,
INCLUDING THE ENTITIES SUBJECT TO CONSOLIDATION	26
IV. INFORMATION ON OPERATING SEGMENTS	28
V. EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF PROFIT AND LOSS	31
5.1.	Structure of operating revenues	31
5.2.	Structure of operating costs	33
5.3.	Other operating income and expenses	34
5.4.	Financial income and expenses	35
5.5.	Corporate income tax	36
5.6.	Earnings per share	36
5.7.	Information on dividends paid out	36
VI. EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION	37
6.1.	Property, plant and equipment	37
6.2.	Intangible assets	37
6.3.	Right-of-use assets	38
6.4.	Goodwill	38
6.5.	Other financial assets	41
6.6.	Prepayments and accrued income	43
6.7.	Receivables and contract assets	43
6.8.	Inventories	44
6.9.	Cash and cash equivalents	45
6.10.	Lease liabilities	45
6.11.	Bank loans and borrowings	46
6.12.	Other financial liabilities	47
6.13.	Trade payables, state budget liabilities and other liabilities	49
6.14.	Provisions	50
6.15.	Accruals and deferred income	50
6.16.	Related party transactions	50
VII. EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS	53
7.1.	Cash flows - operating activities	53
7.2.	Cash flows - investing activities	53
7.3.	Cash flows - financing activities	53

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

3

VIII.	OTHER EXPLANATORY NOTES	55
8.1.	Off-balance-sheet liabilities	55
8.2.	Seasonal and cyclical business	56
8.3.	Employment	56
8.4.	Significant events after the reporting period	56
8.5.	Significant events related to prior years	57
SUMMARY AND ANALYSIS OF THE FINANCIAL RESULTS OF ASSECO SOUTH EASTERN EUROPE GROUP FOR
THE PERIOD OF 9 MONTHS ENDED 30 SEPTEMBER 2023	58
I. FINANCIAL RESULTS OF ASSECO SOUTH EASTERN EUROPE GROUP FOR THE THIRD QUARTER OF 2023	59
II. FINANCIAL RESULTS OF ASSECO SOUTH EASTERN EUROPE GROUP FOR THE PERIOD OF 9 MONTHS
ENDED 30 SEPTEMBER 2023 /CUMULATIVE/	62
III. ANALYSIS OF FINANCIAL RATIOS	65
IV. STRUCTURE OF THE STATEMENT OF CASH FLOWS	66
V. INFORMATION ON GEOGRAPHICAL STRUCTURE OF FINANCIAL RESULTS	67
VI. NON-RECURRING EVENTS WITH IMPACT ON OUR FINANCIAL PERFORMANCE	68
VII. AUTHORITIES OF ASSECO SOUTH EASTERN EUROPE S.A	68
VIII.SHAREHOLDERS STRUCTURE OF ASSECO SOUTH EASTERN EUROPE S.A	69
IX. OTHER INFORMATION	70
9.1	Issuance, redemption and repayment of non-equity and equity securities	70
9.2	Changes in the organizational structure of the Issuer's Group	70
9.3	Information on significant judicial proceedings	70
9.4	Related party transactions	70
9.5	Bank loans, borrowings, sureties, guarantees and off-balance-sheet liabilities	70
9.6	Changes in the Group management policies	70

9.7 Agreements concluded by the Group and Company with its management personnel providing for payment of

compensations if such persons resign or are dismissed from their positions

70

9.8 Information on the agreements known to the Issuer which may result in future changes of the equity interests held by the

	existing shareholders and bondholders	70
9.9	Opinion on feasibility of the Management's financial forecasts for 2023	70
9.10	Information on monitoring of employee stock option plans	71
9.11	Factors which in the Management's opinion will affect the Group's financial performance at least in the next quarter	71
9.12	Other factors significant for the assessment of human resources, assets and financial position	72
INTERIM CONDENSED FINANCIAL STATEMENTS OF ASSECO SOUTH EASTERN EUROPE S.A. FOR THE PERIOD
OF 9 MONTHS ENDED 30 SEPTEMBER 2023	73
FINANCIAL HIGHLIGHTS	74
INTERIM CONDENSED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME	75
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION	76
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY	78
INTERIM CONDENSED STATEMENT OF CASH FLOWS	79

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

4

Financial Highlights

Asseco South Eastern Europe Group

				9 months ended		9 months ended			9 months ended		9 months ended
				30 September		30 September			30 September		30 September
				2023		2022			2023		2022
				PLN'000		PLN'000			EUR'000		EUR'000
	Operating revenues	1,153,937		1,080,586		252,100		230,499
	Operating profit	164,286		154,272		35,891		32,908
	Pre-tax profit	192,296		186,267		42,011		39,733
	Net profit for the reporting period	159,333		157,492		34,809		33,595
	Net profit attributable to Shareholders of the Parent			154,559		152,657			33,766		32,563
	Company
	Net cash provided by (used in) operating activities	136,899		156,754		29,908		33,437
	Net cash provided by (used in) investing activities	(46,974)	(72,284)	(10,262)	(15,419)
	Net cash provided by (used in) financing activities	(121,376)	(76,657)	(26,517)	(16,352)
	Cash and cash equivalents at the end of the period			252,891		298,034			54,554		63,548
	(comparable data as at 31 December 2022)
	Basic earnings per ordinary share for the reporting
	period attributable to Shareholders of the Parent	2.98		2.94		0.65		0.63
	Company (in PLN/EUR)
	Diluted earnings per ordinary share for the reporting
	period attributable to Shareholders of the Parent	2.98		2.94		0.65		0.63
	Company (in PLN/EUR)

The selected financial data disclosed in these interim condensed consolidated financial statements have been translated into euros (EUR) in the following way:

• Items of the consolidated statement of profit and loss and consolidated statement of cash flows have been translated into EUR at the arithmetic average of mid exchange rates as published by the National Bank of Poland and in effect on the last day of each month. These exchange rates were as follows:
  o for the period from 1 January 2023 to 30 September 2023: EUR 1 = PLN 4.5773
  o for the period from 1 January 2022 to 30 September 2022: EUR 1 = PLN 4.6880
• The Group's cash and cash equivalents as at the end of the reporting period and the comparable period of the previous year have been translated into EUR at the mid exchange rates as published by the National Bank of Poland. These exchange rates were as follows:
  o exchange rate effective on 30 September 2023: EUR 1 = PLN 4.6356
  o exchange rate effective on 31 December 2022: EUR 1 = PLN 4.6899

In this report, all figures are presented in thousands of Polish zlotys (PLN), unless stated otherwise.

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

5

Interim Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income

Asseco South Eastern Europe Group

					3 months ended			9 months ended		3 months ended		9 months ended
	STATEMENT OF PROFIT AND LOSS				30 September			30 September		30 September		30 September 2022
				2023			2023		2022		(restated*)
										(restated)
			Note		PLN'000			PLN'000		PLN'000		PLN'000
Operating revenues	5.1	398,346	1,153,937	419,488	1,080,586
Cost of sales	5.2	(287,052)	(840,942)	(317,034)	(798,059)
Allowances for trade receivables	5.2	(1,165)	(4,845)	(530)	(1,083)
	Gross profit on sales				110,129			308,150		101,924		281,444
Selling costs	5.2	(25,561)	(73,148)	(23,325)	(65,814)
General and administrative expenses	5.2	(24,245)	(71,483)	(22,796)	(62,752)
	Net profit on sales				60,323			163,519		55,803		152,878
Other operating income	5.3	728	1,834	1,184	2,291
Other operating expenses	5.3	(481)	(1,150)	(219)	(897)
Share of profits of associates		65	83	-	-
	Operating profit				60,635			164,286		56,768		154,272
Financial income	5.4	18,338	42,783	12,350	44,475
Financial expenses	5.4	(3,010)	(14,755)	(6,586)	(12,467)
Impairment loss on financial instruments		(6)	(18)	(3)	(13)
	Pre-tax profit				75,957			192,296		62,529		186,267
Corporate income tax	5.5	(12,321)	(32,963)	(10,569)	(28,775)
(current and deferred tax expense)
	Net profit for the reporting period				63,636			159,333		51,960		157,492
Attributable to:
	Shareholders of the Parent Company				62,545			154,559		49,936		152,657
Non-controlling interests		1,091	4,774	2,024	4,835
Basic and diluted consolidated earnings per share
for the reporting period, attributable to shareholders	5.6	1.21	2.98	0.96	2.94
of the Parent Company (in PLN)

OTHER COMPREHENSIVE INCOME

Net profit for the reporting period

Components that may be reclassified to profit or loss

63,636	159,333	51,960	157,492
37,103	(47,688)	30,442	73,632

	Net gain/loss on valuation of financial assets	15	87	-	7
	Exchange differences on translation of foreign	37,088	(47,775)	30,841	40,806
	operations
	Restatement of non-monetary assets as at
	1 January	-				(399)	32,819
	- impact of hyperinflation
	Components that will not be reclassified to profit			-			-		-		-
	or loss
	Actuarial gains/losses	-	-	-	-
	Total other comprehensive income			37,103			(47,688)		30,442		73,632
	TOTAL COMPREHENSIVE INCOME attributable to:			100,739			111,645		82,402		231,124
	Shareholders of the Parent Company			98,763			106,738		79,338		225,151
	Non-controlling interests	1,976	4,907	3,064	5,973

*The restatement has been disclosed in detail in explanatory note 2.9 to these interim condensed consolidated financial statements.

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

6

Interim Condensed Consolidated Statement of Financial Position

Asseco South Eastern Europe Group

			30 September		30 June		31 December		30 September
			2023		2023		2022		2022
	ASSETS	Note			(restated)		(restated)		(restated*)
			PLN'000		PLN'000		PLN'000		PLN'000
	Non-current assets
	Property, plant and equipment	6.1	136,011		130,895		135,969		137,475
	Intangible assets	6.2	49,685		51,538		59,616		65,600
	Right-of-use assets	6.3	49,416		45,743		43,131		43,735
	Investment property		516		504		550		573
	Goodwill	6.4	785,610		743,784		794,100		795,804
	Investments accounted for using the equity		262		189		170		-
	method
	Other receivables	6.7	8,698		7,457		7,886		9,074
	Deferred tax assets		13,762		13,519		11,417		13,167
	Other financial assets	6.5	1,561		1,486		2,424		1,354
	Prepayments and accrued income	6.6	1,330		1,189		1,454		2,670
			1,046,851		996,304		1,056,717		1,069,452
	Current assets
	Inventories	6.8	112,661		70,974		57,045		74,361
	Prepayments and accrued income	6.6	49,708		44,291		48,008		43,726
	Trade receivables	6.7	222,736		201,676		290,358		203,908
	Contract assets	6.7	134,001		116,940		78,739		110,601
	Corporate income tax receivable	6.7	2,336		2,129		2,433		2,476
	Receivables from the state and local budgets	6.7	8,288		4,739		3,806		8,221
	Other receivables	6.7	31,306		22,993		23,822		20,611
	Other non-financial assets		5,112		6,210		9,936		6,942
	Other financial assets	6.5	823		1,014		319		287
	Cash and bank deposits	6.9	252,891		295,764		298,034		244,250
			819,862		766,730		812,500		715,383
	TOTAL ASSETS		1,866,713		1,763,034		1,869,217		1,784,835

*The restatement has been disclosed in detail in explanatory note 2.9 to these interim condensed consolidated financial statements.

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

7

Interim Condensed Consolidated Statement of Financial Position

Asseco South Eastern Europe Group

				30 September	30 June	31 December	30 September
				2023	2023	2022	2022
	EQUITY AND LIABILITIES		Note		(restated)	(restated)	(restated*)
				PLN'000	PLN'000	PLN'000	PLN'000
	Equity
	(attributable to shareholders of the Parent
	Company)
	Share capital		518,943	518,943	518,943	518,943
	Share premium		38,826	38,826	38,826	38,826
	Transactions with non-controlling interests		(35,841)	(34,957)	(35,692)	(38,053)
	Other capitals		490	313	(77)	(237)
	Exchange differences on translation of foreign		(126,212)	(162,406)	(78,304)	(43,642)
	operations
	Retained earnings		745,262	682,716	666,469	631,297
				1,141,468	1,043,435	1,110,165	1,107,134
	Non-controlling interests			7,654	7,966	8,515	8,097
	Total equity			1,149,122	1,051,401	1,118,680	1,115,231
	Non-current liabilities
	Bank loans and borrowings	6.11	43,288	32,772	48,635	48,111
	Lease liabilities	6.10	32,472	29,164	25,700	25,939
	Other financial liabilities	6.12	79,415	75,582	91,566	77,655
	Deferred tax liabilities		5,951	6,173	7,205	9,065
	Provisions	6.14	3,465	3,211	3,886	2,976
	Contract liabilities	6.13	4,272	6,588	8,455	8,863
	Other liabilities	6.13	50	59	74	573
				168,913	153,549	185,521	173,182
	Current liabilities
	Bank loans and borrowings	6.11	52,508	62,177	66,455	58,196
	Lease liabilities	6.10	18,355	17,976	19,418	19,659
	Other financial liabilities	6.12	62,236	142,190	62,071	54,753
	Trade payables	6.13	152,613	104,551	123,980	130,388
	Contract liabilities	6.13	130,176	119,229	148,360	121,006
	Corporate income tax payable	6.13	10,696	9,217	9,081	8,359
	Liabilities to the state and local budgets	6.13	26,185	23,872	46,357	22,326
	Other liabilities	6.13	39,114	31,491	48,894	27,923
	Provisions	6.14	6,078	5,474	5,289	4,926
	Deferred income	6.15	3,113	2,899	2,570	2,405
	Accruals	6.15	47,604	39,008	32,541	46,481
				548,678	558,084	565,016	496,422
	TOTAL LIABILITIES			717,591	711,633	750,537	669,604
	TOTAL EQUITY AND LIABILITIES			1,866,713	1,763,034	1,869,217	1,784,835

* The restatement has been disclosed in detail in explanatory note 2.9 to these interim condensed consolidated financial statements.

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

8

Interim Condensed Consolidated Statement of Changes in Equity

Asseco South Eastern Europe Group

															Exchange		Retained		Equity
										Transactions with					differences on			attributable to
															earnings and				Non-controlling
					Share capital			Share premium		non-controlling		Other capitals			translation of			shareholders of				Total equity
			Note									current net				interests
									interests					foreign			the Parent
														profit
															operations			Company
					PLN'000			PLN'000		PLN'000		PLN'000			PLN'000		PLN'000		PLN'000			PLN'000		PLN'000
	As at 1 January 2023				518,943			38,826		(35,692)		(77)			(78,304)		666,469		1,110,165			8,515		1,118,680
	(restated)
	Net profit for the reporting period			-	-	-	-	-	154,559		154,559	4,774		159,333
	Other comprehensive income			-	-	-	87		(47,908)	-	(47,821)	133		(47,688)
	for the reporting period
	Total comprehensive income				-			-		-		87			(47,908)		154,559		106,738			4,907		111,645
	for the reporting period
	Share-based payment transactions			-	-	-	480		-	-	480	-	480
	with employees
	Transactions with non-controlling
	interests (including contingent financial			-	-	(149)	-	-	-	(149)	87		(62)
	liabilities to non-controlling shareholders
	(put options))
	Dividend	5.7	-	-	-	-	-	(75,766)	(75,766)	(5,855)	(81,621)
	As at 30 September 2023				518,943			38,826		(35,841)		490			(126,212)		745,262		1,141,468			7,654		1,149,122

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

9

Interim Condensed Consolidated Statement of Changes in Equity

Asseco South Eastern Europe Group

															Exchange		Retained		Equity
										Transactions with					differences on			attributable to
															earnings and				Non-controlling
					Share capital			Share premium		non-controlling		Other capitals			translation of			shareholders of				Total equity
			Note									current net				interests
									interests					foreign			the Parent
														profit
															operations			Company
					PLN'000			PLN'000		PLN'000		PLN'000			PLN'000		PLN'000		PLN'000			PLN'000		PLN'000
	As at 1 January 2022				518,943			38,826		(19,887)		(500)			(116,129)		545,066		966,319			4,157		970,476
	Net profit for the reporting period			-	-	-	-	-	187,828		187,828	7,728		195,556
	Other comprehensive income			-	-	-	5		37,825		-	37,830	372		38,202
	for the reporting period
	Total comprehensive income				-			-		-		5			37,825		187,828		225,658			8,100		233,758
	for the reporting period
	Share-based payment transactions			-	-	-	418		-	-	418	-	418
	with employees
	Obtaining control over subsidiaries			-	-	-	-	-	-	-	4		4
	Transactions with non-controlling
	interests (including contingent financial			-	-	(15,805)	-	-	-	(15,805)	51		(15,754)
	liabilities to non-controlling shareholders
	(put options))
	Dividend	5.7	-	-	-	-	-	(66,425)	(66,425)	(3,797)	(70,222)
	As at 31 December 2022				518,943			38,826		(35,692)		(77)			(78,304)		666,469		1,110,165			8,515		1,118,680
	(restated)

Asseco South Eastern Europe Group

Quarterly Report for the period of 9 months ended 30 September 2023 (in thousands of PLN)

10