Talex S A : Information in accordance with par. 66 section 4 and 5 - SA-Q1-2021_tlx

Information in accordance with par. 66 section 4 and 5 of the Regulation of the Minister of Finance

on current and periodic information

to the quarter report for the first quarter of 2021

including the period

from 01.01.2021 to 31.03.2021

1. Information on the changes in the methods of assets and liabilities valuation and determination of the financial result

In the 1th quarter of 2021 there was no change in the methods of assets and liabilities valuation and determination of the financial result.

2. Rules adopted during preparation of the report:

1. TALEX S.A. draws up the financial statement on the basis of provisions contained in the Accounting Act of 29th September 1994. Due to the fact, that the Company does not draw up consolidated financial statements, a separate financial statement according to MSR or US GAAP has not been drawn up. Reliable indication of differences in the value of the revealed data, particularly those concerning equity, net financial result and substantial differences regarding the adopted accounting principles, is not possible.
2. According to article 3 section 1 point 9 of the Accounting Act the calendar year is considered the financial year.
3. According to article 3 section 1 point 8 of the Accounting Act the calendar month is considered the reporting period. A balance of the general ledger accounts is drawn up at the end of every reporting period.
4. Record and allocation of operating expenses are kept according to kinds on accounts under group 4 and at the same time according to types of activities and functions on accounts under group 5, with further reference to the costs of products sold or the financial result.
5. Financial statements are drawn up using the profit and loss account by function of expenses.
6. Cash flow account is drawn up using indirect method.
7. It is assumed that substantial for the assessment of the property and financial situation and the financial result is the event resulting in the change of total assets of more than 1%.
8. The Company keeps account books using the computer technique based on the integrated ERP system - Microsoft Dynamics AX by Microsoft Ireland Operations Ltd.

2.1 Methods of assets and liabilities valuation:

1. Fixed assets and intangible assets are covered by the analytical quantity and value

register. They are valued according to acquisition prices or manufacturing cost decreased by depreciation and amortization write-offs in proportion to the period of their utilization,

and also by the permanent impairment write-offs. Equipment with the value of less than PLN 1000 is not entered into the fixed assets register only but is included in the cost of materials. In appropriate cases, by the decision of the Management Board, assets with the value of less than PLN 1000 can be entered in the register of fixed assets. Such fixed assets are amortized once, in the month following

the month in which they were put into use. Fixed assets and intangible assets with the initial value above PLN 1000 are amortized on a straight line basis starting from the month following the month in which they were put into use. When determining the amortization period and the annual amortization rate, the economic useful life rate of the asset is taken into account.

Fixed assets used under finance lease are depreciated at the rate resulting from the term of the agreement, if the lease term constitutes at least 40% of the standard depreciation period. In other cases, fixed assets under finance leases are depreciated over their economic useful lives. Sale-and-lease-back in the books of Talex S.A. functions as financial lease, with the difference that Talex was at the same time the supplier of the leased asset.

b. Fixed assets under construction are valued according to real costs incurred for the construction, assembly, adjustment and improvement of future fixed assets, decreased by the permanent impairment write-offs.

1. Long term investments - do not occur.
2. Reserves covering materials, commodities, finished products and production in progress are appraised according to absolute purchase prices:
3. • materials and commodities - yearly consumption is appraised as follows:
     - commodities identified by serial numbers according to their price of purchase;

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Information in accordance with par. 87 section 3 and 4 - SAQ 1

2021

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1. • - commodities and materials not identified by a serial number according to the FIFO principle "First in, first out".

   • ready products - do not occur.
   • production in progress is appraised according to real, absolute production cost of a particular orders, in the amount not exceeding the value of the income described in the agreement.
2. Domestic receivables are valued according to the nominal value set at their beginning. Receivables in foreign currencies at balancing date are valued at the average exchange

rate set for a given currency by the National Bank of Poland. At balancing date the receivables and claims are indicated in the value corrected by revaluation write-offs in the following cases:

• receivables from entities in liquidation - 100% write-off;
• receivables that have been overdue for over half a year - 100% write-off.

f. Short-termfinancial assets are priced at market value. Results of the differences

between the priced value at the balancing day and the acquisition price regard revenues

or			financial			costs.
Domestic	cash	is	valued	at	nominal	value.

Cash in foreign currencies at the balancing day is valued at the average exchange rate set for a given currency by the National Bank of Poland.

1. Primary capital (share capital) is valued at the nominal value, in accordance with the entry in the National Court Register.
2. Supplementary capital is priced at the nominal value resulting from capital increases and decreases.
3. Revaluation capital is valued at nominal value resulting from capital increases and decreases.
4. Provisions for liabilities include:

• provisions for retirement benefits valued at the balancing day according to the following formula:

the number of employees without the settled right to retirement at the balancing day x average monthly salary in the company x likelihood indicator of retirement severance payment, differentiated by the employee's age:

up to 25 years	5%
26-30 years	16%
31-35 years	27%
36-40 years	37%
41-45 years	48%
46-50 years	60%
51-55 years	73%
56-60 years	85%
61-65 years	99%
over 66years	100%

1. • provision for unused holiday leaves: created at the end of the year as the product of the statutory daily remuneration and the number of days of unused holiday leave
   • provision for deferred income tax created to the amount of income tax payable in the future in relation to the occurrence of positive transient differences between the book value and the tax value of assets and liabilities. The amount of income tax resulting from negative transient differences is shown in the prepayments and accrued income on account of deferred income tax.
   • other provisions include the costs of future solutions for business transactions for which revenues and the provision for the VAT with due interests have been accrued before the balance sheet date.
2. Domestic liabilities are estimated in the amount requiring payment. Liabilities in foreign currencies at the balancing day are valued at the average rate set for a given currency by the National Bank of Poland

2.2. Information on significant changes in estimation values;

In the reporting period there was no significant change in the estimates.

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Information in accordance with par. 87 section 3 and 4 - SAQ 1

2021

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3. Additional information:

3.1 A description of factors and events, particularly of untypical ones, having a significant influence on the financial results achieved;

The Company pays particular attention to the sanitary and epidemiological situation related to the coronavirus COVID-19 pandemic, both in Poland and abroad. The Company notices that the pandemic has had a significant impact on a general situation on the market. In the Company's assessment, the significant upcoming elements affecting the economy over at least the past year and in the coming months are: restrictions imposed by the law, changes in the work practice, clients' changing needs caused by pandemic-related restrictions, postponement by the Company's clients of decisions to invest in new IT solutions for the period of the pandemic, slowdown and disruption of the goods supply cycle. The Company's ongoing and undisturbed operation is possible, inter alia, through the provision of means of communication for remote work, without prejudice to safety standards. Moreover, the Company's activities, with special regard to services, are carried out using fully redundant, two independent Data Centers located in Poznan and Wroclaw. However, due to the atypical situation related to the COVID-19 pandemic and a very wide geographical area affected, it is currently difficult to predict how this situation will affect the economic condition and future business decisions of the Company's customers and the market. Still, with regard to the functioning of the Company itself, it should be emphasized that a significant part of its revenues comes from long-term IT outsourcing contracts, which significantly affects the stability of the Company's operations. At the same time, the Company is offering its clients services adequate to the current, changing and partly new conditions.

3.2 Explanations concerning the seasonality or periodicity of the issuer's activity in the presented period;

The Company records the highest sales in the last quarter of the year, which is connected with the execution of investment budgets by the largest clients of the Company at the end of the year. At the same time, the Company observes that during the period of the COVID- 19 coronavirus pandemic, the purchasing decisions of the Company's customers differed from the practice observed in previous years. In the Company's opinion, this is related to, among other things, different needs of customers adapting to the requirements of working under restrictions and sanitary regimes. The period of the next few quarters will reveal to what extent the changes in purchase decisions made by customers during the pandemic are permanent and to what extent this will affect the purchase seasonality observed in past years.

3.3 Information on write-downs revaluing supplies to the net value obtainable after the reversal of such write-downs.

In the first quarter of 2021 the Company did not recognize a revaluation write-down on service inventories.

3.4 Information on write-downs for impairment of financial assets, tangible fixed assets and fixed assets, intangible assets or other

assets, and on reversal of such write-downs.

The Company did not make the above described write-downs.

3.5 Information on creation, increase, use and dissolution of reserves (in PLN thds);

	Title of the				State as at				Creation of				Use of the				Dissolution				State as at
													of the
	provision				01.01.2021				the provision				provision							31.03.2021
													provision
	- for the provisions for
	retirement severance				782				0				0				0				782
	pay
	- for unused holiday				300				-				-				-				300
	leaves

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Information in accordance with par. 87 section 3 and 4 - SAQ 1

2021

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- for remunerations		482		-		-		-		482
- for the costs of media
in the Company's		3		0		3		0		0
branches
Total		0		-		-		-		0

3.6 Information on assets and provisions due to deferred income tax (in PLN thds);

	Title of the assets				State as at				Creation of				Use of the				State as at
				01.01.2021				the provision				provision				31.03.2021
	- due to unpaid remunerations				28				7				1				0
	- due to write-offs to doubtful accounts				24				0				0				0
	- due to provisions for retirement severance				57				0				0				0
	pay
	- due to provisions for unused holiday				91				0				0				0
	leaves
	- due to invoicing of future periods services				173				0				26				0
	- due to invoicing of prepayments for				4				0				4				0
	deliveries
	- due to the costs of remaining provisions				1				0				1				0
	- due to revaluation write-down on				46				0				0				0
	inventories
	- due to IRS transaction assessment				0				0				0				0
	- due to unlisted loan interest				0				0				0				0
	- due to tax loss				0				0				0				0
	- due to difference in tax and balance sheet				0				0				0				0
	depreciation
	Total assets				424				7				32				0
	Title of provision				State as at				Creation of				Use of the				State as at
					01.01.2021				the provision				provision				31.03.2021
	- due to positive difference in tax				16				62				3				0
	depreciation
	- due to accrued discounts				31				0				31				0
	Total provision				47				62				34				0

3.7 Information on significant transactions of purchase and sales of

fixed assets;

In the reporting period there were no significant transactions of purchase or sale of fixed assets.

3.8 Information concerning significant liability due to the purchase of

tangible fixed assets;

In the reporting period there were no significant liability due to the purchase of tangible fixed assets.

3.9 Information on significant settlements under court proceedings;

In the reporting period there were no significant settlements under court proceedings.

3.10 Indication of the corrections of the errors in previous periods;

In the reporting period there were no corrections of the errors of previous periods.

3.11 Information on changes in the economic situation and conditions of conducting business activity, significantly influencing the fair market value of financial assets and financial liabilities of the entity, whether the assets and liabilities are recognized in the fair market value or corrected purchase price (amortized cost);

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Information in accordance with par. 87 section 3 and 4 - SAQ 1

2021

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