Earnings call transcript: Asseco Poland Q2 2025 shows steady revenue beat

Asseco Poland SA ADR reported its Q2 2025 earnings, slightly exceeding revenue forecasts with $1.24 billion against an expected $1.23 billion. The company’s stock price remained unchanged at $50, reflecting a neutral market reaction, though InvestingPro data shows an impressive 140.7% year-to-date return. The earnings call highlighted the company’s strong performance in public administration and healthcare sectors, alongside continued strategic acquisitions. With a market capitalization of $3.59 billion, Asseco Poland maintains a robust financial health score of "GOOD" according to InvestingPro’s comprehensive analysis.

Key Takeaways

• Revenue of $1.24 billion surpassed forecasts by 0.81%.
• Stock price remained unchanged post-announcement.
• Strong growth in public administration and healthcare sectors.
• Continued mergers and acquisitions strategy.
• Neutral market sentiment despite the revenue beat.

Company Performance

Asseco Poland demonstrated stable performance in Q2 2025, with total sales reaching PLN 9 billion, reflecting an 8% year-over-year increase. The company’s focus on proprietary products and software, coupled with strategic acquisitions, contributed to its sustained growth. Asseco’s market leadership in the banking sector in Poland and its diversified customer base further reinforced its competitive position.

Financial Highlights

• Revenue: $1.24 billion, up from the forecasted $1.23 billion.
• Operating profit (non-IFRS) grew 14% to over €1.1 billion.
• IFRS profit increased 23% to $318 million.
• EBITDA profitability improved to 15%.

Earnings vs. Forecast

The company reported revenue of $1.24 billion, surpassing the forecast of $1.23 billion by 0.81%. This modest beat aligns with historical performance, indicating steady operational execution.

Market Reaction

Despite the earnings beat, Asseco Poland’s stock price remained unchanged at $50. This lack of movement suggests that the market may have already priced in the earnings results or that the revenue surprise was not significant enough to influence investor sentiment.

Outlook & Guidance

Asseco Poland remains optimistic about the second half of the year, driven by a strong order backlog and continued M&A activity. The company is focusing on integrating recent acquisitions and expanding its AI-driven solutions for process automation.

Executive Commentary

CEO Marek Panik emphasized the company’s competence in delivering projects, stating, "We have been demonstrating that we are competent in delivering projects." CFO Korinna Czaja Mayorak highlighted the company’s commitment to customer satisfaction, noting, "We always deliver, and we always want to communicate this to our customers."

Risks and Challenges

• Potential macroeconomic pressures could impact future performance.
• Integration challenges with newly acquired companies.
• Market saturation in certain sectors could limit growth opportunities.

Q&A

During the earnings call, analysts inquired about the ongoing process of obtaining approvals for the TSS share sale and the strategy behind the partial sale of Sapiens. The management addressed profitability differences across segments and highlighted the success in the public sector business.

Full transcript - Asseco Poland SA ADR (ASOZY) Q2 2025:

Marek Panik, CEO, ASECO Group: Good afternoon, ladies and gentlemen. Welcome at our conference where we will present the results of Q2 of ASECO Group and for half one twenty twenty five. Traditionally, we will present to you our activities in the said period and present our financial results. First, Marek Panik, the CEO, will take the floor. And then we will discuss finances, Korinna Czaja Mayorak, CFO and Vice President of the Group.

Later on, we will have the opportunity to ask questions, but also during the presentation, free to send them, and we will try to answer all of them after the conference. For those of you watching us online in English, we want to assure you that all of the questions will be answered. Let’s start first with the presentation of half

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: one and

Marek Panik, CEO, ASECO Group: the performance of the group. Marik, over to you. Hello, ladies and gentlemen, welcome indeed. Today, we are summing up 2025. And let’s be fair, it was a great period for the whole group.

And this, in our opinion, is a consequence of our strategy that we’ve been pursuing, strategy based on our own proprietary products, software and services. For years, we’ve been supporting our M and A activity as well. That means every year, we acquire new companies. And that was also the case this year. You can see on the screen that we were joined by 13 new organizations in the said period.

Well, look at the numbers. The numbers reflect best what was going on in the first six months. Sales went up to PLN 9,000,000,000, which accounts for 8% growth compared to the same period last year. Operating profit non IFRS grew even faster by 14%, So it was more than EUR 1,100,000,000.0. And IFRS profit rate was even more dynamic.

It grew by 23%, $318,000,000. That’s the rate. Reported profit that you can see in the statements, IFRS, went up by 20% to achieve the rate of PLN $282,000,000. We remain optimistic with respect to the second half of the year and the end of the year. Well, this is September now and we know more or less what could happen until the end of the year.

So we have reasons to be optimistic because we have a huge backlog of orders. These projects obviously are yet to be implemented and delivered. But for many years, we’ve been demonstrating that we are competent in doing precisely that. So let’s have a look at what exactly was going on in individual geographical segments where ASECO operates. And so let me just technically explain on the right hand side, you can see those columns.

For some time, we’ve been showing two such diagrams in variable and fixed rates because foreign exchange rate actually impacts very much our results. Right now, the situation on the FX market is quite stable. So that impact was is not so great anymore. That’s why we came back to just one diagram that depicts growth rates in individual segments. So starting from the bottom, it’s Formula Systems.

That’s obviously the largest contributor to the revenues of the group. Here, we had a growth rate of 6% and the value of sales is almost 5,785,000,000.000. ASECO International segment was growing in a faster at the pace of 11% and even faster was ASECO Poland, 13% growth rate. Now highlights. In the ASECO Poland segments, for some quarters, we’ve been actually telling you the same that we see digital transformation ongoing in the public administration, energy and healthcare sectors.

These are all of the sectors where we are very strong and we have great revenues precisely in these sectors. And that was also the case in half one twenty twenty five. So the revenue was growing quite fast. Again, let me stress that the situation in the financial area for ESECO Poland was very stable. It’s because of the banking segment.

We are a leader here. We serve most of the banking institutions. I think the growth here amounted to some 8%, but we will go to details in a moment. Now ASECO International. Here, let me stress the dynamic revenue growth from payment solutions.

This is part of ASECO Southeastern Europe, but for many quarters we’ve been repeating the same because indeed it’s still the case that the revenue growth is very dynamic. Now ERP area, this is this great product related part of the business that is operating in different countries, not only in Poland. So this is also part of ASECO International. Here, we wanted to incorporate into our offer some AI driven solutions allowing for process automation. And we are working on that

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: these days.

Marek Panik, CEO, ASECO Group: And we really welcome a remarkable growth of revenues in the public sector in Assetto Central Europe group. Some two or three years ago, we told you about a sort of stagnation that was observable there due to geopolitical situation in Slovakia and Czechia. Well, this has been changing these days. We’ve been able to restore a good backlog of order. That refers to the the the number of projects.

And finally, Formula Systems. As I said, that’s the greatest contributor of revenues in the group. All of the companies in that segment are faring quite well, led by Matrix IT, that’s the largest Israeli company in terms of software. Now Sapiens, it’s a company that has now had a big share of recurring revenues. About 70% of its sales is accounted for by recurring revenues, be it by maintenance or subscription fees to their proprietary software.

And what makes us very happy is the dynamic growth also in our HR That’s and payroll another leg of formula systems. It’s based on company Mikhail that was purchased some time ago. And we welcome the fact that Formula announced probability of entering the stock exchange. With this company, we hope it will happen until the end of that. Yeah, that’s a great success story showing that we can integrate medium sized and small companies active in that area and based on them, build a lot of business.

Here you can see the revenues broken by different product groups. Let’s start from the upper part, billion dollars that’s the largest part of our business, solutions for finance. It’s about 30% of our revenues. Then it’s followed by solutions dedicated to public institutions. Here, we observed a 17% growth.

That’s the part of the business that really grows the fastest. It accounts for 22% of all the sales. This is followed by ERP solutions. Here we are very close to CHF 800,000,000 value in sales and then other IT solutions and infrastructure. Let me present some comments to you.

Look at that category, infrastructure and other and other IT solutions. Well, might strike you as something quite mysterious, but it’s a huge area worth over 3,000,000,000 zloty. So maybe let’s comment a little bit what’s in there. That was presented at a previous one of the previous meetings, but why don’t we just refresh our knowledge? In other IT solutions, we have all those solutions that can’t be qualified clearly as finance, public institutions or ERP.

Even though in many cases, these are cross sectoral solutions, a great example is the e signature or the digital signature, which is being sold by Aseco Data Systems. It also involves development platforms and integration platforms by Magic Software and which is a big part of that, it’s IT and professional services. Sometimes it’s also called body leasing. Well, it’s about leasing out your people or your whole team so that they can create projects or dedicated solutions adopted to the needs of an individual customer. It also involves telecom solutions that we sell in Poland and through magic also in other destinations.

Now infrastructure and other. Intuitively, it’s about simple sales of hardware but also software of third parties. So technological solutions and everything that has to do with ASECO cloud, cloud based services, managed services. Well, it’s been a really catch the word recently used frequently by ASECO cloud and other formula segment groups. So that was just a pretty long comment but I wanted to clarify that.

What we would also like to stress is that we are not dependent on any particular customers. The share of top 10 customers is about 10% in the group’s revenues, whereas the largest customer accounts for some 2% of the group’s revenues, which again suggests that we are in no way dependent on any individual customers, but rather we have diversified customer base. Now let me describe a little bit individual solution groups, starting by Solutions for Finance. Here we were able to cross the boundary of 2,820,000,000.00 of sales, Formula Systems being the largest contributor. That’s comparable to last year.

The main player in finance is Matrix, a company that serves some banking and insurance organizations in Israel. Magic Software and Sapiens. Sapiens creates some 100% of its revenues precisely from that stream because it produces software dedicated to insurance companies. Now for ASECO International, it’s about EUR 800,000,000 sales, 11% of growth, which is quite dynamic. And again, it’s the payment and banking revenues of Southeastern Europe that is the most important here, but also ASECO Central Europe or Beer Estate, our Portuguese companies should also be mentioned.

And finally, ASSACO Poland here is over €300,000,000 8% growth, which makes us very happy. We have a huge contribution in different banks. So slowly but surely, we are shifting to the so called subscription model and most of the banks are now using that solution. So each month they will pay us a fee for a whole package of software, which they need to operate. Now solutions dedicated to public institutions, 22% contribution to the whole sales of ASECO Group.

We are coming close to the worth of sales of 2,000,000,000, which marks a 17% growth, very dynamic And you can see that, that growth is very dynamic in every segment. Let’s start with Poland. Here, it’s almost 20% more year on year. So the value of sales is almost 600,000,000. That is the consequence of what I mentioned in the beginning, taking part in digital transition of different public institutions.

Some of them are quite big, you can see the list of them. And energy projects such as Central Energy Market Information System, Cecere. All that allowed us to really grow quite substantially. Now ASECO International, here we are restoring a market that was marked by some stagnation in the past, for example, in Slovakia and Czechia. This is also about proprietary solutions which are dedicated, billing systems, road transport systems.

Well, with those solutions, ASECO International marked a 30% growth, which is quite considerable. And for MULA Systems, the largest contributor in that part of solutions for public institutions. The main player, again, Matrix IT with a host of projects dedicated to public institutions in Israel. And Magic Software acting both in Israel and in other countries and not only for classic public administration bodies, but also for healthcare clients.

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: As I go Poland, you can see this is practically only our Dalia Matic company, so this is negligible in the home sales. But we are happy to witness a 20% growth here, ASECO international line. You can see almost four seventy million and this is similar to last year. Let me make a comment here. In ASECO, in Business Solutions, we have put a lot of attention in preparing our systems.

We’ve been doing that, and we also believe that this is going to bring us profits. I’m referring to the National e invoicing system in Poland once it’s operational. Formula Systems is not the greatest contributor this time here in this segment, but Matrix and MichPal are. And Matrix, we have got our ERPs. And in Mihpal, there are HR and payroll ERP related things happening as well.

Other IT solutions, have already talked about it. So you can see the figures, almost EUR 1,500,000,000.0 in sales, a 4% growth in Seco, Poland. This is largely thanks to telecommunications, so mainly the digital pulse up project in the group

Unidentified Questioner: and

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: things that I have already mentioned, as such the digital signature and Data Systems, for instance. Now ASECO International, we’ve been recovering here after some tough projects. Now we have 13% of growth. And as you can see, the share of the segment in the wholesale is not very impressive, but we are happy. Anyway, Formula System, the largest ones with a 5% growth, Matrix and MAGIC software being the largest contributors here.

And finally, our acquisitions. I’ve already mentioned that we have acquired 13 companies. So this is a very geographically speaking, a very diversified portfolio with different companies from different regions. Two in Poland, one acquired by Asiko Poland and then the other one by Asiko Business Solutions. We also have two acquisitions in the Israeli market and two in Spain.

Also acquisitions in India, The UK and The U. S. This is all by Sapiens, two acquisitions by ASECO Central Europe in Czechia and in Slovakia. We have an Egyptian acquisition by ASE. So as you can see, we keep working.

We keep getting more and more new companies. We also have a new pipeline of companies that we are actually talking with right now. We keep doing what we are doing to acquire more companies. Thank you. And now over to Carolina.

Well, Marek has been talking about revenues. As we have already mentioned, we have gone beyond $9,000,000,000 and CAGR plus seven, software proprietary software over EUR 7,000,000,000, CAGR plus 8%. And after H1, EBITDA EUR 1,400,000,000.0, non IFRS and EBIT EUR 1,122,000,000.000. So H1 ends with a net profit non IFRS of EUR $318,000,000. Now let’s have a look at the reconciliation of the revenue half year to half year.

You can see that the exchange rate still has a negative effect on our results, but it’s not as large as previously in 2024, but it continues to be negative anyway. So that’s why we lose 110,000,000 in revenues. So this is around 1% of growth. Four forty million accounts for organic revenue and EUR $3.00 8,000,000 accounts for acquisitions and our revenues. Net operational profits non IFRS.

We start with $980,000,000 for H1 twenty twenty four. There is a negative impact of the exchange rate, 18,000,000. In 2024, there was a one off related to selling real estate. This was EUR 14,000,000, but this year, there are no one offs of this type. So to reconciliate, we have to subtract this one off.

Organic revenue plus EUR 116,000,000 and EUR 15,600,000.0 from acquisitions. So you can see that the acquisitions are profitable, and we are happy to see that. Now the same reconciliation for the net profits. We start with $258,000,000 for 2024 H1 non IFRS, EUR 11,000,000 the real estate transaction after taxes and EUR 71,000,000 accounts for delta organic and acquisition related results of companies. We have also broken down the delta, as you have asked, at the level of the net profit.

So there are different contributions from different geographical segments. Maybe this will help you understand better our consolidated profitability and some trends. So let’s begin with the non IFRS results for 2024. You can see that largely the contribution is from Asiko Poland, the parent company, 44,000,000, and EUR 2,000,000 comes from formula’s contribution. That might seem little.

But speaking about formula, Q2 was heavily impacted by foreign exchange rates. So organically speaking, the companies have been growing. But if we translate this into shuts or dollars and from dollars into PLN. This growth has been consumed. That’s why the contribution net profit contribution only amounts to 2,000,000.

And there are EUR 14,000,000 coming from ASECO International, and EUR 1,000,000 is an adjustment between segments. So let’s have a look in general at the revenues and operating profit. So we are happy to witness growth, a double digit growth of EBITDA and the operating profit, both IRFS and non IRFS. You can see in the right what it looks like if you eliminate the exchange rate impact, plus 16%, respectively, plus 14 like for like H1 to H1. And also, if you look at Q2, it’s plus EUR 16,000,000, so it’s even better with including the exchange rate differences and plus EUR 19 and also similarly, plus 14%, plus 16% if you have the IFRS recognition.

Profitability has also improved, and it’s also good news. You can see that this trend has been quite consistent for a few quarters now. EBITDA, so here, profitability is 15. It’s an improvement of 0.6% points, and non IFRS is 12.4% and improvement by 0.7% points. IFRS, we already have 10.3% of profitability, so it’s quite good and 0.5 of improvement.

So let me comment these figures. Let me refer to the M and A costs, which are higher than in 2024, and this is because of our acquisitions. Many of the costs come from the Formula Systems segment and ASECCO International, and this is largely because of acquisitions and costs borne in H1 and those to be incurred in the upcoming quarters.

Marek Panik, CEO, ASECO Group: Have a

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: look at the operating profit. The result is similar on interest, and there is a negative impact of exchange rate, and this risk is something that is beyond our control. You can see the delta amounts to almost EUR 23,000,000 H1 to H1, and this is largely also thanks to formula. Hyperinflation doesn’t have such a big effect anymore, and this is, let me remind you, from Turkey, from our Southeastern Europe subgroup. In h one, we sold the company there.

This was settled with a loss, and this also had a negative effect on the M and A transactions and was included in the EUR 25,000,000. This impact is smaller here because the company is not a part of our portfolio anymore. Higher effective tax rate, as you can see, 2.6. Partially, this is because we brought dividends from outside the EU to the group. And this means that we have to pay the tax at source, hence, the higher taxes.

Overall, let me mention that the net profit amounts to million. This is 22% of growth and Q2 to Q2 is plus 32%. So I have to say that we should be happy about what we have managed to achieve in H1. Now let’s break it down into regions and companies. Let’s focus on the largest companies.

Well, you can see clearly what I have already discussed, namely the Polish segment has a huge contribution to growth. ASECO Poland, over 40,000,000 of growth, EBITDA only. And we are very happy to see that in the parent company, all the segments are growing. The same goes for the backlog. It’s very satisfying.

And this also comes from all the operating segments of the parent company. Asiko Data Systems has been growing and improving its results. And we are happy that we have managed to streamline the situation in other companies that operate in Poland. There have been some challenges last year and two years ago. You can see many companies here, and they have improved their results.

Hence, the EUR 14,000,000 in the previous half year and EUR 20 to as much as EUR 20,000,000 this year. Now the Formula Systems segment. So as you can see in PLN, MATRIX is growing, both the revenues and EBITDA, but the growth is much impressive plus SEK 8 and plus 14 If you recognize it in shuttles, the magic is growing the same way, but this is not visible in the Polish zlotus. In the USD, it’s plus SEK 12 in revenues, plus 4% in EBITDA. Sapiens is doing a bit worse.

It’s growing, but not that much, plus 2% in revenues and plus 1% in EBITDA. And you can see that in PLN, this growth is negative. Have a look at Line four. We are going to discuss it now. So this covers the Mishpal Group, Marek has already mentioned, which is planning to go public.

And the results are very, very decent of this group. And this, despite the fact that we had to pay the costs related to the prospectus and the general management costs have gone up, but it was a one off. And the group has grown largely thanks to its consistent strategy of acquisitions of buying small but profitable companies. So there are, I think, a dozen or so of transactions of this type. So therefore, this has become noticeable.

Marek Panik, CEO, ASECO Group: Now Asakol International, as we mentioned before, we’ve been trying to restore its core business in Czechia and in Slovakia. This was initiated last year and we continue this year. Hence, we see an improvement in the organic results. Obviously, some great results are still observed in the ERP segment. Now for South And Eastern Europe, it’s still the case that both in terms of EBITDA and revenues, it’s the payment segment that is the driving force.

In this half of the year, however, also dedicated services are doing quite well. In the Western European market, we see a growth in revenues, but EBIT or the net profit is not as impressive. And we see a small drop in terms of the operating profit. Let’s remember that we keep consolidating the company that doesn’t deal with the core business. It’s not trading in hardware.

It’s hardware trade. So improvement of revenues doesn’t necessarily mean an improvement or maintenance of profitability. And the rest of the numbers, I think, are quite self explanatory. And now the cash flow rate is very satisfactory this time, also in the operational perspective. And we are still the cash conversion rate is cash conversion ratio rather is very satisfactory.

It’s 102% for the whole group, 110% for ASECO Poland segment. So that’s the best cash conversion ratio, which translates into a stable liquidity situation. We see here a nominal drop in terms of debt. And the servicing cost of the debt midterm were going down, so this is quite satisfactory. Now let’s have a look at the proportional recognition.

Here, we prepared comparable diagrams both for the full recognition and the proportional one. So on this one, the proportional recognition chart, you can see a negative impact of foreign exchange differences. Since we have effectively less share in currencies, that currency impact is smaller. EUR $313,000,000 is the organic results. FX rates is minus EUR 37,000,000.

And also our acquisitions were well diversified, so we are quite decent here looking at the proportional recognition. For EBITDA for EBIT, sorry, the trends are quite the same. So I think it doesn’t require any more explanations. Now let’s have a look at the revenues and operating profit. Again, proportional recognition.

I think it’s quite visible that those companies where we have a higher share have a higher profitability. So those proportional numbers show us it’s 17% at the level of EBITDA, 13.3%. It’s the profit from operating activity in non IFRS. And you can see also other results on this slide. If we break that down, then in terms of improved profitability, you could say that all of the segments improved that particular ratio.

For Formula and International, it’s 0.4 percentage points. For ASECO Poland, as a segment as a whole, it’s 3.3 percentage point. That’s the proportional recognition, and it is seen very precisely here. As I said, Q2 itself, in terms of growth and improved profitability, it will be even better. Also proportionally, you can have a look here at our balance sheet.

And when it comes to different assets that we hold, well, I think that diagram shows clearly our debt for ASECO. Poland is just a credit line that the parent company holds. And part and parcel of the debt is driven by formula, in fact. In proportional recognition, you can see that these numbers are much lower, in fact. And the final slide from me is the order backlog, plus 10%.

That’s the growth in fixed rates for the whole group, 9% in variable rates. ASECO Poland, again, grows very dynamically. It’s plus 13%. It’s driven however, the growth is observed in all of the three segments. It’s first public, then enterprises, banking and finance comes third.

However, in all of those segments, these numbers are quite good. For ASECO International, it’s plus 12%. And its contributors are as follows: ASECO Eastern Europe, ACE and then Western Europe. For formula, again, it’s globally plus 9% in fixed rates and plus 8% in variable rates. That’s it from me.

I’m sure we have loads of questions. Yes, indeed, I confirm. We will take question number one first. It’s rather a statement, however. So, hello.

Question number one is this.

Unidentified Questioner: Already mentioned that you have received 10 out of 15 approvals for the sale of treasury shares to Topicos. How likely is that you will obtain the remaining approvals? Based on the structure of the deal, it does not seems that antitrust law should pose a major obstacle.

Marek Panik, CEO, ASECO Group: If possible, I would be happy to take this one because I’ve been navigating that matter from the very beginning. So looking at statistics, indeed, 10 out of 15 consents is what we’ve obtained so far. But they are of different gravity, I would say. Some of them are more complex, whereas others are rather simple. So that statistics doesn’t really reflect well what’s still in store.

But it’s undeniable that the five consents we’re still waiting for have the following status. Right now, we’ve filed all

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: of

Marek Panik, CEO, ASECO Group: the documents that were required. So now we are waiting for decisions to be taken. It may be the case, of course, that regulators will have some additional questions or will require some additional clarifications. If so, we’ll provide them with them. And yet, are optimistic.

After all, we’ve been working on that deal for several months starting from February. So we’ve been very diligent. We have a team of lawyers, both us and at TSS. They’ve been working very hard on that deal. So we hope that sooner rather than later, we will obtain the required consents.

However, whether it happens in September or October, well, that’s a secondary thing. Right. Second Second question.

Unidentified Questioner: Appears that you are benefiting from certain developments within the company. What is driving the stronger increase in net income?

Marek Panik, CEO, ASECO Group: Well, indeed, it’s quite undeniable that the net profit grows faster than revenues do. However, since I saw the question prior to my presentation, I tried to justify that a little bit during my presentation. So let me reiterate. First of all, please bear in mind that individual segments have respective profitability rates, and they are also subject to consolidation. The net profit for the parent company, Osseco Poland is almost consolidated to 100%.

International, it’s about 60%. However, looking at the operating activity of formula, that rate is some 11% to 13% depending on individual quarters. So that’s the first factor behind that reason. As I said, Osseco Poland grows the fastest. So looking at the contributed numbers, that growth is faster.

It’s not diluted by the segments that grow at a slower pace. And the same applies to profitability. I saw a question dedicated to profitability. So well, things are the way they are. So in principle, I would say that the highest profitability is observed by Zakopoland, followed by international and then followed by formula.

And first of all, it’s due to the business model. In Osaka, Poland, we have more activity based on our own products. And in other cases, we sell them in fixed price projects, and it’s the vendor that takes over risks. So the margin rate in such projects is higher. In formula segment, however, well, there is the matrix company, for example.

And part and parcel of its revenues is generated based on time and material projects, where average profitability is not even half of what we have in Osaka Poland.

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: But look

Marek Panik, CEO, ASECO Group: well, try to compare Osaka Poland and international. And remember, in Western Europe, we have a company that trades in hardware. And so it grows revenues, but it doesn’t necessarily drive our profitability. So it’s hard to compare these segments. Rather, I think we should count profitability based not on the total of the revenues, but rather on the products which are based on proprietary solutions.

And then it’s more measurable to compare profitability. And the difference between the two segments will then be much lower because non IFRS EBITDA profitability, it’s about 26% for ASACO Poland and 22% ASACO International. Slovakia, Czechia, our activities there and the ERP segment, they, in fact, are quite similar in terms of the type of activity as ASSECO Poland. Right. Thank you very much for that answer.

Indeed, you answered the next question as well. So let’s move on to the next question. How come you have 18% share in Sapiens and you don’t want to sell it? Do you plan any other sales of assets in Formula Systems segment? Let me take this one.

So I will start with a comment on that Sapiens deal. Indeed, at the end, we are left well, the Formula Systems is left with a package of 18% of shares. Still, we believe Sapiens is a great business. So this deal is like, well, we sold Sapiens, but in fact, we still have a stake because we are confident that this company has a bright future. Also, at the same time, we believe that the new investor can release even more potential, which is there in that company and should be released.

That’s why we decided to stick to that package of 18 shares. We also will have our own guy in the board of directors of Sapiens, which means we will be kept in the loop. And we will assist if the new shareholder wishes to use our assistance. After all, it’s formula that built Sapiens from scratch, so they know best what is good for the company, and they may want to use our help. I’m just wondering what else I should add.

All in all, we are very positive about that deal. Now to the second part of that question, are there any other companies that we are planning to dispose off? Well, no. At the moment, we don’t have any such ideas. Right now, we concentrate, as you know, on merging Magic with the other company.

And Michpal is also part of the deal. So that’s what Formula is now concentrating on.

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: Thank you. The next question is, please explain to us what is covered by the other position in the charts where the operational profit and net profit are reconciliated. The delta here is million. Slide 17. Now we can break down the 6,000,000 into the following way.

Five comes from Osseco Poland, and the rest is formula. So the 5 over 5,000,000 accounts for the costs related to the sale of own shares largely. So actually, you should consider it as a one off this year. I haven’t mentioned it because I thought that maybe EUR 5,000,000 is not that important, but this is what’s behind it. This cost will certainly go down because we have already recognized most of it in q one.

But as Marek has mentioned, the process of acquiring permits and approvals is very long in many countries, involves handling many documents, and this generates a lot of costs which have been gathered here in this line.

Unidentified Questioner: Now do

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: you expect such a high margin in Poland in h two, especially in the corporate and power industry areas. Well, speaking of our expectations, we never share forecasts. This is our caveat. But we are always ambitious. We have made some achievements in H1.

And I think that this can be repeated to a certain extent in H2. But let’s not forget what I mentioned when I was speaking about the results of Q1. In the power industry in Q1, we had extraordinary profitability, which also had an effect on Q2. And this was related to the contracts in the power industry. The process of signing the contracts was longer.

That’s why in 2024, we accumulated costs without revenues. That’s why we didn’t recognize the margin. The cost was a burden in the p and l. But now when we are signing contracts and evaluating contracts, we have what we call the catch up effect. So you can link revenues and margins with the costs.

And this is an effect that is visible in H1 now to a certain extent. But speaking about market challenges in the segment of Osseco Poland and the power industry, well, they are enormous, but we are ready. We have been getting ready for quite a lot of time now. And here, now, we would like to show that we are very well prepared. This is our ambition.

Marek Panik, CEO, ASECO Group: Thank you.

Unidentified Questioner: What would happen if TSS wouldn’t be allowed to acquire 15%? Will TSS still be involved as an adviser to ASECO? Or is there any agreement of selling the current stake of 10% in case they don’t allow to acquire the other 15%? Do you consider TSS to be a passive in case they will just retain a 10% stake?

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: Well, I will say the following. This is a scenario we are not considering right now at all. We are now following the process of getting the approvals, which is actually necessary to close the deal. And we see no risk here of not getting the approvals. This is simply a long and tedious project, which involves a lot of work and preparing many documents.

Unidentified Questioner: But

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: we think that not getting approvals in in the jurisdictions is simply not an option. That’s why we haven’t brought this up today because we haven’t been thinking about it. And I think that this question about the potential consequences is not we shouldn’t be asking this to

Unidentified Questioner: other disclosure is wonderful. JEAN It looks like your Polish public business has been winning many contracts while expanding revenues and profits. Can you help us understand why that part of the business is doing so well? Well,

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: I think this is thanks to many, many years of hard work and building our position of a very stable provider to the public administration segment. Let me remind you the following. A few years ago, the results of this segment were completely different. And we put a lot of hard work into this business in order to diversify our income. We create teams that contacted and acquired new, sometimes difficult customers, clients.

At the beginning, it was purely an investment. In many cases, we also renewed the teams to make sure that there is generational replacement as well. Many things are happening in Poland and The EU in this respect, so there is a lot of work. And we are hired by clients to do this work, sometimes without tenders as well because sometimes this is what needs to be done, and they need a a vendor which is large enough. And often, this is largely thanks to a huge effort and sacrifice of the employees.

That’s why, thanks to that, we deserve the the image of a supplier that always delivers. This is actually the effect of many years of work. Francis has asked this question because I know that he’s one of the new investors. But in the past, in Poland, many companies took part in public procurement procedures, offering money different prices, often losing money. And we decided to focus only on proceedings where we knew that we knew what we are doing.

In some cases, our competitors were very aggressive in their pricing, but they didn’t deliver. And now it’s totally different because our clients know that we have the resources to deliver even the most complex projects. So it’s a completely new approach to the public sector and to the large projects and contracts. Let me also add one thing. Our clients have been also changing their approach and their public procurement proceedings because price is not as important as it used to be and now the technical part is increasingly important.

And for years, we have gathered the trust of our customers and they know that we can deliver the solutions they expect. So this helps because we are a trusted provider, and this makes us stand out on the market. We always deliver, and we always want to communicate this to our customers that we always deliver. This is our edge.

Unidentified Questioner: Hello, Marek. You mentioned that target companies keep coming through the ASECO. Are you seeing more targets in ASECO International or ASECO Poland?

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: Well, actually, in all our segments, we are looking for companies to acquire. We have acquisition teams located in many different locations in the group. And these teams try to identify potential targets. So I wouldn’t specify any segments. We are being selective.

We are under no pressure to buy. We simply choose companies that we think we like and for many different reasons, starting with some product related, skills related arguments and also the soft soft aspects where we have to be sure that the team will will be compatible with us in terms of their culture, their model, and our federation model. And there are also many other factors involved. So we keep making the efforts to show that we are effective and we are trying to attract as many companies as possible to our group. And we have already answered all your questions once again.

Thank you so much for your attention and thank you for your input, for your questions and collaboration and

Marek Panik, CEO, ASECO Group: hope to see

Korinna Czaja Mayorak, CFO and Vice President, ASECO Group: you again during our next meeting. If you have any question, you can always contact us. Thank you very much and see you soon.

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