Asseco Poland S.A. (ACP) Earnings Call Transcript & Summary

[Interpreted] Good afternoon, ladies and gentlemen. Welcome at the meeting that is all about the annual results of the Asseco Group. Today, we are going to present our operations for the past year and financial performance. We have with us the President of the Board, Adam Goral with us. He will speak about the prospects for the further development of the group. Karolina Rzonca-Bajorek, VP and CFO of the group, who l discuss financial performance; and Marek Panek, Vice President, who will speak about the operations of the group. We have the meeting in 2 languages available for people who are in the speaking, have the presentation in English, and they may take advantage of the simultaneous interpretation into English. Questions will be also accepted in English. So first, we would like to start with a summary of the past year. We will discuss our operations and financial performance. And afterwards, we are going to take your questions. You may start sending them right away. We'll start with our President of the Board, Adam Goral.

[Interpreted] Good afternoon, and gentlemen, very cordial welcome. I'm happy that we can meet again. Regretfully, we no longer meet with a large group, I'm still longing for the scalable meetings where we all were able to sit in the same room and very cordial welcome goes to a handful of analysts who decided to join us here on the premises and help me make my dream come true. We are coming to this meeting in a good mood business-wise. When you are a mature person and really responsible for what is happening, it's really hard to start on a dry full note. If you look around the world, we all pay the price for the war that is going on in Ukraine. We keep thinking about it. Our country has a very particular position on the map. For many years, we enjoyed peace, now everyone is concerned that the developments may jeopardize the peace that we have. Everyone is watching what is happening in Israel. We have friends in Israel, and we understood what was happening, we understood that the war was going on, but we are very concerned because we understand that a lot of innocent people are losing lives. So all of us here are really waiting for the peace here and there. We believe that the peace will come. And I have a lot of faith in people who are here on board in this company. And I think that our performance actually testifies that the space is well grounded. The past year, in my opinion, is the best ever, PLN 16.9 billion in revenue, EBITDA, PLN 2.2 billion, operating profit PLN 1.6 billion and the net profit, 483 million. Someone may say, "Hey, PLN 483 million is definitely below PLN 502 million. So how come that PLN 483 million means so much of me and seems to be much more than what we used to have. Well, we need to acknowledge the risks that we've been facing, the war in Israel. 1000 people from the companies that were subordinated to Formula had to get engaged in the war. Some part of them were able to get back to work, but Formula and people that are there had a very hard time. I'm really impressed how well they were doing and when you will see the performance of Formula, if you look at the numbers, you can tell that the company was still growing despite -- against the odds. We were not able to get Slovakia in full swing. We were not able to get it to the same operational level as it used to be before the pandemic. Now we are more optimistic. We believe that the IT services for the government will definitely play a more important and permanent role there. We are also looking with optimism at the Czech Republic. And I think that Karolina will provide the numbers that will collaborate that and will prove my point that the past year was definitely the best ever. But what you can see on the right-hand side of the slide is our thank you note that goes to all of you. Truly appreciate our partners and shareholders who are helping us achieve things that seem to be unattributable. Our revenue since IPO we're growing by 145x and EBITDA was growing since our IPO and the first listing at the Warsaw Stock Exchange. I'm really happy that we had the idea to actually sell the multipliers on the slide. So we are truly grateful to everyone who contributes to the development of the stock exchange and the capital market. We are truly happy to have the newly appointed President and the CEO of the Warsaw Stock Exchange who has raised on the stock extent, and I'm sure that he will do a lot to make sure that this market becomes highly liquid because it is true, that liquidity could be improved. But I'm always saying that if not for the Warsaw Stock Exchange, all the stories that [ St. Paul Adam Kura ] was telling you, but he will go out to Europe and integrate other businesses with his business. Well, without the stock extent and Warsaw that would never happen. You definitely made the ride back and what I'm telling you is all collaborated by great numbers and even a greater team that I'm truly proud about. So I would like to thank you for your trust and confidence and the faith that you have in us. We truly appreciate that. So how come that we are so successful? We focus on our proprietary software and services, and we deliver that to the key sectors of the economy. This is the holy grail of the company. And we also take advantage of our domain geared expertise and technological insights. I think that we were able to withstand the toughest times and toughest test, we were able to survive pretty well through the pandemic. I don't want to brag about it, but we were able to deliver projects that seem to be impossible to deliver. So I'm really proud of the team, the team that was standing behind the ongoing operation of this country and of the government. So I think that this pride is well grounded. We will never give up on our ambitions and aspirations to continue acquisitions. We will continue to work on that. However, you might have noticed that for some time now, acquisitions have become more challenging. The fact is that when you look around the laboring markets, Slovakia, Czech Republic welcomes, you could barely notice any success that will be comparable to ours and I have always claimed that we want to attract to our group, entrepreneurs, people who have proven that they understand what it takes to run such a business. We do have a startup that makes us truly happy. This is the [ Next bank ], but when it comes to startups and this particular trajectory to get to the market and to establish yourself. Sometimes it's such a long journey that from the Asseco point of view, that is definitely more interesting projects when we are able to attract and onboard someone who has already proven concept and is able to contribute and accelerate our growth. Today, within our group, we have 33,000 employees. 87% of people work for Asseco represent production department. Now the dividend. You know me better, well, I've been always against borrowing. But at some point, I had to say, okay, let's borrow. Let's take on the loan. We all appreciate our partners, our business partners and the progress that they take on like development of the power sector, nuclear power, et cetera. And we understood their needs. And I'm really happy that we were able to go through the transparent process. When we made the decision, all the numbers were properly calculated and tracked. So for years, I've been avoiding any loans and credits. But eventually, I decided to do it because right now, the very fact that we have VAT to our disposal, but this is available. It is really keeping us on our toes. We feel mobilized, and we took a fresh look at our operations. But with the loan or the -- along the way, we had to make a decision about the dividend. And we had a dilemma whether we should rather save on the dividend and accelerate the payback of the loan. Because of the backlog that we will share with you shortly and because of the certainty, although this is not the best word for business, but we've been quite certain that we should be able to park quite well in the future. So eventually, we decided that it would be reasonable to offer a nice dividend. We decided to allocate PLN 250 million to a dividend payment. And on a per share basis, this is PLN 3.66. I do hope that this is a nice surprise because I understand that there were some discussions going in the market about the likelihood of the dividend. And myself, I always like to have more than less. So I'm all with you on this one. So I trust that everyone will be fairly happy with our dividend decision. And the dividend payment is just to prove that we truly appreciate you and we take you seriously as our shareholders. Now the prospects for group development. Well, today, I'm all about the cloud, AI and cybersecurity. These things really fill my days, but nevertheless, I'm really proud about our core business. So as I said, the holy grail proprietary software and services, the continued growth and reinforcement of our standing in sectors such as telecommunications, health care and power and energy public administration. When you look at the product segments, I understand that you are familiar with our success in ERP. Rafal Kozlowski, who will take over at some point, really played a major role in taking on the integration efforts. His career in Asseco Solution is really a great bridge that will bring him to this final position because this helps him build international standing and position. He is well recognized internationally. [ Pia Elaski ] is leading payments. That's a beautiful project. I remember that 12 years ago, we started from scratch. We were discussing how to go about it. Now you were tracking our efforts in us, and you know that we really scored the success. And step-by-step, Asseco data system and an excellent team that help us lead the part of the market with the electronic signature. I do hope that we will be a healthy competitor to the Polish post, and we will help the Polish post really reinvent themselves when it comes to e-deliveries. I think that I should really emphasize that many times, we had to start with the old technologies. So we have a beautiful story behind us. So when we had to part with the old technology, the way we were approaching that was such that together with our client, we were taking on new technologies step by step, fragment by fragment. So we were able to exit the old technologies. So we were not exposed to the situation where someone would open up a new project without a client saying, "Wait, hang on, don't worry." I need 3 years out of 5 years to deliver that. Because normally, even if you want to estimate the time to develop a new thing without the clients contribution, it's next to impossible. And on top of it, when you operate in the segments where we are, where you have sensitive solutions, if you want to do something from scratch and find new client, first client is again a miracle that you need to make it happen. So we almost forgot how it was done, but it was a huge effort from the visionaries and from people who are behind the production. And this is something that we should maintain. It's a great value. And all these values will cause and the causing that we exactly know and we are sure we will take and we have already taken place a very decent position in cloud. And that we will be able to work out a significant position in terms of AI. We will be at least one of the leaders and my ambition is to make Asseco a leader and to be able to state so in cybersecurity. I will delve into this topic. When it comes to M&A strategy, we are still looking for new opportunities, and we reflect on what we are doing, maybe sometimes we do not have enough information, even if we have some weaknesses, we will do everything in order to make up for them because we are still looking for companies, especially companies which have their proprietary software and we are able to implement the software in order to enrich our offer. So that is our ambition that we are going to implement. When it comes to the domains, which are remains of the future, namely cloud. So here, we have a lot of achievements. And as you know, quite a typical strategy because Asseco is developing its own cloud. Asseco Cloud is a well-performing project by now, Asseco Cloud has about 50% of revenues coming from Asseco Poland, and it started with the majority of revenues from Asseco Poland and 50% coming from the market. We attract clients. These are significant brands. And that's why I'm happy that this theme is so capable of attracting new ones. We are still investing in development of our offer, and we are learning from the market. We have always been saying that there will be some situations that will need some challenges with cloud. For example, in November, there was a peak in December and that would drive our costs up, and this is a subscription-based model. I'm very proud of this last year project to transfer Allegro pay service to Oracle Cloud. So this is our shared success. And we are all proud of that. Allegro is a Polish brand which have been developed skillfully and it's a great pleasure to collaborate with such a great company and paragon of their respect towards our company. We have implemented a great debit card for PKO BP project, that was also our shared success with PKO BP. PKO BP is one of the first Polished banks, paving the way and which was not afraid of this project and they are fully aware of the future of cloud-based solutions, another success. Now we are coming to an end with delivery of yet another batch of credit cards. And I think that in the summertime, we will be able to finalize next project. So based on good collaboration with large clouds, it makes me happy. And I'm happy that we have talented people who are able to embrace that. So AC also is implementing an analogical project. We have teams in Slovakia and Czech, [ adrialenski, ] he hasn't started yet, but he will shortly, we don't want to drive attention away from the success there is a bit of confusion within the company that the decision needs to be taken in right time. So that's why we do not exert extensive pressure our colleagues. So there will be something like micro European cloud because of the fact that the Europeans -- sometimes we hear that -- we -- it is told that Europeans have no ambition to build and to develop their own cloud. And with due respect to big tax, we need to prove that we are able to do so, and that's going to be a great company delivering high profits next domain. And I think we are all becoming experts and advocates of artificial intelligence and all people gathered here in the room and watching us online, all of us appreciate the strength of artificial intelligence. To me, artificial intelligence has been developed for a few decades already. And now some concrete solutions are being implemented. This is somewhat obvious to me. So the salience that we attach to this development is something, which is not a surprise. So for the last years, we could see that we have been a bit chaotic because in different parts of our group, within our capabilities, we have supported passionate people, and they were to look for appropriate tools for appropriate areas to apply AI-based solutions. So Marek was great in coordinating this topic. But last week, we took the decision to appoint a great person and the leader of our business intelligence, [ Eric Bro, ] as a coordinator responsible for integration of all our activities in AI. Eric reports directly to me and he is an entrepreneur. So we did not put any caps or limits on him, and he's free to come up with any kind of concept he can, and he will approach us in a few months, and we will decide on the ultimate coordination of the topic. So what is our place? When we are discussing AI, that reminds me of the times, I'm sorry, because I'm -- I have a long-term experience, so I can remember the times in the '90s when we started to develop this company and why? I had to come to terms with the idea that I will not be able to build a global base database. I will not design software. So I will be dependent on other companies with larger capital. So we, as Asseco employees, our specialization are tools, but our position is very well defined. It's about our clients and expertise because a tool is not any goal. Clients will still look for a possibility to try drive their sales up to cut their cost or to enhance security. And this is where our expertise fits in because in many areas, we perfectly know what are the needs of our clients and customers. And when learning all these tools, we will be able -- thanks to all these tools, we will be able to shape our internal reality because we count that at some specific moment, we will be able to use exactly the same tools to drive up the efficiency of our solutions. And thanks to all these tools, we will be able to master our internal back-office processes, and we will be working on that really fast because it's easier for us. You know the risk. These tools are not perfect. And if internally, we make a mistake, we will do -- we will cope with that. But in relationship with our clients, if -- any mistake can cost a lot. That's why we are going to be smart. But of course, we attach great importance to that. I know that people are afraid of this world. We should encourage them to think in a different way because we have many years of people being scared of the Internet and people who didn't follow, they are excluded. And now a person not following and who doesn't use AI tools, they will be excluded soon. So we have attached importance to that. We have defined our position, and we have first achievements. I don't want to bore you to death with all that. But the time will come that we will brag about all these great achievements and this is -- that was made with the involvement of the youngest people with the youngest talent, and I'm happy to work for them because we build a beautiful future together. And next cybersecurity, Christoph [indiscernible], I know that the team creating concert will change. Christoph is quite unhappy because he's not happy with last year performance. Market -- when we analyze some market because we're looking for partners, we're looking for companies on different markets globally to attract them to this group. And please believe me that these are all small companies. In cybersecurity, I will go back to what I was already saying before. Sorry to refer to the story once again, but let me remind you that there were times for people when I started to develop software, people used to tell me it's mistake because you should focus on sales of equipment. And now people who are experts in cybersecurity, they want to make their living on licenses and -- distribution of licenses. And it's all about analysts and of -- HR potential. So we are proud of what we did. And now I get signals for many different countries telling me that they want to make another step forward. So how much, 30% about PLN 3.5 million, PLN 16 million of revenues, and there is a market rebound, whether we'll be able to work it out. I don't know, but we are in direct contact with the minister. She wants to spread the message and to increase the awareness of cybersecurity in Africa, now we also are concentrated on stock in [indiscernible]. The mayor of [indiscernible] was one of the first mayors in Poland, who was aware that what is the price for cyber attack of on municipal systems and all systems, which are related to providing services municipalities. And that's a perfect example. So now we are creating a place for all our analysts because there were some ambitions to develop our own analyst team, but we were not ready for that, but please believe that still there is handful of people on the market still aware and who are experts in cybersecurity and who are able to provide and embrace cybersecurity issues at the mid- and top level. So we will do everything in order to make them train another generation of cybersecurity specialists, Asseco will cope with that because in -- equipment will soon become only an addition to the service, which will be cybersecurity. As I believe that software will be more important than equipment now is exactly the same with cybersecurity. Of course, we wouldn't do anything without equipment, but the true value is the work of analysts who are following the traffic and the Internet were able to anticipate some moves and to be smarter than cyber attackers. So this is everything that we do. This is like the essence of my life of our life. Now I would like to turn the floor over to Marek and later Karolina will walk us through the numbers and she will prove that PLN 483 million is more than PLN 502 million. So thank you for your attention. And over to Marek. So fingers cross for Karolina, how she will come with that proof, but I'm sure she will manage.

[Interpreted] Good afternoon, everyone. My business comments will be probably shorter than usual. But today, this is the annual conference we speak about the annual results for 2023. And we also wanted to cast some light into the future. And therefore, the ongoing business comments will be shorter, and we will save some time for questions and answers since we have Adam with us, we expect more questions. And the truth is that in our business comments, we will not have many more different things from those that we have spoken during the past year. So we see the similar things as we saw in Q4 2023 obviously, but was a sad development when the war broke out in Israel, and it definitely had some impact on our business. So let me start with that slide, which is well familiar. This is the breakdown of our revenue by geographical segments. This is what you see on the pie chart. PLN 16.9 billion that we split across 3 segments, Asseco Poland, Asseco International and Formula Systems. Now a brief comment that will probably come back today, again, namely the adverse impact of the negative FX differences on our performance. Over PLN 1.5 billion, that's how much we were short in our sales because of the foreign exchange differences. In other words, if we were showing the sales numbers at the fixed exchange rate from the last year, we would have PLN 1.5 billion more to show. But this is what basically under our control. However, there is not anything that is really making us dry fall, namely the organic growth because we see that we have 5% growth across the group. There are differences between the different segments, but the average for the group is 5%. Poland shows the most robust growth. This is plus 13% because we don't have any foreign exchange differences. And that was a good year for all the companies of Asseco Group operating in Poland. We would like to throw the highlight of the financial sector health care and the power sector. They were growing very fast. We are happy to embrace the public sector. We've been engaged with them delivering the multiannual projects that are geared to digitize the public finance sector. This is a good prospect for the future, and we are happy to see the dynamic growth in ADS and Asseco Cloud. These are our direct companies where we have 100% shareholdings, and they were growing nicely throughout 2023. Asseco International was down by 3%, but the exchange rate differences were really hitting us there, although not as hard as in Formula. And on top of it, we saw the Danish companies at the end of 2022. So last year, we were not showing the Danish contribution in 2023. So it was a natural decline in our sales. And there were some other developments that I will cover later. And now Formula Systems segment, 5% down. But over 90% of that effect of the foreign exchange differences was really absorbed by Formula Systems. So I mentioned PLN 1.5 billion, PLN 1.4 billion goes to Formula. But when we look at the organic business within the Formula Systems segment, again, they were growing more or less at the rate of 5%. And I have to say that Formula has definitely the best year historically. When you look at the PLN in the original currencies, all of them were growing handsomely, and we can be really happy to see that, especially when you look at Q4 and beginning of October 2023 and the war that suddenly came around 1,000 people, but had to join the army while they were engaged in our project. So definitely that what was a hit to business, it caused uncertainty. But we are getting back on track business-wise and more and more projects are actually initiated products related to the defense and they popped up in Q4 2023. Now this slide goes to highlight our diversification. So the split of the revenue across sectors. So General Business, Finance and Banking and the public institutions, I don't want to discuss the actual percentages, but this is our strength, and it has been always our strength. We have a very good diversification. By sectors and geographically, we are not dependent on a single customer or a handful of customers. That really helps the business because if something happens, if something goes wrong in one place when the added sections and the added locations helped to offset such problems. Here, individual sectors, Finance and Banking, sales are similar as last year, over PLN 5.7 billion. Formula Systems, the greatest contributor. As I said, they were down by 3%. But again, I mentioned foreign exchange differences. It's not for the foreign exchange than we would be growing. Sapiens makes us truly happy. They were growing their sales at a very robust rate over 10%. They are really strong in Europe, over 50% of the revenue comes from Europe and 40% from the American market. And just 10% is from Israel, and we are really happy about it because Sapiens from day 1 has been built and positioned as a global company, and it really works well. Asseco International sales on par with the last year, and we are happy because, again, we had the foreign exchange hit, and Denmark disappeared. But Asseco Southeastern Europe is doing quite well, especially in the banking segment. And please bear it in mind, that we completed major projects where we implemented car systems. I'm not saying that these were one-off events, but it was some top-up revenue. And now finally, we can take a look at Poland, very dynamic growth, 17% up, but Finance and Banking sector has been very healthy in Poland for years. We have a large stream of reoccurring revenue from maintenance and the systems development and we continue to develop and implement the large car system projects. The general business sector across the group, we were down by 7%, but this is where the foreign exchange difference is really, really contribute negatively. Israel has been the greatest contributor. We are not concerned looking forward because we can tell that the business has been growing organically, also in Israel, we have a major decline in Asseco International. But again, we don't have the Danish contribution that Danish companies used to contribute PLN 50 million to the sector, and we had a major decline in infrastructure sales in Spain. But this is a development that has been monitored throughout the year. Already during the pandemic, we communicated the fact that we had a very robust growth. A lot of equipment was sold, but when things came to slowdown. And therefore, the sales went down by PLN 180 million compared to 2022. But please bear it in mind that this is low-margin business -- low margin sales. So that didn't really eat negatively on our financial performance, operating profit. In Poland, we had a major growth of revenue, 22% up and that the main drivers were telecommunications, the power and energy sector, the gas sector, the Polish oil and gas company was a major contributor with their large-scale billing system that we implemented. And we are happy to see ADS growth, especially when it comes to the electronic signature services and related services. And finally, the public institution sector. Across the group, we were growing at the rate of 2%. Israel is at minus 1%. But again, if we put aside the foreign exchange differences, we would have a nice growth, more than 5%, and that is an organic growth. The main driving force behind that is Matrix. Matrix was able to deliver a number of major government projects in 2023. And on top of that, well, I don't want to say that we had war-related projects. But the truth is that we did get new projects that are related to defense capabilities. They call it defense because they've been working with Israeli Defense Ministry for years. And TSG, our company that is operating in the defense sector has also acquired new projects. Asseco international 4% up, happy to see that because we sort of recovered our position in the public sector in the Czech Republic and in Slovakia. We've been communicating that throughout the year, but they had a particular political situation. Things are getting back on track, as was showing growth of revenue to some extent, it was the infrastructure, so low margin contribution, but still, and remember, we lost PLN 110 million in revenue that was coming earlier from the Danish companies. And Poland was up by 7%. The health care was growing at a very dynamic rate. It was yet another year for the health care sector in Poland. We felt that it would be hard to actually break the record of 2022, but it turned out that 2023 was even better. And now the central and local government administration sector is committed to several long-term projects, and we have good prospects for the future. We are happy about it because we know that this is something that will be growing. And finally, the acquisition, 7 companies were onboarded within the group. Three of them are from Israel. The Arab-free are from Europe and our ASSE Group, that's mostly about payment services, but not only. And the fourth one at the bottom of the page on the right-hand side, this is the European market. But this is the company that was acquired by Sapiens by Israeli company. So this is a Polish company, but they've been doing business in the Scandinavian market. So this is another company that will help us grow our business in that part of Europe because Sapiens are actually getting more and more active in the Scandinavian markets. They acquired TIA, a major player in Denmark. And since then we've been exploring Scandinavian markets especially the insurance business pretty well. And now over to Karolina.

[Interpreted] About the foundations and the background for our figures. Marek said a bit about revenues that amounted PLN 16.8 billion, and we wanted to draw attention that CAGR for 5 years on top line is 12%, and we think it's quite a decent result that we can be proud of. When it comes to proprietary software and services, revenues is PLN 13.2 million and -- PLN 13.2 billion and CAGR 12%, EBITDA more than PLN 2.5 billion. And in non-IFRS, we are heading towards PLN 2 billion and 13% of 5 years CAGR, PLN 531 million of non-IFRS net profit with 10% CAGR. Indeed, the FX effect and impact as well as the impact of our acquisitions can be really difficult to follow with like to start to present such a bridge between the revenues of 2022 and revenues of 2023. That's why a new slide was introduced to our performance presentation, PLN 17.33 million in 2022, as we can see the negative impact of FX rates more than PLN 1.5 million of negative FX rate, but what is really optimistic. This is the organic results, plus PLN 948 million. Additionally, we presented acquisition effect, Marek about sold Danish companies and acquired companies, which contributed to our P&L. So the net effect is about PLN 230 million. So all in all, we have PLN 16.9 million. And additionally, we start with PLN 2 billion in the non-IFRS operating profit negative FX rate, minus PLN 122 million. We remember that in the previous years, we had a one-off and we sold some property. We generated minus PLN 13 million of profit. Organic results, plus PLN 64 million and even greater net impact of acquisitions, a positive PLN 1 million over PLN 30 million, which gave us total non-IFRS EBIT at the level of PLN 1.9 billion. All that aggregated in our P&L, it looks as follows. We can stress Q4, which was particularly important better yield and we can tell that we will be focused on improvement of our yield in order to effect the [ scissors ] between the rising employment costs that will still be challenging for us, especially and which were challenging during the pandemic year plus indexation of remuneration to make this spread now lower. So this in fact, is -- and improvement of yield was seen in Q4. That is all due to some project, which generated loss and they are coming to an end. And they do not contribute to the total loss and they do not affect the total performance of the group. At the level of above the IFRS EBITDA last year, we had a significant impact of one-offs, so as Adam said, that the year 2023 was a bit better, so I would agree because in business terms, it was, for sure, better. In 2022, PLN 135 million, it was a contribution and impact due to one-off transaction settlements, mainly disposal of a Matrix IT company, that's why these results should be adjusted by this one-off transaction. So from the business perspective, we think that the year 2023 was a record-breaking year. When it comes to everything which is going on below the EBIT loan that we have taken to '23 in the Asseco Poland, that is PLN 16 million of additional cost of interest plus our companies, their deposit their money their means. So this net effect on interest and debt service cost has been driven up a bit hyperinflation and something that we managed to deliver that is to use tax allowances effectively. This is a timely process and quite a lengthy process because in order to acquire a positive task interpretation that involves 2 instances of course, but we won 5 law cases, and we managed to get positive interpretations, which affected our business positively in terms of tax preferences and historical tax clearance. So that's why this efficient tax rate is a bit lower. So we ended the year with a profit of PLN 483 million. If we were to deduct the effect of one-off transactions plus this effect of the sales of property in 2023, we would end up at the level of about PLN 470 million. And now we have only a few one-offs on the PLN [ 3 ] million above one the EBIT plus inflation plus PLN 16 million of cost of credit. So generally, figures are quite comparable, and I will do everything to prove that well, so PLN 470 million, that would make a net result for 2022. And PLN 485 million, it was -- would be for the total result for 2023. When it comes to the situation within the company, Marek commented on the revenues. And I would like to draw your attention to quite decent improvement or maintenance of profitability in companies in Poland and abroad and especially in Formula. Here you should take a look at Sapiens and Matrix, although both companies had some record-breaking results. But I'm telling about original reporting currency of all these companies. So for one company, these are dollars. And when we recalculated and converted these amounts into PLN, the result is as you can see. We are especially proud of Asseco Poland increase of sales of revenues. I think that we should further work on our total yield in Asseco Data Systems. EBIT has improved. And in other companies in Poland, I would tell that the situation is solid and stable. And you can see this property sales impact between individual years. So you can see that, that should be substructed. When it comes to the segment of Asseco International as such, I think that a lot of questions somewhere in the background about ASSE, I think that Q4 was better in business terms and operations usually especially in Czech, we have completed a very difficult phase in this challenging project, which delivered a loss to ASSE project. So Q4 was better than Q4 in Czech and improved situation in Slovakia. So we hope that, as Adam told you, this is the place where after a difficult time of 2 years, it will start to recover and it will rebound and go back to our norm. And generally, when it comes to the market, I think that ERP sector is especially interesting because its contribution to total result is significant and also, it has improved Q4 in the previous years. So when it comes to the Central Europe and Eastern Europe, great results in payments and banking. And at the level of revenues, you can see the effect, which was discussed by Marek on sales of equipment in Spain, bit lower, it did not contribute to the loss of profitability. But in EBITDA, the difference is this drop year-on-year is due to over PLN 10 million of one-off effect of settlement of disposal of the Danish companies at the end of the year. So if we deduct that, the result would be comparable. That would mean a higher yield. Over the last few conferences, I was telling you that we ask you to be patient when it comes to our cash flow. And this slide proof that this patience paid off because according to our predictions, Q4 was the quarter of -- it was a great quarter in terms of cash flow and the entire 2024, much stronger than 2022. Here, it's worth taking a look at the Asseco Poland in cash-dominant entities. And -- so cash flow in public mostly, which required us to invest the working capital and to enter into long-term contracts, which were settled at the end of the year, that translated into this cash flow at the level of 4%. A great cash flow in all areas of Asseco International, the index 126%. All companies in Asseco International contributed to this result and a great performance and great indices and systems. So the total amount 117% all in all, at the level of the group, which translates into a very stable situation and great solvency of the company. We -- of course, we have debt, we have a net debt at the end of the year. But as we said, we are sure that this debt will be served in an appropriate manner. And I think that these figures prove a stable condition of the company positive cash flow in Asseco International. And I would say this standard net debt in Formula, which is safe and which is served on a daily basis. Very often, you've been asking us to present our group also from another perspective and present a pro rata approach. That's why I would like to address this request, and we will also present the figures in pro rata from the very top of P&L. Of course, that is pro rata to net results. So that we present all these figures, taking into account the efficient percent in of all consolidated and own companies. So revenues from sales is nearly PLN 6 billion. And as I say, we multiply it by effective rate. So in Formula 25% in holding because in Formula and Matrix, it has 47%. So the efficient rate is about 11% and the effect of such recalculation on the bottom part of the group have been applied. IFRS -- non-IFRS EBITDA, PLN 906 millio,n operating profit, non-IFRS 682%, and profitability, 11.5% and operating profit, IFRS PLN 617 million, we will do everything in order to keep this slide to present the figures like that. Just to complement this picture and just to make your life easier, some figures for entire group, we will present our debt -- net debt and cash in the vision into different segments at the level of pro-rata consolidated group, net debt and in some proportion coming from Formula and the majority of companies almost in 100%. So what we are going to change in our presentation format is that in addition to the proportional figures, we would like to show you a different setup of our P&L by the product groups, so that you can compare what's happening here to the overall market trends. Therefore, we decided to present our numbers, not only by geographic segments, but also by product groups. And here, we see the proportional numbers for product groups, that we defined by sectors. For instance, solution for finance. And that means banking, insurance, and broadly defined capital markets. So this is the entire payments asset. And if you go below, we actually see the geographical breakdown so that you can really see things in the right perspective. Another product group is ERP solutions. And here, it's mostly ERP sector that is showed in asset segment, but also ERP solutions that we have in ADS and also some solutions offered by Formula. Now the third group is solutions for public institutions. And I think that the intuition tells you that this is the same as the public institution sector, and this is true, but here, we added all the solutions that are dedicated to the power sector. Because at the end of the day, this is a similar business model with the fixed price contracts plus maintenance. The legal regime is similar here and there. In Poland, our clients at the end of the day are very much dependent on the same things that the public sector is dependent on. Therefore, we decided to group them together, the public sector institutions and the power sector. Now our IT solutions is the electronic signature solutions for the telecom businesses and everything else that didn't fit in that categories. But from each revenue group, we excluded a simple resale of infrastructure and possibly third-party licenses, just to facilitate the discussion about profitability of individual product groups. We know that the resale of infrastructure is not the core business. This is a complementary business that goes together with other product segments. And therefore, the margin of the last group is definitely way lower than the all the other group of that. Now why we are so optimistic about the future? I think that this slide tells it all. Now backlog and the fixed rates, the growth is up -- is 14% up year-to-year, and that was growing across 3 segments. Asseco Poland, it's 11% up, with the main contributor being the public sector. Asseco International 13% up, Formula Systems 15% up. So this is the business snapshot. When you look at the variable rate, you see that the appreciation of the Polish [indiscernible] is visible. But the business truth is reflected with the fixed rate numbers. I think that I covered it all. Thank you.

[Interpreted] Thank you, Karolina. Thank you, Adam and Marek. Now we open up to questions, but let me just say that you cannot hear, but you actually got applause. Thank you for the proportional presentation, which is really helpful for our analysis. So this is a natural consequence of the very fact that we had our own shares. We had to take a fresh look at it. So we knew that it would really mobilize everyone. So I'm really happy that it was such a positive feedback. Central European markets in Q4 2023, which is over PLN 90 million on EBITDA. Is it considered to be the performance that can be repeated? Or actually, this is one-off contribution or release of some provisions. And another question, any guidelines for the operating profit for the Marek Company.

[Interpreted] Okay. Q4 and profitability, it really shows that the business was improving. In Q4, we did release some provisions, it was just PLN 4 million, so it was not a major contributor. But a good performance of ASSE was geared to the fact that certain things had to be invoiced and they were not invoiced before because of the political situation in Slovakia. So that was my answer to this question. And the second question was -- it was about guidance on the operating profit at the mat company level. When it comes to thematic company, Well, we never offer guidance or guideline for the future. We may just say that we are really working hard on improving profitability, and we do set ourselves some challenges in the budget to really improve the profitability.

[Interpreted] Okay. We have another more difficult question. In 2024, EBITDA profitability of the group can be supported by the increased activity related to the growing uptake and use of AI.

[Interpreted] I think that this is not the moment to say that the profitability will be supported substantially by AI tools because we are just at the beginning of the journey. Our business lines are really thinking hard how to use a line with during the development and testing, but we are still at the reconnaissance space. So if you ask about substantial support, I should say not at this point in time, not yet.

[Interpreted] Next question. Strong free cash flow in Q4 2023 was caused by the major impact of cash from the working capital. Would you expect that this will be reversed in 2024?

[Interpreted] Not really. We know that in the previous years, we had a weak cash flow. So 2023 was about catching up.

[Interpreted] What is your assessment of the wage pressure in the IT market in Poland? Do you see a greater supply of IT workforce due to the layoffs and job cuts by the competitors.

[Interpreted] Well, we believe that the pressure from [ weight ] expectations is probably less than it used to be. Our HR claims, but it's easier to recruit new hires and to fill our vacancies. We are one of the few companies that has been hiring and our head count has been growing. Now it's easier to recruit, but it doesn't mean that it's very easy. An average weight in Asseco Poland was growing on a year-to-year basis. And I think that we were up by 10%. It was in line with our budget projections. Therefore, it seems that the growth rate is not as dynamic as it used to be, but it continues, and it's still a challenge to get top-notch experts.

[Interpreted] Another question, which product areas are an opportunity for you to get access to the funding coming from the recovery fund.

[Interpreted] Well, I think that this is all about the local governments, public health care and higher education. So we can probably aggregate it with the public institutions. And on top of it, probably some power sector projects, that would be to a lesser extent.

[Interpreted] When the acceleration may happen, I think that this is not a question to us. It depends when the tenders will be announced probably in the second half of 2024. And I was really highlighting the fact that the SOC [indiscernible] is an important milestone. We will continue to develop all the major towns and marshals of the towns because we believe that the marshals of the regions and the mayor of the town should really develop SOCs for their relevant institutions. We believe that awareness is not there yet. So we will be supporting our net growing process. And you may remember that ADS has some solutions for the cities, for the towns. We made a major progress there. We had excellent references from the city of Krakow and we do hope that the towns and cities will be able to show a better uptake. We will have a look at the finance and banking sector. Well, when it comes to cybersecurity, we have some good ideas for them. They think that they cannot really finance that, but we are going to lend them a helping hand. And there are applications to be filled and Marek is leading the team that is very efficient when it comes to producing the proper grant applications, and we believe that the new funding that is coming from the EU will support our business. But I always say that we should rely on ourselves, not on anyone else. So we should continue to rebuild our business on our core pillars, but it would be a nice addition.

[Interpreted] Okay. The recovery plan funding is over EUR 60 billion that will be coming into Poland. On top of this cohesion fund, EUR 70 billion and when you listen to the communications coming from the EU and our ministry, we see that 25% of that funding will be invested in the projects about IT and innovation. So we believe that our industry may actually benefit from that. Another question. How is the process of looking for the investor for your shares in Asseco Poland. Are you active in hunting for investors? And do you think that it's realistic to find the investors willing to buy at a minimum price of PLN 80?

[Interpreted] We are not under pressure. As I said, there are several options to me, we still can -- we still have time to go with it. Redemption is my also favorite step to take. Karolina is leading some projects to very effect. The team was working hard to reformat our figures presentations. So 17.4 million to improve our liquidity, if we can somehow the spurs bet and find like 2020 investors Karolina is really motivated. I think that I'm stepping on her toes the second time today because I'm saying that it's not likely to happen. So I think that she gets agitated again. Why am I saying that it's not likely to happen. Well, let me say that I feel that we are underappreciated our stock and I know what we are able to deliver, but I'm fully aware of the regional situation. For the U.S. investors, the perception of risk is set with Poland is part of the region that has a problem with Ukrainian war. I might have mentioned that some years ago, we had a prospective partners. We were building a global group together. Our Polish contribution would be tremendous, but this is when Crimea happened. So Marek was there, and I think that Marcelino was participating at the meeting. Marcelino [indiscernible] but you cannot see her on the camera. We almost got to the hand shake, like preliminary handshake. But when they came how they wrote me e-mail, look, I'm sorry, Adam, but you are having a war beyond your border. I obviously replied politely. But at that time, it would never cross my mind, but we would be at the war. Obviously, I will surround because when Crimea was just the first step and the war in Ukraine is the next step. So my team wants to prove me that I'm wrong, and I will be thrilled if they really prove that I am wrong. Obviously, we never rule out other options because those who will follow us, they see that the Board has 17.4% of the shares, and this is a nice holding. Asseco is not very easy to buy. I was a buyer myself at some point. So I know what is a process that you have to go through. So liquidity is our weakness, but I believe that this is true about many Polish companies that are listed on the Warsaw Stock Exchange. So no, I wouldn't rule out the scenario where we would be holding discussions with someone who comes and says, "Look, we are really interested in that stock. " If we continue to do business together, I can add something to that equation. In the Western countries, we are very successful with ERP in Germany. And obviously, this is all sort of measure to a scale when you look at Portugal business and I have to say that it was a fantastic investment. [indiscernible] and [ Adsare ] really -- very much engaging that we were somewhat more innovative than our company there, but they are really becoming an important contributor to our overall product achievements in Poland. But as you may remember, the infrastructure was something that we treated as an addition. And I was wrong. I thought that in Spain, we would be able to actually get some sales with the banks. Because they were selling the hardware to the banks. I was around because in the banks, it's like a different study to buy the hardware and to buy the software, but we have a lot of respect for that team. Now getting back to my story. If we get a partner that will recognize us as the Polish company and will help us keep our Polish identity, but at the same time, would give us more exposure to the Western markets. Well, set discussions will be definitely interesting to us. So there are like 3 options that we are going to develop, we will continue to communicate that in a very transparent way. Today, we are really happy that we are less -- we are more prepared to get sort of promoted as a Asseco business. We are going to speak some different language. I never understood you when you were saying that we have a complex organization, but we are complicated. So when we decided to chop that into the segments. Asseco Poland, Asseco International, just to simplify the picture. So why I couldn't really grasp what you were saying that we are complicated. Because I believe that this apparently complicated or complex structure is a great value that we have, the very fact that our stock is sort of distributed and dispersed. It means that we are being watched by many players. When you have all the stock sitting in one place, it's a different story. Like I don't want the situation that someone is paid, not based on their merits. The client has to pay for things going south. And this is not because we are less effective, et cetera. This is related to the circumstances that he has to live in, and we will continue to support him, but he pays the price. If he were at the top of Asseco Poland, he would continue to paid very well. So to me, having such a complex structure means that we are able to attract more people and get them committed to drive our efficiency in business. That's why I'm joking when I say but I don't understand your claim, but we are a complex organization. But I'm really grateful to Karolina that we are doing the best we can to present everything in the most transparent and understandable way to you.

[Interpreted] Thank you very much. We have also our foreign guest and our English-speaking channel, we get also questions in English. First and foremost, thank you very much for joining because our investors from the United States have joined us so early in the morning. So we are happy to see you. And we also garnered some congratulations, so this is the first information, the first news from abroad. Can you comment further clarify on the current demand environment? Given your organic revenue growth was about 5%, but your backlog and the fixed rates for prepaid software is growing 14%. It is reasonable to conclude that demand is accelerating. The Second question is, what is your outlook for 2004? And what would you anticipate a sustainable organic growth to be over the midterm.

[Interpreted] So indeed, as the backlog is expanding faster than what we've presented in our reports and in figures, I want to remind you that reports are based on floating FX rates, and we have backlog at different level. But year-on-year, when we are taking a closer look at Asseco Poland and Asseco International just remind you that best year, we could see the effect of change of concept in terms of presentation of the backlog now, it has been eliminated so far is more like back to normal. But the outlook is very optimistic for Asseco Poland and Asseco International and then standards in Formula and Backlog is expanding at the most dynamic pace in the public sector. We have some change request considering our existing alliance and new contract and acquisition of new clients on the market. So they speak for themselves, and they gave us a positive outlook for 2024. And the second question, exactly, as I said, we do not define any guidance for the future because there are too many variables in order to be able to promise anything, but the backlog plus the termination of our people and perspective on the job market and this decreasing pressure, making it easier to attract the right people. that allows us to think that the results will improve this year. And as I've said, this is more about our ambition rather than any promise that we can make today.

[Interpreted] Our ultimate ambition is to go up and up again and we do everything in order to tell you that PLN 483 million is greater than PLN 502 million. And kind of did everything to prove.

[Interpreted] And the question here from Poland, do you think that a new management of Social Insurance Institution will change something about this institutions for transparency and public tenders.

[Interpreted] We have our competitor who has played a positive role, and I say it with due respect for Commerce, but from a perspective, we have won this competition. Why? because we have great people. We have people who are well trained and prepared for experts who are loyal and strongly believe that Social Insurance Institution due to the solid character of this organization. It will be managed in a good way, and they will provide business continuity. The share backlog shows that our team has great foundations for further development. And we have also prepared some ideas and the pandemic set times helped us to accelerate digitization and Social Insurance Institutions become one of the leaders. This is stressed by current leaders. I don't know if you know the opinion of the Minister of Justice about the IT sector and ICT as an industry and he said that he is grateful to the previous government for the digitization processes and for ICT, they established I know that it's worth setting up, I know that the Polish judiciary, thanks to some ICT solutions, they could operate effectively. And I think that there is some room for improvement and the beginnings are very promising because let me draw our attention that people participating in competitions to the companies, which operate on the verge of public and private business, they are prepared. They are very much aware of ICT solutions and the probability that these people will be willing to work with us and to appreciate our expertise is great.

[Interpreted] Thank you very much. That was the last question. Do we have any questions from the room? The question was about Israel and about backlog. And what's about greater number of requests regarding defense.

[Interpreted] First and foremost, we wish a lot of peace to Israel because everything that's important for the citizens of Israel but also for the citizens of the Gaza Strip, and that is a very difficult moment. So that would be the best. If we didn't grow with -- in relation to this or the war time showed us that Formula Group was highly appreciated. 1,000 people went to the army, 70% of the remuneration were paid by the government. So 3,000 people, mostly from our Matrix, which is a service provider that was really difficult to deliver on our objectives and our targets. So I'm happy about the results, which was generated in Q4 that was something that Marek presented. So that was a very great quarter, and that confirms that in defense industry, we have a great position. So well, we wish peace to the region, but the probability that some things that we do not expect now we will come to us eventually is quite high. because in this difficult time, we got this confirmation that we are a serious partner.

[Interpreted] Thank you very much. Yet another question. Do you expect increase of profit in 2024, Taking into account the financial costs related to SBB. Can we expect an increase of net profit.

[Interpreted] Generally, we say that we have -- we are ambitious to increase our yield. The financing cost is about PLN 60 million per year. That means that this result that it would be very difficult to make up for this effect.

[Interpreted] One more question from international investors. What explain the operating profit margin decline from PLN 16.8% million to PLN 14.2 million, which also at any operate at leverage from the 13% revenue growth there. What declines in OPM transitory or structural?

[Interpreted] What explains the operating decline in Asseco Poland, okay. Generally the drop in operational efficiency and the mother company, it is due to fast-growing cost of labor. So it is to make up for this result with regard to indexation. So this is the first effect. And the second effect is a drop because the greater drop of profitability concerns public maybe -- with regard to this part of the public sector, which is related to public institutions. So we owe it to the fact that 2022 brought us an effect of dramatic effort and something that was sold by Adam, that we made a lot of contracts, but people where people had to do over time and the number of people was limited in order to deliver what was critical from the perspective of the entire state. And in 2023, there was a business decision made in order to normalize the situation and we note that employment is an investment for the future, we have hired a lot of people. And because of that yield of displays of this location had to go down. That's the effect on this investment, we stress it.

[Interpreted] It was made in line with the market because this year backlog is a confirmation that without all the people we hired at the time, we wouldn't make it. and we wouldn't deliver on our targets.

[Interpreted] And that was the last question from all who were with us online.

[Interpreted] Thank you very much for joining us. And I'm sorry, even if we are not the best actors and actresses, it will be better to meet face-to-face, and I strongly believe one day, it will be possible. I will always find time for all of you, we have Artur and his team. So should you have any questions or doubts, feel free to approach us. We wish you all the best to all people celebrating Easter, a great joyful come Easter, full of relax and after that, we're going to get there.

[Interpreted] And we invite you to our Q1 results conference soon. Thank you very much and see you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]