CONSOLIDATED INTERIM REPORT - summalinguae.com · Dear Sirs, As the President of ... Foundation...

CONSOLIDATED INTERIM REPORT

Q4 2017

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TABLE OF CONTENTS:

I. LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD ............................................................................. 3

II. INTRODUCTION .................................................................................................................................................. 4

III. KEY INFORMATION ABOUT THE ISSUER ............................................................................................................. 5

IV. CONDENSED QUARTERLY FINANCIAL STATEMENTS OF THE COMPANY AND THE GROUP .............................. 8

V. INFORMATION ON PRINCIPLES ADOPTED FOR PREPARATION OF THE REPORT, INCLUDING INFORMATION

ON CHANGES IN THE ACCOUNTING POLICIES ................................................................................................. 23

VI. BRIEF DESCRIPTION OF THE ISSUER’S SIGNIFICANT ACHIEVEMENTS OR FAILURES DURING THE REPORTING

PERION ALONG WITH DETAILS OF THE MOST IMPORTANT FACTORS AND EVENTS, ESPECIALLY THOSE OF

UNUSUAL NATURE, AFFECTING THE RESULTS ACHIEVED BY THE ISSUER ...................................................... 31

VII. WHERE THE ISSUER PUBLISHED EARNINGS GUIDANCE – THE POSITION AS REGARDS ITS FEASIBILITY IN THE

YEAR CONCERNED, IN LIGHT OF THE RESULTS PRESENTED IN THE QUARTERLY REPORT .............................. 39

VIII. WHERE THE ISSUER’S INFORMATION DOCUMENT CONTAINED THE INFORMATION REFERRED TO IN

ARTICLE 10(13A) OF APPENDIX 1 TO THE ALTERNATIVE TRADING SYSTEM RULES – DESCRIPTION OF THE

ADVANCEMENT OF THE ISSUER’S OPERATIONS AND INVESTMENTS ALONG WITH THE SCHEDULE OF THEIR

IMPLEMENTATION ........................................................................................................................................... 39

IX. WHERE THE ISSUER UNDERTOOK DURING THE REPORTING PERIOD INITIATIVES TO DEPLOY IN THE

COMPANY INNOVATIVE SOLUTIONS AIMED AT THE DEVELOPMENT OF ITS BUSINESS – INFORMATION ON

SUCH INITIATIVES ............................................................................................................................................. 40

X. THE NUMBER OF THE ISSUER’S EMPLOYEES IN FULL-TIME EQUIVALENTS .................................................... 40

XI. DESCRIPTION OF THE STRUCTURE OF THE GROUP WITH INFORMATION ON THE CONSOLIDATED ENTITIES40

XII. WHERE THE ISSUER IS THE PARENT OF A GROUP AND DOES NOT PREPARE CONSOLIDATED FINANCIAL

STATEMENTS – THE REASON WHY SUCH STATEMENTS ARE NOT PREPARED ................................................ 40

XIII. INFORMATION ON THE ISSUER’S SHAREHOLDING STRUCTURE WITH DETAILS OF SHAREHOLDERS HOLDING,

AS AT THE DATE OF THE REPORT, AT LEAST 5% OF VOTES AT THE GENERAL MEETING ................................ 41

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I. LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD

Dear Sirs,

As the President of the Management Board of Summa Linguae S.A. (“the Company”), I have a pleasure to

present the quarterly report of the Company for Q4 2017.

Our consolidated revenue for Q4 2017 amounted to PLN 2.910 thousand. The Q4 revenue is thus 23% higher

than that generated by the Group in Q3 2017, and represents an increase by 71% compared to separate revenue

of Summa Linguae S.A. for Q4 2016 (the level prior to the acquisition of Mayflower Language Services Pvt Ltd

and Summa Linguae Romania S.r.l.). An increase was recorded both as regards the Polish company - Summa

Linguae S.A. (+23% YoY) and the Indian one - Mayflower Language Services Pvt. Ltd.

(+6% YoY). Summa Linguae Romania S.r.l. is also gradually growing - in spite of being in the early stages of its

expansion, the company establishes increasingly more promising business relations and supports us in acquiring

and implementing public procurement on the international market. Based on the data presented in this Report

(unaudited) our Company generated throughout 2017 consolidated revenue of PLN 9,853 thousand, which

represents an increase by 71% (compared to separate revenue, before the aforementioned foreign acquisitions).

Consolidated EBITDA loss for Q4 2017 amounted to PLN 89 thousand, and that for the whole year, by analogy

according to preliminary financial data - to PLN 1,160 thousand.

In 2017, our Company was implementing a new growth strategy which will enable us, within several years, to

join the prestigious group of the largest LSPs, not only in Europe but in the whole world. Such a dynamic

development path is inevitably associated with some losses, but given the current interest in our services,

reflected, e.g. in RFPs and increasingly larger projects implemented by our Company, we have a good reason to

believe that capital expenses incurred by us will soon bring measurable effects.

When Q4 2017 was already over, in January 2018, our Company concluded an agreement with Mayflower

Language Services Pvt. Ltd. and its partners. After implementation of subsequent stages described in the

agreement, Summa Linguae will hold, within one year, 100% of shares in the Indian company. The operational

takeover of our Indian jointly-controlled company took place, however, already in January 2018, hence the next

consolidated financial statements of the Summa Linguae Group will account for the consolidation of the financial

statements of Mayflower Language Services Pvt. Ltd. using the full consolidation method. This is yet another

important step in the development of the Company's Group.

I would like to express my gratitude to our Investors, business partners and colleagues for their trust and

cooperation, and kindly invite you to get familiar with this Report. Krzysztof Zdanowski

President of the Management Board of

Summa Linguae S.A.

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II. INTRODUCTION

The Summa Linguae Group (”Company”, “Issuer”) is one of the leading language service providers worldwide. The

Issuer provides translation and interpreting services for virtually all industries in more than 190 languages.

The Summa Linguae Group provides services for global brands such as Mercedes-Benz, Accenture, Capgemini,

TATA, Adobe Systems, ArcelorMittal, Volvo, Michelin, KPMG, Skanska, Orange, Deloitte, UniCredit, Generali, as

well as the largest Polish companies operating in the industry and financial sectors and for public institutions.

The translation and interpreting services offered by the Issuer include:

a. standard and certified translations and standard and sworn interpreting,

b. localization of applications, games, e-learning platforms, websites and videos,

c. text reviewing, edition and proofreading,

d. organization of simultaneous interpreting with the provision of relevant equipment,

e. organization of conferences,

f. accompanying interpreting, also away,

g. machine translation, post-edition of machine translations (MT/PEMT),

h. voice-over,

i. staffing of multilingual resources

j. outsourcing of processes and resources for the LSP sector.

The Company’s strategy provides for dynamic growth through, among others, acquisitions and the consolidation of

the translation services market.

2011 – Merger of Busy B Translations Sp. z o.o. and Spectraling Sp. z o.o. Summa Linguae S.A. is founded

2013 – Acquisition of the infrastructure and ongoing projects of Contact Language Services Sp. j. (the

formal acquisition took place in 2014)

2014 – Acquisition of International Translators Group s.c.

2014 – Acquisition of Transmart Business Services Sp. z o.o. Sp. k. (with access to Transmart.System)

2016 – Signing of an investment agreement providing for exchanging shares (25% of shares in the share

capital) in Mayflower Language Services Pvt Ltd, based in Bangalore (India), for shares in Summa Linguae

S.A.

2016 – Signing of an investment agreement providing for the acquisition of 59.99% of shares in Certitude

Eurologos S.r.l., based in Bangalore (Romania), and change of the company’s name into Summa Linguae

Romania S.r.l. (the shares were acquired in January 2017).

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2018 – Conclusion of an agreement aimed at setting out terms and conditions of taking full operational

control (which took place in January 2018) and ultimately reaching capital commitment at the level of 100%

of the share capital of Mayflower Language Services Pvt. Ltd by Summa Linguae S.A.

III. KEY INFORMATION ABOUT THE ISSUER

PARENT COMPANY

Name Summa Linguae S.A.

Registered office ul. Josepha Conrada 63

31-357 Kraków, Polska

Governing bodies Management Board composed of:

Krzysztof Zdanowski – President of the Management Board

Foundation date 26 October 2011

National Court Register The Company is entered in the register of companies kept by the District Court for Krakow – Śródmieście in Krakow, 11th Economic Division of the National Court Register under KRS number 0000400208

VAT identification number 945-216-57-21

REGON statistical number 122435108

Core business 74 30.Z (PKD 2007): Translation and interpreting services

Share capital PLN 297,576.00

Phone number Tel. +48 12 293 93 80

FAX number Fax +48 12 293 93 89

Email [email protected]

Website www.summalinguae.pl

mailto:[email protected]

http://www.summalinguae.pl/

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JOINTLY CONTROLLED ENTITY until December 2017 (since January 2018 – SUBSIDIARY COMPANY)

Name Mayflower Language Services Pvt Ltd

Registered office

No. 104, 2nd Floor,

Infantry Techno Park,

Infantry Road,

Shivajinagar, Bengaluru-560001, India

Governing bodies

Management Board composed of:

Madhuri Hegde – President of the Management Board

Krzysztof Zdanowski – Member of the Management Board

Registration data Corporate Identification Number U74140KA2003PTC033065

Core business Translation and interpreting services

Share capital INR 156,870 (PLN 8,538.28 as at 31 December 2017)

Phone number Tel. +91 9538930111 71


Website www.mayflowerlanguages.com


http://www.mayflowerlanguages.com/

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SUBSIDIARY COMPANY

Name Summa Linguae Romania S.R.L.

Registered office Calea Plevnei 20, scara B, interfon 28, sector 1, Bucuresti, Rumunia

Governing bodies Management Board composed of:

Irina Didoiu – President of the Management Board

Registration data Registry of Commerce: J40/334/2012 CUI: RO 29544744

Core business Translation and interpreting services

Share capital RON 254,100 (PLN 227,495.73 as at 31 December 2017)

Phone number Tel. +40 734 883 54571


Website www.summalinguae.ro


http://www.summalinguae.ro/

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IV. CONDENSED QUARTERLY FINANCIAL STATEMENTS OF THE COMPANY AND

THE GROUP

The Issuer presents financial data for Q4 2017 along with comparative data for the same period of the previous

year. Due to the fact that the Issuer did not form a group in 2016, data comparative to consolidated data include

only separate data concerning the Issuer.

The balance sheet, income statement, cash flow statement and statement of changes in equity have been drawn

up pursuant to the Accounting Act of 29 September 1994

(Journal of Laws of 2017, item 2342, as amended) and its implementing acts. The presented data have not been

audited. Amounts are given in PLN thousand unless otherwise specified.

Table 1. Consolidated income statement for Q4 2017 along with comparative data (in PLN thousand)

Consolidated income statement of Summa Linguae S.A. Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

A. Sales revenue and equivalents, of which: 9,852.6 5,700.8 2,909.5 1,701.2

- from related parties which are not fully consolidated 0.0 0.0 0.0 0.0

I. Net revenue from sales of products 9,852.6 5,700.8 2,909.5 1,701.2

II. Movement in inventories - additions (+), withdrawals (-) 0.0 0.0 0.0 0.0

III. Cost of production for internal purposes 0.0 0.0 0.0 0.0

IV. Net revenue from sales of goods and materials 0.0 0.0 0.0 0.0

B. Operating expenses 11,481.8 5,500.5 3,105.1 1,717.6

I. Amortization and depreciation 86.2 28.8 18.8 6.9

II. Consumption of materials and energy 144.3 37.2 25.3 16.6

III. Third-party services 6,286.2 3,466.7 1,795.4 1,136.4

IV. Taxes and fees, of which: 6.6 4.0 0.7 2.1

- excise tax 0.0 0.0 0.0 0.0

V. Salaries 4,091.4 1,711.8 1,089.5 509.4

VI. Social security and other benefits, of which: 415.9 73.7 107.7 26.9

- retirement pay 139.4 71.5 37.6 0.0

VII Other costs by type 451.3 178.4 67.6 19.2

VIII. Value of goods and materials sold 0.0 0.0 0.0 0.0

C. PROFIT/(LOSS) ON SALES (A-B) -1,629.2 200.3 -195.6 -16.5

D. Other operating income 437.7 274.8 103.8 8.3

I. Profit on disposal of non-financial fixed assets 0.0 0.0 0.0 0.0

II. Subsidies 3.4 0.0 0.0 0.0

III. Revaluation of non-financial assets 0.0 0.0 0.0 0.0

IV. Other operating income 434.3 274.8 103.8 8.3

E. Other operating expenses 309.1 203.7 79.7 41.7

I. Loss on disposal of non-financial fixed assets 0.0 0.0 0.0 0.0

II. Revaluation of non-financial assets 0.0 34.7 0.0 0.0

III. Other operating expenses 309.1 169.1 79.7 41.7

- of which: amortization of goodwill 254.4 132.4 63.6 33.1

F. OPERATING PROFIT/(LOSS) (C+D-E) -1,500.6 271.3 -171.5 -49.8

G. Financial revenue 26.7 8.0 0.0 2.7

I. Dividends and share in profits, of which: 0.0 0.0 0.0 0.0

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(a) from related parties, of which: 0.0 0.0 0.0 0.0

- those in which the entity has equity interests 0.0 0.0 0.0 0.0

(b) from other entities, of which: 0.0 0.0 0.0 0.0


II. Interest, of which: 8.9 8.0 0.0 2.7

- from related parties 0.0 0.0 0.0 0.0

III. Profit on disposal of financial assets, of which: 0.0 0.0 0.0 0.0

- in related parties 0.0 0.0 0.0 0.0

IV. Revaluation of non-financial assets 0.0 0.0 0.0 0.0

V. Other 17.8 0.0 0.0 0.0

H. Financial expenses 247.5 213.0 54.0 95.0

I. Interest, of which: 198.6 160.4 43.6 77.8

- to related parties 0.0 0.0 0.0 0.0

II. Loss on disposal of financial assets, of which: 0.0 0.0 0.0 0.0


III. Revaluation of financial assets 0.0 0.0 0.0 0.0

IV. Other 49.0 52.7 10.4 17.2

I. Profit/(loss) on sale of all or part of shares in controlled entities

0.0 0.0 0.0 0.0

J. PROFIT/(LOSS) ON ORDINARY ACTIVITIES (F+G+H+/-I) -1,721.4 66.3 -225.5 -142.1

K. Goodwill write-off 59.2 0.0 14.8 0.0

I. Goodwill write-off – subsidiaries 8.6 0.0 2.1 0.0

II. Goodwill write-off – jointly controlled entities 50.6 0.0 12.6 0.0

L. Negative goodwill write-off 0.0 0.0 0.0 0.0

I. Negative goodwill write-off – subsidiaries 0.0 0.0 0.0 0.0

II. Negative goodwill write-off – jointly controlled entities 0.0 0.0 0.0 0.0

M. Profit/(loss) on shares in subsidiaries measured using the equity method

0.0 0.0 0.0 0.0

N. PROFIT/(LOSS) BEFORE TAX (J-K+L+/-M) -1,780.6 66.3 -240.3 -142.1

O. Income tax 114.6 46.6 24.8 22.2

P. Other obligatory charges 0.0 0.0 0.0 0.0

R. Minority interest profit/(loss) 74.6 0.0 0.0 0.0

S. NET PROFIT/(LOSS) (N-O-P+/-R) -1,820.6 19.7 -265.1 -164.3

Table 2. Consolidated balance sheet as at 31 December 2017 along with comparative data (in PLN thousand)

Consolidated balance sheet of Summa Linguae S.A. 31.12.2017 31.12.2016

ASSETS

A. NON-CURRENT ASSETS 5,449.2 5,782.2

I. Intangible assets 4,498.8 4,742.0

1. R&D expenses 0.0 0.0

2. Goodwill 4,460.1 4,714.5

3. Other intangible assets 38.7 27.4

4. Advances for intangible assets 0.0 0.0

II. Goodwill of controlled entities 236.7 0.0

1. Goodwill – subsidiaries 34.3 0.0

2. Goodwill – jointly controlled entities 202.4 0.0

III. Property, plant and equipment 188.8 101.6

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1. Fixed assets 188.8 82.9

(a) freehold land (including right of perpetual use) 0.0 0.0

(b) buildings, premises, rights to premises and constructions 0.3 0.0

(c) plant and machinery 68.9 29.8

(d) vehicles 41.0 51.7

(e) other fixed assets 78.6 1.4

2. Fixed assets under construction 0.0 18.7

3. Advances for fixed assets under construction 0.0 0.0

IV. Non-current receivables 0.0 64.0

1. From related parties 0.0 0.0

2. From other entities in which the reporting entity has equity interests

0.0 0.0

3. From other entities 0.0 64.0

V. Long-term investments 128.0 814.6

1. Real property 0.0 0.0

2. Intangible assets 0.0 0.0

3. Not-current financial assets 128.0 814.6

(a) in subsidiaries and jointly controlled entities which are not measured using the full or proportional consolidation method

0.0 0.0

- shares 0.0 0.0

- other securities 0.0 0.0

- loans granted 0.0 0.0

- other not-current financial assets 0.0 0.0

(b) in subsidiaries, jointly controlled entities and affiliates measured using the equity method

0.0 0.0

- shares 0.0 0.0




(c) in other entities in which the entity has equity interests 0.0 649.9

- shares 0.0 649.9




(d) in other entities 128.0 164.7

- shares 0.0 0.0




4. Other long-term investments 0.0 0.0

VI. Non-current prepayments and accrued income 396.9 60.0

1. Deferred income tax assets 84.3 60.0

2. Other accrued income 312.6 0.0

B. CURRENT ASSETS 2,759.3 2,700.0

I. Inventory 0.0 0.0

1. Materials 0.0 0.0

2. Semi-finished goods and work in progress 0.0 0.0

3. Finished products 0.0 0.0

4. Goods 0.0 0.0

5. Advances for deliveries and services 0.0 0.0

II. Current receivables 1,686.4 1,655.6

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1. Receivables from related parties 0.0 0.0

(a)trade receivables, maturing: 0.0 0.0

- within up to 12 months 0.0 0.0

- in over 12 months 0.0 0.0

(b) other 0.0 0.0

2. Receivables from other entities in which the reporting entity has equity interests

0.0 320.4




(b) other 0.0 315.6

3. Receivables from other entities 1,686.4 1,335.2

(a)trade receivables, maturing: 1,411.3 611.7

- within up to 12 months 1,411.3 611.7


(b) taxes, subsidies, custom duties, social and health insurance and other public liabilities

62.1 108.4

(c) other 213.1 615.2

(d) claimed in court 0.0 0.0

III. Short-term investments 758.5 644.6

1. Current financial assets 758.5 644.6

(a) in subsidiaries and jointly controlled entities 0.0 0.0

- shares 0.0 0.0



- other current financial assets 0.0 0.0

(b) in associates 0.0 0.0

- shares 0.0 0.0




(c) in other entities 107.3 65.1

- shares 0.0 0.0




(d) cash and cash equivalents 651.2 579.5

- cash in hand and at bank 651.2 579.5

- other cash 0.0 0.0

- other financial assets 0.0 0.0

2. Other short-term investments 0.0 0.0

IV. Current prepayments and accrued income 314.4 399.7

C. CALLED UP SHARE CAPITAL 0.0 15.2

D. TREASURY SHARES 221.1 0.0

TOTAL ASSETS 8,429.6 8,497.3

LIABILITIES AND EQUITY

A. EQUITY 4,168.1 5,064.6

I. Share capital 297.6 248.5

II. Reserve capital, of which: 5,040.8 3,976.2

- share premium 4,738.9 3,659.8

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III. Revaluation reserve, of which: 0.0 0.0

- fair value revaluation 0.0 0.0

IV. Other capital reserves, of which: 820.3 820.3

- created in accordance with the Articles of Association 0.0 0.0

V. Exchange rate differences on translation of foreign operations -170.0 0.0

VI. Profit/(loss) carried forward 0.0 0.0

VII. Net profit/(loss) -1,820.6 19.7

VIII. Net profit write-offs during the financial year (negative value) 0.0 0.0

B. MINORITY INTERESTS 0.0 0.0

C. NEGATIVE GOODWILL OF CONTROLLED ENTITIES 0.0 0.0

I. Negative goodwill - subsidiaries 0.0 0.0

II. Negative goodwill – jointly controlled entities 0.0 0.0

D. LIABILITIES AND PROVISIONS FOR LIABILITIES 4,261.5 3,432.7

I. Provisions for liabilities 365.6 13.6

1. Provision for deferred income tax 0.2 0.2

2. Provision for retirement and similar benefits 47.2 0.0

- long-term 47.2 0.0

- short-term 0.0 0.0

3. Other provisions 318.3 13.4

- long-term 162.4 0.0

- short-term 155.9 13.4

II. Non-current liabilities 1,700.0 809.5

1. Payable to related parties 0.0 0.0

2. Payable to other entities in which the reporting entity has equity interests

0.0 0.0

3. Payable to other entities 1,700.0 809.5

(a) loans and borrowings 1,521.3 500.0

(b) arising from issue of debt securities 0.0 0.0

(c) other financial liabilities 13.8 26.8

(d) bill-of-exchange liabilities 0.0 0.0

(e) other 164.9 282.8

III. Current liabilities 1,903.6 2,537.3


(a)trade liabilities, maturing: 0.0 0.0



(b) other 0.0 0.0


0.0 0.0




(b) other 0.0 0.0

3. Payable to other entities 1,903.6 2,537.3

(a) loans and borrowings 344.2 78.9

(b) arising from issue of debt securities 0.0 1,479.7


(d) trade liabilities, maturing: 865.1 330.6



(e) received advances for deliveries and services 0.3 0.0

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(f) bill-of-exchange liabilities 0.0 0.0

(g) taxes, custom duties, social and health insurance and other public liabilities

225.6 149.6

(h) payroll liabilities 450.7 210.9

(i) other 4.6 273.7

4. Special purpose funds 0.0 0.0

IV. Accruals 292.3 72.3

1. Negative goodwill 0.0 0.0


- long-term 0.0 0.0

- short-term 292.3 72.3

TOTAL LIABILITIES AND EQUITY 8,429.6 8,497.3

Table 3. Consolidated cash flow statement for Q4 2017 along with comparative data (in PLN thousand)

Consolidated cash flow statement of Summa Linguae S.A. Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

A. OPERATING CASH FLOWS

I. NET PROFIT/(LOSS) -1,820.6 19.7 -265.1 -164.3

II. Adjustments (total) 1,304.9 -441.2 312.9 -309.5

1. Minority interest profit/(loss) -74.6 0.0 0.0 0.0

2. Profit/(loss) on shares in entities measured using the equity method

0.0 0.0 0.0 0.0

3. Depreciation and amortization 359.3 161.2 101.1 40.0

4. Goodwill write-off 59.2 0.0 14.8 0.0

5. Negative goodwill write-off 0.0 0.0 0.0 0.0

6. Foreign exchange gains/losses 0.0 12.7 0.0 0.0

7. Interest and share in profits (dividends) 0.0 10.8 0.0 0.0

8. Profit/(loss) on investing activity 4.7 0.0 4.7 0.0

9. Movement in provisions 229.5 7.0 89.3 0.0

10. Movement in inventory 0.0 0.0 0.0 0.0

11. Movement in receivables 524.7 -271.6 -59.8 -1,239.8

12. Movement in current liabilities, excluding loans and borrowings

62.3 -274.4 283.1 825.0

13. Movement in prepayments and accrued income 307.5 -86.9 41.0 35.2

14. Other adjustments -167.6 0.0 -161.3 30.1

III. Net operating cash flow (I+/-II) -515.6 -421.6 47.8 -473.8

B. CASH FLOW FROM INVESTING ACTIVITIES 0.0 0.0 0.0 0.0

I. Inflows 23.3 11.6 0.0 0.0

1. Disposal of intangible assets and property, plant and equipment

23.3 0.0 0.0 0.0

2. Disposal of investments in real property and intangible assets

0.0 0.0 0.0 0.0

3. From financial assets, of which: 0.0 11.6 0.0 0.0

(a) in entities measured using the equity method 0.0 0.0 0.0 0.0

(b) in other entities 0.0 11.6 0.0 0.0

- sale of financial assets 0.0 0.0 0.0 0.0

- dividends and share in profits 0.0 0.0 0.0 0.0

- repayment of long-term loans granted 0.0 11.0 0.0 0.0

- Interest 0.0 0.6 0.0 0.0

- other inflows from financial assets 0.0 0.0 0.0 0.0

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4. Other inflows from investments 0.0 0.0 0.0 0.0

II. Outflows 587.0 738.1 28.7 21.1

1. Purchase of intangible assets and property, plant and equipment

151.7 58.1 28.7 21.1

2. Investment in real property and intangible assets 0.0 0.0 0.0 0.0

3. For financial assets, of which: 99.5 679.9 0.0 0.0



- purchase of financial assets 99.5 649.9 0.0 0.0

- long-term loans granted 0.0 30.0 0.0 0.0

4. Dividends and other interests in profit paid to minority shareholders

0.0 0.0 0.0 0.0

5. Other capital expenses 335.7 0.0 0.0 0.0

III. Net cash flows from investing activities (I-II) -563.6 -726.5 -28.7 -21.1

C. CASH FLOWS FROM FINANCING ACTIVITIES 0.0 0.0 0.0 0.0

I. Inflows 2,782.0 1,614.4 170.5 944.6

1. Net inflows from issue of shares and other securities and from capital contributions

1,349.2 985.5 3.2 365.6

2. Loans and borrowings 1,428.3 628.9 167.3 578.9

3. Issue of debt securities 0.0 0.0 0.0 0.0

4. Other financial inflows 4.5 0.0 0.0 0.0

II. Outflows 1,738.6 88.2 94.5 9.1

1. Purchase of treasury shares 0.0 0.0 0.0 0.0

2. Dividends and other payments to shareholders 0.0 0.0 0.0 0.0

3. Profit distribution expenses other than payments to shareholders

0.0 0.0 0.0 0.0

4. Repayment of loans and borrowings 229.9 63.9 91.0 9.1

5. Redemption of debt securities 0.0 0.0 0.0 0.0

6. Other financial liabilities 0.0 0.0 0.0 0.0

7. Payment of liabilities under finance lease agreements 13.8 12.9 3.5 0.0

8. Interest 0.0 11.4 0.0 0.0

9. Other financial expenses 1,494.9 0.0 0.0 0.0

III. Net cash flows from financing activities (I-II) 1,043.5 1,526.2 76.0 935.5

D. TOTAL NET CASH FLOWS (A.III.+/-B.III+/-C.III) -35.8 378.2 95.1 440.6

E. BALANCE SHEET MOVEMENT IN CASH, of which: -35.8 378.2 95.1 440.6

- movement in cash due to foreign exchange gains/losses 0.0 0.0 0.0 0.0

F. OPENING BALANCE OF CASH 687.0 201.3 556.1 138.9

G. CLOSING BALANCE OF CASH (F+/-D), of which: 651.2 579.5 651.2 579.5

- restricted cash 0.0 0.0 0.0 0.0

Table 4. Consolidated statement of changes in equity for Q4 2017 along with comparative data (in PLN)

Consolidated statement of changes in equity of Summa Linguae S.A.

Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

I. OPENING BALANCE OF EQUITY (OB) 5,064.6 3,231.1 4,532.2 3,227.1

- amendments to adopted accounting policies 0.0 0.0 0.0 0.0

- corrections of errors 0.0 0.0 0.0 0.0

I.a. Opening balance of equity (OB) after adjustments 5,064.6 3,231.1 4,532.2 3,227.1

1. Opening balance of share capital 248.5 228.5 297.6 228.5

15

1.1. Movement in share capital 49.1 20.0 0.0 20.0

(a) increase (due to) 49.1 20.0 0.0 20.0

- issue of shares 49.1 20.0 0.0 20.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

- redemption of shares 0.0 0.0 0.0 0.0

1.2. Closing balance of share capital 297.6 248.5 297.6 248.5

2. Opening balance of reserve capital 3,976.2 2,776.7 5,040.8 2,972.7

2.1. Movement in reserve capital 1,064.6 1,199.5 0.0 365.4

(a) increase (due to) 1,504.7 1,364.5 0.0 365.4

- share premium 0.0 1,354.6 0.0 324.5

- (statutory) profit distribution 19.7 9.9 0.0 9.9

- profit distribution (above the minimum statutory value)

0.0 0.0

0.0 31.0

- issue of shares 1,485.0 0.0 0.0 0.0

(b) decrease (due to) 440.1 165.0 0.0 0.0

- loss coverage 0.0 0.0 0.0 0.0

- share issue costs 440.1 165.0 0.0 0.0

2.2. Closing balance of reserve capital 5,040.8 3,976.2 5,040.8 3,338.1

3. Opening balance of revaluation reserve 0.0 0.0 0.0 0.0

3.1. Movement in revaluation reserve 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

- disposal of fixed assets 0.0 0.0 0.0 0.0

3.2. Closing balance of revaluation reserve 0.0 0.0 0.0 0.0

4. Opening balance of other capital reserves 820.3 216.0 820.3 20.0

4.1. Movement in other capital reserves 0.0 604.3 0.0 -5.0

(a) increase (due to) 0.0 624.3 0.0 15.0

(b) decrease (due to) 0.0 20.0 0.0 20.0

4.2. Closing balance of other capital reserves 820.3 820.3 820.3 15.0

5. Exchange differences on translation of foreign operations

-170.0 0.0 -170.0 0.0

6. Opening balance of profit/(loss) carried forward 19.7 9.9 0.0 9.9

6.1. Opening profit carried forward 19.7 9.9 0.0 9.9



6.2. Opening balance of profit carried forward, after adjustments 19.7 9.9 0.0 9.9

(a) increase (due to) 0.0 0.0 0.0 0.0

- distribution of profit carried forward 0.0 0.0 0.0 0.0

(b) decrease (due to) 19.7 9.9 0.0 9.9

6.3. Closing profit carried forward 0.0 0.0 0.0 0.0

6.4. Opening loss carried forward 0.0 0.0 0.0 0.0



6.5 Opening loss carried forward, after adjustments 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0

- loss carried forward to be covered 0.0 0.0 0.0 0.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

6.6. Closing balance of loss carried forward 0.0 0.0 0.0 0.0

6.7. Closing balance of profit/(loss) carried forward 0.0 0.0 0.0 0.0

7. Net profit/(loss) -1,820.6 19.7 -1,820.6 -164.3

16

(a) net profit 0.0 19.7 0.0 0.0

(b) net loss -1,820.6 0.0 -1,820.6 -164.3

(c) profit write-offs 0.0 0.0 0.0 0.0

II. CLOSING BALANCE OF EQUITY (CB) 4,168.1 5,064.6 4,168.1 3,437.3

III. EQUITY ACCOUNTING FOR PROPOSED PROFIT DISTRIBUTION/(LOSS COVERAGE)

4,168.1 5,064.6 4,168.1 3,437.3

Table 5. Separate income statement for Q4 2017 along with comparative data (in PLN thousand)

Separate income statement of Summa Linguae S.A. (in PLN thousand)

Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

A. Sales revenue and equivalents, of which: 6,766.9 5,700.8 2,088.4 1,701.2

- from related parties which are not fully consolidated 0.0 0.0 0.0 0.0

I. Net revenue from sales of products 6,766.9 5,700.8 2,088.4 1,701.2

II. Movement in inventories - additions (+), withdrawals (-) 0.0 0.0 0.0 0.0

III. Cost of production for internal purposes 0.0 0.0 0.0 0.0

IV. Net revenue from sales of goods and materials 0.0 0.0 0.0 0.0

B. Operating expenses 8,021.0 5,500.5 2,223.7 1,717.6

I. Amortization and depreciation 53.6 28.8 12.6 6.9

II. Consumption of materials and energy 66.5 37.2 15.4 16.6

III. Third-party services 4,408.0 3,466.7 1,289.8 1,136.4

IV. Taxes and fees, of which: 3.7 4.0 0.1 2.1

- excise tax 0.0 0.0 0.0 0.0

V. Salaries 2,814.6 1,711.8 772.6 509.4

VI. Social security and other benefits, of which: 284.0 73.7 76.3 26.9

VII Other costs by type 390.6 178.4 56.9 19.2

VIII. Value of goods and materials sold 0.0 0.0 0.0 0.0

C. PROFIT/(LOSS) ON SALES (A-B) -1,254.1 200.3 -135.3 -16.5

D. Other operating income 428.4 274.8 103.1 8.3

I. Profit on disposal of non-financial fixed assets 0.0 0.0 0.0 0.0

II. Subsidies 3.4 0.0 0.0 0.0

III. Revaluation of non-financial assets 0.0 0.0 0.0 0.0

IV. Other operating income 425.0 274.8 103.1 8.3

E. Other operating expenses 299.2 203.7 79.1 41.7

I. Loss on disposal of non-financial fixed assets 0.0 0.0 0.0 0.0

II. Revaluation of non-financial assets 0.0 34.7 0.0 0.0

III. Other operating expenses 299.2 169.1 79.1 41.7

- of which: amortization of goodwill 254.4 132.4 63.6 33.1

F. OPERATING PROFIT/(LOSS) (C+D-E) -1,124.9 271.3 -111.3 -49.8

G. Financial revenue 19.6 8.0 2.1 2.7

I. Dividends and share in profits, of which: 0.0 0.0 0.0 0.0

(a) from related parties, of which: 0.0 0.0 0.0 0.0


(b) from other entities, of which: 0.0 0.0 0.0 0.0


II. Interest, of which: 5.6 8.0 2.0 2.7

- from related parties 4.7 0.0 0.0 0.0

III. Profit on disposal of financial assets, of which: 0.0 0.0 0.0 0.0


IV. Revaluation of non-financial assets 0.0 0.0 0.0 0.0

17

V. Other 14.0 0.0 0.1 0.0

H. Financial expenses 200.2 213.0 43.6 95.0

I. Interest, of which: 171.1 160.4 38.9 77.8

- to related parties 0.0 0.0 0.0 0.0

II. Loss on disposal of financial assets, of which: 0.0 0.0 0.0 0.0


III. Revaluation of financial assets 0.0 0.0 0.0 0.0

IV. Other 29.1 52.7 4.7 17.2

I. PROFIT/(LOSS) BEFORE TAX (F+G-H) -1,305.6 66.3 -152.8 -142.1

J. Income tax 100.0 46.6 25.0 22.2

K. Other obligatory charges 0.0 0.0 0.0 0.0

L. NET PROFIT/(LOSS) (I-J-K) -1,405.6 19.7 -177.8 -164.3

Table 6. Separate balance sheet as at 31 December 2017 along with comparable data (in PLN thousand)

Separate balance sheet of Summa Linguae S.A. (in PLN thousand) 31.12.2017 31.12.2016

ASSETS

A. NON-CURRENT ASSETS 6,064.2 5,782.2

I. Intangible assets 4,478.8 4,742.0

1. R&D expenses 0.0 0.0

2. Goodwill 4,460.1 4,714.5

3. Other intangible assets 18.6 27.4

4. Advances for intangible assets 0.0 0.0

II. Property, plant and equipment 136.2 101.6

1. Fixed assets 136.2 82.9

(a) freehold land (including right of perpetual use) 0.0 0.0

(b) buildings, premises, rights to premises and constructions 0.0 0.0

(c) plant and machinery 25.7 29.8

(d) vehicles 41.0 51.7

(e) other fixed assets 69.5 1.4

2. Fixed assets under construction 0.0 18.7

3. Advances for fixed assets under construction 0.0 0.0

III. Non-current receivables 0.0 64.0

1. From related parties 0.0 0.0

2. From other entities in which the reporting entity has equity interests

0.0 0.0

3. From other entities 0.0 64.0

IV. Long-term investments 1,389.3 814.6

1. Real property 0.0 0.0

2. Intangible assets 0.0 0.0

3. Not-current financial assets 1,389.3 814.6

(a) in related parties 110.9 0.0

- shares 0.0 0.0




(b) in other entities in which the entity has equity interests 1,150.4 649.9

- shares 1,150.4 649.9



18


(c) in other entities 128.0 164.7

- shares 0.0 0.0




4. Other long-term investments 0.0 0.0

VI. Non-current prepayments and accrued income 60.0 60.0

1. Deferred income tax assets 60.0 60.0


B. CURRENT ASSETS 2,008.2 2,700.0

I. Inventory 0.0 0.0

1. Materials 0.0 0.0

2. Semi-finished goods and work in progress 0.0 0.0

3. Finished products 0.0 0.0

4. Goods 0.0 0.0

5. Advances for deliveries and services 0.0 0.0

II. Current receivables 1,254.6 1,655.6

1. Receivables from related parties 121.0 0.0




(b) other 0.0 0.0

2. Receivables from other entities in which the reporting entity has equity interests

0.0 320.4




- taxes, subsidies, custom duties, social and health insurance 0.0 0.0

- other 0.0 315.6

3. Receivables from other entities 1,133.6 1,335.2




(b) taxes, subsidies, custom duties, social and health insurance and other public liabilities

56.8 108.4

(c) other 206.5 615.2

(d) claimed in court 0.0 0.0

III. Short-term investments 592.5 644.6

1. Current financial assets 592.5 644.6

(a) in related parties 4.7 0.0

- shares 0.0 0.0




(b) in other entities 56.3 65.1

- shares 0.0 0.0




(c) cash and cash equivalents 531.5 579.5

- cash in hand and at bank 531.5 579.5

- other cash 0.0 0.0

19

- other financial assets 0.0 0.0

2. Other short-term investments 0.0 0.0

IV. Current prepayments and accrued income 161.1 399.7

C. CALLED UP SHARE CAPITAL 0.0 15.2

D. TREASURY SHARES 0.0 0.0

TOTAL ASSETS 8,072.4 8,497.3

0.0 0.0

LIABILITIES AND EQUITY 0.0 0.0

A. EQUITY 4,753.1 5,064.6

I. Share capital 297.6 248.5

II. Reserve capital, of which: 5,040.8 3,976.2

- share premium 4,738.9 3,659.8

III. Revaluation reserve, of which: 0.0 0.0

- fair value revaluation 0.0 0.0

IV. Other capital reserves, of which: 820.3 820.3

- created in accordance with the Articles of Association 0.0 0.0

- for treasury shares 0.0 0.0

VI. Profit/(loss) carried forward 0.0 0.0

VII. Net profit/(loss) -1,405.6 19.7

VIII. Net profit write-offs during the financial year (negative value) 0.0 0.0

B. LIABILITIES AND PROVISIONS FOR LIABILITIES 3,319.4 3,432.7

I. Provisions for liabilities 0.2 13.6

1. Provision for deferred income tax 0.2 0.2

2. Provision for retirement and similar benefits 0.0 0.0

- long-term 0.0 0.0


3. Other provisions 0.0 13.4

- long-term 0.0 0.0


II. Non-current liabilities 1,581.3 809.5



0.0 0.0

3. Payable to other entities 1,581.3 809.5

(a) loans and borrowings 1,402.5 500.0

(b) arising from issue of debt securities 0.0 0.0


(d) other 164.9 282.8

III. Current liabilities 1,445.7 2,537.3





(b) other 0.0 0.0


0.0 0.0




(b) other 0.0 0.0

3. Payable to other entities 1,439.0 2,537.3

(a) loans and borrowings 344.2 78.9

(b) arising from issue of debt securities 0.0 1,479.7

20


(d) trade liabilities, maturing: 604.5 330.6



(e) received advances for deliveries and services 0.0 0.0

(f) bill-of-exchange liabilities 0.0 0.0

(g) taxes, custom duties, social and health insurance and other public liabilities

178.6 149.6

(h) payroll liabilities 295.1 210.9

(i) other 3.7 273.7

4. Special purpose funds 0.0 0.0

IV. Accruals 292.3 72.3

1. Negative goodwill 0.0 0.0


- long-term 0.0 0.0

- short-term 292.3 72.3

TOTAL LIABILITIES AND EQUITY 8,072.4 8,497.3

Table 7. Separate cash flow statement for Q4 2017 along with comparative data (in PLN thousand)

Separate cash flow statement of Summa Linguae S.A. (in PLN thousand)

Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

A. OPERATING CASH FLOWS

I. NET PROFIT/(LOSS) -1,405.6 19.7 -177.8 -164.3

II. Adjustments (total) 1,136.4 -441.2 317.4 -309.5

1. Depreciation and amortization 326.7 161.2 123.1 40.0

2. Foreign exchange gains/losses 0.0 12.7 0.0 0.0

3. Interest and share in profits (dividends) 0.0 10.8 0.0 0.0

4. Profit/(loss) on investing activity 4.7 0.0 3.8 0.0

5. Change in provisions and deferred income tax assets -13.4 7.0 0.0 0.0

6. Movement in inventory 0.0 0.0 0.0 0.0

7. Movement in receivables 354.1 -271.6 52.0 -1,239.8

8. Movement in current liabilities, excluding loans and borrowings

5.8 -274.4 120.0 825.0

9. Movement in prepayments and accrued income 458.5 -86.9 18.5 35.2

10. Other adjustments 0.0 0.0 0.0 30.1

III. Net operating cash flow (I+/-II) -269.2 -421.6 139.6 -473.8

B. CASH FLOW FROM INVESTING ACTIVITIES

I. Inflows 0.0 11.6 0.0 0.0

1. Disposal of intangible assets and property, plant and equipment

0.0 0.0 0.0 0.0

2. Disposal of investments in real property and intangible assets

0.0 0.0 0.0 0.0

3. From financial assets, of which: 0.0 11.6 0.0 0.0



- sale of financial assets 0.0 0.0 0.0 0.0

- dividends and share in profits 0.0 0.0 0.0 0.0

- repayment of long-term loans granted 0.0 11.0 0.0 0.0

- interest 0.0 0.6 0.0 0.0

- other inflows from financial assets 0.0 0.0 0.0 0.0

4. Other inflows from investments 0.0 0.0 0.0 0.0

21

II. Outflows 438.5 738.1 53.0 21.1

1. Purchase of intangible assets and property, plant and equipment

102.8 58.1 53.0 21.1

2. Investment in real property and intangible assets 0.0 0.0 0.0 0.0

3. For financial assets, of which: 0.0 679.9 0.0 0.0



- purchase of financial assets 0.0 649.9 0.0 0.0

- long-term loans granted 0.0 30.0 0.0 0.0

4. Other capital expenses 335.7 0.0 0.0 0.0

III. Net cash flows from investing activities (I-II) -438.5 -726.5 -53.0 -21.1

C. CASH FLOWS FROM FINANCING ACTIVITIES

I. Inflows 2,343.2 1,614.4 63.3 944.6

1. Net inflows from issue of shares and other securities and from capital contributions

1,109.2 985.5 0.0 365.6

2. Loans and borrowings 1,234.0 628.9 63.3 578.9

3. Issue of debt securities 0.0 0.0 0.0 0.0

4. Other financial inflows 0.0 0.0 0.0 0.0

II. Outflows 1,683.6 88.2 53.1 9.1

1. Purchase of treasury shares 0.0 0.0 0.0 0.0

2. Dividends and other payments to shareholders 0.0 0.0 0.0 0.0

3. Profit distribution expenses other than payments to shareholders

0.0 0.0 0.0 0.0

4. Repayment of loans and borrowings 190.1 63.9 49.5 9.1

5. Redemption of debt securities 0.0 0.0 0.0 0.0

6. Other financial liabilities 0.0 0.0 0.0 0.0

7. Payment of liabilities under finance lease agreements 13.8 12.9 3.5 0.0

8. Interest 0.0 11.4 0.0 0.0

9. Other financial expenses 1,479.7 0.0 0.0 0.0

III. Net cash flows from financing activities (I-II) 659.7 1,526.2 10.2 935.5

D. TOTAL NET CASH FLOWS (A.III.+/-B.III+/-C.III) -48.0 378.2 96.8 440.6

E. BALANCE SHEET MOVEMENT IN CASH, of which: -48.0 378.2 96.8 440.6

- movement in cash due to foreign exchange differences

0.0 0.0 0.0 0.0

F. OPENING BALANCE OF CASH 579.5 201.3 434.7 138.9

G. CLOSING BALANCE OF CASH (F+/-D), of which: 531.5 579.5 531.5 579.5

- restricted cash 0.0, 0.0, 0.0, 0.0,

Table 8. Separate statement of changes in equity for Q4 2017 along with comparative data (in PLN thousand)

Separate statement of changes in equity of Summa Linguae S.A. (in PLN thousand)

Q1-Q4 2017 Q1-Q4 2016 Q4 2017 Q4 2016

I. Opening balance of equity (OB) 5,064.6 3,231.1 4,930.9 3,227.1

- corrections of errors from previous years 0.0 0.0 0.0 0.0

- effects of changes in accounting policies 0.0 0.0 0.0 0.0

I.a. Opening balance of equity (OB) after adjustments 5.1 3.2 4.9 3.2

1. Opening balance of share capital 248.5 228.5 297.6 228.5

22

1.1. Movement in share capital 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0

- issue of shares 49.1 20.0 0.0 20.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

- redemption of shares 0.0 0.0 0.0 0.0

1.2. Closing balance of share capital 0.2 0.2 0.3 0.2

2. Opening balance of reserve capital 3,976.2 2,776.7 5,040.8 2,972.7

2.1. Movement in reserve capital 0.0 0.0 0.0 0.0

(a) increase (due to) 1.5 1.4 0.0 0.4

- share premium 0.0 1,354.6 0.0 324.5

- (statutory) profit distribution 19.7 9.9 0.0 9.9

- profit distribution (above the minimum statutory value)

0.0 0.0 0.0 0.0

- share issue costs 1,485.0 0.0 0.0 31.0

(b) decrease (due to) 0.4 0.2 0.0 0.0

- share issue costs 440.1 165.0 0.0 0.0

2.2. Closing balance of reserve capital 4.0 2.8 5.0 3.0

3. Opening balance of revaluation reserve 0.0 0.0 0.0 0.0

3.1. Movement in revaluation reserve 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

- disposal of fixed assets 0.0 0.0 0.0 0.0

3.2. Closing balance of revaluation reserve 0.0 0.0 0.0 0.0

4. Opening balance of other capital reserves 820.3 216.0 820.3 20.0

4.1. Movement in other capital reserves 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.6 0.0 0.0

- INCREASE – declared unpaid shares 0.0 624.3 0.0 0.0

- INCREASE – ISSUE OF SERIES G SHARES 0.0 0.0 0.0 15.0

(b) decrease (due to) 0.0 0.0 0.0 0.0

- issue of series E shares 0.0 0.0 0.0 20.0

- transfer to the share capital due to registration in the National Court Register

0.0 20.0 0.0 0.0

4.2. Closing balance of other capital reserves 0.8 0.2 0.8 0.0

5. Opening balance of profit/(loss) carried forward 19.7 9.9 0.0 9.9

5.1. Opening balance of profit carried forward 0.0 9.9 0.0 9.9



5.2. Opening balance of profit carried forward, after adjustments

0.0 0.0 0.0 0.0

5.3. Movement in profit carried forward 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0


(b) decrease (due to) 0.0 0.0 0.0 0.0


- decrease – movement to reserve capital 0.0 0.0 0.0 0.0

5.4. Closing balance of profit carried forward 0.0 0.0 0.0 0.0

5.5. Opening balance of loss carried forward 0.0 0.0 0.0 0.0



5.6. Opening balance of loss carried forward, after adjustments

0.0 0.0 0.0 0.0

5.7. Movement in loss carried forward 0.0 0.0 0.0 0.0

(a) increase (due to) 0.0 0.0 0.0 0.0


23

(b) decrease (due to) 0.0 0.0 0.0 0.0


5.8. Closing balance of loss carried forward 0.0 0.0 0.0 0.0

5.9. Closing balance of profit/(loss) carried forward 0.0 0.0 0.0 0.0

6. Net profit/(loss) -1.4 0.0 -1.4 -0.2

(a) net profit 0.0 19.7 0.0 0.0

(b) net loss 1,405.6 0.0 1,405.6 164.3

(c) profit write-offs 0.0 0.0 0.0 0.0

II. Closing balance of equity (CB) 0.0 0.0 0.0 0.0

III. Equity accounting for proposed profit distribution 0.0 0.0 0.0 0.0

V. INFORMATION ON PRINCIPLES ADOPTED FOR PREPARATION OF THE REPORT,

INCLUDING INFORMATION ON CHANGES IN THE ACCOUNTING POLICIES

These financial statements cover the period from 1 January 2017 to 31 December 2017 and have been

prepared assuming that the Company will continue its business in the foreseeable future, and that it

neither intends nor is forced to abandon its business or significantly reduce its scale. To the Issuer’s

knowledge, there are no circumstances indicating a threat to the continued operation of the Company.

Due to the fact that the Issuer did not form a group in 2016, data comparative to consolidated data include

only separate data concerning the Issuer.

The Company prepares a comparative income statement.

The cash flow statement is prepared using the indirect method.

The Polish zloty is the reporting currency.

The Company's financial result for the period concerned includes all revenue generated by it, as well as

revenue payable to it and costs related to this revenue calculated on an accrual basis, and according to the

principle of prudence and the matching principle.

The accounting policies adopted in the preparation of these financial statements are compliant with the

Accounting Act.

Individual assets are measured at their actual purchase prices or costs, subject to the principle of prudence.

Liabilities are measured at the amount due. In the case of financial liabilities, the adjusted purchase price

can be used, and for those held for sale within up to three months – the market value or a fair value

specified otherwise.

24

Intangible assets and fixed assets

Intangible assets, fixed assets and fixed assets under construction are measured at their purchase price or

manufacturing cost, less accumulated depreciation.

Depreciation is calculated in accordance with the straight-line method.

In the case of assets for which there is a suspicion that they will not bring economic benefits in the

foreseeable future, an allowance is made for impairment losses.

The Company uses the following tax depreciation rates for its key categories of assets:

1) For intangible assets:

a. all are charged against costs within a period of 48 months,

whereby the components relating to fees for modification of computer software are treated as

services.

2) For fixed assets:

a. Buildings - 2,5%

b. Plant and machinery - 10% - 30%

c. Vehicles - 20%

d. Other fixed assets - 20%

whereby:

a. fixed assets of a greater value (over PLN 2,500) are depreciated linearly,

b. fixed assets of a lesser value (up to PLN 2,500) are depreciated (posted to expenses) as

follows: 100% of the value at the time of purchase,

c. tax depreciation rates are used.

The Company passed resolutions under which it adopted a 20-year period of amortization of the goodwill

of Contact Language Services P. Stróżyk, P. Siwiec spółka jawna (CLS) and that of Summa Linguae

Outsourcing Sp. z o.o. (SLO) pursuant to Article 44b(10) of the Accounting Act. The useful economic life of

the goodwill arising from the acquisitions is 20 years, which results, among others, from contracts signed

with customers acquired along with CLS and SLO and the history of cooperation with them. In accordance

with its strategy, Summa Linguae S.A. does not foresee the sale of the organized parts of the

aforementioned enterprises and intends to draw from them tangible economic benefits for minimum 20

years. The Management Board of Summa Linguae S.A. believes that the proposed period for carrying out

amortization of the goodwill reflects in the best way the actual period of drawing economic benefits arising

from the acquisition.

25

Since Q4 2015 inclusive, amortization of the goodwill defined above has been recognized in other

operating expenses.

Permanent investments

Acquired or generated financial assets and other financial investments are recognized in the accounts as at

their acquisition or generation date, at their acquisitions/purchase price.

As at the balance sheet date, shares in other entities and other investments classified as fixed assets are

measured at their acquisition price less any impairment losses.

Impairment losses are charged to financial expenses. If the reason for which assets were written down has

ceased to exist the equivalent of all or part of the previously made impairment losses increases the value of

a given asset and is recognized in financial income.

As at the balance sheet date, shares in other entities and other investments recognized as fixed assets for

which maturity dates have been specified are measured at their amortized cost.

Short-term investments

Acquired shares and other current assets are recognized in the accounts as at the date of their acquisition

or generation, at the acquisition cost.

As at the balance sheet date, assets classified as short-term investments are measured at their market

price.

The effects of changes in the value of short-term investments affect in the total amount financial income or

expenses, respectively.

As at the balance sheet date, assets classified as short-term investments for which maturity dates have

been specified are measured at amortized cost.

Inventory

Materials and goods acquired during the financial year are recognized at their purchase price. The costs of

consumption of materials and goods are determined on the first-in, first-out basis. Inventory of materials

and goods is measured as at the balance sheet date at their purchase price, not higher, however, than the

net selling price of a given asset.

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Inventory assets produced during the financial year are recognized at the manufacturing cost.

Finished and semi-finished products are measured as at the balance sheet date at their manufacturing cost

which is not higher, however, than the net selling price of a given asset.

Inventory assets which have lost their commercial and utility value are written down. Inventory write-

downs are classified respectively as other operating expenses.

The Issuer keeps inventory quantity and value records.

Receivables and liabilities

Receivables denominated in PLN are recognized at the amount due, subject to the principle of prudence.

Liabilities (including loans and borrowings) denominated in PLN are measured at the amount due. In the

case of financial liabilities, the adjusted purchase price can be used, and for those intended for sale within

up to three months – the market value or a fair value specified otherwise.

Receivables and liabilities denominated in foreign currencies at the time of their origination are recognized

at the average exchange rate determined for a given currency by the President of the National Bank of

Poland on the day preceding the day of their recognition. Foreign exchange gains/(losses) arising on the

date of payment due to the difference between the exchange rate as at that date and the exchange rate on

the date when receivables or liabilities originated, are charged to financial income or expenses,

respectively.

Receivables and liabilities in foreign currencies outstanding as at the balance sheet date are measured at

the average exchange rate determined for a given currency on that day by the President of the National

Bank of Poland.

The value of receivables is re-measured based on the probability of their payment by creating an allowance

for bad debts.

Cash

Domestic cash in hand and at bank is measured at its par value.

Transactions denominated in foreign currencies are recognized in the accounts as at the date on which

they were carried out – unless separate provisions on funds from the budget of the European Union and

other countries of the European Economic Area and on non-reimbursable funds from foreign sources

provide otherwise – at the rate actually applied on that date, resulting from the nature of the transaction –

in the case of sale or purchase of currencies and payment of receivables or liabilities.

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As at the balance sheet date, cash in foreign currencies is measured at the average exchange rate

determined for that date for a given currency by the President of the National Bank of Poland.

Foreign exchange gains/(losses) determined at the end of the financial year are recognized as financial

income or expenses, respectively.

Capitals

The share capital is recognized in the amount specified in the Articles of Association and entered in the

relevant court register.

Accruals and provisions for liabilities

Accruals are made when the Company incurs expenses relating to future reporting periods. Accruals

include mainly:

property insurance,

costs of lease,

costs directly related to issue of bonds,

other.

Provisions are made for certain or highly probable future liabilities that may be caused by past events

where the amount or date of their payment or incurrence is not certain, but they can be reliably estimated.

The Company creates provisions for expenses in the amount of probable liabilities falling in the current

reporting period, which arise from services provided to the Company by its contractors and the obligation

to meet future liabilities relating to current operations, whose value can be estimated, although the date

when they will arise is yet unknown.

Provisions are recognized in other operating expenses, financial expenses or extraordinary losses,

depending on the circumstances which caused the loss.

Liabilities recognized as accrued ones and rules for determining the amounts thereof should be based on

acceptable trade practices.

Accruals include mainly future liabilities related to current operations, such as:

liabilities payable to the employees, including holiday and retirement pay,

liabilities payable to unknown persons, whose amount can be reliably estimated, although the

date when they will arise is yet unknown, including those relating to warranty repairs and

guarantee for durables sold.

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Accrued expenses are charged to operating expenses.

Deferred income

The Company's deferred income includes in particular the equivalent of revenue from services that will be

performed in future reporting periods, intangible assets and fixed assets received free of charge, in the part

not covered with depreciation write-offs, and negative goodwill.

Deferred income includes also cash received to finance the acquisition or construction of fixed assets,

including fixed assets under construction and development work. Amounts charged to deferred income

increase gradually the amount of other operating revenue, in parallel with amortization or depreciation

write-offs of fixed assets or costs of development work funded from these sources.

Provisions for deferred income tax and deferred income tax assets

Due to temporary differences between the book value of assets and liabilities and their tax value and tax

loss deductible in the future, the Issuer creates a provision for deferred income tax and determines such

deferred income tax assets.

Deferred income tax assets are determined in the amount of the expected future income tax deduction in

relation to deductible temporary differences which will result in a future reduction in the income tax base

and a reduction in the deductible tax loss determined in accordance with the principle of prudence.

A provision for deferred income tax is established in the amount of income tax payable in the future with

respect to taxable temporary differences, i.e. differences that will increase the income tax base in the

future.

The amount of the provision for deferred income tax and that of deferred income tax assets are

determined using the income tax rates applicable in the year when the tax liability arose.

In its balance sheet, the Company presents the balance of deferred income tax assets and provisions for

deferred income tax.

Financial instruments

Acquired financial assets are measured at the price of expenditure (the par value and transaction costs

incurred directly in connection with the acquisition of the financial assets).

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As at the balance sheet date, assets held for trading and available for sale are measured at fair value, while

held-to-maturity assets and loans granted by the Company – at amortized cost.

Financial liabilities are recognized in the accounts in the amount due. As at the balance sheet date, financial

liabilities held for sale are measured at their fair value. Other financial liabilities are recognized as at the

balance sheet date at amortized cost.

Gains and losses from revaluation, as at the balance sheet date, of financial assets and financial liabilities

classified as held for trading (including derivatives) and financial assets classified as held for sale and

measured at fair value (with the exception of hedged items) are recognized, respectively, as financial

income or expenses of the reporting period.

In the case of financial assets and liabilities measured at amortized cost (with the exception of hedged and

hedging items), discount or premium amortization and other differences determined as at the date of their

exclusion from the accounts, are recognized, respectively, as financial income or expenses under interest in

the reporting period.

An embedded derivative instrument is measured as at the date of its recognition in the accounts and as at

the balance sheet date at its fair value. The difference between the fair value determined as at the balance

sheet date and the fair value as at the date of recognition in the accounts is recognized in profit/(loss) on

financing activity.

Derivative instruments used to hedge fair value are measured at fair value, and the change is recognized in

profit/(loss) on financing activities.

Derivative instruments intended for cash flow hedging are measured at fair value, and the change is

recognized in the revaluation reserve to the extent representing an effective hedge, while the part which

does not constitute an effective hedge is recognized in profit/(loss) on financing activity.

Financial profit/(loss)

Financial profit/(loss) accounts for: profit/(loss) on sales, profit/(loss) on other operating activities,

profit/(loss) on financing activities, profit/(loss) on extraordinary operations and mandatory charges on the

profit. The Company prepares a comparative income statement.

The amount to be paid by the recipient of finished products and services, less output tax on goods and

services, constitutes revenue from sale of finished products and services. The date of transfer of goods to

the recipient or receipt of a service by it is the date of sale.

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The amount to be paid by the recipient of goods or materials, less output tax on goods and services,

constitutes revenue from sale of goods and materials. The date of transfer of goods or materials is the date

of sale.

The value of goods and materials sold at the purchase price, commensurate with the revenue on this

account, is the value of goods and materials sold.

Other operating income and expenses include expenses and revenues which are not directly related to

operating activities, but affect profit/(loss).

Financial income includes revenue from financing activities, whereas financial expenses include expenses

incurred with respect to such activities. Interest, fees and foreign exchange gains/(losses) relating to fixed

assets under construction accrued to the date of putting those assets into use influence the initial value of

those assets. After putting a given fixed asset into use, foreign exchange gains/(losses) and interest on

liabilities and investment loans affect profit/(loss) on financing activities.

The difference between generated extraordinary profits and extraordinary losses incurred as a result of

random events unrelated to the general risk to which the entity’s business is exposed constitutes

profit/(loss) on extraordinary events.

Rules governing consolidation

These consolidated financial statements have been drawn up based on the financial statements of the

Parent Company and those of the controlled entity (subsidiary) and the entity jointly controlled by the

Parent Company.

The subsidiary (Summa Linguae Romania S.r.l.) has been fully consolidated from the moment of taking

control over it by the Parent Company and will be fully consolidated until such control ceases to exist. Any

transactions, balances, revenue and expenses settled between the consolidated entities are subject to

relevant elimination.

The jointly controlled company (Mayflower Language Services Pvt. Ltd.) has been proportionately

consolidated from the moment of taking over joint control over it by the Parent Company and will be fully

consolidated until such joint control ceases to exist. This involves recognizing part of amounts of items in

the financial statements of the jointly controlled entity, proportionately to shares held by the shareholder

of the jointly controlled entity.

Any transactions, balances of settlements, dividends, revenue and costs related to dealings between the

consolidated entities are subject to relevant elimination. In the case of proportionate consolidation, this is

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done in proportion to shares held. The purchase price does not account for shares held by Summa Linguae

S.A. in the aforementioned companies and a relevant part of net assets of these entities measured at fair

value corresponding to the share of Summa Linguae S.A. in these entities. According to the Management

Board the fair value as at the date of acquisition of shares in the aforementioned companies did not differ

from their book value. Relevant adjustments were also made as regards the measurement and

presentation of financial statements of the foreign companies to comply with the accounting policies of

Summa Linguae S.A. and the Accounting Act.

The jointly controlled company (Mayflower Language Services Pvt. Ltd.) is consolidated proportionately,

which results from an investment agreement concluded by this jointly controlled company and its

shareholders with the Parent Company. The agreement provides for the possibility of exercising the right of

veto by the Parent Company in case of adopting by the management board or shareholders’ meeting of the

jointly controlled company of a defined wide-ranging list of key decisions.

In view of the above, the Management Board of the Parent Company believes that it has the capacity to

manage - to the same extent as the other shareholders and on the terms and conditions set out in the

investment agreement - the financial and operating policies of the jointly controlled company in order to

achieve economic benefits from its business. Therefore the Management Board of the Parent Company

resolved to consolidate financial data of the jointly controlled company in a proportionate manner.

VI. BRIEF DESCRIPTION OF THE ISSUER’S SIGNIFICANT ACHIEVEMENTS OR

FAILURES DURING THE REPORTING PERION ALONG WITH DETAILS OF THE

MOST IMPORTANT FACTORS AND EVENTS, ESPECIALLY THOSE OF UNUSUAL

NATURE, AFFECTING THE RESULTS ACHIEVED BY THE ISSUER

1. THE GROUP

Table 9. Entities making up the Summa Linguae Group

Item Country of

incorporation

Parent company’s share in the share capital

Consolidation method

Description of the business

Summa Linguae S.A. (hereinafter referred to as: “Summa Linguae”, “Issuer”, “Parent Company”)

Poland NA Parent

Company (NA)

The company was founded in 2011 through a merger of two brands recognizable on the Polish translation market (Busy B and Spectraling). One of the leading translation

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agencies in Poland with Polish capital.

Mayflower Language Services Pvt. Ltd. (hereinafter referred to as “Mayflower", “MF”)

India 25.00% Proportionate (since January

2018 – full)

The company was founded in 2003 and is headquartered in Bangalore (India). Mayflower specializes in translation and localization of websites, software and computer applications, e-learning platforms as well as localization and voice-over video.

Summa Linguae Romania S.R.L. (hereinafter referred to as “SLR”)

Romania 59.99% Full

Translation agency founded in 2012 (initially as Certitude Eurologos S.r.l.), headquartered in Bucharest. The company serves corporate customers and public institutions, in particular from South Europe. The team is experienced in tenders organized by EU institutions.

2. SUMMARY OF FINANCIAL PERFORMANCE OF THE GROUP

In Q4 2017, the Group generated revenue of PLN 2,910 thousand (+71% compared to separate revenue of

the Parent Company in Q4 2016), an EBITDA loss of PLN 89 thousand and a net loss of PLN 265 thousand.

The Issuer also indicates that the key entities in the Group's structure, i.e. both the Parent Company and

the jointly controlled company - Mayflower Language Services Pvt. Ltd. recorded in Q4 2017 an increase in

their separate revenue YoY (Summa Linguae: +23%, Mayflower Language Services: +6%). According to

preliminary financial data (as the total of the four quarters before the audit of the financial statements) the

consolidated revenue of Summa Linguae S.A. amounted to PLN 9,853 thousand, which represents an

increase by 73% YoY compared to the separate revenue of the Company in 2016, i.e. in the period before

foreign acquisitions.

In Q4 2017, just like in previous periods, the Group’s profit was decreased by costs related to activities

taken by the Company with respect to consolidation of the LSP market, amounting to PLN 9 thousand (PLN

112 thousand since the beginning of the year). The consolidated profit of the Group for Q4 2017 was also

reduced by the costs associated with the relocation of the register office of the Parent Company (PLN 8.5

thousand), which translated into higher one-off costs recorded in the period concerned.

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3. SUMMA LINGUAE

SEPARATE FINANCIAL RESULTS

[REVENUE] Summa Linguae, as the Parent Company, generated in Q4 2017 separate revenue of PLN 2,088

thousand, which represents an increase by 23% YoY. The increase in revenue was recorded both as regards

sales of translation and interpreting services to public institutions (+17% YoY), accounting in Q4 2017 for

61% of the Parent Company’s separate revenue, and services sold to corporate customers (+2% YoY). At

the same time, the Parent Company recorded in Q4 2017 a 127% revenue growth rate QoQ as regards

outsourcing services, which ultimately accounted for 16% of the Parent Company's revenue for Q4 2017.

[Profitability] The Parent Company recorded also an increase in the profitability of its services, manifested

in a higher direct margin (i.e. after deduction of costs related directly to translation processes – including

primarily translators’ salaries and those of project managers involved in outsourcing) of 40% in Q4 2017

(compared to 39% in the same period of the previous year).

A separate EBITDA loss for Q4 2017 amounted to PLN 35.0 thousand. This result was, however, reduced by

one-off costs related to consolidation processes, totalling to PLN 21.7 thousand.

The Issuer settles part of transaction prices with the former owners of acquired entities successively over a

certain time, depending on the future achievement of certain levels of economic indicators by the acquired

assets (the earn-out mechanism). Therefore, as it is highly probable that the indicators agreed on with the

former owner of the acquired Transmart Business translation agency will not be accomplished at the turn

of 2018, the Company will be entitled to revenue from liquidated damages, compensating the earn-out

instalment liability. This revenue will be posted to other operating income. Due to the high probability that

this will be the case, the Issuer started, already in August 2017, accounting for 1/12 of the anticipated

amount of the liquidated damages in its monthly results. Taking into account the amount of the liquidated

damages for the previous reporting period, revenue from the aforementioned liquidated damages

amounted in Q4 2017 to PLN 70.7 thousand.

After adjusting the EBITDA amount for the aforementioned one-off costs (in plus), Summa Linguae’s

separate EBITDA loss for Q4 2017 amounted to PLN 13.3 thousand. After adjusting the EBITDA amount also

for the above-described liquidated damages (in minus), the separate EBITDA for Q4 2017 was PLN 84.0

thousand.

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The Issuer’s Management Board points out that the separate results are reduced by operating expenses

related to enhanced sales efforts made by Summa Linguae. Expenses on marketing efforts alone increased

in the period concerned by 33% QoQ, and this tendency has been observed since the beginning of the year.

The effects can be partially seen in higher revenue, but the Management Board expects that expenses

incurred will translate into greater sales in coming quarters.

At the same time, the sales structures in the entire Group are being optimized and the companies of the

Group are being systematically integrated with each other, which will also result in greater effectiveness of

sales and marketing efforts.

[Production] The Management Board of the Issuer emphasizes that from quarter to quarter the production

departments (PM, VM, DTP) of the companies of the Group are getting increasingly more integrated, which

allows for achieving operational synergies and improving the effectiveness of this area of the Group’s

operations. The Parent Company continuously seeks ways to automate part of processes (e.g. by using

advanced technological solutions); which should translate, in coming quarters, into increased effectiveness

of management of human resources, projects and workflow, to consequently result in enhanced quality of

services provided. Thanks to the ongoing processes, the Company is capable of handling a significantly

greater number of projects, while reducing the growth rate of the production departments’ costs.

[Public procurement] As shown in Table 12, as at 31 December, the Issuer contracted for the entire 2018

the maximum potential revenue* under agreements signed following successful tenders, in the amount of

PLN 3,670 thousand. This is 55.4% of the maximum revenue under agreements concluded and

implemented in the entire 2017, and the Company continues to actively participate in subsequent tenders

and signs new agreements on the provision of translation services with public institutions, which are to be

implemented in 2018.

Table 12. Revenue under public procurement for the year as maximum potential contractual revenue under

agreements signed following successful tenders (in PLN thousand).

Year Maximum revenue*

2011 1,539.5

2012 2,644.3

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2013 2,951.0

2014 4,367.2

2015 4,109.9

2016 5,828.5

2017 6,620.0

2018** 3,670.0

*The level of actual revenue depends on the value of translation and interpreting services commissioned to be

performed by the Company under agreements entered into by it, whose maximum value arising from those agreements

is presented in the table above.

**Includes agreements on the provision of translation and interpreting services concluded by 31 December 2017, whose

implementation will take place within the calendar year indicated in the table.

[TSUE] In November 2017, the Issuer concluded framework agreements with the Court of Justice of the

European Union (CJEU) on the provision of services involving translation from French into Bulgarian and

from English, Spanish, Italian, German and French into Romanian. The Parent Company announced this in

Current Report 44/2017 of 30 November 2017. The Agreements have been concluded for one year with an

option to extend their duration for another three years. The Issuer’s maximum compensation for the

implementation of the Agreements may amount to PLN 6,300 thousand per annum, but the Management

Board of the Issuer estimates that the probable compensation of the Issuer under all Agreements within 12

months of their duration will be approximately PLN 1,000 thousand, as the Issuer is not the sole entity that

has concluded agreements in this respect with the CJEU. The other terms and conditions of the

Agreements do not differ from those commonly used for these types of agreement.

GROWTH AND STRATEGY

[Agreement with Mayflower] In its Current Report 38/2017 of 22 September 2017, the Issuer announced

that it had signed a heads of terms document with respect to the planned full takeover of Mayflower

Language Services Pvt (“Mayflower”). The fourth quarter of 2017 saw intense work over the formal and

organizational preparation to determining the terms and conditions of taking full control over Mayflower

by the Parent Company, leading to the conclusion of an agreement between the Issuer, Mayflower and

Mayflower's partners after Q4 2017, in January 2018. The agreement provides for taking full operational

control over Mayflower by the Issuer already from January 2018, and ultimately also reaching 100%

commitment in the share capital of Mayflower by 12 January 2019. The transaction will be effected in

several steps specified in the aforementioned current report. From the financial perspective, the ability to

consolidate Mayflower’s financial statements using the full method from Q1 2018 on is of key importance.

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The Management Board of the Issuer perceives the takeover of Mayflower as an important step on the way

to building an international group of companies operating on the translation services market. The

Management Board of the Parent Company believes that consolidation of Mayflower’s financial statements

using the full method will enable the Company's Group to seek to join the global group of leading

companies in terms of generated revenue (the largest companies in the sector are ranked in its annual

reports by Common Sense Advisory).

[Sales] The Issuer puts particular emphasis on winning new, prestigious corporate customers, including

international ones. The Management Board of the Issuer intends to execute ever-increasing comprehensive

translation projects which will be characterized by a significant unit scale.

At the same time, the Issuer intends to continue to gradually reduce services with a low unit value, whose

profitability in the general bottom line, taking into account also resources that are not directly related to

the very translation process, is relatively low. By doing so, the Parent Company intends to improve the

profitability of the entire organization and direct the Company towards strategic projects with a much

larger unit scale.

Development of services targeted at corporate customers operating in strictly defined, prospective and

growing sectors which require specialist translation and localization services remains an important element

of the strategy of both the Issuer and the entire Summa Linguae Group. These are such sectors as e-

commerce, life science or IT and new technologies (including games and applications - computer and

mobile ones, and advanced technological solutions).

[Outsourcing] Outsourcing remains an important business segment which the Issuer intends to develop in

subsequent quarters. The locations in which the Issuer and its subsidiary and jointly controlled company

operate are recognized as leading outsourcing centers, with qualified human resources, operating in

competitive economies. The Management Board of the Issuer intends to take advantage of these factors to

achieve business success by offering global translation corporations and companies from other sectors,

having their own translation or localization resources, competitive outsourcing and subcontracting

solutions – from project management, through vendor management to comprehensive outsourcing of

translation processes.

As regards this business segment, the Management Board indicates primarily the continued development

of cooperation with the first outsourcing client of Summa Linguae - Cintra Language Services Ltd. (UK),

which is a stable revenue source with transparent and predictable profitability and prospects to grow in

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scale. The Issuer coordinates also the development of cooperation with a customer won originally by

Summa Linguae Romania S.r.l., a subsidiary of the Issuer – Jouve SA, based in Paris. At present, outsourcing

services for Jouve SA, which offers e.g. global scale comprehensive content management services, are

rendered using resources of the entire Summa Lingua Group.

[M&A] The Management Board of the Issuer plans to continue expansion on promising foreign markets

through M&A. The Company is interested especially in entities operating on the Scandinavian, Asian and

North American markets, since it finds these regions particularly attractive from the perspective of the size

of their markets, their expected growth rate and the strategic competitive edge which the Issuer is able to

develop on these markets.

OPERATING ACTIVITIES

[Marketing] As in every year, the Company developed in the fourth quarter a marketing strategy for the

next year for the whole Group. The strategy accounts for KPIs, which will be analyzed in detail in

subsequent quarters.

In Q4 2017, permanent cooperation with a new copywriter was established. A detailed SEO audit was also

performed. Recommendations developed based on the audit findings have been implemented already

since January 2018. In order to optimize its operations in this respect, the Issuer has established

cooperation with a renowned marketing agency with experience on international markets.

The Company also refreshed and unified the visual identification within the entire Group.

[Other] Anna Pietruszka, a member of the key management of the Group, was appointed in Q4 2017 head

of the newly opened Polish branch of “Women in Localization” - an organization that associates women

involved in the localization and translation sector. Anna Pietruszka is also a member of an organizational

committee responsible for the preparation of the LocWorld conference to be held in Warsaw in June this

year.

In Q4 2017, Krzysztof Zdanowski, President of the Company’s Management Board, gave a speech at the

Kraków Enterprise Mondays meeting and ran a webinar on Business Communication in the US, organized

by the Trade and Investment Promotion Section of the Polish Embassy in New York. Krzysztof Zdanowski

attended also the Innovation Panel conference in Helsinki, and gave a lecture on outsourcing at a

conference in Bucharest.

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In Q4 2017, the Company also strived to strengthen its team with a new Global Vendor Manager with vast

experience gained in the largest companies in the sector (Argos Translations, Moravia), that ultimately

joined the team in January 2018. The Global Vendor Manager will be responsible for managing service

providers and acquiring translators on the international market.

4. MAYFLOWER LANGUAGE SERVICES

[Revenue] In Q4 2017, Mayflower’s revenue increased by 6% YoY. Throughout the whole year, this increase

was 23% YoY. The increase in revenue is due to the continuous development of cooperation with

customers won in previous quarters, as well as winning new promising customers for diversified services. In

Q4 2017, Mayflower won 21 new customers, including recognizable international corporations, also ones

operating in the area of modern technologies.

[Strategy] Mayflower adjusted its strategy, among other things as regards key sectors in which it intends to

enhance sales of its services, to that of the entire Group. In this respect, Mayflower intends to closely

follow the implementation of the adopted objectives, as these are particularly promising, potentially high-

margin and growing market segments.

[HR] In Q4 2017, Mayflower implemented a Human Resource Management System (HRMS) and a biometric

system (magnetic cards with fingerprints), which enables partial automation of selected processes in the

area of human resources management.

[Staffing] Q4 2017 was another consecutive quarter in which staffing services offered by Mayflower were

used by international corporations interested in hiring a translator or a whole team to implement a specific

project. This service accounts for 24% of the company's revenue for Q4 2017.

5. SUMMA LINGUAE ROMANIA

SLR is still in the early stages of its development and is only shaping its internal structures while entering

the market. The promising location, competencies and access to resources, coupled with operational, sales

and marketing support offered by the other companies of the Summa Linguae Group, make the Issuer's

Management Board see great potential for intense growth of SLR’s business in subsequent months,

quarters and years.

[Jouve] One of the key SLR's achievements in the past quarter was the development of cooperation with a

strategic customer, promising for the entire Group, that provides global advisory, technological and

39

outsourcing services in the area of content lifecycle management and digital transformation – Jouve Group

based in Paris. Business relations established through this contract with the entire Summa Linguae Group

enable implementation of further joint projects.

[Outsourcing] In the past quarter, SLR won 3 new customers interested in outsourcing services. It also

carried out intensive business negotiations with several other potential counterparties in this service area.

In coming quarters, SLR intends to intensify its operations in this area, in particular on Western Europe

markets.

[Strategy] Besides the development in the area of outsourcing services, which is of key importance to SLR,

the company intends also to further extend the portfolio of language pairs it handles, in order to develop a

more competitive offer on the local and international markets. At the same time, SLR develops its

technological infrastructure and optimizes translation memories in order to increase the efficiency and

profitability of its services.

VII. WHERE THE ISSUER PUBLISHED EARNINGS GUIDANCE – THE POSITION AS

REGARDS ITS FEASIBILITY IN THE YEAR CONCERNED, IN LIGHT OF THE RESULTS

PRESENTED IN THE QUARTERLY REPORT

The Management Board of Summa Linguae S.A. did not publish earnings guidance relating to the Parent

Company or the Group for 2017 or for subsequent years

VIII. WHERE THE ISSUER’S INFORMATION DOCUMENT CONTAINED THE

INFORMATION REFERRED TO IN ARTICLE 10(13A) OF APPENDIX 1 TO THE

ALTERNATIVE TRADING SYSTEM RULES – DESCRIPTION OF THE

ADVANCEMENT OF THE ISSUER’S OPERATIONS AND INVESTMENTS ALONG

WITH THE SCHEDULE OF THEIR IMPLEMENTATION

The Management Board of Summa Linguae S.A. announces that the Issuer’s Information Document did not

contain the information referred to in Article 10(13a) of Appendix 1 to the Alternative Trading System

Rules.

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IX. WHERE THE ISSUER UNDERTOOK DURING THE REPORTING PERIOD

INITIATIVES TO DEPLOY IN THE COMPANY INNOVATIVE SOLUTIONS AIMED AT

THE DEVELOPMENT OF ITS BUSINESS – INFORMATION ON SUCH INITIATIVES

The Issuer monitors technological solutions and innovations deployed in the translation services sector. The

Management Board of the Issuer considers technological development in this area as a chance to increase

competitiveness, optimize profitability of operations and streamline processes associated with the

implementation of translation and localization projects.

In the past quarter, the Issuer’s Group was intensively building up its translation memories, using, e.g. an

XTM tool. Such solutions - used with extensive translation memories and advanced algorithms – enable

significant acceleration of translation processes.

X. THE NUMBER OF THE ISSUER’S EMPLOYEES IN FULL-TIME EQUIVALENTS

As at 31 December 2017, the Summa Linguae Group employed – under contracts of employment or similar

ones in the foreign companies 120.3 full-time equivalent employees (including 22.3 ones in the Parent

Company).

XI. DESCRIPTION OF THE STRUCTURE OF THE GROUP WITH INFORMATION ON

THE CONSOLIDATED ENTITIES

The composition of the Summa Linguae Group as at the last day of the period covered by this quarterly

report is presented in its sections IV and VI.1. The companies are subject to consolidation.

XII. WHERE THE ISSUER IS THE PARENT OF A GROUP AND DOES NOT PREPARE

CONSOLIDATED FINANCIAL STATEMENTS – THE REASON WHY SUCH

STATEMENTS ARE NOT PREPARED

The Issuer is the Parent Company of the Summa Linguae Group and prepares consolidated financial

statements.

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XIII. INFORMATION ON THE ISSUER’S SHAREHOLDING STRUCTURE WITH DETAILS

OF SHAREHOLDERS HOLDING, AS AT THE DATE OF THE REPORT, AT LEAST 5%

OF VOTES AT THE GENERAL MEETING

The Issuer’s shareholding structure as at the date of this quarterly report, accounting for shareholders

holding at least 5% of votes at the General Meeting of Shareholders, is presented in Table 6 below and

Charts 3 and 4.

Table 6. Shareholding structure of Summa Linguae S.A.

No. Shareholder Number of

% of shares Number of

% of votes shares votes

1. Michał Butscher (indirectly via Snap1 Sp. z .o.o. which holds SL shares indirectly via Potemma Ltd)

944,985 31.76% 1,538,985 38.71%

2. Krzysztof Zdanowski 919,045 30.88% 1,319,045 33.18%

2.1 Directly 281,005 9.44% 421,005 10.59%

2.2 Indirectly (via Fenomen SPV Sp. z o.o. which holds SL

shares indirectly via Amidio Services Ltd) 638,040 21.44% 898,040 22.59%

3. eM64 Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych

247,502 8.32% 247,502 6.23%

4. Other 864,228 29.04% 870,228 21.89%

TOTAL 2,975,760 100.00% 3,975,760 100.00%

Figure 3. Shareholding structure of Summa Linguae S.A. (intrest in the share capital)

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Figure 4. Shareholding structure of Summa Linguae S.A. (proportion of the total number of votes at the General

Meeting of Shareholders)

Michał Butscher (indirectly)

31.8%

Krzysztof Zdanowski (directly and

indirectly) 30.9%

eM64 Fundusz Inwestycyjny

Zamknięty Aktywów Niepublicznych

8.3%

Other 29.0%

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Michał Butscher (indirectly)

38.7%

Krzysztof Zdanowski (directly and

indirectly 33.2%

eM64 Fundusz Inwestycyjny

Zamknięty Aktywów Niepublicznych

6.2%

Other 21.9%

Krakow, 14 February 2018 Management Board of Summa Linguae S.A. Krzysztof Zdanowski, CEO

Office in Krakow (Headquarters) ul. Josepha Conrada 63 31-357 Kraków, Polska Tel. +48 (12) 293 93 80 Office in Bangalore (India) No. 104,2nd Floor, Infantry Techno Park, Infantry Road, Tasker Town Shivajinagar, Bangalore – 560001 Tel. +91 9 538 945 655 Office in Bucharest (Romania) 20 Plevnei street, Division B Office 28 (interphone 28) Sector 1, Bukareszt Tel. +40 31 438 02

Administration Department [email protected] Tel. +48 12 293 93 80 Marketing and PR Department [email protected] Tel. +48 12 293 93 85 Sales Department [email protected] Tel. +48 12 293 93 84 Tel. +48 785 121 151 Contact for the media [email protected] Tel. +48 785 052 752

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