ComArch S.A.'s Management Board conveys 2005 activities' report of ComArch S.A.'s Board of Supervisors including assessment of the company's situation in 2005 according to the rule number 18 of the Corporate Governance Principles:

Report of ComArch S.A. Board of Supervisors' activities in 2005

Board of Supervisors held 4 meetings in 2005 (on 23 March, 22 June, 26 September, 15 December). Furthermore the Board of Supervisors passed the resolutions in correspondence mode on 6 June and 12 July. Four persons of the five members of the Board of Supervisors were present at the Board of Supervisors' Meetings averagely. Main subjects of the Board of Supervisors' meetings were:ol>

According to the Board of Supervisors ComArch Capital Group gained financial results the best in its history. Revenues from sales increased by 35 % in comparison to the last year and at the same time, significant increase in the net profit was recorded up to the amount of 28,1 million PLN and it was higher by 146.7 % than in 2004. The operating profit increased by 69.5 % to the amount of 27.4 million PLN. It is noteworthy that the whole improvement was reached as a result of an organic development of ComArch Group. Significant increase in revenues from sales and profits came about with the improvement in operating profitability (from the level of 4.92 % to the level of 6.16 %) and net profitability (from the level of 3.46 % to the level of 6.32 %). Improvement in profitability came about with the simultaneous increase in employment in the Group to the level of 1,836 persons (excluding those employed in MKS Cracovia SSA). It is also noteworthy the return on equity in the amount of more than 17 % being twice as high as in 2004. Profit per share reached the value of 4.06 PLN, which means increase of 143 % from the level of 1.67 PLN in 2004.

Board of Supervisors assessed positive the strategy which is realised by the Company on both domestic and foreign markets. ComArch S.A. - as the product firm- improves financial results along with the increase of the scale of the activity, hence in the Board of Supervisors' opinion the sale of products on many geographical markets profitably bears on realized financial results. At the same time, the maintaining of sectoral diversification of proceeds protects ComArch Group before business fluctuation in particular sections of the economics.

The Board of Supervisors was making also constant analysis of risk areas related to the activity of the Company and analysis of the manner of the risk management by the Management Board. As the most important risks, similarly how in previous periods, one acknowledged:

1. the risk related to the necessity of the constant creation of new software products and updating present software products;
2. the risk related to the fulfilling terms of the contracts, particularly comply with a term and quality of works (the risk of the proper valuation of the time consuming of long-term) contracts);
3. the risk of the foreign legal and political environment related to the realisation of export-contracts;
4. the risk of the financial standing of foreign contractors (minor possibilities - difficulties - checking and monitoring);
5. the tax risk related to the activity in the Special Economic Zone and unsteadiness of the tax legal environment in Poland;
6. the risk of the proper kilter of the internal audit in the Company.