Prokom has announced that it accepted ZUS (Social Security Fund), its biggest and most profitable customer offer and prolonged the frame agreement for three years (till 2009) without additional compensation.
Our view: We believe the news could have a negative trading impact. We believe that the news should be understood that Prokom now has to take on more work due to constant changes in law regarding social security. At the same time, its compensation stays the same which implies lower margins. Although the management had stated in its official communicate that it would intensify efforts so that the agreement did not negatively translate into Prokom’s earnings, nevertheless we believe that some margin deterioration could be possible. In our forecasts we assume Prokom derives some PLN 200m of revenues annually from the Social Security Fund.