Hello, everyone. I would like to welcome you to our call today to review Asseco's financial results for the first half of 2023. My name is Joanna Paczkowska-Tatomir, and I'm Head of Investor Relations at Asseco. Our result meeting summarizing our financial and performance and operation in H1 2023 will be divided into two parts. In the first part, we'll go through the extract of our result presentation. Above the window with the slides, you can see a small banner pointing to the full version of the presentation. The second part, as always, will be dedicated to Q&A session. So if you've got any questions, please write them in the chat box at any time during the meeting. So let's start with the presentation.
Thanks to our strong diversification, product, sectoral, and geographical, and focus on proprietary systems for key sectors of the economy, in the first half of 2023, we observed a stable development of our business in changing market environment. Taking into account the volatility of the environment and the inverse effect of FX exchange rates, we are showing a solid set of results. The group's revenues increased by 3% to PLN 8.5 billion. Non-IFRS EBIT was higher by 2% and amounted to PLN 982 million. Non-IFRS net profit was equal to PLN 260 million, and the reported profit amounted to PLN 231 million. Many IT companies are reporting layoffs. In the case of Asseco, the situation is different. We employ.
If we compare FTE for the first half of 2023 to first half of 2022, we have an increase of 4% at the group level, and in the case of Polish segment, this increase is 7%. In the reporting period, 89% of our revenues were generated on international markets through Formula Systems and Asseco International segment. In the Asseco Poland segment, the revenue dynamics was the highest and amounted to 16%. In Poland, we achieved very good sales results in banking and finance, healthcare, energy, and telecommunications. We recorded stable sales to the central administration sector. Our two subsidiaries, Asseco Data Systems and Asseco Cloud, also reported very good results.
In the case of Asseco Data Systems, growth recorded, was recorded in the area of trust services, and, the revenues of our Polish cloud company, Asseco Cloud, increased in the reported period by more than 30%. When Formula Systems segment is concerned, we increased sales by 3%. I would like to point out that in the case of this segment, the negative impact of exchange differences recorded in H1 2023 versus 2022 is the largest. Organically, nothing disturbing is happening. The Formula Group is gradually strengthening its position in Israel, North America, and Europe, noting a high level of recurring revenues. In H1 2023, Sapiens generated 50% of revenues in Europe and 41% in North America. Matrix IT generated 90% in Israel, the rest was North America.
Magic Software reported 51% of revenues in North America, 37% in Israel, and in Europe, 9%. Companies from Formula Systems support organic development with acquisitions. In the first half of this year, they finalized 3 acquisitions on the Israeli market, strengthening their position in the area of cybersecurity and expanding their offerings with more IT solutions and services. Our Israeli companies realized many significant projects for the public sector in Israel. For instance, Matrix IT is involved in the Nimbus project. This is a huge project which aims to accelerate the deployment of cloud technologies in Israeli public sector. In Asseco International segment, we recorded comparable sales year-on-year, but it should be mentioned that in Q4 2022, we sold 2 Danish companies-...
which generated PLN 95 million in H1 2022. The first six months of 2023 were very good for Asseco Enterprise Solutions Group, which intensively developing sales of ERP solutions, and in the Asseco South Eastern Europe Group, which increased the scale of operations in all business segments. I mean, banking and finance, payments, and dedicated solutions. In the lower right corner, you can see how our sales by business segments have been developing over the last 5 years. Our revenues are highly diversified by sector. We recorded sales increases in all of them. In the reported period, banking and finance sector accounted for 34% of our revenues. General business were responsible for 42%, and public institution sector for 24%. I would like to also emphasize Asseco's diversified customer portfolio.
In H1 2023, 10 largest contractors accounted for 11% of the group revenues, while the largest customer was responsible for only 2% of the revenues. In banking and finance sector, our revenues grew by 3%. The highest growth, by 28%, was observed in Asseco Poland segment. When we reported double-digit increases in all major areas, I mean, commercial and cooperative banking, capital market, and business intelligence. Asseco International segment grew by 6%, mainly due to significantly higher revenues in Asseco South Eastern Europe. In Formula Systems Segment, we reported comparable year-on-year sales, but once again, please bear in mind FX changes. In the case of this segment, the company that stood out is Sapiens, which is a leading global provider of IT solutions for the insurance industry.
The financial results of this company reflect their focus on supporting existing clients, cross-selling and upselling potential. In general business sector, sales increased by 2%. The highest growth, by 29%, was made in Asseco Poland segment. It was very good half year period for Asseco Poland, Asseco Data Systems, and Asseco Cloud. In Asseco Poland, mainly thanks to the dynamic growth of revenues in the energy and telecommunication sector. In the first half of this year, Asseco implemented two important digital transformation projects in the Polish utility sector. The migration of data to Asseco Utilities Management Solution software for over 6 million customers of the Tauron Group was completed. Moreover, the construction and implementation of the largest billing system in the energy sector in Central and Eastern Europe at PGNiG was also finalized.
The new solution is currently used by over 7 million gas and electricity customers in Poland. In H1 2023, Asseco Poland continued its operation, cooperation with Polsat Plus Group, supporting transformation of the B2C systems of this group. In case of others, sales increase was visible, especially in the area of trust services, such as the e-signature. In case of Formula Systems segment that grew by 2%, we observed higher sales in Matrix IT, Magic Software, and InSync Staffing. In the Asseco International segment, we reported double-digit revenue growth in Asseco Enterprise Solutions, as well as in Asseco South Eastern Europe. The flatter result of this segment results from lower sales of equipment in Asseco Spain. This company was supported by this pandemic phenomenon of stocking up of enterprises.
Now it's lower, and it should be also remembered that, in Asseco International segment, we reported results of our two Danish companies that were sold, in Q4 2022, and those two entities generated 25 million PLN in comparable period. In public institution sector, sales grew by 6%. The most significant sales growth, by 10%, was recorded in Formula Systems segment. The biggest contributor to the reported growth was Matrix IT, that has been implementing many projects for the government and healthcare sector in Israel. Magic Software and Michpal Micro Computers also reported revenue growth. Acquired in Q4 2022, Shamrad Electronics also contributed to the results of this segment. Shamrad is an Israeli provider of advanced security and control systems, and this company was taken over by the parent of Formula Systems Group.
Asseco Poland segment grew by 3%, mainly due to significant higher sales of healthcare unit in the mother company. Asseco International segment reported 8% decrease in revenues on year-on-year basis. As we have already commented during our previous meetings, we have a temporarily worse period in the public administration sector in Slovakia and Czech Republic due to turbulent political situation in those countries. In addition, as in the general business sector, we are dealing with lack of revenues of 2 Danish companies sold in Q4 last year. They generated in public institution sector, PLN 53 million in H1 2022. On the other hand, strong sales performance at Asseco South Eastern Europe and Asseco Enterprise Solutions should be noted. We are satisfied with H1 2023 results achieved in such a volatile market environment.
After a 3% growth, our sales reached PLN 8.5 billion. We strongly emphasize the negative impact of exchange differences. In H1 2023, the organic growth was equal to PLN 546 million. M&A gave us additional PLN 104 million, while exchange differences work in an opposite direction and taken away PLN 385 million. Therefore, our revenue-- Therefore, our revenues increase in H1 2023 in the whole group by PLN 265 million. In the reporting periods, non-IFRS EBIT was up by 2%, while reported EBIT declined by 14%. This is due to the material one-offs that took place in Q2 2022, and boosted results at that time.
The total positive effect of one-offs that took place in Q2 2022 amounted to PLN 142 million zloty, while the total effect of one-offs recorded in Q2 this year amounted to PLN -3 million zloty. So the difference is huge. We strongly recommend looking at non-IFRS figures. They are crucial for assessing real financial standing of the Asseco Group. In H1 2023, our non-IFRS operating profit was equal to 11.5%, and in Q2 2023 alone, it was 11.7%. Commenting on the income statement, items below EBIT, please pay attention that companies from Asseco International and Formula Systems segment are fully consolidated and to- on top and EBIT line. At the level of net result, we consolidate their results, lowered by the minority interests.
In H1 2023, Asseco South Eastern Europe from Asseco International segment and Formula Systems segment grew faster at the revenues and EBIT level than the rest of the group. The net interest income remains under control. These costs are increasing year-on-year, but analyzing the structure of our debt, this was fully anticipated effect. Worth mentioning is the impact of foreign exchange transactions that in H1 2022 amounted to PLN 17.7 million, while in H1 2023 to PLN 4.5 million. Also worth mentioning is the impact of Hyperinflation, which concerns our subsidiary, Asseco South Eastern Europe. In H1 2022, we reported positive impact of PLN 20.3 million, while in H1 2023, it was PLN 10.8 million.
Comparing the results on a year-on-year basis, we can see that the difference in these two positions totals to PLN 23 million. Higher tax is incomparable. On the slide, you can see higher tax in comparable period, and this stem from disposal in Q2 2022 of shares in Infinity Labs. This was company within Matrix Group, located in Formula Systems segment. All this contributed to the fact that while the non-IFRS EBIT were the non-IFRS EBIT recorded 2% increase at the non-IFRS net profit attributable to her shareholders of net of parent company level, we recorded a slight decrease, -4%. So this describes this difference between 2% increase and -4% on the level of net income.
Commenting on cash generation, as you can see on the slide, we managed to cash in 84% of the group's non-IFRS EBIT. We are within the range of 80%-100%, which we have set ourselves as a super safe benchmark. A slightly worse level of the ratio is visible in Asseco Poland segment. This is due to payment schedules in long-term contracts signed in public sector. In the parent company, we observed a relatively high balance of receivables from contracts valuation. We expect that in the second half of 2023, this ratio should improve, as receivables from several year contracts will be invoiced. We have a stable liquidity position. As at the end of June, the level of cash amounted to over PLN 2.5 billion.
We have net cash in Asseco International and Asseco Poland segment, while net debt in Formula Systems segment. That is why you can see a net debt of PLN 1 billion at the level of the entire group. The debt we have in Formula Systems segment is safe and serviced of on an ongoing basis by companies from this subgroup. Last but not least, our backlog. Asseco consolidated all the backlog for 2023 in variable rates in the area of proprietary software and services is now worth PLN 12.2 billion. In turn, in fixed rates, it totals PLN 13.4 billion and is 7% higher than in the same period last year. Here you can see. You can also see how visible exchange rate differences are in the case of Formula Systems segment.
That you can see -6% dynamics in variable rates, plus it's +6% in fixed rates. Okay, so this is all from my side. We can go to Q&A session. Yeah, there is a question from Mark. Can we put it in Q&A? Oh, yeah. Can you clarify what the one-offs related to Q2 2022? Oh, Karolina just replied on the chat. We'll still wait a little bit. Okay. Sure. Do we have other questions? We'll wait a minute. Okay, so if there are no further questions, we would like to thank you for participating in our half-year earnings call. Oh, yeah, we've got question from Mark: Can you comment on the M&A outlook?
Yeah. We are constantly looking at companies reviewing the markets. We think that it became more easy to acquire company these days when compared to the previous year. We don't have a specified pipeline yet. There are a couple of targets that we're advanced talking to. So, it... And it's both in Israel and in Europe, so including Poland. So I guess, well, if we conclude on the price and the due diligence are going to be not to show anything surprising, I think we're gonna conclude probably a couple of transactions in the forthcoming months. But this is a constant process in Asseco Group, so I don't expect anything spectacular in terms of top-line numbers.
However, the processes are ongoing, and there are a couple of those. Relating to the, there is another question more on capital allocation priorities. Well, our priority is the product development. So, what's most important is investment in R&D. Then obviously, we allocate some cash for M&As. And yeah, we've gotten a resolution of the EGM for the management board to decide on potential buyback.
However, no decision was made yet, and as far as we're concerned, where our top priority is to equally treat all of the shareholders, and as soon as a decision will, shall be concluded, we can inform on that, according to Polish law, issuing the current report, if the buyback is going to be decided on with the terms and dates of such.
Thank you, Karolina. Do we have other questions? Or someone is writing, I can see. Yeah. Wage Inflation and employee turnover.
Relating to Wage Inflation, I guess the wages pressure eased on these days. I mean, there are still countries we have challenges addressing the pressure. However, in general terms, I would say that the pressure eased on, and we've managed to address it last year. So I don't expect the pace of the wages increase to be maintained. When you look backwards at 2022 numbers. I also guess that... Well, when it's going to be broadly impacted by the FX, right? So if you look at the absolute, in absolute terms of our numbers, you can see places when actually the wages cost decrease.
But generally, I would say in fixed price terms, we've got a single-digit wages increase, and it differs segment to segment, but on average, it's 9% in fixed terms in the group, and the highest pace is in Poland, and then a second international. In Formula Systems, it's negligible in terms of percentage pace. And then employee turnover, as a consequence, is also lower than what we've observed last year, so it's on a group level. I don't have a number. However, we can see, and this is also the feedback from basically all of our HR departments, that the vacancies are way easier to be filled, and we actually did increase employment.
When you look at half year versus half year, 1,500 people joined the group. We increased employment in Poland, and, well, the turnover of employees in Poland is a single digit and decreasing number.
Yeah, we've got another follow-up questions. Yeah. Can you pass on those wage increases to your customers?
Yes, I mean, Well, we've already commented on the fact that, in terms of top-line growth, last year, we've started to negotiate with our customers to include index inflation clauses into our contracts. So this was a mechanism based on which we managed to pass on the wages increases. However, it was not the case for 100% of our revenues. There are still places where, like Slovakia and Czech Republic, where for contracts where the customers are public entities, it's not that easy to include such clauses based on local law. So there still is some gap between what you can see on the wages increase and then what's translated into revenues.
Whenever there is a sales model where we sell based on times and materials, obviously, this is a more easy going process. The backlog is stable, however, I mean, the backlog increase pace is stable. However, there are some contracts in banking and finance in Poland and in public entities that we've gained some time ago already. So it was already reflected in backlog as at year-end. This is why the number of people increased. We strongly believe in the market and there are a lot of contracts that are still an opportunity, and we believe in the market.
This is why we think we need more resources. The increase in the number of people hired is also the result of acquisitions, obviously, but this is something that you should also consider.
Thank you, Karolina. Yeah, we see no further-
Sure.
Sorry, yeah, I see they're all... Yeah, someone? Oh, okay. Thanks, Mark.
Thank you.
If there are no further questions, thank you, and see you in November during our Q3 call. Thanks once again. Have a nice weekend. Bye.