Semi-Annual Report on

Operations of

Asseco Group for the period of six months ended June 30, 2017

Present in

54

countries

22,431 mPLN 4,162 highly committed in sales revenues employees

113 mPLN th

mPLN 6 in net profit for the 7,449 shareholders of the in order backlog for 2017 largest software parent company vendor in Europe

Semi-Annual Report on Operations of Group for the period of six months ended June 30, 2017 MANAGEMENT REPORT ON OPERATIONS OF ASSECO CAPITAL GROUP for the period of six months ended June 30, 2017

GENERAL INFORMATION ON ASSECO GROUP ...... 4

COMPANY'S AUTHORITIES ...... 4 Management Board ...... 4 Supervisory Board ...... 6 ASSECO GROUP ...... 7

STRATEGY AND DIRECTIONS OF DEVELOPMENT...... 7

INFORMATION TECHNOLOGY MARKET AND ITS FUTURE OUTLOOK ...... 9

ORGANIZATIONAL STRUCTURE OF ASSECO GROUP ...... 11 Federation model ...... 11 Structure of Asseco Group ...... 11 TARGET MARKETS, BUSINESS SECTORS AND PRODUCT PORTFOLIO OF ASSECO GROUP ...... 16 Target markets by geographical regions ...... 16 Operations by sectors ...... 16 Product portfolio of Asseco Group ...... 21 MAJOR EVENTS WITH IMPACT ON FINANCIAL PERFORMANCE OF ASSECO CAPITAL GROUP IN 2016 ...... 22 Polish market ...... 22 Israeli market ...... 23 Central European market ...... 24 South Eastern European market ...... 24 Western European market ...... 24 Eastern European market ...... 25

FINANCIAL INFORMATION OF ASSECO GROUP ...... 26 Financial results ...... 26 Cash flow ...... 30 Statement of financial position ...... 30

OTHER INFORMATION ...... 32 Non-recurring events with impact on our financial performance ...... 32 Significant events with impact on Asseco Group operations after December 31, 2016 ...... 32 Opinion on feasibility of investment plans ...... 32 Asseco S.A. in the capital market ...... 32 Shareholder structure ...... 33 Discussion of significant risk factors and threats ...... 35 Opinion on feasibility of the Management Board financial forecasts for 2017 ...... 38 Changes in the Capital Group management policies ...... 38 Agreements concluded by the Capital Group with its management personnel providing for payment of compensations if such persons resign or are dismissed from their positions ...... 38 Information on the agreements known to the Issuer which may result in future changes of the equity interests held by the existing shareholders and bondholders ...... 38 Changes to equity relationships ...... 38 Related party transactions ...... 38 Bank loans, borrowings, sureties and guarantees ...... 38 Monitoring of employee stock option plans ...... 39 Information on judicial proceedings where the value in dispute exceeds 10% of the amount of equity ...... 39

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

GENERAL INFORMATION ON ASSECO GROUP COMPANY’S AUTHORITIES

Managament Board

Adam Góral President of the Management Board

responsible for the development vision and strategy of Asseco Group.

PrzemysławBorzestowski Vice President of the Management Tadeusz Dyrga Board Vice President of the Management Board responsible for Public Administration and Agriculture Division, the Office responsible for Social Insurance for Protection of Non Public Division and Systems Maintenance Information and the Office for Division. Infrastructure Projects.

Rafał Kozłowski Krzysztof Groyecki Vice President of the Management Vice President of the Management Board Board

Chief Financial Officer responsible responsible for Healthcare Division. for Finance Division of Asseco

Group, and Logistics Department.

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Paweł Piwowar Marek Panek Vice President of the Management Vice President of the Management Board Board

responsible for Energy and Gas responsible for Development Industry Division, Division of Asseco Group, and EU Telecommunications and Media Projects Office. Division, and Enterprises Division.

Zbigniew Pomianek Vice President of the Management Board Przemysław Sęczkowski

Vice President of the Management responsible for Commercial Banks Board Division, PKO BP Division,

Cooperative Banks Division, Business responsible for Public and Investor Intelligence and Capital Market Relations Department, and Division, Compliance and Risk Marketing Department. Management Department, and Maintenance and Development of Back Office Systems Department.

During the period of 6 months ended June 30, 2017, the Company’s Management Board was composed of the following persons:

Management Board Period of service Adam Góral 01.01.2017 – 30.06.2017 Przemysław Borzestowski 01.01.2017 – 30.06.2017 Tadeusz Dyrga 01.01.2017 – 30.06.2017 Krzysztof Groyecki 01.01.2017 – 30.06.2017 Rafał Kozłowski 01.01.2017 – 30.06.2017 Marek Panek 01.01.2017 – 30.06.2017 Paweł Piwowar 01.01.2017 – 30.06.2017 Zbigniew Pomianek 01.01.2017 – 30.06.2017 Przemysław Sęczkowski 01.01.2017 – 30.06.2017 Robert Smułkowski 01.01.2017 – 28.03.2017

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 Supervisory Board

Jacek Duch Chairman of the Supervisory Board

Adam Noga Izabela Albrycht Vice Chairman of the Supervisory Member of the Supervisory Board Board

Piotr Augustyniak Dariusz Brzeski Member of the Supervisory Board Member of the Supervisory Board

Artur Kucharski Member of the Supervisory Board

During the period of 6 months ended June 30, 2017, Within the Supervisory Board there is an Audit the Company’s Supervisory Board was composed of Committee composed of: Artur Kucharski - Chairman, the following persons: Jacek Duch and Piotr Augustyniak- Members of the Supervisory Board Period of service Audit Committee. Jacek Duch 01.01.2017 – 30.06.2017 Adam Noga 01.01.2017 – 30.06.2017 Izabela Albrycht 01.01.2017 – 30.06.2017

Piotr Augustyniak 01.01.2017 – 30.06.2017 Dariusz Brzeski 01.01.2017 – 30.06.2017 Artur Kucharski 01.01.2017 – 30.06.2017

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

ASSECO GROUP The Group's companies are listed not only on the The parent company of Asseco Group (the "Group", Stock Exchange, but also on the NASDAQ "Asseco Group") is Asseco Poland S.A. (the Global Markets as well as on the Tel Aviv Stock "Company", "Asseco"). Exchange. Asseco Poland (WSE: ACP) is a leading Polish Asseco Group is a unique combination of a software information technology company listed on the house and a service provider. It produces . With a market capitalization technologically advanced, top quality software that reaching about PLN 3.7 billion (about EUR 850 supports mission-critical business processes of million), the Company is included in the prestigious enterprises in all key sectors of the economy. WIG20 index. It is also the largest company listed in Revenues from proprietary software and services the IT industry index, WIG-Informatyka. represent over 80% of the Group's total sales. Asseco Poland stands at the forefront of the Concurrently, 83% of Asseco Group’s sales revenues multinational Asseco Group which is present, along are generated by its foreign operations. with its subsidiaries, in 54 countries worldwide, Asseco Group is a unique federation of companies including most of the European countries as well as which are allowed a great deal of independence in , USA, , Canada, Russia and African making business based on their local competencies, countries. Asseco Group is the largest provider of while taking advantage of synergies arising from their innovative IT solutions in Central and Eastern Europe. cooperation within the whole Asseco Group. STRATEGY AND DIRECTIONS OF DEVELOPMENT

Responsibility Mission We take full responsibility for our work and Our mission is to build a reliable and profitable, global environment in which we operate. information technology company providing high quality software and services. Strategy Values of Asseco – our Source Code The foundation of the strategy of Asseco Group is providing proprietary software and IT services to Asseco has come up with its own “source code” that business customers and public administration. The lists the common values shared by Asseco employees. strategy of Asseco Group is based on two pillars. The These values have been devised by all of our first is organic growth which is achieved through employees and are recorded in a formal document, proprietary software and services, whereas the which is effective across our organization. second one involves expansion through acquisitions. Commitment In 2017, the Company will continue its present approach. We are fully committed to each and every project and the success of our Clients is our greatest satisfaction. Organic growth Respect The strategy of organic growth of Asseco Group is based on providing proprietary software and services We require trust, honesty and mutual respect both to clients in the global IT market. Asseco's strategy from ourselves and from others. relies on sector-specific business expertise, which is Quality supported by technological competence. In addition, Asseco leverages on the vast experience of its We always maintain high quality standards in all of international affiliated companies to create a our activities. comprehensive portfolio of products satisfying the Professionalism highest needs of its customers. The Group's wide competences and geographical presence increase the We continually upgrade our qualifications and are knowledge of local markets and their specific willing to share experience. conditions, make it easier to reach customers and Effectiveness allow for providing the best solutions tailored to customer expectations. Thanks to global scale of We are ambitious and consistent in striving to achieve operations and strong financial foundations, Asseco our goals.

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Group can cope with the toughest and most ambitious implementation projects. The activities of the Group and its companies focus on providing a wide range of proprietary IT solutions and services. The Group specializes in implementing the largest and most complex IT projects ordered by various clients, offering comprehensive solutions to all sectors of the economy, and also selling standardized products to smaller entities. The Group builds long-term trust-based relationships with customers, becoming their strategic business partner. One of the elements of organic growth is increasing integration of divisions with similar or identical competences. That allows the Group to increase efficiency and improve its offer to customers. Expansion through acquisitions Asseco Group has been pursuing successful acquisition policy in Poland and abroad for many years. Asseco Poland, the leading company in the Group, is ranked among the most experienced companies in this field in Poland. Since 2004, the Company has finalized over 60 purchase transactions, repeatedly increasing the scale of its operations and geographic reach. Also, other companies from the Group, mainly Israeli group , pursue active and effective acquisition policy. The purpose of acquisitions of Asseco Group is to increase competence in key sectors of activity, enter new geographic markets, or strengthen the position of the entire Asseco Group in the countries where it has been already active. Above all, the Group is interested in profitable entities with committed and highly-specialized employees willing to further develop themselves by connecting to a unique federation model of Asseco or integrating with Asseco Poland. In the past, the Group’s acquisitions were focused on increasing the scale of operations in the largest global IT markets – the US and Europe. Majority of the transactions finalized by the Group have involved small and mid-sized capital investments up to several dozen million euros, which have brought synergy effect and carried limited risk for the Group’s stability.

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

INFORMATION TECHNOLOGY MARKET AND ITS FUTURE OUTLOOK

sales of computer hardware and suspending IT Development prospects of the global IT market projects in the public administration segment. According to Gartner’s updated forecasts from July It is expected that in 2017 the condition of the IT this year, in 2017, the global IT industry will grow by market will improve thanks to higher GDP growth and 2.4% to reach the total value of USD 3,477 billion. increased investment spending in the private sector. That figure is slightly higher than USD 3,465 billion According to PMR, in 2017, the Polish IT market may which was forecast by the company at the beginning grow even by 5.5%. of the year. Situation in the public administration segment This year's growth has been driven primarily by the IT services and enterprise software segments. According to estimates of market research Companies have increased the use of digital solutions companies, the public administration remains one of to conduct and develop their operations. According to the leading recipients of services from the IT industry. analysts, in 2017, spending on enterprise solutions Therefore, the situation in this sector has a significant will increase by 7.6% to USD 351 billion, on on IT impact on the situation in the whole services and services by 3.1% to USD 922 billion. Both segments software market. are key to Asseco Group’s operations. At the beginning of 2017, negative tendencies in It is worth noting that according to Gartner, the tenders for the IT industry ended, but according to growth of the IT market in the EMEA region – Europe, data gathered by the Polish Chamber of Information Middle East and Africa – reached 0.6% in 2016 and and Telecommunications (PIIiT), the value of public will accelerate to 1.9% in 2017. As on global level, the contracts concluded in the January-June period was expenditures on IT software and services will grow by 13.9% lower than in the corresponding period in faster than other market segments – by 6.0% and the previous year and amounted to PLN 2.46 billion. A 3.8%, respectively. positive signal for the market was the fact that the value of contracts concluded in June increased by 76% IT spending (in billions of USD) 2016 2017 on monthly basis. Data center systems 170 171 Software for businesses 326 351 Situation in the financial and general business Hardware 630 654 segments Services 894 922 The economic growth contributes to increasing Telecommunication services 1,374 1,378 spending on software and IT services by the general Total 3,396 3,477 business sector. This trend is clearly visible among Source: Gartner (http://www.gartner.com/newsroom/id/3759763) smaller and mid-sized companies whose IT needs In turn, according to analysts from the International grow along with the scale of their operations and Data Corporation (IDC), in 2017, the global It market, drive demand for the ERP solutions. after currency impact adjustment, will grow by 4.5% Among banks and financial institutions, the spending on annual basis. IDC is expecting that increased on technology is determined by intense fight for the spending on cloud-based solutions will be a major customer and competition, in which modern solutions growth engine that will translate into higher spending play a very important role. This phenomenon, on server infrastructure, enterprise software and supporting the demand for IT services, is partially mobile devices. offset by the need for cost savings and a conservative Improving conditions in the global IT market are also a financial policy of these institutions. result of better and stabilized sentiment among According to market research, cloud and SaaS companies, which are more eager to make solutions, although still representing small part of the investment decisions. According to the IDC report, the IT market, will grow particularly dynamically in the financial, retail and health care sectors will be leading near term. These solutions are particularly attractive the way in increasing IT spending budgets in 2017. for small and mid-sized companies, which can gain IT market in Poland access to more advanced products with relatively lower costs. The growing importance of products According to the latest report Computerworld from that market area will be one of the factors Top200, in 2016, the Polish IT market shrank by 5.2% enhancing the need for the expansion of data centers to PLN 59.7 billion due to lower corporate investments (drop by 5.5% on annual basis), falling

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

- another rapidly growing sector of the IT market in Poland. Ranking Ranking position Company’s market position Producers of customer-tailored software 1 The Polish IT sector is a competitive and diversified Providers of IT maintenance services 1 market consisting of both local and leading global Providers of IT services 1 companies. Asseco Poland S.A. is one of the largest IT Providers of system integration services 1 companies in Poland and the largest company in the Source: Computerworld Top200 2017, Ranking of IT and telecom companies country focused on the sales of proprietary software by net profit generated in 2016. and services, and not computer hardware. In terms of sectors, Asseco Poland is the leader or one According to the latest available estimates of of the leading suppliers in the key segments of its COMPUTERWORLD TOP200, Asseco Poland ranked business. The positions in individual segments are 16th in the category of the “Largest IT companies presented below. operating in Poland”, and Asseco Group, with annual revenues reaching PLN 7.9 billion, is an undisputed Ranking of providers of software and Ranking market leader. services to the sector of position Public administration 1 IT companies with highest net Net profit (in millions of profit in 2016 PLN) Healthcare 1 Asseco Poland 352.1 Large companies and corporations 1 CD Projekt 249.7 Banking 4 AB 51.0 Energy industry 3 PKO BP Finat 45.7 Utilities (excluding energy) 3 Comarch 45.6 Asseco Business Solutions 42.4 Source: Computerworld Top200 2017, Ranking of IT and telecom companies Medicalgorithmics 41.6 by net profit generated in 2016.

Source: Computerworld Top200 2017, Ranking of IT and telecom companies by net profit generated in 2016. After one year, Asseco Poland has again topped the rank of the most profitable IT companies in Poland. Additionally, it is the second-largest R&D spender in the IT sector. It is also worth noting that another company from Asseco Group - Asseco Business Solutions – holds 6th position in the rank in terms of profitability. Asseco Poland's leading market position is confirmed by the next table, which presents the positions taken by the Company in the Polish market by the type of business. Asseco Poland is a clear leader in the category of customer-tailored software and IT services for the business sector. Another company from Asseco Group - Asseco Business Solutions - is in turn the leader in the sales of ERP (Enterprise Resource Planning) software..

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

ORGANIZATIONAL STRUCTURE OF ASSECO GROUP

Federation model Asseco Group is based on a unique cooperation model . Knowledge of local markets, customers, - a federation model. Asseco Poland, acting as the business environment and unique leading company in the Group, is the largest circumstances. shareholder in the companies which create the Group, . Access to local teams of employees who speak but does not aim to have 100% of the stake in the their native language. companies or force the integration of the members of . Conducting responsible business activities in the Group. The companies which decide to join Asseco relation to local stakeholders. Group maintain a wide degree of autonomy in their daily activities, and the Group sets out their strategic A company which becomes a part of Asseco Group can directions of development and goals and monitors count on: their achievement. . Access to the products and the experiences of The functioning of the Group's federal model is based other members of the Group. on mutual trust, focus on people and a set of clearly . Access to the sales network of Asseco Group. defined principles of cooperation between the entities . Strengthening of the financial position. of the Group. Therefore, the companies acquired by . Becoming a part of international brand with a Asseco Poland retain their local character and are often managed by existing owners and management strong market position. teams. . Access to global agreements with equipment suppliers. The Group’s benefits resulting from the federation model are the following: The cooperation model based on a federation creates a wide scope for sales and cost synergies in the activities . Strengthening the market position and of the Group. increasing customer confidence. . Access to interesting, locally well-known product solutions.

Structure of Asseco Group Asseco Group has identified six geographical markets of clients, for exampleSKG S.A. and ZUI Novum Sp. z where the Group companies conduct their business o.o. operations, including Poland, Israel, Central Europe, Asseco Poland S.A. South Eastern Europe, Western Europe, and Eastern Europe. Asseco Poland (WSE: ACP) is the largest Polish information technology company listed on the Warsaw

Stock Exchange and one of the major software vendors Polish market in Europe. With a market capitalization amounting to about PLN 3.7 billion (about EUR 850 million), the Since 2016, Asseco Group's operations have been Company is included in the prestigious WIG20 index. It organized around four key entities with separate is also the largest company listed in the IT industry competencies: index WIG-Informatyka. . Asseco Poland S.A. Asseco Poland is a producer of state-of-the-art . Asseco Enterprise Solutions a.s software that supports mission-critical business . Asseco Data Systems SA processes of enterprises in all key sectors of the Polish . DahliaMatic Sp. z o.o. economy. Asseco's software applications are used by Additionally, in the Polish market, Asseco Group more than half of Polish banks, the largest insurance, consists of several smaller companies offering energy and telecommunication companies, various specialist and tailor-made solutions for specific groups healthcare institutions, local and central public

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 administration bodies, as well as by the uniformed . Matrix IT Ltd services. . Sapiens International Ltd . Magic Software Ltd Asseco Enterprise Solutions a.s.i Asseco Business Solutions S.A. In addition, the holding jointly controls TSG IT Advanced Systems Ltd - a company providing specialist Asseco Enterprise Solutions was established in software for the armed forces. It also controls US December 2016 and does not conduct operating supplier of consulting and HR outsourcing solutions - activities. Its most important asset are the shares in Insync Staffing Ltd - and producer of payroll software Asseco Business Solutions, provided by Asseco Poland for companies with strong market position in Israel - as an in-kind contribution. Michpal Micro Computers Ltd. Asseco Business Solutions is listed on the Warsaw Formula Systems Ltd Stock Exchange (WSE: ABS) and delivers state-of-the- art IT solutions for businesses, regardless of their Formula Systems is a holding company listed on the sector, size and specificity. In AssecoGroup, Asseco NASDAQ Global Markets (NASDAQ: FORTY) as well as Business Solutions is a competence center responsible on the Tel Aviv Stock Exchange in Israel. The companies for the ERP systems, software for small and mid-sized of the Formula Systems group operate in over 50 companies and the IT outsourcing. The company's countries: in Northern America (the US and Canada), product portfolio also includes mobile solutions, Europe, EMEA (including Israel, the United Kingdom, factoring systems as well as electronic data exchange , the Netherlands, France and Nordic platforms. countries) and Asia (including Japan and India). Asseco Data Systems S.A. Matrix IT Ltd. Asseco Data Systems (ADS) has been established on This company is listed on the Tel Aviv Stock Exchange the knowledge base and many years of experience of (TASE: MTRX). Its key competencies include IT six Polish subsidiaries of Asseco Group, namely ADH- services, security solutions, outsourcing as well as Soft, CK ZetoŁódź, Combidata Poland, ZUI Otago, PI integration of information systems to the client's Zeto Bydgoszcz, and Unizeto Technologies. It has been order. An important area of Matrix IT's operations in strengthened by the infrastructure division separated the US is providing financial customers with advanced from Asseco Poland in 2016. Thanks to that operation, security, risk management and compliance solutions. the company formed a competence center specialized Matrix IT also acts as a distributor for the world's in providing the IT infrastructure, including database leading software manufacturers. It provides centers, to both the public administration and general infrastructure solutions for computer and business sector. In addition, the company is a provider communication systems. The company is also of IT software and services for small and mid-sizes engaged in hardware distribution and, through its companies as well as the local administration. subsidiary John Bryce, it runs training and DahliaMatic Sp. z o.o. qualification centers offering professional courses and trainings for IT personnel The company was established on the basis of a subsidiary of listed company Infovide Matrix, which Sapiens International N.V. was acquired by Asseco Poland in 2015. DahliaMatic This company is listed on the American NASDAQ received from that subsidiary divisions responsible for (NASDAQ: SPNS) and on the Israeli TASE. It is a leading integration services and third-party software global provider of software solutions for the insurance implementation. In 2016, the company was industry. Sapiens operates in the US, Western Europe, strengthened by the general business division of Scandinavua, South Africa and Asia. Asseco Poland due to similar operation profiles. As a result, a competence center was established in Asseco The company offers comprehensive solutions for all Group which deals with the implementation of segments of the insurance market: for the life business software and third party solutions - primarily insurance segment, pension programmes, property SAP, Oracle and Microsoft. insurance, reinsurance, as well as supporting software for decision-making process in financial institutions.

Sapiens offers both global solutions and software Israeli market tailored to specific markets, such as the US. Holding Formula Systems Ltd is responsible for Asseco Magic Software Ltd. Group's operations in the Israeli market. The holding includes three operating companies:

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

This company is listed on the American NASDAQ (NASDAQ: MGIC) and on the Israeli TASE. South Eastern European market Technologies offered by Magic Software accelerate the processes of building and deployment of business In the South Eastern European market, Asseco Group applications that can be easily adapted to current and is represented by Asseco South Eastern Europe, which future demands or integrated with the customer's comprises from several companies operating in legacy enterprise systems. Serbia, Croatia, Montenegro, Bosnia and Hervegovina, Albania, Bulgaria, and . Magic Software provides services taking a code-free approach, allowing users to focus on developing Asseco South Eastern Europe S.A. business applications and support existing IT This company is listed on the Warsaw Stock Exchange resources in order to increase business capabilities. (WSE: ASE) and is the parent of Asseco South Eastern Europe Group. It was created by integrating the Central European market competence, experience, know-how, software solutions and customer base of many South Eastern In the Central European market, Asseco Group is European companies, each being a leader in its represented by Asseco Central Europe a.s. group. Its market segment. From the beginning of its key entities are the following companies: operations, it has focused on the development of proprietary IT solutions. Asseco South Eastern Europe . Asseco Central Europe a.s. Słowacja and Asseco runs its business operations in three major segments Central Europe a.s. Czechy of the IT market: solutions and services for the . Asseco Solutions Group banking sector, payment solutions and integration services. . Interway a.s. and exe a.s.

In addition, the group consists of smaller companies, which focus on the healthcare sector (ACE Western European market Magyarorszag) and the payment industry (DanubePay). Asseco Group's operations in the Western European Asseco Central Europe, a.s. market are focused around the companies operating Asseco Central Europe is the leading company in the in the Iberian Peninsula and in Northern Europe. Key group, which operates mainly in the Slovakian and companies operating in that regions incluse: Czech markets. It provides comprehensive IT solutions . Asseco S.A. and services for international financial institutions, for . Exictos SGPS S.A. the private sector enterprises, as well as for the public . Necomplus institutions of central and local administration. Its product portfolio comprises information systems for In addition, companies operating in the Scandinavian banks, insurance companies and construction firms, and Baltic regions play an important role. Asseco card transaction systems, healthcare information Denmark and Peak Consulting are companies systems, data warehouses, Business Intelligence and providing consulting services and software for the e-Commerce solutions, reporting systems, and turn- biotechnology industry. In turn, Asseco Lietuva UAB is key projects the leading software manufacturer and information systems integrator in . Asseco Solutions Group Asseco Spain S.A Asseco Solutions Group is a manufacturer of high end Enterprise Resource Planning (ERP) software for mid- This company is a provider of modern IT sized and large enterprises, primarily in the infrastructure consulting services, security solutions, manufacturing and service sectors. The group human resources management solutions, outsourcing operates primarily in the Slovak and Czech markets, as services, as well as fully comprehensive IT support. well as in German-speaking European countries ExictosSGPS S.A. (Germany, , Switzerland). Portuguese company offering IT services and InterWay a.s iExe a.s. providing software to the general business and Two companies from ACE group which focus on banking sectors. Its main markets are Portuguese- integration services, localization services, the sales of speaking countries in Africa – Angola and IT infrastructure and related software. Mozambique. Necomplus S.L

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

This Group is engaged in the provision of electronic payment solutions (POS), self-service solutions as well as professional Call Center technologies.

Eastern European market In the Eastern European market, Asseco Group is represented by two companies controlled by Asseco Poland - Asseco Georgia LLC and Asseco Kazakhstan LLP. They offer diversified services for the public administration and financial sector. In addition, R-Style Softlab (49% of its stake is controlled by Asseco Poland) operates in the Eastern European market - it is a Russian producer of software for banks.

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 Organizational Structure of Asseco Group

Asseco Poland S.A.

Polish market Western European market Eastern European market South Eastern European market

Asseco Enterprise Solutions, a.s. KKI-BCI Sp. z o.o. * Asseco Western Europe S.A. Peak Consulting Group ApS R-Style Softlab JSC Asseco South Eastern Europe S.A. B) Poland Poland Denmark Russia Poland 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 73.68/70 (73.68/70) 49/49 (100/100) 51.06/51.06 (55.34/55.34)

Asseco Business Solutions S.A. Podkarp. Fund. Nieruchomości Sp. z o.o. Necomplus, S.L. Asseco Danmark A/S R-Style Softlab Kiev South Eastern European market Poland Poland Spain Denmark Ukraine 46.47/46.47 (46.47/46.47) 100/100 (100/100) 65/65 (65/65) 62.25/55 (62.25/55) 99/99 (99/99) Central European market

Macrologic S.A. Park Wodny Sopot Sp. z o.o. Necomplus Serveis Andorra, S.L. Sintagma UAB Asseco Kazakhstan LLP Asseco Central Europe, a.s. A) Poland Poland Andorra Lithuania Kazakhstan Slovakia 96.43/88.29 (0/0) 100/100 (100/100) 33.33/33.33 (33.33/33.33) 96.94/96.94 (96.94/96.94) 51/51 (51/51) 92.81/92.81 (99.32/99.32)

Retilia Sp. z o.o. Aquapark Sopot Sp. z o.o. Necomplus Portugal Lda. Asseco Lietuva UAB Asseco Georgia LLC Central European market Poland Poland Portugal Lithuania Georgia 100/100 (0/0) 100/100 (100/100) 100/100 (100/100) 96.94/96.94 (96.94/96.94) 51/51 (51/51) Israeli market

Gladstone Consulting Ltd Gdyoski Klub Koszykówki Arka S.A. Necomplus Dominicana, Srl CodeConnexion Ltd. Formula Systems (1985) Ltd. Cyprus Poland Dominican Republic Sri Lanka Eastern European market Israel 100/100 (100/100) 36.78/36.78 (0/0) 100/100 (100/100) 45/45 (45/45) 46.33/46.33 (46.33/46.33)

SKG S.A. Asseco Software Nigeria Ltd Necomplus Colombia SAS Exictos SGPS S.A. Matrix IT Ltd. Poland Nigeria Colombia Portugal Israel C) 60/60 (60/60) 51/51 (51/51) 90/90 (90/90) 69.4/69.4 (69.4/69.4) 49.50/49.50 (50.01/50.01)

ZUI Novum Sp. z o.o. DahliaMatic Sp. z o.o. Necomplus PERÚ SAC Portexictos S.A. Magic Software Enterprises Ltd. D) Poland Poland Peru Portugal Israel 51/51 (51/51) 100/100 (100/100) 90/90 (90/90) 100/100 (100/100) 47.17/47.17 (47.26/47.26)

Asseco Data Systems S.A. Solver Sp. z o.o. T EMPLEAMOS ETT, S.L. LebaTechnology S.A. A - Group structure presented in chart A Sapiens International Corp. NV E) Poland Poland Spain Angola B - Group structure presented in chart B Curaçao 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 99.86/99.86 (99.86/99.86) C - Group structure presented in chart C 48.71/48.71 (48.85/48.85) D - Group structure presented in chart D Modulus Sp. z o.o. IMX tow Asseco Spain S.A. Mzexictos Lda. E - Group structure presented in chart E Insync Staffing Inc Poland Ukraine Spain Mozambique USA 50/50 (50/50) 100/100 (100/100) 70.32/70.32 (70.32/70.32) 90/90 (90/90) 90/90 (90/90)

Postdata S.A. Valorista S.L.U. Cvexictos Lda. Michpal Micro Computers (1983) Ltd Poland Spain Republic of Cape Verde Israel 49/49 (49/49) 100/100 (100/100) 90/90 (90/90) 100/100 (0/0)

Logis IT S.L.U. TSG IT Advanced Systems Ltd. Spain Israel 100/100 (100/100) 50/50 (50/50) * company in liquidation Random Centro de Informática, S.A.U. subsidiary company Spain associated company 100/100 (100/100) joint venture Israeli market

Polish market Western European market 100/100 voting rights / equity interest as at 30 June 2017 (in %) (100/100) voting rights / equity interest as at 31 December 2016 (in %)

The complete organizational structure of the Group and changes that took place in the reporting period are presented in item III of Supplementary Information to the consolidated financial statements of Asseco Group for six months ended June 30, 2017.

.

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

TARGET MARKETS, BUSINESS SECTORS AND PRODUCT PORTFOLIO OF ASSECO GROUP

Target markets by geographical regions Asseco Group has identified six geographical markets The Group’s companies located in Israel conduct where the Group companies conduct their business business in over 50 geographical markets in the world. operations, including Poland, Israel, Central Europe, The most important regions include Israel, Northern South Eastern Europe, Western Europe, and Eastern America, Western Europe and the Middle East. Europe.

Western Western Poland Europe Europe Poland PLN 714.9m South PLN 296.0m PLN 290.3m PLN 835.3m 17% Eastern 7% Eastern 7% 22% Europe Europe PLN 282.8m PLN 34.3m 7% 1% Central South Europe Eastern PLN 372.4m H1 2017 Europe H1 2016 9% PLN 260.0m 7% Eastern Central Israel Europe Israel Europe PLN PLN 7.7m PLN PLN 330.1m 2,053.4m 0% 2,512.0m 9% 54% 60%

*Including PLN 23.8m in revenues between segments

Israel and Poland remain two key geographical regions the levels from the corresponding period in 2016 - 9% for Asseco Group’s operations. In the first half of 2017, when it comes to Central Europe and 7% when it the share of the Polish market in the revenues dropped comes to South Eastern and Western Europe each. In to 17% due to lower annual sales. At the same time, turn, the share of Eastern Europe in the Group’s total Asseco Group’s companies located in Israel increased revenues dropped in the reported period due to the their sales and the share in the Group’s total revenues change of the consolidation method in R-Style Softlab to 60%. The revenues generated by Central, South as a result of ownership changes. Eastern and Western European markets remained at

Operations by sectors

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

General Public Public General business administratio administratio business PLN n n PLN 1,691.9m PLN 857.6m PLN 775.5m 1,531.8m 41% 20% 20% 41%

H1 2017 H1 2016

Banking and Banking and finance finance PLN PLN 1,612.5m 1,463.3m 39% 39% *Data excluding sales between segments *Data excluding sales between segments

Banking and finance The Group's portfolio features core insurance systems and a variety of specialized solutions, including billing Banks - - production of banking software is one of the and collection systems, applications supporting claim key businesses of the majority ofAsseco Group settlement processes, reinsurance, co-operation with subsidiaries. Both regional and international agents, and detection of insurance frauds. We also expansion of our Group is largely dependent upon provide tools enabling insurance companies to fulfill continuing development and further improvement of the requirements of Solvency II. IT solutions tailored to meet the banking sector's growing expectations from information technology. The Group's flagship insurance industry products are ALIS, IDIT, and INSIGHT systems which are offered by The Group's flagship product for the banking sector is our Israeli Sapiens group. In turn, Asseco Central def3000, a comprehensive IT system developed by Europe offers its own StarINS software suite. Asseco Poland. In addition, we offer dozens of specialized ready-to-implement solutions, requiring To complement the above described banking and only some adaptation to specific operations of a insurance industry competencies, Asseco is also a particular institution. provider of all-in-one IT solutions for brokerage houses, investment funds, as well as for leasing and Comprehensive banking systems are also offered by factoring companies. other companies of our Group. Asseco Central Europe, marketing its proprietary StarBANK solutions, Public institutions has gained a strong position in the Slovak market for Asseco Group is the largest IT provider for the public banking industry software. Asseco South Eastern administration sector in Central Europe and one of the Europe offers core banking systems, payment leading players in that market in Israel. The Group gateways, business intelligence solutions, and supplies the largest and most complex projects at the customer relationship management (CRM) solutions, central level, in the defense sector, as well as smaller and is engaged in the installation and maintenance of solutions at the local level and in the healthcare sector. ATMs and POS terminals. Central level - Asseco Poland develops and Insurance - Asseco Group companies boast many implements software solutions for public years of experience in the provision of comprehensive administration in the areas that cannot be supported software solutions for major global insurance by ready-made tools. These are mostly complex companies. Sapiens International, the Group's systems with powerful functionality suitable for competence center in that field, is the second-largest processing of large data volumes. Asseco Poland has software provider for the insurance sector in the got vast experience in the execution of complex IT world. Asseco Group companies boast many years of projects for the public administration. The largest experience in the provision of comprehensive information technology project in Poland - the software solutions for major global insurance Comprehensive Information System of the Social companies. Insurance Institution - has been implemented by Asseco. The companies from the group of Asseco

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Central Europe also have a long track record of Group's portfolio for the healthcare sector is cooperation with the institutions of central complemented with Hungarian GlobeNet solutions. In administration. For years, they have been offering turn, the Israeli center of innovation develops high quality solutions and services to the Ministry and pioneering IT solutions for the largest medical centers Finance, the Ministry of Interior Affairs and the in the world. These include Tanit, which meets the equivalent of the Polish Supreme Audit Office (NIK) in specific needs of hospital management. Slovakia. In turn, Matrix IT is one of the key partners General business of the Israeli government. Telco & Utilities - Asseco Group offers comprehensive We also have broad competences and experience in the security sector. As the only IT company from proprietary solutions that are capable of handling multi-million customer databases and are customized Central and Eastern Europe, we have executed over 50 for the specific needs of telecommunication, media, prestigious projects for the EU and NATO agencies, including the EU border protection system for the energy, gas and utility enterprises. Over a 20-year Frontex agency. Our competences in the security field long presence of our solutions in this sector resulted in strategic partnerships with many major companies are strengthened by Israeli company TSG IT Advanced in Europe, which appreciate Asseco specialists' in- Systems, associated with Formula Systems. It is an important supplier of software and services to the depth professional knowledge and experience, just as Israeli defense and interior ministries. the quality of our solutions. Our product portfolio dedicated to the Telco & Experience gained during the implementation of Utilities sector includes billing systems, fraud projects for international institutions allowed the Company to move from the position of a service detection systems, sales and CRM applications, portal applications, data warehouses, BI tools, and many provider to the position of a supplier of solutions and more. The product portfolio is supplemented with products. Over the past two years, the Company has invested in the development of innovative solutions in technical infrastructure and asset management the areas of: unmanned platforms, examination and systems, and GIS/NIS solutions. data analysis, command support systems, satellite Asseco Poland has, for many years, been one of the solutions and cybersecurity. key providers of billing systems to Orange Poland. Our Local governments – In cooperation with other software solutions are also used by other mobile and companies from the Group, Asseco Poland provides fixed-line operators, as well as by media companies, including Grupa ITI. Moreover, our solutions are proprietary IT solutions for all levels of local utilized by major energy holdings operating in Poland, administration. A significant advantage of our software is that it can be easily integrated with specialized tools such as Tauron, PGNiG, Enea and PGE. such as digital maps or metropolitan networks. At the same time, Asseco Central Europe specializes is technical infrastructure management systems for Healthcare – Asseco Group continues to build its market leadership in the provision of IT solutions for all network enterprises, while Asseco South Eastern types of medical facilities. Our solutions are used by Europe delivers IT solutions to many leading telecom operators in the region. hundreds of major hospitals and most clinics in the region of Central and Eastern Europe. Asseco's services ERP solutions – Asseco Group offers a full range of include professional consulting on the design, state-of-the-art ERP systems for small, mid-sized and implementation and maintenance of information large companies. All of them are fully integrated systems for health insurance companies, and the software packages designed to support enterprise provision of comprehensive solutions for hospitals and management processes. Owing to their diversified clinics. Asseco delivers patient service solutions, functionality and module-based structure, our contract settlement systems as well as facility solutions can be utilized in virtually every industry. management solutions. Moreover, the Group has departments specializing in The Group's flagship product is AMMS (Asseco Medical the implementation, development and industry Management Solutions), Asseco Poland's adaptation of ERP systems based on the technologies of Oracle, SAP and Microsoft. comprehensive package of information systems designed to help manage large and medium-sized One of the Group's subsidiaries operating in the Polish hospitals, polyclinics, medical centers, outpatient market is Asseco Business Solutions (ABS), which clinics and emergency departments. Asseco Central specializes in ERP systems to support the Europe also provides a proprietary healthcare management of small and mid-sized enterprises. information system, which is called Mediform. The Depending on the client's preferred technology, ABS

18

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 may offer Asseco SAFO based on Oracle technology, or Asseco SOFTLAB ERP using Microsoft technology. In addition, Asseco Central Europe developed a proprietary ERP solution which has been implemented by its Asseco Solutions subsidiary. Also, a German company of AssecoSolutions has competences in the field of ERP. Furthermore, Asseco Group provides consulting and implementation services covering SAP, Oracle, and Microsoft Dynamics AX solutions.

19

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 Product portfolio - sectors

Banking and finance Public institutions General business

. Banks . Central administration . Telecommunications . Insurance . Local administration . Municipal utilities . Brokerage houses . Healthcare . Energy industry . Investment funds . International organizations . Gas industry . Leasing companies . Social insurance . Manufacturing, trade and services . Factoring companies . Uniformed services . FMCG . Education . Multimedia

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Product portfolio of Asseco Group

Proprietary Proprietary software and software and services services PLN PLN 3,391.4m 3,019.7m 81% 80%

Other Other PLN 1.6m PLN 2.4m 0% H1 2017 H1 2016 Third party Third party software software PLN 321.5m PLN 322.0m 8% 9% Hardware Hardware PLN 447.5m PLN 426.5m 11% 11%

*Data excluding sales between segments

Asseco Group is focused on providing customers with . Standard software packages proprietary solutions in the form of software and We also provide standard software packages for services. Third-party software and IT equipment are thousands of small and mid-sized companies. With no provided only when necessary. As a result, the need for customer-tailored products and at an Company offers its customers top-class solutions affordable cost, firms can use Asseco’s out-of-the-box tailored to their needs. software to support their routine enterprise . Dedicated software solutions management functions. A good example of a standard software package is Magic xpa – a platform for creating Asseco Group is the most experienced Polish IT and developing applications. company when it comes to the execution of large-scale and complex IT projects, implemented to individual . Cloud computing solutions customer needs. A good example of Asseco’s Small and mid-sized enterprises can use our IT competence in this area is the IT project implemented solutions available over the Internet. With a minimum for the Social Insurance Institution (ZUS), the largest in of effort and cost and maximum benefits, our the history of our country. The Comprehensive customers may take advantage of our knowledge and Information System handles more than 24 million experience without investing large sums of money in IT unique accounts and is used by over 30 thousand users infrastructure or a team of IT experts. Major clients for on a daily basis. The Comprehensive Information cloud-based e-banking systems delivered by Asseco System of ZUS won the main prize in the “eEurope Poland are cooperative banks operating in Poland. Awards for eGovernment – 2005” competition, which was organized by the European Institute of Public Administration (EIPA), working under the auspices of the European Commission. The ZUS’s CIS was awarded for the creation of optimum environment for successful implementation of a public administration project. . Comprehensive solutions for business sectors We offer comprehensive IT packages that are customized to individual needs of large and mid-sized companies virtually from every sector of the economy. In this category, our product portfolio includes comprehensive systems dedicated to the banking sector (Asseco def3000), power industry (AUMS), healthcare (AMMS), as well as for brokerage houses (Promak) and the insurance sector (IDIT, ALIS).

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

MAJOR EVENTS WITH IMPACT ON FINANCIAL PERFORMANCE OF ASSECO CAPITAL GROUP IN 2016

Polish market January-June period was by 13.9% lower than in the corresponding period in the previous year and In the first half of 2017, the sales revenues generated amounted to PLN 2.46 billion. The positive signal for in the Polish market dropped by 14.4% on annual the market was the fact that in June, the value of basis to PLN 714.9 million. In turn, in the same period, concluded contracts increased by 76% on monthly operating profit in the market went down by 24.9% to basis. PLN 98.6 million. Asseco Poland's revenues were negatively affected Above all, the situation in the Polish market was by the reduction of development works for the Social affected by Asseco Poland's lower sales, which, Insurance Institution (ZUS), stagnation in the however, was to a large extent offset by higher announcement of new tenders in the previous revenues recorded by the Group's other companies quarters, and the decision of the Agency for operating in Poland: Asseco Business Solutions, Restructuring and Modernization of Agriculture among others. (ARiMR) to select other company's offer for the maintenance of the IT system which manages direct In the financial institutions segment, Asseco Group payments to farmers. In spite of this, in the first continued the cooperation with the largest bank in months of this year, Asseco Group's companies the region - PKO BP - as well as with other key clients. Works on the export sales of the solutions dedicated signed several new contracts - with the City of Łódź to implement the ERP system, with the Sejm to to commercial banks, including def3000 and Asseco modernize the voting system, and with the Main CBP software family, resulted in signing an agreement to implement the Def3000 Treasury Office of Geodesy and Cartography (GUGiK) to implement spatial information management and system in the Austrian branch of the Russian analysis systems, among others. In addition, Asseco Sberbank. In the , Asseco Group will Poland will provide unmanned photogrammetric implement Internet banking based on the Asseco CBP software for an international client. Apart from works systems, operated by the Asseco Ground Control Station, to the Nigerian administration. for commercial banks, the Group also continues its broad partnership with cooperative banks. In the first In the general business sector, a cooperation was half of the year, implementations in the cooperative continued with key clients in the telecommunication banks in Skierniewice and Poddębice were segment, including , T-Mobile and conducted. Polkomtel. In the utilities segment, a cooperation was expanded with the Ethiopian energy sector. Asseco Poland is a leading provider of solutions for entities operating in the Polish capital market. In the In the first quarter, sales revenues in the Polish reporting period, the company continued the market were positively affected by higher sales of cooperation with key customers, and its extensive Asseco Business Solutions, which was boosted by experience in this area resulted in signing an increasing demand for the ERP solutions from Polish agreement with the Warsaw Stock Exchange (GPW) and foreign companies. In the first half of the year, for the implementation of the PROMAK TS system. In the revenues of the company increased by 11% addition, in the first half of the year, intensive work thanks to dynamic increase in foreign sales, which in was undertaken to adapt the PROMAK solutions the January-June period was by 33% higher than in family to the requirements of the EU MIFID II the corresponding period in the previous year. In the Directive, which will enter into force in 2018. Due to domestic market, Asseco BS increased its revenues the imminent implementation of the Directive, the by 8%. increased demand for IT services among brokerage In June, Asseco Business Solutions finalized the houses is expected in the second half of the year. takeover of Macrologic S.A. - a producer of the ERP The first six months of 2017 did not bring any software, which specializes in solutions for improvement in the public administration segment. production companies. As a result of the call to sell The value of announced and settled contracts shares, Asseco BS acquired 88.3% of Macrologic's remained below the previous years' levels. According shares for PLN 98.4 million. After the deal, Asseco BS, to data gathered by the Polish Chamber of along with Macrologic S.A., controlled 96.7% shares Information Technology and Telecommunications of the company, which enabled a forced buyout of (PIIiT), the value of public contracts concluded in the minority shareholders in July 2017. The deal was

22

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 concluded on July 24, 2017. The consolidation of A dynamically changing environment and new trends Macrologic S.A. will affect the company's results from in the high technology market require continuous the third quarter of 2017. investments in research and development (R&D). In response to customer expectations, in the first Israeli market quarter, Magic Software started its investment in the St. Petersburg R&D center, which will focus on the In the first half of 2017, the sales revenues generated development and expansion of the functionalities of in the Israeli market increased by 22.3% on annual key products - the xpi integration platform and xpa basis to PLN 2,512 million. In turn, in the same environment application. period, operating profit in that market went down by Thanks to Magic Software's fast growth of revenues 20% to PLN 127.6 million in the first half of the year, the management board of An increase in revenues, as compared to the the company raised its full-year revenue forecast to corresponding period in the previous year, was a USD 245 million - 255 million, assuming stable result of dynamic increase in the scale of operations exchange rates. Previously, the management of the largest companies from the Formula Systems expected annual revenues of USD 225 million - 230 group. million. The revenues of Matrix IT, a leading IT company in Sapiens International, a global leading provider of IT Israel, increased in the first half of the year thanks to software and services for the insurance sector, improvement in key operating segments: the sales of continued its double-digit revenue growth in the first proprietary solutions and software in Israel, half of the year, but that did not translate into integration services and the sales of software in the operating profit. The company's lower operating US. profit is a result of a dispute with one of the key In the Israeli market, the company benefits from clients and, in consequence, halting the ongoing growing demand for IT solutions among key clients in implementation process. In the second quarter, the financial and public administration sectors. Sapiens concluded an agreement with the client Despite unfavorable changes in the foreign exchange under which the parties waived any mutual financial market (strengthening of NIS versus USD), the sales claims. In addition, the parties agreed that the of software in the US market significantly exceeded company from Asseco Group would retain copyrights the levels recorded in the first half of 2016. The for the solutions developed for the client, which growth is linked to growing demand for security, opens the way for their potential commercial use in anti-fraud and compliance solutions in the financial the future. sector. In turn, increased interest in cloud-based At the end of the first quarter, Sapiens International solutions in the Israeli corporate sector, as well as finalized an agreement to buy the US software strategic partnership with leading providers of such developer StoneRiver for nearly USD 100 million. The services (Microsoft, Amazon, Google) translates into aim of the acquisition is to strengthen the market higher sales of integration services. position of Sapiens in the US and increase its stake in Magic Software, a company providing technology the largest US insurance companies. In addition, in solutions to the corporate sector, also significantly the first months of 2017, Sapiens signed several improved its financial results over the reporting significant contracts with new customers, including a period. The company significantly increased the leading Scandinavian insurer for the modernization scale of its operations both through organic growth and implementation of the company's solutions for and acquisitions. In the previous year, Magic USD 30 million and the South African financial acquired software provider for the medical sector, company Alexander Forbes for the implementation Roshtov Software, among others. In addition, of the company's entire range of solutions. revenues were boosted by an intensified process of Due to lower operating results, in the second renewal of long-term licenses (3-5 years) by the quarter, Sapiens introduced a cost-cutting and company's largest clients and by expanding its client restructuring programme for 2017, with a planned base. In the first quarter, agreements were signed to cost of approximately USD 5 million. The program implement the xpi integration platform with Swiss invovles employment reduction, integration of the security system and locks producer Assa Abloy AG, back office processes of Sapiens and Stoneriver and a Japanese pharmacy chain Aisei Pharmacy and withdrawal of some secondary products from Asia. In international shipping group DB Schenker, among the second quarter, the company already incurred others. USD 2.7 million in costs, and remaining costs, mainly related to the withdrawal of some products in the

23

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Asian markets, will be incurred in the second half of by the last year's acquisition of e-Mon - a company the year. offering Internet solutions to the banking sector in Montenegro. After the first half of the year, Sapiens International kept its revised full-year forecast of revenues at USD Significantly higher revenues in the payment 265 million - 275 million with operating margin (non- segment are a result of the takeover of Chip Card in GAAP) at 10% for whole 2017. April 2016 and the finalization of several contracts for outsourcing of services and delivery of Central European market equipment in the first half of the year (a significant number of ATMs in Croatia and POS terminals in In the first half of 2017, the sales revenues generated Romania). Asseco SEE also increased revenues from in the Central European market increased by 12.8% handling and authenticating transactions. The on annual basis to PLN 372.4 million. In turn, in the revenues in the integration segment remained at same period, operating profit in that market went up the levels close to the first half of 2016. Higher by 14.9% to PLN 30.8 million. revenues in the banking and payment sectors Asseco Central Europe Group took advantage of resulted in higher (62.3%) share of the sales of stronger demand for ERP solutions in the region, proprietary software and services in the total sales mainly in German-speaking countries, and increased than in the previous year (60.7%). revenues and operating profit in this segment. The Higher operating profit in the first half of the year is situation improved in the Slovakian public above all a result of increased profitability in the administration sector and in the Czech Republic, banking segment when compared to the previous where Asseco CE implemented contracts for the year (when the result was lowered by cost National Health Fund, the Ministry of Finance and reserves). Higher profitability of the segment is also the Home Affairs Ministry, among others. The a result of several implementation projects in the implementation of the lighting management system first half of 2017, primarily in the mobile solutions in the Austrian capital also continued. segment. The fact that the pace of the improvement During the reporting period, Asseco CE, in of the operating result in the payment segment is cooperation with Asseco Poland, started cooperation lower, when compared to revenues, is above all a with a new client in the financial sector - a branch of result of higher share of equipment delivery and the Russian bank Sberbank in the Czech Republic, as outsourcing in revenues. Thanks to optimization well as with energy utility and natural gas provider efforts and increased sales of proprietary software, Prazska Plynarenska, in which the company will the operating profit in the integration segment implement the TOMS asset management software. increased. In addition, in the second quarter, the company Western European market signed several contracts for the implementation of solutions in the public and financial sector in In the first half of 2017, the sales revenues Vietnam. generated in the Western European market increased by 2% on annual basis to PLN 296 million. South Eastern European market In turn, in the same period, operating profit in that market went up by 16.9% to PLN 25.6 million In the first half of 2017, the sales revenues generated in South Eastern European market The increase in revenues of Asseco Group in the increased by 8.8% on annual basis to PLN 282.8 Western European market was driven by higher million. In turn, in the same period, operating profit sales in Spain, where delivery of parcel stations and in that market went up by 29.5% to PLN 30.7 shipping points to Azkoyen and Correos mail million. operator continued. In the second quarter of 2017, cooperation with high quality mobile equipment Higher revenues are a result of increased scale of suppliers (including Apple) was expanded to operations in the key areas of Asseco South Eastern increase revenues from this segment. Growth was Europe's operations: the banking and payment also recorded in Northern Europe, mainly thanks to services. At the same time, the company managed expanding the scope of work for existing clients and to maintain stable revenues in the integration acquiring new contracts, for example in the public segment. The sales in the banking segment was administration segment. boosted by mobile solutions implementations in Croatia. The segment's revenues were also boosted Portuguese Exictos, which provides solutions to the financial sector in Portuguese-speaking African

24

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 countries, continued working with its existing clients - it implemented a package of programmes (core Banca system, Financa software, mobile and internet banking) in Banco Prestigio and Banco Pungo Andongo in Angola. In the second quarter, Exictos signed new contracts with banks in the region for the implementation of new systems and the modernization of existing solutions. In the first half of the year, the company's revenues were under pressure due to low commodity prices on global exchanges, which translated into lower capital expenditures in the African market. In addition, Exictos's revenues were negatively affected by a decision to withdraw from the implementation of third-party ERP systems.

Eastern European market In the first half of 2017, the sales revenues generated in the Eastern European market dropped by 77.6% on annual basis to PLN 7.7 million. In turn, operating loss in that market reached PLN 3.3 million. A significant drop in the revenues generated in the Eastern European market is a result of the change of the consolidation method of the financial results of R-Style due to the sales by Asseco Poland of 51% per cent of shares in that company in the first quarter of 2017 (Regulatory Filing No. 3/2017).

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

FINANCIAL INFORMATION OF ASSECO GROUP

Financial results In the first half of the year, Asseco Group increased PLN 2.1 billion. In turn, the sales of proprietary revenues on annual basis. Above all, sales went up in software and services went up by 10.6%. foreign markets, whose share in consolidated As in the first half of the year, in the second quarter, revenues increased to 83%. the Group's operating profit dropped - by 18.2%, On the other hand, in the reporting period, Asseco which was higher rate than in the first half of the Group's operating result and net profit dropped. year. Net profit attributable to shareholders of the Significant disproportion between operating result parent company dropped to PLN 52.4 million in the EBIT and net profit attributable to shareholders of same period. the parent company is above all a result of significant The table below presents selected consolidated stake of minority shareholders in subsidiaries, mainly financial results for the period of 3 months ended in the Formula Systems group. June 30, 2017 and the comparable period. The table below presents key consolidated financial 3 months 3 months Change results for the period of 6 months ended June 30, mPLN ended June 30, ended June 30, (%) 2017 and the comparable period. 2017 2016* 2,093.7 1,926.2 8.7% 6 months 6 months Revenues Change ended June ended June mPLN (%) 30, 2017 30, 2016* Proprietary software and service 1,689.9 1,528.1 10.6%

Revenues 4,162.0 3,770.6 10.4% Gross profit/(loss) on sales 426.0 444.9 (4.2%)

Proprietary software and service 3,391.4 3,019.7 12.3% Selling costs (122.2) (117.8) 3.7%

Gross profit/(loss) on sales 874.7 887.0 (1.4%) General and administrative (158.2) (153.9) 2.8% expenses Selling costs (248.2) (231.2) 7.4% Other operating activities (1.6) 2.9 - General and administrative (311.0) (294.4) 5.6% expenses Operating profit 144.0 176.1 (18.2%) Other operating activities (6.3) 0.3 - Net profit attributable to 52.4 76.9 (31.9%) Operating profit 309.2 361.7 (14.5%) Shareholders of the Parent Company Net profit attributable to Shareholders of the Parent 113.3 142.4 (20.4%) EBITDA 222.3 247.9 (10.3%) Company *Data restated EBITDA 468.6 505.7 (7.3%) EBITDA = EBIT + depreciation and amortization

*Data restated EBITDA = EBIT + depreciation and amortization In the second quarter, as in the first half of the year, the revenues of Asseco Group increased - by 8.7% to

26

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

The following table presents the key financial results generated by our various geographical segments in the period of 6 months ended June 30, 2017.

Financial results of key geographical segments, 6 South Eastern Central Europe Western Eastern Europe months ended June 30, 2017 Poland Israel Europe (in millions of PLN) Europe

Sales revenues * 714.9 2,512.0 372.4 282.8 296.0 7.7

EBIT 98.6 127.6 30.8 30.7 25.6 (3.3)

EBIT margin 13.8% 5.1% 8.3% 10.9% 8.6% (42.9%)

Adjusted EBIT 107.6 178.3 31.4 30.7 28.6 (2.6)

Adjusted EBIT margin 15.1% 7.1% 8.4% 10.9% 9.7% (33.8%)

EBITDA 143.4 206.9 40.4 49.9 32.7 (2.2)

EBITDA margin 20.1% 8.2% 10.8% 17.6% 11.0% (28.6%)

CFO BT 64.2 214.1 7.4 26.7 28.6 (2.8)

CAPEX (21.1) (36.7) (8.6) (26.7) (17.7) (0.2)

FCF 43.1 177.4 (1.2) - 10.9 (3.0)

Cash conversion rate 40.1% 99.5% -3.8% 0.0% 38.1% -

Cash and cash equivalents at the end of 65.5 757.7 86.8 103.8 58.7 6.9 period Interest-bearing debt at the end of (383.1) (1,144.3) (9.5) (40.8) (35.1) (0.1) period of which bank loans, borrowings and (301.6) (1,144.1) (9.4) (38.0) (34.3) (0.1) bonds issued of which finance lease liabilities (81.5) (0.2) (0.1) (2.8) (0.8) -

*Revenues generated in individual markets include sales to external customers as well as inter-segment sales EBIT = operating profit Adjusted EBIT = EBIT+PPA+SBP, where PPA means amortization charges on intangible assets recognized in purchase price allocation, and SBP means the costs of share-based payment transactions with employees EBITDA = EBIT + depreciation and amortization CFO BT = cash generated from operating activities, before income tax CAPEX = segment’s capital expenditures for non-current assets FCF = CFOBT – CAPEX Cash conversion rate = FCF/adjusted EBIT

The following table presents the key financial results generated by our various geographical segments in the period of 6 months ended June 30, 2016.

Financial results of key geographical segments, 6 South Eastern Central Europe Western Eastern Europe months ended June 30, 2016 Poland Israel Europe (in millions of PLN) Europe

Sales revenues * 835.3 2,053.4 330.1 260.0 290.3 34.3

EBIT 131.2 159.5 26.8 23.7 21.9 (0.4)

EBIT margin 15.7% 7.8% 8.1% 9.1% 7.5% (1.2%)

Adjusted EBIT 140.3 197.3 27.7 23.7 25.3 1.2

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Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Adjusted EBIT margin 16.8% 9.6% 8.4% 9.1% 8.7% 3.5%

EBITDA 176.8 222.0 35.7 41.5 29.9 2.5

EBITDA margin 21.2% 10.8% 10.8% 16.0% 10.3% 7.3%

CFO BT 64.1 251.2 4.6 22.1 23.7 (3.7)

CAPEX (22.0) (39.5) (5.8) (12.8) (8.2) (0.1)

FCF 42.1 211.7 (1.2) 9.3 15.5 (3.8)

Cash conversion rate 30.0% 107.3% -4.3% 39.2% 61.3% -

Cash and cash equivalents at the end of 82.4 879.2 142.6 90.1 73.6 13.4 period Interest-bearing debt at the end of (352.9) (832.4) (9.1) (45.0) (54.5) - period of which bank loans, borrowings and (247.6) (829.7) (8.9) (42.7) (53.0) - bonds issued of which finance lease liabilities (105.3) (2.7) (0.2) (2.3) (1.5) -

*Revenues generated in individual markets include sales to external customers as well as inter-segment sales ** Data restated in comparison with the consolidated financial statement of Asseco Group for 2015 EBIT = operating profit Adjusted EBIT = EBIT+PPA+SBP, where PPA means amortization charges on intangible assets recognized in purchase price allocation, and SBP means the costs of share-based payment transactions with employees EBITDA = EBIT + depreciation and amortization CFO BT = cash generated from operating activities, before income tax CAPEX = segment’s capital expenditures for non-current assets FCF = CFOBT – CAPEX Cash conversion rate = FCF/adjusted EBIT

28

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Revenues In the first half of 2017, Asseco Group's revenues billion, which was higher rate of increase than total increased by 10.4% to PLN 4.2 billion. The revenues. The sales of third-party software and improvement resulted from higher sales in foreign services decreased in the same period by 0.2%, and markets, mainly among Israeli companies, but also in the sales of hardware and infrastructure increased by the Central European and South Eastern European 4.9%. markets. On the other hand, revenues were In the reporting period, a similar revenue growth was negatively affected by the situation in the Polish recorded in three segments. The fastest growth was market and changes to the Group's structure, which observed in the public administration sector (by were a consequence of the change of the method of 10.6%), followed by the general corporate sector (by consolidation of R-Style. Due to the change in the 10.5%) and the finance and banking sector (by geographical structure of revenues, the share of the 10.2%). Polish market in total sales dropped to 17%, and of the Eastern European market - went down below In terms of geographical regions, Asseco Group 0.5%. recorded the fastest revenue growth in foreign markets, mainly in the Israeli market (by 22.3%). It The below table presents the currency structure of was followed by the Central European market (by the sales in the first half of 2017 and the 12.8%) and South Eastern European market (by corresponding period in 2016. 8.8%). Higher revenues in these markets are above all a result of organic growth and acquisitions made between June 2016 and June 2017. 6 months to 6 months to

June 30, 2017 June 30, 2016 In turn, revenues were negatively affected by the NIS (new Israeli shekel) 36.24% 32.47% situation in the Polish market (a drop by 14.4%), USD (US dollar) 17.35% 15.27% where lower revenues resulted from limiting works EUR (euro) 16.44% 17.34% for the clients from the public administration sector - PLN (Polish zloty) 16.01% 20.98% only partly was that offset by higher revenues in GBP (British pound) 3.38% 2.82% other segments. A significant drop in revenues (by CZK (Czech crown) 1.98% 1.81% 77.6%) in the Eastern European market was a RON (new Romanian leu) 1.78% 1.37% consequence of the sales by Asseco Poland of a 51- RSD (Serbian dinar) 1.54% 1.82% percent stake in R-Style in the first half of 2017, as HRK (Croatian kuna) 1.20% 0.91% well as the change of the consolidation method in R- other currencies 4.08% 5.20% 100.0% 100.0% Style - from a full consolidation to equity method.

The revenues generated by the Group's key segment - the sales of proprietary software and services - increased in the first half of 2017 by 12.3% to PLN 3.4

The table below presents our consolidated sales revenues broken down into individual geographical markets.

General business Banking and finance Public institutions Total*

Polish market 270.9 217.3 226.7 714.9

Israeli market 1,050.2 1,012.6 449.1 2,512.0

Central European market 186.4 56.0 130.1 372.4 South Eastern European market 46.0 213.0 23.7 282.8 Western European market 140.1 125.5 30.3 296.0 Eastern European market 0.5 7.2 0.0 7.7 * Revenues generated in individual markets include sales to external customers as well as inter-segment sales

29

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Profitability In the first half of 2017, Asseco Group's operating 6 months 6 months profit dropped by 14.5% to PLN 309.2 million. The ended June 30, ended June 30, Change 2017 2016 largest drop in operating profit was recorded in the 21.0% 23.5% (2.5) pp Polish (-24.9%) and Israeli market (-20%). In turn, the Gross profit margin Eastern European market generated operating loss 11.3% 13.4% (2.1) pp reaching PLN 3.3 million. EBITDA margin 7.4% 9.6% (2.2) pp Operating profit margin A drop in EBIT in the Polish market is above all a 4.4% 6.6% (2.2) pp result of lower sales due to limited scale of works for Net profit margin the Social Insurance Institution (ZUS) and the Agency for Restructuring and Modernization of Agriculture (ARiMR), among others. In addition, the dynamics of the drop on annual basis was overestimated by the Cash flow reversal of provisions amounting to ca. PLN 13 In the first half of 2017, net cash flows from million in the first half of 2016. A demanding operating activities (CFO) of Asseco Group decreased situation in the public administration market was by 7.5% on annual basis, which was a consequence of partly offset by improving conditions in the banking, lower profit before tax on annual basis and a similar finance and ERP solutions segments. level of income tax paid. Cash flows in the first half of The operating result in the Israeli market was the year were boosted by higher forex exchange negatively affected by Sapiens International's gains on year-on-year basis, with working capital at situation. The company recorded an operating loss of similar level. PLN 8.8 million in the first half of 2017 versus an Negative cash flows from investing (CFI) were operating profit reaching PLN 50.4 million in the first significantly higher, reaching the level of PLN 506.2 half of 2016. The operating loss was a consequence million in the first half of 2017. That was a result of of the end of the cooperation with one of key clients higher acquisition activity: Formula Systems took and ca. USD 2.7 million in restructuring costs over MichpalMicro Computers, Sapiens International associated with this event. Sapiens International is acquired Stoneriver and Asseco Business Solutions forecasting improvement in the second half of the bought Macrologic. year and a return to profitability at operating level. Negative cash flows from financing activities were Lower results in the Israeli and Polish markets were reduced to PLN 229.8 million in the first half of 2017 partly offset by an improvement in EBIT in the thanks to higher financing inflow resulting from Central European (up by 14.9%), Western European borrowings for the acquisitions. In the reporting (up by 16.9%) and South Eastern European (up by period, the most significant financing outflows 29.5%) markets. included the payment of dividend reaching almost Lower operating profit, along with higher PLN 250 million and the repayment of borrowings consolidated revenues in the first half of 2017, and loans. translated into a drop in operating profit margin (by As a result of these cash flows in the first half of 2.2 percentage points) and EBITDA profit margin (by 2017, the level of cash and cash equivalents dropped 2.1 percentage points). by the total of PLN 478.7 million at the end of June A drop in operating profit translated into Asseco 2017. Group's lower net profit in the first half of 2017. In addition, the net result was affected by an increase in Statement of financial position financing costs to PLN 94.8 million in the first half of 2017. As a result, consolidated net margin dropped In the analysis of liquidity, Asseco Group uses the to 4.4%. ratio of working capital, defined as the difference between current assets and current liabilities. It represents the amount of capital which is used to finance current assets. In the first half of 2017, the level of working capital dropped due to significantly lower level of current assets in the same period (to PLN 3.79 billion), which was in turn a consequence of lower cash and

30

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

cash equivalents at the end of the reporting period. December 31, June 30, 2017 June 30, 2016 A reduction in current assets was accompanies by 2016 an increase in current liabilities (to PLN 2.65 billion). 33.9% 32.2% 30.0% Total debt ratio A lower level of cash and cash equivalents at the 19.4% 15.9% 15.5% end of June 2017, apart from an impact on the level Debt/equity ratio 16.3% 13.7% 13.4% of working capital, also negatively affected the Debt/(debt + equity) ratio current liquidity ratio (to 1.4) and the quick liquidity Working capital = current assets - current liabilities Total debt ratio = (non-current liabilities + current liabilities) / assets; ratio (to 1.3), as compared to the end of the Debt/equity ratio = (interest-bearing bank loans + debt securities + finance lease liabilities) / equity previous year and the end of June 2016. Debt/(debt + equity) ratio = (interest-bearing bank loans + debt securities + finance lease liabilities) / (interest-bearing bank loans + debt securities + finance lease liabilities Despite a drop versus the level at December 31, + equity 2016 and the end of June this year, the current liquidity ratio remains at the level which is generally perceived as safe (1.2-2). Also the quick liquidity ratio remains significantly above the 1.0 level, which is perceived as secure. Lower cash conversion ratio (i.e. FCF/adjusted EBIT) in the first half of 2017 is a result of lower operating cash flows. As a result, the ratio dropped to 61% at the end of June 2017 from 92% at the end of the previous year. The below table presents key liquidity ratios of Asseco Group as at June 30, 2017 and comparable periods:

June 30 December June 30

2017 31, 2016 2016

Working capital (in millions of 1,146.0 1,835.9 1,612.0 PLN) Current liquidity ratio 1.4 1.7 1.7 Quick liquidity ratio 1.3 1.6 1.6

Absolute liquidity ratio 0.4 0.6 0.5 61% 92% 66% Cash conversion ratio Working capital = current assets - current liabilities Current liquidity ratio = current assets / current liabilities Quick liquidity ratio = (current assets - inventories – prepayments) / current liabilities Absolute liquidity ratio = (cash + short-term bank deposits) / current liabilities

At the end of the first half of the year, the total debt ratio increased due to higher current liabilities (to PLN 2.65 billion), which were a consequence of Asseco Group companies' acquisition activity in the reporting period. An increase in the debt/equity ratio is a result of higher value of current loans and slightly higher value of non-current debt. Both the level of total debt ratio and the debt/equity ratio should be perceived as low, when compared to global standards: 57-67% for total debt and 100% for debt/equity. It is a result of Asseco Group Management Board's conservative financial policy. The below table present Asseco Group's key debt ratios as at June 30, 2017 and comparable periods:

31

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

OTHER INFORMATION ON ASSECO CAPITAL GROUP consolidated financial statement of Asseco Group Non-recurring events with impact on our for the period of 6 months ended June 30, 2017. financial performance Opinion on feasibility of investment plans In the period of six months ended June 30, 2017, there were no non-recurring events with impact on The companies of Asseco Group pay their trade the financial performance, finance and assets' payables, settle the state obligatory charges, and situation or cash flow of Asseco Poland. fulfill their investment obligations on a timely basis. We maintain loan facilities at various banks in order to diversify our sources of financing. The Company Significant events with impact on Asseco Group pays its liabilities from current operating revenues operations after June 30, 2017 which may be supplemented with third party Significant events with impact on Asseco Group financing, in the form of short-term bank overdraft operations that took place after the reporting facilities, bank term loans, borrowings, or capital period, i.e. after June 30, 2017, have been described contributions. in explanatory note 24 to the semi-annual

Asseco Poland S.A. in the capital market

70 Asseco Poland shares in 2017 2450

65 2350

WIG 20 Index (points) 20Index WIG 60 2250

55 2150

50 2050

AssecoPoland shares (PLN) 45 1950

40 1850 January-17 February-17 March-17 April-17 May-17 June-17

Asseco Poland WIG20

2017-01-02 2017-03-31 2017-06-30 Δ 6M

Asseco Poland S.A. (PLN) 54.37 54.30 48.77 -10.30% WIG20 (pts) 1,956.72 2,175.96 2,299.80 17.53% WIG (pts) 51,907.77 57,911.31 61,018.36 17.55%

WIG-Info (pts) 2,169.82 2,359.40 2,287.84 5.44%

For the significant part of 2017, the price of Asseco payment of the company's dividend amounting to Poland shares remained stable, at the level around PLN 3.01 per share. As a result, Asseco Poland's PLN 54 per share. The price dropped after the shares lost 10.3% in the first half of 2017.

32

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

At the same time, the Polish capital market benefited Company's shares info from the improvement of the situation in emerging Total number of shares 83,000,303 markets and more stable political situation in Europe after Emmanuel Macron's victory in the French ISIN PLSOFTB00016 presidential election. Both WIG20 and WIG increased GPW ACP by over 17% so far this year. In turn, the WIG- Reuters ACPP.WA Informatyka sector index, in which Asseco Poland has Bloomberg ACP PW significant share, increased by 5.4%.

Shareholder structure Major Shareholders as at June 30, 2017

Aviva Pension Fund holds 9,384,498 shares representing 11.31% of Adam Góral holds voting rights 8,083,000 shares representing 9.74% of voting rights

PZU Pension Fund holds 4,281,040 shares Other shareholders hold representing 5.16% of 57,080,644 shares voting rights representing 68.77% of Nationale-Nederlanden voting rights Pension Fund holds 4,171,121 shares representing 5.02% of voting rights

In the management board's best judgement, as at the

date of publication of this report, i.e. on August 23, Shareholders Percentage of total Number of shares held 2017, the Shareholders who, either directly or as at June 30, 2017 voting rights through their subsidiaries, hold at least 5.0% of total Aviva OFE2) 9,384,498 11.31% voting rights are as follows: Adam Góral, President of the ) 8,083,000 9.74% Management Board PZU OFE1) 4,281,040 5.16% Shareholders Percentage of total NN OFE4) 4,171,121 5.02% Number of shares held as at August 23, 2017 voting rights Other shareholders 57,080,644 68.77% 2) Aviva OFE 9,384,498 11.31% 83,000,303 100% Adam Góral, President of the 1) In accordance with the regulatory filling no. 38/2010 of June 2, 2010 ) 8,083,000 9.74% 2) In accordance with the regulatory filling no. 02/2012 of January 5, 2012 Management Board 3) In accordance with the regulatory filling no. 51/2012 of December 15, 2012 PZU OFE1) 4,281,040 5.16% 4) In accordance with the regulatory filling no. 21/2015 of October 19, 2015 NN OFE4) 4,171,121 5.02% In the management board's best judgement, as at the Other shareholders 57,080,644 68.77% publication date of the prior report, i.e. on May 25, 83,000,303 100% 2017, the Shareholders who, either directly or 1) In accordance with the regulatory filling no. 38/2010 of June 2, 2010 through their subsidiaries, held at least 5.0% of total 2) In accordance with the regulatory filling no. 02/2012 of January 5, 2012 3) In accordance with the regulatory filling no. 51/2012 of December 15, 2012 voting rights were as follows: 4) In accordance with the regulatory filling no. 21/2015 of October 19, 2015

Shareholders Percentage of total In the management board's best judgement, as at Number of shares held June 30, 2017, the Shareholders who, either directly as at May 25, 2017 voting rights 2) or through their subsidiaries, hold at least 5.0% of Aviva OFE 9,384,498 11.31% total voting rights are as follows: Adam Góral, President of the 8,083,000 9.74%

33

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Management Board) PZU OFE1) 4,281,040 5.16% NN OFE4) 4,171,121 5.02% Other shareholders 57,080,644 68.77% 83,000,303 100%

1) In accordance with the regulatory filling no. 38/2010 of June 2, 2010 2) In accordance with the regulatory filling no. 02/2012 of January 5, 2012 3) In accordance with the regulatory filling no. 51/2012 of December 15, 2012 4) In accordance with the regulatory filling no. 21/2015 of October 19, 2015

Shares held by the management and supervisory personnel

The numbers of Asseco Poland shares held by its management and supervisory staff are presented in the table below:

May 25, June 30, August 23,

2017 2017 2017 Jacek Duch Chairman of the 31,458 31,458 31,458 Supervisory Board Adam Góral President of the 8,083,000 8,083,000 8,083,000 Management Board Tadeusz Dyrga Vice President of the 3,710 3,710 3,710 Management Board The remaining members of the Supervisory Board and Management Board did not hold any shares in Asseco Poland S.A. in any of the above-mentioned periods.

34

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Discussion of significant risk factors and threats Asseco Group constantly monitors major factors taken for granted that the new solutions which are, or posing risk to its operations in order to identify, will be, created or developed by Asseco will satisfy prevent and mitigate their possible effects. For this the technological requirements, and whether they will purpose, the Company has introduced a number of be accepted positively by their potential users.Such management systems as well as control procedures circumstances might have a significant adverse impact and internal audit. In particular, Asseco uses the on the operations, financial position, financial results following systems: and prospective development of Asseco Group. . quality management system; Risk related to consolidation and structural changes . risk management system; in the financial sector . business continuity management system; The finance sector is the place of ongoing . information security management system; consolidation processes. There is a risk that . system monitoring the compliance with the consolidators of this sector will force the acquired law and general standards, as well as the financial institutions to use their global IT solutions, market standards adopted by the Company; which may slow down the process of gaining new . internal control system. contracts or even result in termination of already The systems and smoothly functioning internal audit concluded contracts. In addition, in the finance sector, effectively reduce the negative impact of the there is a growing trend of establishing both IT and following risk factors and threats to the Company's finance services companies (fintechs), whose operations. solutions may be competitive for the products of the Company or may introduce alternative mechanisms of

the functioning of finance companies, which may Risk related to intensified competition affect acquiring new contracts. Such circumstances might have a significant adverse impact on the Business operations of Asseco Group are under the operations, financial position, financial results and pressure of intense competition both from local prospective development of Asseco Group. players and international IT corporations. Competitors with global reach are getting continually stronger as Risk related to carrying out of public tenders they have got faster access to innovative Delays in finalization of the tendering procedures for technological solutions, but also to cheaper sources of delivery of IT infrastructure for the public funds which makes it possible to finance large administration may result in unstable revenues from contracts more efficiently.It is not certain whether the this sector. If combined with unsatisfactory utilization increasing competition will have no significant of the EU funds granted for improving innovation at adverse impact on the Group’s operations, financial public offices, this might substantially reduce the local position, financial results and future development demand for IT services and thereby exert a negative outlook. impact on the operations, financial position, financial Risk related to technological changes in the industry results and prospective development of Asseco and development of new products Group. The IT sector is characterized by rapid development of Risk involved in gaining new contracts new solutions and technologies, which shorten the It is characteristic of the IT business that most of lifecycle of products.Therefore, the future success of contracts of Asseco Group are awarded under Asseco Group will largely depend upon our capability tendering procedures.Therefore, it is not certain that to incorporate the latest technological solutions into the Company will be able to gain such new contracts our products and services.In order to maintain the that would ensure sufficiently high and satisfactory competitive advantage in this market, it is necessary revenues in the future.These factors might have a to conduct research work and to invest in new significant adverse impact on the operations, financial products.Asseco keeps on monitoring the present position, financial results and prospective information technology trends and develops and development of Asseco Group. upgrades its business offer accordingly.However, there is still a risk that the market will receive new Risk related to global macroeconomic situation products, which will cause our products and services Development of the IT services sector is closely to become less attractive, and eventually not as correlated to the overall economic prosperity. The profitable as expected. Additionally, it cannot be main factors affecting the financial results of Asseco

35

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Group include the pace of GDP growth, value of public into PLN, and therefore their values presented in the orders for IT solutions, level of capital expenditures consolidated financial statements may change as they made by enterprises, inflation rate, and foreign remain under the influence of foreign exchange rates currency exchange rates versus the Polish zloty. These against PLN. factors might have a significant adverse impact on the Interest rate risk operations, financial position, financial results and prospective development of Asseco Group. Changes in the market interest rates may have a negative influence on the financial results of Asseco Risk of becoming dependent on the key customers Group. The Group is exposed to the risk of interest The implementation of contracts with key clients will rate changes primarily in two areas of its business heavily impact the level of sales revenues generated activities: (i) change in the value of interest charged by Asseco Group in the coming years. It cannot be on loan facilities granted by external financial precluded that a potential loss of any major client, institutions, which are based on variable interest deterioration in the financial terms for provision of rates, and (ii) change in valuation of the concluded services, or potential compensatory claims would derivative instruments, which are based on the have a significant adverse impact on the operations, forward interest rate curve. In order to manage its financial position, financial results and prospective interest rate risk: (i) the Group tries to avoid taking development of Asseco Group. loans based on a variable interest rate, and (ii) if the first precaution is not possible, the Group may Risk of increasing cost of work conclude forward interest rate agreements. Salaries account for over 70% of the project Risk of changes in regulations and their implementation costs.Taking into account such high interpretation human resource requirements, an increase in salaries would squeeze the margins achieved on projects, and Frequent amendments, lack of cohesion and uniform consequently have an unfavorable impact on the interpretations of the provisions of law, concerning in financial results of Asseco Group. In order to manage particular the tax regulations, banking law, insurance the risk of higher cost of work, the Group takes a law (inclusive of social insurance), public procurement number of measures which can help reduce potential law, personal data protection law, regulations negative effects of rising salaries.Among other things, pertaining to trading in securities and public offering, Asseco (i) employs people in many geographical and commercial companies law, give rise to the regions aiming to diversify that risk, (ii) continually regulatory risk occurring in the environment in which monitors the level of salaries in the market not to be Asseco Group operates.The tax regulations and their taken by surprise, and (iii) tries to maintain an interpretations are more than others prone to appropriate structure of employment within numerous changes. Practices of the internal revenue particular levels of competence. administration and the court judicature are not uniform in this domain.In the event the taxation Risk related to offshoring authorities take a position that is different from our Development of information technology services interpretation of tax regulations, the operations, provided offshore to the customers based in the financial position and financial results of Asseco may countries where Asseco conducts direct business be exposed to negative consequences thereof. Such operations may eventually trigger off stronger risk may be materializing especially due to potential competition in those markets. On the other hand, doubts expressed by the taxation authorities over the offshoring investments located in the countries where transactions the Company conducts with its related Asseco operates may bring about higher competition parties.This might have a significant adverse impact in the local labour markets. Such circumstances might on the operations, financial position, financial results have a significant adverse impact on the operations, and prospective development of Asseco Group. financial position, financial results and prospective Risk of potential legal disputes concerning copyrights development of Asseco Group. Development of Asseco Group operations in the Foreign currency risk market of IT products depends to a large degree on The currency used by Asseco Group for presentation ownership of intellectual property rights, especially of its financial results is the Polish zloty (PLN). copyrights to computer programs. Because of a Moreover, functional currencies of the Group’s variety of legal regulations pertaining to the foreign subsidiaries are the local currencies of the protection of intellectual property that are applicable countries where they operate. Consequently, assets in the countries where Asseco Group operates, in of such subsidiaries or groups need to be converted some circumstances there may be doubts as to the

36

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 effectiveness of transferring of copyrights in the the initial and periodic verification of the operating software codes compiled by employees in favour of process for external entities. In the case of smaller their employers (Asseco companies). In order to clients, it is quite helpful to monitor their industry prevent such situations, any employment contracts or press as well as to analyze previous experience other contracts under which employees provide their gathered by ourselves and by our competitors, etc. services to the Group companies must include Risks associated with IT licenses adequate provisions to effectively assign such employee’s copyrights in software to the Group Asseco Group's companies use IT software licenses companies. under civil law agreements concluded with leading global software and application providers, including Risk of losing the clients’ trust but not limited to: Business Objects, HP, IBM, Operations of Asseco Group are to a large extent Microsoft, Oracle and SAS Institute. By using the based on the customers’ trust. Implementation of an solutions and products of these companies, Asseco IT system, which has critical importance for the Group develops its most important products. customer’s business, usually results in signing a long- Terminating license agreements or limiting the use of term agreement with the system user. The quality of the licensed software, particularly developed by IBM solutions and services provided to such clients and Oracle, can have a significant negative impact on determines their confidence in the Asseco brand.In the operations, the financial situation, results and the event the quality of delivered products and development prospects of Asseco Group. services was poor, our customers might lose their Risk of inability to effectively integrate the taken- trust in Asseco, which might hurt our reputation in over companies or to achieve the intended rates of the market and make it impossible to continue return on acquisitions or investments successful business operations. Asseco Group implements the strategy of Risk of underestimation of the project cost development, among others, through acquisitions of Most of Asseco Group’s profits are derived from the or capital investments in IT companies.Valuation of execution of complex information technology projects the future acquisitions or investments will depend on carried out under long-term agreements with a the market conditions as well as on other factors predefined remuneration. Implementation of such beyond the Asseco’s control. It cannot be entirely projects requires very good planning both in terms of precluded that the investor company may be unable the schedule of work and the resources needed to to accurately estimate the values of undertaken provide the promised scope of the contract. Here the acquisitions or investments. There is also a risk that Group follows complex procedures, which on one earnings generated by the acquired or investee hand facilitate the process of preparation of reliable companies fall short of the initial estimates which plans and on the other hand prevent the incurrence might prevent us from achieving the rates of return of unexpected costs. In order to manage the risk of that were originally expected from such transactions. the project cost underestimation, Asseco Group Risk involved in insufficient insurance coverage applies the methods (either based on the world recognized standards or proved by own experience) Business activities conducted by the Group for estimation of the project costs, preparation of companies, including production and supply of work schedules, and identification of risks that may software as well as implementation of integration hinder timely, professional or financial performance projects, give rise to a risk of damages that may be under a contract. incurred by the Group clients or their end customers as a result of defective operation or failure of the Risk of concluding a contract with a dishonest products delivered by Asseco, whether attributable to customer itsnegligence or not. The agreements concluded by Asseco Group is exposed to the risk of defaulting the Group companies provide for contractual contractors. This risk is connected firstly with the penalties in the event of non-performance or financial credibility and good will of customers to improper performance of obligations. Any claims for whom the Group provides IT solutions, and secondly compensation in excess of the guarantee amounts with the financial credibility of contractors with whom under the carried insurance policies might have a supply transactions are concluded. significant adverse impact on the operations, financial position, financial results and prospective Hence, the risk control measures usually consist of development of Asseco Group. monitoring the timely execution of bank transfers and, if needed, sending a reminder of outstanding payment. In addition, the Group uses processes for

37

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017

Risk related to losing the key personnel position, financial results and prospective development of the Group companies. The Group’s operations and development outlook depend to a large extent on the knowledge, experience and professional qualifications of its Opinion on feasibility of the Management Board employees, who implement the IT projects. A financial forecasts for 2017 substantial demand for IT specialists and the The management boards of the Group's companies competitors’ activities may induce the key personnel have not published financial forecasts for 2017 and to leave our organization, and also make it quite other reporting periods. difficult to recruit new employees with suitable knowledge, experience and professional qualifications. Still there is a risk that resignation by Changes in the Capital Group management the key personnel would have a negative impact on policies the execution of IT contracts conducted by the During the year 2017, the Capital Group management Company, as well as on ensuring the required quality practices remained unchanged. and range of services provided. This in turn might have a significant adverse impact on the operations, financial position, financial results and prospective Agreements concluded by the Capital Group development of Asseco Group. with its management personnel providing for Risk of business continuity payment of compensations if such persons resign or are dismissed from their positions Occurrence of an emergency situation at one of Asseco Group companies may impair our ability to Asseco Group did not conclude any agreements with continue to provide services to our clients, which in their management officers that would provide for turn may lead to delays, failure to comply with our payment of compensations in the event such persons obligations, claims for damages, or loss of reliability resign or are dismissed from their positions without for our clients. Such circumstances might have a substantial reason, or when they are dismissed as a significant adverse impact on the operations, financial result of a company merger by acquisition. position, financial results and prospective development of the Group. Information on the agreements known to the Risk associated with data leakage Issuer which may result in future changes of the equity interests held by the existing shareholders As a result of deliberate actions of third parties or and bondholders dishonest employees, as well as mistakes or carelessness of our employees or contractors, There are no agreements which may result in future confidential data of the Group or of our clients may changes of the equity interests held by the existing be disclosed to unauthorized persons. Such shareholders and bondholders. circumstances might have an adverse impact on the perception of Asseco by our clients, and consequently Changes to equity relationships on the Group’s operations, financial position, financial results and prospective development. A description of the changes to equity relationships has been presented in Point III of the consolidated financial Risk of property damage statement of Asseco Group for the period of six As a result of abuse or errors committed by months ended June 30, 2017. employees of Asseco, the Group may suffer damage to its property. Such circumstances might have an Related party transactions adverse impact on the Group’s financial condition and business continuity, and consequently on the Group’s Related party transactions have been presented in operations, financial position, financial results and explanatory note 19 to the consolidated financial prospective development. statement of Asseco Group for the period of six months ended June 30, 2017. Personnel policy risk The Group companies may incur costs in connection Bank loans, borrowings, sureties and guarantees with legitimate or illegitimate claims filed by their employees on the grounds of discrimination, working Bank loans drawn, loans granted, as well as sureties conditions, etc. Such circumstances might have a and guarantees granted have been described in significant adverse impact on the operations, financial explanatory notes 11 and 15 to the consolidated

38

Semi-Annual Report on Operations of Asseco Group for the period of six months ended June 30, 2017 financial statement of Asseco Group for the period of Information on judicial proceedings where the six months ended June 30, 2017. value in dispute exceeds 10% of the amount of equity Monitoring of employee stock option plans At the publication date of this report, the Group was As at the date of preparation of this report, the not a party to any proceedings pending before any Company did not run any share-based employee court, arbitration authority or public administration incentive scheme. authority, under which the value in dispute would exceed 10% of the Groups’s equity.

39

Statements by

the Management of

Asseco Poland S.A.

Statements made by the Management

Board of Asseco Poland S.A. to the semi- annual Report for the period of six months ended June 30, 2017

Statement made by the Management Board of Asseco Poland S.A. on the reliability of preparation of the semi- annual consolidated financial statements of Asseco Group for the period of six months ended June 30, 2017 The Management Board of Asseco Poland S.A. hereby declares that, to the best of its knowledge, the semi-annual consolidated financial statements of Asseco Poland S.A. for the period of six months ended June 30, 2017 and comparable data contained therein have been prepared in compliance with the applicable accounting standards, namely the International Financial Reporting Standards as endorsed by the European Union. Furthermore, the Management Board declares that the presented data give a true, reliable and fair view of the Company’s assets, financial position and financial performance.The report on operations of Asseco Poland S.A. provides a fair description of the development, achievements and economic position of the Company, inclusive of major risks and threats to its operations.

President of the Management

Adam Góral Board

Vice President of the Management

Przemysław Borzestowski Board

Vice President of the Management

Tadeusz Dyrga Board

Vice President of the Management

Krzysztof Groyecki Board

Vice President of the Management

Rafał Kozłowski Board

Vice President of the Management

Marek Panek Board

Vice President of the Management

Paweł Piwowar Board

Vice President of the Management

Zbigniew Pomianek Board

Vice President of the Management

Przemysław Sęczkowski Board

Statement made by the Management Board of Asseco Poland S.A. on the entity authorized to audit the semi- annual consolidated financial statements of Asseco Group for the period of six months ended June 30, 2017 The Management Board of Asseco Poland S.A. hereby declares that the entity authorized to audit the semi-annual consolidated financial statements of Asseco Group for the period of six months ended June 30, 2017, namely Ernst & Young AudytPolska Sp. z o.o. Sp.k., seated in Warsaw, has been chosen in accordance with the provisions of the law in force.This entity as well as certified auditors, who audited these financial statements, satisfied the conditions for expressing an impartial and independent opinion on the audited annual financial statements, in line with the applicable regulations and professional standards.

President of the Management

Adam Góral Board

Vice President of the Management

Przemysław Borzestowski Board

Vice President of the Management

Tadeusz Dyrga Board

Vice President of the Management

Krzysztof Groyecki Board

Vice President of the Management

Rafał Kozłowski Board

Vice President of the Management

Marek Panek Board

Vice President of the Management

Paweł Piwowar Board

Vice President of the Management

Zbigniew Pomianek Board

Vice President of the Management

Przemysław Sęczkowski Board

Asseco Poland S.A.

14 Olchowa St.

35-322 Rzeszów

tel.: +48 17 888 55 55 fax: +48 17 888 55 50 e-mail: [email protected]

inwestor.asseco.pl