Management Report on Operations of Asseco Poland S.A

ASSECO POLAND S.A.

Annual Report for the year ended 31 December 2014

45.7 mPLN of income tax paid in Poland in 2014

1,321 mPLN 2,967 in sales revenues highly committed for 2014 employees

th 290.3 mPLN 215.8 mPLN 6 in net profit of dividends largest software for 2014 paid out for 2013 vendor in Europe

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

PRESIDENT’S LETTER

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

PRESIDENT’S LETTER with state-of-the-art solutions for online banking and security. We have high hopes for our new banking and finance products, namely UFE (Universal Front End) and CBP (Customer Banking Platform). These systems make it easy to implement the strategy of omni-channel banking which is currently very popular among financial institutions. In response to the needs of capital market institutions, we developed innovative solutions to enable mobile trading. We have been pretty successful in the public institutions sector as well. Despite amendments to some of our ongoing contracts and a limited number of new tenders in this sector, we managed to achieve our target results. Last year we expanded our cooperation with such important clients as the Agricultural Social Insurance Fund (KRUS) and the Agency for Restructuring and Modernization of Agriculture (ARiMR). We recorded a significant growth in the medical sector, where more than 130 healthcare centers have already implemented our latest system AMMS (Asseco Medical Management Solutions). We have successfully completed the implementation of our earlier projects, including the Subcarpathian Medical Information System. Asseco’s development and experience have been well recognized by the market. We are constantly the largest IT company in Poland. We hold a high 40th position in the Rzeczpospolita 500 List of the largest companies operating in Poland. Asseco advanced in the ranking of the biggest firms in Central and Eastern Europe as prepared by Deloitte and Dear Shareholders, also won recognition in the International Champion competition organized by PwC. For Asseco Poland, the past year was a period of many challenges and continuing efforts for the development Thanks to our solid fundamentals and improving of our business. Hence, it is a great pleasure to inform financial results, we were once again able to share our you that we managed to achieve our goals set for 2014. success with the company’s shareholders by distributing PLN 215.8 million in dividends in 2014. Net profit increased from PLN 280.3 million in 2013 to PLN 290.3 million for the full year. The company’s I am proud to emphasize that we are one of the leaders profitability improved and the margins of profit of the Polish capital market that pay out dividends on a stabilized at a higher level. regular basis, having spent more than PLN 830 million for that purpose during the past five years alone. During the past year, we made a good progress in the general business sector. In the telecommunications The success of Asseco would not be possible without the market, we further developed our cooperation with ongoing commitment of all of our employees and the strategic customers and began the implementation of trust of our customers. On behalf of the whole new projects. We also strengthened our position in the management team, I would like to express our genuine energy market. This industry appreciated the quality of gratitude to all the people that support the development solutions and services offered by Asseco Poland, and in of Asseco. particular our new product called AUMS (Asseco Utility

Management Solutions). With best regards, We are pleased with our position in the banking and finance sector. In 2014, we continued to develop IT Adam Góral systems for our key clients and launched new solutions President of the Management Board, and functionalities. Moreover, we have increased our Asseco Poland S.A. presence among cooperative banks by providing them

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

MANAGEMENT REPORT ON OPERATIONS OF ASSECO POLAND S.A. for the year ended 31 December 2014

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

MANAGEMENT REPORT ON OPERATIONS OF ASSECO POLAND S.A. for the year ended 31 December 2014

GENERAL INFORMATION ON ASSECO POLAND S.A...... 8 Directions of development ...... 8 Company’s authorities ...... 9 Management Board ...... 9 Supervisory Board ...... 11 Awards and accolades ...... 12 Information technology market and its future outlook ...... 13 Product portfolio and target markets ...... 15 Financial information ...... 18 Structure of sales revenues of Asseco Poland S.A...... 20 Non-recurring events with impact on our financial performance ...... 22 Opinion on feasibility of investment plans ...... 22 Asseco Poland S.A. in the capital market ...... 23 Shareholder structure ...... 24 Shares held by the management and supervisory personnel ...... 24 Discussion of significant risk factors and threats ...... 25

OTHER INFORMATION ...... 28 Explanation of differences between the financial results disclosed in the annual report and previous financial forecasts for the year ...... 28 Opinion on feasibility of the Management Board financial forecasts for 2015 ...... 28 Changes in the Company management policies ...... 28 Remuneration of the management and supervisory personnel ...... 28 Agreements concluded by Asseco Poland S.A. with its management personnel providing for payment of compensations if such persons resign or are dismissed from their positions ...... 28 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 ...... 28 Organizational and equity relationships ...... 28 Related party transactions ...... 28 Bank loans, borrowings, sureties and guarantees ...... 28 Loans granted during the financial year...... 28 Off-balance-sheet items ...... 28 Utilization of proceeds from issuance of shares ...... 28 Monitoring of employee stock option plans ...... 28 Significant agreements concluded by the Company ...... 28 Information on judicial proceedings where the value in dispute exceeds 10% of the amount of equity ...... 28 Information on adhering to the corporate governance standards ...... 29 Agreement with the entity authorized to audit financial statements ...... 29 Remuneration of the entity authorized to audit financial statements ...... 29

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

MANAGEMENT REPORT ON OPERATIONS OF ASSECO POLAND S.A. for the year ended 31 December 2014 This Management Report on Operations has been approved for publication by the Management Board of Asseco Poland S.A. on 13 March 2015. Management Board:

Adam Góral President of the Management Board

Przemysław Borzestowski Vice President of the Management Board

Andrzej Dopierała Vice President of the Management Board

Tadeusz Dyrga Vice President of the Management Board

Rafał Kozłowski Vice President of the Management Board

Marek Panek Vice President of the Management Board

Paweł Piwowar Vice President of the Management Board

Zbigniew Pomianek Vice President of the Management Board

Włodzimierz Serwiński Vice President of the Management Board

Przemysław Sęczkowski Vice President of the Management Board

Robert Smułkowski Vice President of the Management Board

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

GENERAL INFORMATION ON ASSECO POLAND S.A. Asseco Poland S.A. Expansion through acquisitions Asseco Poland S.A. (the “Company”, “Asseco”) is the Asseco is interested in taking over companies that will largest Polish information technology company listed either enhance its competence in individual sectors or on the Warsaw Stock Exchange (WSE ticker: ACP). With provide an opportunity to enter new geographical a market capitalization exceeding PLN 4.1 billion (or markets. Asseco Poland has successfully implemented nearly EUR 1 billion), the Company is included in the its acquisitions policy for many years, and nowadays is prestigious WIG20 index. It is also the largest company one of the most experienced market consolidators in listed in the IT industry index, WIG-Info, accounting for Poland. over 50% of its value. Asseco Poland values – our source code Asseco Poland is a unique combination of a software The Company has come up with its own “source code” house and a service provider. The Company is a that lists the common values of Asseco. These values producer of state-of-the-art software that supports have been devised by all of our employees and are mission-critical business processes of enterprises in all recorded in a formal document, which is effective key sectors of the Polish economy. Asseco’s software across our organization. applications are used by more than half of Polish banks, the largest insurance, energy and Commitment – we are fully committed to each and telecommunications companies, miscellaneous every project and the success of our clients is our healthcare institutions, local and central public greatest satisfaction administration bodies, as well as by the uniformed Respect – we require trust, honesty and mutual services. respect both from ourselves and from others Over the twenty years of persistent implementation of Quality – we always maintain high quality standards in our development strategy, which focuses on gaining all of our activities expertise and development of proprietary software, we have become a leader in the Polish information Professionalism – we continually upgrade our technology market and accumulated the necessary qualifications and are willing to share experience potential to build a global company. Effectiveness – we are ambitious and consistent in striving to Directions of development achieve our goals Our mission is to build a reliable and profitable global Responsibility – we take full information technology company providing high responsibility for our work and quality software and services. environment in which we operate The strategy of Asseco Poland is based on two pillars. The first is organic growth which is achieved through proprietary software and services, whereas the second one involves expansion through acquisitions. Organic growth Asseco strategy relies on sector-specific business expertise, which is supported by technological competence. The Company builds long-term trust- based relationships with customers, becoming their strategic business partner. Asseco leverages on the vast experience of its international affiliated companies to create a comprehensive portfolio of products satisfying the needs of thousands of its customers. The Company wants to be perceived as a ‘one-stop shop’ and therefore, in addition to its own IT solutions and services, it also delivers infrastructure necessary for the proper operation of business applications.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Company’s authorities Andrzej Dopierała Vice President Management Board of the Management Board responsible for During the period of 12 months ended 31 December the Infrastructure Division, 2014, the Company’s Management Board was Data Processing Center, and ICT Department composed of the following persons:

Management Board Period of service

Adam Góral 01.01.2014 – 31.12.2014 Przemysław Borzestowski 01.01.2014 – 31.12.2014 Andrzej Dopierała 01.01.2014 – 31.12.2014 Tadeusz Dyrga 01.01.2014 – 31.12.2014 Tadeusz Dyrga Rafał Kozłowski 01.01.2014 – 31.12.2014 Vice President Marek Panek 01.01.2014 – 31.12.2014 of the Management Board responsible for the Divisions Paweł Piwowar 01.01.2014 – 31.12.2014 of Social Insurance, Zbigniew Pomianek 01.01.2014 – 31.12.2014 Healthcare, and Systems Maintenance Włodzimierz Serwiński 01.01.2014 – 31.12.2014 Przemysław Sęczkowski 01.01.2014 – 31.12.2014 Robert Smułkowski 01.01.2014 – 31.12.2014

Adam Góral President of the Management Board responsible for Rafał Kozłowski the development vision Vice President and strategy of Asseco of the Management Board Group responsible for the Finance Division of Asseco Group and for the Logistics Department

Marek Panek Vice President of the Management Board Przemysław Borzestowski responsible for Vice President the Development Division of the Management Board of Asseco Group and for responsible for the Divisions the EU Projects Office of Public Administration, Capital Market, and for the Office for Protection of Non-Public Information

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Paweł Piwowar Przemysław Sęczkowski Vice President Vice President of the Management Board of the Management Board responsible for the Divisions responsible for the Public and of Energy and Gas Industry, Investor Relations Telecommunications and Department and for the Media, Agriculture, and Marketing Department Enterprises

Zbigniew Pomianek Robert Smułkowski Vice President Vice President of the Management Board of the Management Board responsible for the Divisions responsible for the PKO Bank of Commercial Banks, Division Cooperative Banks, Business Intelligence, as well as for the Departments of Compliance, and Maintenance and Development of Back-Office

Systems

Włodzimierz Serwiński Vice President of the Management Board responsible for the Commercial Insurance Division

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Supervisory Board Dariusz Brzeski Member of the Supervisory During the period of 12 months ended 31 December Board 2014, the Company’s Supervisory Board was composed of the following persons:

Supervisory Board Period of service Jacek Duch 01.01.2014 – 31.12.2014 Adam Noga 01.01.2014 – 31.12.2014

Piotr Augustyniak 01.01.2014 – 31.12.2014 Dariusz Brzeski 01.01.2014 – 31.12.2014 Artur Kucharski Artur Kucharski 01.01.2014 – 31.12.2014 Member of the Supervisory Dariusz Stolarczyk 01.01.2014 – 31.12.2014 Board

Jacek Duch Chairman of the Supervisory Board

Dariusz Stolarczyk Member of the Supervisory Board

Adam Noga Vice Chairman of the Supervisory Board

Piotr Augustyniak Member of the Supervisory Board

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Awards and accolades 1st place among 500 largest Asseco Poland won the main information technology award in the 3rd edition of the companies and groups “Polish Company – operating in Poland. The ranking was prepared under International Champion” the auspices of the Polish Ministry of Economy, by the competition organized by the editors of Businessman.pl as part of their Teleinfo 500 PwC consulting firm, in the report. This was the 17th annual edition of the report category of Investor, Polish which presents the leaders of the Polish ICT market. Privately Owned Company. The competition is intended to give recognition to companies that successfully

implement the strategy of international expansion, being No. 1 “Software Producer” in the best ambassadors of Poland abroad. The competition the Book of Lists annual was open for state-owned companies as well as all ranking compiled by Warsaw companies financed by Polish capital which, during the Business Journal. The Book of last five years, made significant foreign investments Lists is a collection of more and/or conducted large-scale export activities and than 70 rankings presenting became successful in foreign markets. over 2.5 thousand most prosperous companies from various business sectors, including consulting, advertising, telecommunications, information Asseco Poland was listed in the technology, and real estate. ranking of “25 for 25 Years: Brands for Poland” prepared by Asseco Poland reached the Brief magazine on the occasion final of the Polish of the 25th anniversary of President’s Economic Prize freedom in Poland. The listing presents 75 brands that for “Lasting Success”. In build up the image of Poland being a modern, creative the 12th edition of the and economically strong country. Polish President’s Economic Prize, the jury nominated 15 companies. Asseco Poland was nominated Asseco Poland debuted in the Forrester Research in the category of “Lasting Success”. report. Forrester Research firm collected information on capital expenditures made by the financial sector for replacement or upgrading of core banking systems. In 2013, a record number of 1,600 such contracts were Asseco Poland won the concluded all over the world. More than a dozen of them th Grand Prize of the 7 are implemented by Asseco Group companies. Forrester edition of IT@Bank 2014 analysts surveyed 29 vendors of globally deployed ranking. The jury banking platforms, for the first time including Asseco. appreciated the company’s contribution to the development of high quality software and services for the banking sector. The Grand Prize was just one of many accolades awarded to Asseco in this prestigious AUMS for energy utilities in the Gartner’s Magic competition that was attended by 48 information Quadrant. Internationally recognized research and technology companies. In addition, the company advisory firm Gartner published a report on key vendors received 4 special awards. of IT solutions for the utilities sector, entitled “Magic Quadrant for Utilities Customer Information Systems 2014”. Asseco Utility Management Solutions (AUMS) were mentioned in the prestige group of products that meet the demanding functional criteria at a sufficiently large scale of business, and were the only Polish product included in the report.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Information technology market and These estimates take into account all new companies its future outlook that were just included in the ranking. High revenue growth was achieved also in the Development prospects of the IT market healthcare sector (an increase by 76% to PLN 0.44 According to Gartner’s latest forecasts, in 2015 the billion) as well as in the energy industry alone global IT industry will grow by 2.4% to reach the total (an increase by 75% to PLN 0.85 billion). value of USD 3,828 billion. The most dynamic growth is Company’s market position anticipated in the enterprise software market, by 5.5% (to the level of USD 335 billion). The computer Asseco Poland S.A. tops the rankings of IT vendors that hardware market is seen to expand by 5.1% (to USD are prepared by both Polish and international research 732 billion), whereas IT services by 2.5% (to USD 981 institutes. billion). Analysts estimate that spending for Data The following table presents the position of Asseco Center systems will increase by 1.8% (to USD 143 Poland S.A. in the Truffle 100 2014 ranking, which lists billion). The slowest pace of growth is expected in the largest European software vendors by sales of telecommunication services, by 0.7% (to USD 1,638 proprietary software generated in 2013. billion). Gartner assumes that 2015 will bring continued downward pressure on prices and further Name of company Coun Sales of proprietary consolidation of vendors, especially in the segment of try software cloud-based software. in EUR millions 1. SAP DE 16,512.3 Forecast of IT spending in 2015 (in USD billions) 2. Dassault Systems FR 1,887.5 3. Sage UK 1,522.6 Segment 2015 Change 4. Hexagon SE 1,309.6 Computer hardware 732 5.1% 5. Wincor Nixdorf DE 1,257.3 Data Center systems 143 1.8% 6. Asseco Poland PL 1,063.0 Software 335 5.5% 7. Software AG DE 865.5 IT services 981 2.5% Telecommunication 1,638 0.7% 8. DATEV DE 752.8 services 9. Wolters Kluwer NL 720.9 Total 3,828 2.4% 10. SWIFT BE 580.2 Source: Truffle 100 ranking, 2014

In 2014, the Company achieved the largest growth of IT Market in Poland proprietary software revenues among the top 10 As presented by Computerworld magazine in their vendors leading the ranking. latest TOP200 ranking, according to IDC estimates, in As estimated by COMPUTERWORLD TOP200, in 2013 2013 the Polish information technology market Asseco Poland ranked 8th in the category of the expanded by 17% and was worth PLN 92.8 billion. “Largest IT companies operating in Poland”. Revenues of IT companies alone reached PLN 50.5 Concurrently, Asseco is the biggest IT group and billion, accounting for over a half of the total market company in Poland in terms of net earnings, value, whereas sales of telecom companies amounted outperforming the runner-up in this ranking by 4.5 to PLN 42.3 billion. Hence, it was one of the best times. periods for the industry in recent years. Following the crisis of 2008-2009, the IT sector managed to grow by IT companies with the highest Net profit almost 8% per annum. net earnings in 2013 in PLN thousands Asseco Poland 280,273 The largest customers for IT services and products are Action 62,768 still public institutions and telecom companies. Each of Capgemini Poland 49,729 them spent approx. PLN 2.58 billion for that purpose in Ericpol 47,670 2013. Sales to small and middle-sized enterprises as Comarch 45,584 well as to the banking sector were not much lower, Comp 41,519 amounting to PLN 2.55 billion and PLN 2.26 billion, Source: Computerworld; figures in PLN thousands respectively. However, the fastest growth was observed in the utilities sector (excluding the energy industry), where IT spending, according to Computerworld, increased to PLN 0.32 billion or by 95% in comparison to 2012.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Again, according to COMPUTERWORLD TOP200 rankings, Asseco Poland S.A. held leading positions in terms of sales to individual sectors of the Polish economy, as shown in the table below.

Ranking of software providers Ranking to the sector of position Public administration 1 Healthcare 1 Banking 2 Energy industry 4 Financial institutions 4 Telecommunications 9 COMPUTERWORLD TOP200, 2014 Ranking of IT and telecom companies by sales revenues generated in 2013 Whereas, the next table presents the positions taken by Asseco Poland S.A. in the COMPUTERWORLD TOP200 rankings that compare leading companies operating in the Polish market by type of business.

Ranking Ranking position Producers of customer-tailored software 1 Providers of IT maintenance services 1 Providers of IT services 2 Providers of system integration services 3 Providers of training services 8 COMPUTERWORLD TOP200, 2014 Ranking of IT and telecom companies by sales revenues generated in 2013

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Product portfolio and target markets Product portfolio – competencies money in IT infrastructure or a team of IT experts. Several hundred cooperative banks operating in Asseco Poland provides clients with software solutions Poland have decided to use cloud-based e-banking tailored to their specific needs. We have strong systems. expertise in the following four main areas: Product portfolio – sectors . Dedicated solutions Asseco Poland S.A. is specialized in the development of Asseco Poland is the most experienced Polish IT proprietary IT solutions for all sectors of the economy. company when it comes to the execution of large- Asseco’s product portfolio is divided into three main scale and complex IT projects, implemented to sectors: banking and finance, public administration, individual customer needs. A good example of and general business. Each of these sectors comprises Asseco’s competence in this area is the IT project a wide range of institutions that use our proprietary IT implemented for the Social Insurance Institution systems. Presented below is a selection of our IT (ZUS), the largest in the history of our country. The solutions dedicated for individual sectors. Comprehensive Information System handles more than 24 million unique accounts and is used by over . Banking and Finance 30 thousand users on a daily basis. The Banks – production of Banking software is one of the Comprehensive Information System of ZUS won key businesses of Asseco Poland. The Company the main prize in the “eEurope Awards for continues to improve and further develop its IT eGovernment – 2005” competition, which was solutions tailored to meet the banking sector’s growing organized by the European Institute of Public expectations from information technology. Administration (EIPA), working under the auspices of the European Commission. The ZUS’s CIS was Asseco’s flagship product for the banking sector is the awarded for the creation of optimum environment comprehensive IT suite called def3000. In addition, the for successful implementation of a public Group offers dozens of specialized ready-to-implement administration project. solutions, requiring only some adaptation to specific operations of a given institution. . Comprehensive solutions for business sectors Insurance – Asseco Poland has, for many years, We offer comprehensive IT packages that are cooperated with major international insurance customized to individual needs of large and companies. Among them are life and property medium-sized companies virtually from every insurance companies, insurance brokers, as well as sector of the economy. In this category, our insurance market regulators. Advanced solutions product portfolio includes comprehensive systems provided by Asseco are always adjusted to conform to dedicated to the banking sector (Asseco def3000), applicable insurance regulations and ensure the highest power industry (AUMS), healthcare (AMMS), as levels of security. well as for brokerage houses (Promak). The Company’s portfolio features core insurance . Standard software packages systems and a variety of specialized solutions, including We also provide standard software packages for billing and collection systems, applications supporting thousands of small and medium-sized companies. claim settlement processes, reinsurance, co-operation With no need for customer-tailored products and with agents, and detection of insurance frauds. at an affordable cost, tens of thousands of firms To complement the above described banking and use Asseco’s out-of-the-box software to support insurance industry competencies, Asseco is a provider their routine enterprise management functions. A of all-in-one IT solutions for brokerage houses, as well good example of a standard software package is as for leasing and factoring companies. mMedica – software dedicated to outpatient clinics and small hospitals. . Cloud computing solutions Small and medium-sized enterprises can use our IT solutions available over the Internet. With a minimum of effort and cost and maximum benefits, our clients may take advantage of our knowledge and experience without investing large sums of

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

. Public Institutions Asseco’s flagship product is AMMS (Asseco Medical Management Solution), a comprehensive package of Central level – Asseco Poland develops and implements information systems designed to help manage large software solutions for public administration in the and medium-sized hospitals, polyclinics, medical areas that cannot be supported by ready-made tools. centers, outpatient clinics and emergency These are mostly complex systems with powerful departments. functionality suitable for processing of large data volumes. . General Business The Company has got vast experience in the execution Telco & Utilities – Asseco Poland offers comprehensive of complex IT projects for the public administration. proprietary solutions, which are capable of handling The largest information technology project in Poland – multi-million customer databases and are customized the Comprehensive Information System of the Social for the specific needs of telecommunication, media, Insurance Institution – has been implemented by energy, gas and utility enterprises. Over a 20-year long Asseco. Furthermore, Asseco developed the Central presence of our solutions in this sector resulted in Register of Vehicles and Drivers for the Ministry of the strategic partnerships with many major enterprises Interior and Administration, Information System for the which appreciate the in-depth professional knowledge National Border Guard, as well as IT solutions for the and experience of our specialists and the flexibility of Agency for Restructuring and Modernisation of our solutions. Agriculture. As the only IT company of Central and Our product portfolio dedicated to the Telco & Utilities Eastern Europe, we executed over 50 prestigious sector includes billing systems, fraud detection projects for the EU and NATO agencies. systems, sales and CRM applications, portal Healthcare – the Company continues to build its applications, data warehouses, BI tools, and many market leadership in the provision of IT solutions for all more. The product portfolio is supplemented with types of medical facilities. Our solutions are used by technical infrastructure and asset management hundreds of major hospitals and most clinics in Poland. systems, and GIS/NIS solutions. Asseco’s services include professional consulting on the Asseco Poland has, for many years, been one of the key design, implementation and maintenance of providers of billing systems to ORANGE Poland. Our information systems for health insurance companies, software solutions are also used by other mobile and and the provision of comprehensive solutions for fixed-line telephony operators, as well as by media hospitals and clinics. Asseco delivers patient service companies such as ITI Group. Moreover, our systems solutions, contract settlement systems as well as facility are utilized by major energy holdings operating in management solutions. Poland, such as Tauron, PGNiG, Enea, and PGE.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Product portfolio – sectors

Banking and Finance Public Institutions General Business

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

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Financial information Summary and analysis of the financial results of Asseco Poland S.A. Presented below are the operating results for Margins of profit the year ended 31 December 2014 as well as for 31 Dec. 2014 31 Dec. 2013 Change the comparable period of the previous year: (audited) (audited)

12 months 12 months Gross profit margin 28.2% 27.3% 3.0% ended ended PLN millions Change 31 Dec. 2014 31 Dec. 2013 EBITDA margin 22.8% 22.1% 3.0% (audited) (audited) Operating profit margin 18.2% 17.9% 1.6% Sales revenues 1,321.3 1,428.4 (7.5%)

Proprietary software and services 1,049.8 1,106.2 (5.1%) Net profit margin 22.0% 19.6% 12.0%

Gross profit (loss) on sales 372.0 390.4 (4.7%) In 2014, the Company managed to improve its EBITDA Selling costs (53.4) (52.6) 1.5% margin to 22.8%, operating profit margin to 18.2%, as General and administrative (78.5) (83.5) (6.0%) well as its net profit margin to the level of 22.0%. expenses Other operating activities 0.2 1.4 (85.7%) Such favourable results were achieved primarily due 240.3 255.7 (6.0%) to greater control of the Company’s costs and new Operating profit EBITDA 300.6 315.4 (4.7%) business projects.

Net profit 290.3 280.3 3.60% Cash flows EBITDA = EBIT + depreciation and amortization The following table presents major lines of the In 2014, the Company’s sales revenues dropped by separate statement of cash flows for the years 2014 7.5% as compared with those of 2013. Such and 2013. a decrease resulted, among others, from lower sales 31 Dec. 2014 31 Dec. 2013

of hardware and infrastructure which amounted (audited) (audited)

to PLN 136.1 million in 2014 as compared with CFO 207.8 259.4 PLN 189.1 million in 2013. CFI 50.7 (155.3)

General and administrative expenses incurred in CAPEX (25.1) (64.2) 2014 were PLN 5 million lower than in 2013. M&A expenditures (7.0) (135.2)

Net profit increased by 3.6%. This was achieved 182.7 195.2 Free cash flow owing to lower financial expenses, as we did not Dividend income 92.0 110.0 recognize any impairment charges on financial assets, as well as higher financial income resulting CFF (279.6) (286.9) basically from the reversal of allowances for Dividend payment (215.8) (200.0) Net change in cash and cash commercial papers and other receivables from (21.1) (182.8) equivalents Prokom Investments as such receivables have been Cash conversion ratio 72.62% 72.81% settled by Prokom. (FCF/EBIT Non-IFRS) CFO = net cash provided by (used in) operating activities CFI = net cash provided by (used in) investing activities The table below presents the amounts of sales CAPEX = expenditures for purchases of property, plant and equipment and intangible revenues and operating profit generated during the assets + expenditures for R&D projects M&A expenditures = expenditures for company acquisitions last five years. CFF = net cash provided by (used in) financing activities

The Company achieved net cash inflows from operating activities amounting to PLN 207.8 million as well as from investing activities amounting to PLN 50.7 million. We were less active in the market of mergers and acquisitions, hence our M&A expenditures decreased substantially in comparison to the previous year. In 2014, the Company increased the amount of dividend payment to PLN 215.8 million, of which PLN 92 million or over 42% came from dividends received from our subsidiaries.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Liquidity The tables below present our financial results for the individual quarters of 2014 as well as for the Working capital, defined as the difference between comparable periods of 2013: current assets and current liabilities, represents

the amount of capital which is used to finance current assets. PLN millions Q1 2014 Q2 2014 Q3 2014 Q4 2014

Sales revenues 301.7 346.2 306.8 366.6 of which proprietary The table below presents the closing balances of 252.8 259.3 246.6 291.1 working capital as at 31 December 2014 and at software and services the end of the comparable period. Margin IV 58.4 62.1 65.9 53.7 EBIT 59.3 62.2 66.1 52.7 31 Dec. 2014 31 Dec. 2013

(audited) (audited) Net profit 86.7 113.1 54.8 35.7 Depreciation and (15.4) (15.1) (15.0) (14.8) Working capital (in PLN millions) 429.8 389.1 amortization

Current liquidity ratio 2.7 2.1 CFO (2.4) 102.4 19.3 88.5

Quick liquidity ratio 2.5 1.9 CAPEX (incl. R&D) (3.9) (7.5) (5.9) (7.8) Margin IV = net profit on sales Absolute liquidity ratio 0.3 0.3 CFO = net cash provided by (used in) operating activities Working capital = current assets - current liabilities CAPEX = expenditures for purchases of property, plant and equipment and intangible assets Current liquidity ratio = current assets / current liabilities + expenditures for R&D projects Quick liquidity ratio = (current assets - inventories – prepayments) / current liabilities Absolute liquidity ratio = (cash + short-term bank deposits) / current liabilities

As at 31 December 2014, the Company’s working capital amounted to PLN 429.8 million and was 10.5% PLN millions Q1 2013 Q2 2013 Q3 2013 Q4 2013

higher if compared to its level reported as at 31 Sales revenues 321.1 332.0 318.1 457.2 December 2013. of which proprietary 229.5 316.5 109.1 451.1 software and services Over the year 2014, the Company managed to reduce Margin IV 85.1 72.3 56.0 40.9 its liabilities by 17.6%, hence our current liquidity EBIT 85.5 73.0 56.4 40.8 ratio increased to 2.7, while quick liquidity ratio improved to 2.5. Net profit 81.7 136.5 42.8 19.3 Depreciation and (14.4) (13.7) (15.8) (15.8) Debt amortization CFO 79.8 31.6 (32.6) 180.6 The Company’s debt ratios as at the end of 2014 CAPEX (incl. R&D) (5.0) (6.5) (9.5) (43.2) were lower than a year ago. As compared with Margin IV = net profit on sales the end of 2013, the Company’s current liabilities CFO = net cash provided by (used in) operating activities CAPEX = expenditures for purchases of property, plant and equipment and intangible assets decreased by PLN 115.7 million. Whereas, non- + expenditures for R&D projects current liabilities decreased by PLN 37.4 million (including the reduction of interest-bearing debt by PLN 32.2 million). At the same time, our assets decreased by PLN 42.1 million.

31 Dec. 2014 31 Dec. 2013

(audited) (audited)

Debt ratio 9.9% 11.9%

Debt/equity ratio 4.5% 5.6%

Short-term debt ratio 4.7% 6.0%

Long-term debt ratio 5.3% 5.9%

Debt ratio = (non-current liabilities + current liabilities) / assets Debt/equity ratio = (interest-bearing bank loans + debt securities + finance lease liabilities) / equity Short-term debt ratio = (current liabilities / assets) Long-term debt ratio = (non-current liabilities / assets)

Quarterly financial results

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Structure of sales revenues of Asseco Poland S.A. Breakdown of sales revenues by products and sectors in 2014 and in the comparable period

General Business Banking and Banking and 280.3 mPLN General Business Finance Finance 21% 305.9 mPLN 24% 371.6 mPLN 410.8 mPLN 29% 30%

2014 2013

1,4 mln 1,4 mln PLN /0,1% Public PLN /0,1% Public Administra- Administration tion 601.5 mPLN 663.1 mPLN 47% 49%

Banking and Finance Consolidation project and modified the def3000/TR Asseco Poland is the national leader in the system for their Treasury Department. Our projects development of software for financial institutions. for other banking institutions included More than half of Polish banks use IT solutions implementations of the seizure processing system produced by Asseco. The Company is furthermore a (def3000/SP) and e-banking system (def3000/REB-LT). leading provider of IT systems for the capital market The Company also performed further orders for the and insurance industry. largest Polish bank – PKO BP, under the agreement for their Integrated Information System (IIS). The following table presents the financial results generated by our Banking and Finance segment for The def3000/TR system won recognition from the years 2014 and 2013. international IT market analysts and, as the only Polish product, was placed in the “Magic Quadrant for

Trading Platforms”, a prestigious report published by Gartner research and advisory firm. Asseco’s 12 months 12 months def3000/TR (Treasury) solution met the strict ended 31 Dec. ended 31 Dec. PLN millions Change 2014 2013 evaluation criteria imposed on IT systems included in (audited) (audited) the report.

Sales1) 371.6 410.8 (9.5%) Another important achievement of 2014 was to complete the development of the first version of EBITDA2) 131.0 131.4 -0.3% def3000/UFE – Universal Front End system. Universal EBITDA margin 35.3% 32.0% 3.3 pp Front End is a fully flexible system which allows to Depreciation and (16.4) (19.7) (16.8%) implement the strategy of omni-channel banking by amortization integrating the bank’s existing systems into a uniform, Margin IV 114.6 111.7 2.6% ergonomic and user-friendly working environment, Margin IV (%) 30.8% 27.2% 3.6 pp available both on desktop computers and mobile Margin IV adjusted 121.0 117.8 2.7% devices. Margin IV adjusted (%) 32.6% 28.7% 3.9 pp During the past year, the Company completed a Employment [persons] 1,013 1,070 (5.3%) number of projects in the area of innovative internet

Allocated goodwill 871.4 871.4 - and mobile banking. We successfully implemented a

1) Sales to external customers new version of the online banking system for 2) EBITDA = Margin IV + depreciation and amortization corporate and public finance clients at Bank Ochrony 3) Margin IV = net profit on sales generated by operating segment 4) Margin IV adjusted = Margin IV + PPA, where PPA means amortization charges on Środowiska, as well as the second version of the ING intangible assets recognized in purchase price allocation BankOnLine system at ING Bank Śląski. We also launched the eBGŻ Lite mobile banking system at Bank In 2014, the Company continued to cooperate with its Gospodarki Żywnościowej. major clients and, concurrently, developed its flagship Moreover, the Company reinforced its position among banking system – def3000. At Bank Gospodarstwa cooperative banks. We implemented the Krajowego, we completed, ahead of the scheduled def3000/suite system for a new client, namely deadline, the first stage of the Public Finance Cooperative Bank in Wronki. Asseco def3000 systems

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

have been also deployed, among others, at Poznański and challenging projects was to adapt this system to Cooperative Bank and Podkarpacki Cooperative Bank. changes resulting from the new Act on Open Pension We also completed the development of a new Funds (OFE). Other modifications of the system were module, namely def3000/cIRM – Prudential related to the new templates of PIT (personal income Reporting. In order to upgrade the functionality of the tax) form as well as to the amended rules of data Internet Services Centre, we provided modern tokens exchange between ZUS and the Ministry of Finance. for authentication of transactions conducted over the Due to a lower demand for the CIS development Internet. Moreover, we launched the Asseco VAMM services, the Company has reorganized its team of platform at 60 cooperative banks, enabling their specialists responsible for working with this client. customers to receive bank account information through SMS messages. Our past actions and support The following table presents the financial results for Polish cooperative banking have been recognized generated by our Public Administration segment in by the National Association of Cooperative Banks, the years 2014 and 2013. which honoured Adam Góral, President of Asseco

Poland, with the Golden Cross of Franciszek Stefczyk. Furthermore, the Company was actively engaged in 12 months 12 months ended 31 Dec. ended 31 Dec. PLN millions Change the development of IT infrastructure for the Polish 2014 2013 capital market and helped to upgrade it to the latest (audited) (audited) world standards. We implemented an innovative Sales1) 601.5 663.1 (9.3%) mobile application for the clients of mBank Brokerage House – mDM iPad, which is one of the first stock EBITDA2) 99.5 127.1 -21.7% trading apps for Apple devices available in Poland. We EBITDA margin 16.5% 19.2% (2.7) pp Depreciation and managed to complete the development of the (22.0) (23.7) (7.2%) PROMAK RNZ system enabling the clients of a amortization brokerage house to invest money in foreign markets, Margin IV 77.5 103.4 (25.0%) as well as PROMAK TE allowing to use the stock Margin IV (%) 12.9% 15.6% (2.7) pp trading platform on tablets. Margin IV adjusted 81.9 109.8 (25.4%)

In 2014, the Company effectively continued and Margin IV adjusted (%) 13.6% 16.6% (2.9) pp expanded its cooperation with the insurance industry Employment [persons] 1,156 1,144 1.0% clients. We signed a new maintenance agreement Allocated goodwill 925.2 925.2 - with AIG and concurrently modified the Ins.MR 1) Sales to external customers insurance reporting system. Moreover, we concluded 2) EBITDA = Margin IV + depreciation and amortization a framework agreement to provide IT services for the 3) Margin IV = net profit on sales generated by operating segment 4) Margin IV adjusted = Margin IV + PPA, where PPA means amortization charges on headquarters of Allianz in Germany. Asseco Poland intangible assets recognized in purchase price allocation carried out further projects for the largest and oldest insurance company in Poland – PZU, including the In 2014, the Company signed a new agreement for implementation of the fourth stage of centralization the development, maintenance and integration of and standardization of accounting processes at PZU the Workflow System at the Agricultural Social and PZU Life. We also integrated the PZU’s Target Insurance Fund (KRUS) over a period of 48 months, Policy Administration System with the Oracle with a total gross value exceeding PLN 24 million. accounting system, and completed the project of Moreover, we signed and commenced a new automation of their compensation management contract for the maintenance and development of an processes which contributed to increased work IT system intended to support the management of efficiency. insurances and short-term benefits at KRUS. This two-year contract is worth nearly PLN 60 million Public Administration (gross). We also successfully completed the period of transition under the contract for maintenance of AIS Asseco Poland is one of the leading providers of (Agency Information System) performed in favour of software for the sector of public institutions. In 2014, the Agency for Restructuring and Modernization of the Company expanded cooperation with its key Agriculture (ARiMR). Hence, the team of Asseco clients and signed a number of new contracts. started to provide maintenance and modification We successfully performed further work under the services for this system on its own. framework agreement for the Comprehensive The Company achieved dynamic growth in the Information System (CIS) at the Social Insurance market for healthcare systems. Thanks to the newly Institution (ZUS). Last year, one of the most important signed contracts, today more than 130 hospitals and

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

healthcare centers use our latest system called The following table presents the financial results AMMS (Asseco Medical Management Solutions). generated by our General Business segment in the During the last year, this system was enriched with years 2014 and 2013. additional functionalities and modules. We also successfully developed the Subcarpathian Medical 12 months 12 months Information System and provided high-quality ended 31 Dec. ended 31 Dec. PLN millions Change equipment and software for the Regional Blood 2014 2013 (audited) (audited) Donation and Hemotherapy Centers.

In 2014, Asseco gained another important client in Sales1) 305.9 280.3 9.1% the public administration sector, namely the Office of EBITDA2) 65.5 53.4 22.7% Electronic Communications (UKE). EBITDA margin 21.4% 19.1% 2.3 pp Depreciation and (16.1) (9.7) 66.0% General Business amortization Margin IV 49.4 43.7 13.0% In 2014, we carried out significant contracts and projects especially in the sectors of Margin IV (%) 16.1% 15.6% 0.6 pp telecommunications and energy. The Company Margin IV adjusted 49.4 43.7 13.0% signed a contract for further development of a Margin IV adjusted (%) 16.1% 15.6% 0.6 pp proprietary IT solution of Cyfrowy Polsat Group Employment [persons] 638 531 20.2% (Polkomtel), which is used for distribution of their products and services. This task involves the Allocated goodwill 129.7 129.7 - 1) Sales to external customers modification of 50 software systems and is 2) EBITDA = Margin IV + depreciation and amortization performed by more than 200 people. This is the next 3) Margin IV = net profit on sales generated by operating segment 4) Margin IV adjusted = Margin IV + PPA, where PPA means amortization charges on project building up our cooperation with that client – intangible assets recognized in purchase price allocation in the previous year, we redesigned the www.plus.pl web portal and store owned by Polkomtel, the operator of Plus mobile network, as well as launched The AUMS solution has been also recognized by Asseco Utility Management Solutions (AUMS) to Gartner research firm and included in their Magic support their electricity distribution operations. The Quadrant report as the first Polish software solution Company also continued its close cooperation with and the only IT product designed for the energy Orange Poland within their Vendors Consolidation sector. project. We completed the migration of several million individual customers of fixed-line telephony and Internet into a new billing system maintained by Non-recurring events with impact on our the team of Asseco Poland. financial performance Orange Poland has also deployed the AUMS system During the period of 12 months ended 31 December to support their sales of electricity. This is yet another 2014, the financial results were affected by the large telecommunications player that decided to following one-time events. provide energy distribution services with the help of AUMS. Opinion on feasibility of investment plans Apart from Orange Poland, the AUMS system has Asseco Poland S.A. pays its trade payables, settles the been implemented for one of the biggest energy state obligatory charges, and fulfils its investment companies in Poland, namely Enea Centrum of the obligations on a timely basis. We maintain loan Enea Group, where Asseco’s system will be expanded facilities at various banks in order to diversify our to serve as their main customer service platform. sources of financing. The Company pays its liabilities Moreover, the Company entered into an agreement from current operating revenues which may be with the Ethiopian Information Network Security supplemented with third-party financing, in the form Agency (INSA) to jointly execute a project of building of short-term bank overdraft facilities, bank term a modern energy market in Ethiopia. This contract is loans, borrowings, or capital contributions. worth over PLN 29.9 million. The system will be created based on Asseco’s proprietary AUMS software as well as extensive know-how in IT solutions for the energy sector.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Asseco Poland S.A. in the capital market

37 02 Jan 2014 02 Mar 2014 02 May 2014 02 Jul 2014 02 Sep 2014 02 Nov 2014

Asseco Poland WIG20

2014-01-02 2014-03-31 2014-06-30 2014-09-30 2014-12-30 Δ 12M

Asseco Poland S.A. (PLN) 45.40 44.20 41.10 46.60 51.00 12.3%

WIG20 (points) 2,430.7 2,462.50 2,408.80 2,500.30 2,315.90 - 4.7%

WIG (points) 51,865.89 52,373.47 51,934.94 54,878.58 51,416.08 -0.9%

WIG-Info (points) 1,397.57 1,312.10 1,247.43 1,322.84 1,386.48 -0.8%

In 2014, the price of Asseco Poland shares performed Another important factor with impact on stock prices much better than the index of blue chips WIG20 and on the Warsaw Stock Exchange was the conflict in the the broad market measured by WIG index. Over this east of Europe which increased the investment risk in period, the Company’s shares appreciated by 12.3%, the region. while both WIG20 and WIG indices declined by 4.7% The market valuation of Asseco Poland might have and 0.9%, respectively. The information technology been also affected by the distribution of a dividend for industry index, WIG-Info, also recorded a decrease of 2013 which amounted to PLN 2.60 per share. 0.8% in the past year.

Last year the Polish capital market was affected by both economic and political factors. The reform of the Company’s stock information Act on Open Pension Funds (OFE) resulted in a reduced Total number of shares 83,000,303 demand for stocks from pension funds. The demand ISIN PLSOFTB00016 from institutional investors was also limited due to a WSE ACP small inflow of new money into equity investment Reuters ACPP.WA funds. Bloomberg ACP PW On the other hand, the stock market was supported by decisions of the Monetary Policy Council that cut the Polish interest rates to a record low level.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Shareholder structure Major Shareholders as at 31 December 2014

Aviva Pension Fund holds 10,920,000 shares representing 13.16% of voting rights

Adam Góral holds 8,083,000 shares representing 9.74% of voting rights

PZU Pension Fund holds 7,600,000 shares representing 9.16% of voting rights

Other shareholders hold 56,397,303 shares representing 67.94% of voting rights

To the best knowledge of the Company’s Management directly or through their subsidiaries, held at least 5.0% Board, as at the date of publication of this report, i.e. of total voting rights were as follows: on 13 March 2015, the Shareholders who, either Percentage of Shareholders Number of directly or through their subsidiaries, hold at least 5.0% total voting as at 14 November 2014 shares held of total voting rights are as follows: rights Aviva Pension Fund1) 10,920,000 13.16% Shareholders Percentage of total Adam Góral, President of Number of shares held 8,083,000 9.74% as at 13 March 2015 voting rights the Management Board2) Aviva Pension Fund1) 10,920,000 13.16% PZU Pension Fund1) 7,600,000 9.16%

Adam Góral, President of 3) 8,083,000 9.74% ING Pension Fund 4,266,558 5.14% the Management Board2) Other shareholders 52,130,745 62.80% PZU Pension Fund1) 7,600,000 9.16% 83,000,303 100% Other shareholders 56,397,303 67.94% 1) According to the number of votes exercised at the GMS held on 24 April 2013. 83,000,303 100% 2) According to Adam Góral’s notification received by the Company on 14 December 2012 1) According to the number of votes exercised at the OGMS held on 12 May 2014. informing that, following the issuance of series K shares, his shareholding in the Company 2) According to Adam Góral’s notification received by the Company on 14 December 2012 dropped below 10%. informing that, following the issuance of series K shares, his shareholding in the Company 3) According to notification received by Asseco Poland S.A. from ING Pension Fund on 20 dropped below 10%. August 2014.

According to the best knowledge of the Management Shares held by the management and Board of Asseco Poland S.A., as at 31 December 2014, the Shareholders who, either directly or through their supervisory personnel subsidiaries, held at least 5% of total voting rights were The numbers of Asseco Poland shares held by its as follows: management and supervisory staff are presented in the table below: Shareholders Number of Percentage of total as at 31 December 2014 shares held voting rights 13 March 31 Dec. 2014 14 November Aviva Pension Fund1) 10,920,000 13.16% 2015 2014 Adam Góral, President of Jacek Duch – Chairman of 31,458 31,458 31,458 8,083,000 9.74% the Management Board2) the Supervisory Board PZU Pension Fund1) 7,600,000 9.16% Adam Góral – President of 8,083,000 8,083,000 8,083,000 the Management Board Other shareholders 56,397,303 67.94% Tadeusz Dyrga – Vice 21,724 21,724 21,724 83,000,303 100% President of the Management Board 1) According to the number of votes exercised at the OGMS held on 12 May 2014. Robert Smułkowski – Vice 2,212 2,212 2,212 2) According to Adam Góral’s notification received by the Company on 14 December 2012 President of the informing that, following the issuance of series K shares, his shareholding in the Company dropped below 10%. Management Board To the best knowledge of the Company’s Management The remaining members of the Supervisory Board and Board, as at the publication date of the prior report, i.e. Management Board did not hold any shares in Asseco on 14 November 2014, the Shareholders who, either Poland S.A. in any of the above-mentioned periods.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Discussion of significant risk factors and Risk related to consolidation of the banking sector threats The banking and finance sector is the place of ongoing consolidation processes. There is a risk that Risk related to intensified competition consolidators of this sector will force the acquired Business operations of Asseco Poland are under the financial institutions to use their global IT solutions, pressure of intense competition both from local which may slow down the process of gaining new players and international IT corporations. Competitors contracts or even result in termination of already with global reach are getting continually stronger as concluded contracts. Such circumstances might have a they have got faster access to innovative technological significant adverse impact on the operations, financial solutions, but also to cheaper sources of funds which position, financial results and prospective makes it possible to finance large contracts more development of Asseco. efficiently. It is not certain whether the increasing Risk related to carrying out of public tenders competition will have no significant adverse impact on the Company’s operations, financial position, financial Delays in finalization of the tendering procedures for results and future development outlook. delivery of IT infrastructure for the public administration may result in unstable revenues from Risk related to technological changes in the industry this sector. If combined with unsatisfactory utilization and development of new products of the EU funds granted for improving innovation at The IT sector is characterized by rapid development of public offices, this might substantially reduce the local new solutions and technologies, which shorten the demand for IT services and thereby exert a negative lifecycle of products. Therefore, the future success of impact on the operations, financial position, financial Asseco Poland will largely depend upon our capability results and prospective development of Asseco. to incorporate the latest technological solutions into Risk involved in gaining new contracts our products and services. In order to maintain the competitive advantage in this market, it is necessary to It is characteristic of the IT business that most of conduct research work and to invest in new products. contracts of Asseco Poland are awarded under Asseco keeps on monitoring the present information tendering procedures. Therefore, it is not certain that technology trends and develops and upgrades its the Company will be able to gain such new contracts business offer accordingly. However, there is still a risk that would ensure sufficiently high and satisfactory that the market will receive new products, which will revenues in the future. These factors might have a cause our products and services to become less significant adverse impact on the operations, financial attractive, and eventually not as profitable as position, financial results and prospective expected. Additionally, it cannot be taken for granted development of Asseco. that the new solutions which are, or will be, created or Risk related to the macroeconomic situation of developed by Asseco will satisfy the technological Poland requirements, and whether they will be accepted positively by their potential users. Such circumstances Development of the IT services sector is closely might have a significant adverse impact on the correlated to the overall economic prosperity. The operations, financial position, financial results and main factors affecting the financial results of Asseco prospective development of Asseco. Poland include the pace of GDP growth, value of public orders for IT solutions, level of capital expenditures Risk related to market saturation made by enterprises, inflation rate, and foreign Technological saturation that begins to emerge in the currency exchange rates versus the Polish zloty. Polish banks and private enterprises may prompt them to focus their strategies on smaller or mid-size IT projects that would address their current needs only. Such circumstances might have a significant adverse impact on the operations, financial position, financial results and prospective development of Asseco.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Risk of becoming dependent on the key customers Risk of losing the clients’ trust The implementation of contracts with key clients will Operations of Asseco Poland S.A. are to a large extent heavily impact the level of sales revenues generated by based on the customers' trust. Implementation of an IT Asseco Poland in the coming years. It cannot be system, which has critical importance for the precluded that a potential loss of any major client, customer’s business, usually results in signing a long- deterioration in the financial terms for provision of term agreement with the system user. The quality of services, or potential compensatory claims would have solutions and services provided to such clients a significant adverse impact on the operations, determines their confidence in the Asseco brand. In financial position, financial results and prospective the event the quality of delivered products and development of Asseco. services was poor, our customers might lose their trust in Asseco, which might hurt our reputation in the Risk of increasing cost of work market and make it impossible to continue successful Salaries account for over 70% of the project business operations. implementation costs. Taking into account such high Risk of underestimation of the project cost human resource requirements, an increase in salaries would squeeze the margins achieved on projects, and Most of Asseco’s profits are derived from the consequently have an unfavourable impact on the execution of complex information technology projects financial results of Asseco Poland S.A. carried out under long-term agreements with a predefined remuneration. Implementation of such In order to manage the risk of higher cost of work, the projects requires very good planning both in terms of Company takes a number of measures which can help the schedule of work and the resources needed to reduce potential negative effects of rising salaries. provide the promised scope of the contract. Here the Among other things, Asseco (i) employs people in many Company follows complex procedures, which on one geographical regions aiming to diversify that risk, (ii) hand facilitate the process of preparation of reliable continually monitors the level of salaries in the market plans and on the other hand prevent the incurrence of not to be taken by surprise, and (iii) tries to maintain unexpected costs. an appropriate structure of employment within particular levels of competence. In order to manage the risk of the project cost underestimation, Asseco Poland applies the methods Risk of changes in regulations and their interpretation (either based on the world recognized standards or Frequent amendments, lack of cohesion and uniform proved by own experience) for estimation of the interpretations of the provisions of law, concerning in project costs, preparation of work schedules, and particular the tax regulations, banking law, insurance identification of risks that may hinder timely, law (inclusive of social insurance), public procurement professional or financial performance under a law, personal data protection law, regulations contract. pertaining to trading in securities and public offering, Risk of concluding a contract with a dishonest and commercial companies law, give rise to the customer regulatory risk occurring in the environment in which Asseco Poland operates. The tax regulations and their Asseco is exposed to the risk of defaulting contractors. interpretations are more than others prone to This risk is connected firstly with the financial numerous changes. Practices of the internal revenue credibility and good will of customers to whom the administration and the court judicature are not Company provides its IT solutions, and secondly with uniform in this domain. In the event the taxation the financial credibility of contractors with whom authorities take a position that is different from our supply transactions are concluded. interpretation of tax regulations, the operations, Hence, the risk control measures usually consist in financial position and financial results of Asseco may monitoring the timely execution of bank transfers and, be exposed to negative consequences thereof. Such if needed, sending a reminder of outstanding payment. risk may be materializing especially due to potential In the case of smaller clients, it is quite helpful to doubts expressed by the taxation authorities over the monitor their industry press as well as to analyze transactions the Company conducts with its related previous experience gathered by ourselves and by our parties. This might have a significant adverse impact on competitors, etc. the operations, financial position, financial results and prospective development of Asseco.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Risk of inability to effectively integrate the taken- Risk of data leakage over companies or to achieve the intended rates of As a result of deliberate actions of third parties or return on acquisitions or investments dishonest employees, as well as mistakes or Asseco Poland implements the strategy of carelessness of our employees or contractors, development, among others, through acquisitions of confidential data of the Company or of our clients may or capital investments in IT companies. Valuation of be disclosed to unauthorized persons. Such the future acquisitions or investments will depend on circumstances might have an adverse impact on the the market conditions as well as on other factors perception of Asseco by our clients, and consequently beyond the Asseco’s control. It cannot be entirely on the Group’s operations, financial position, financial precluded that the investor company may be unable to results and prospective development. accurately estimate the values of undertaken Risk of property damage acquisitions or investments. There is also a risk that earnings generated by the acquired or investee As a result of abuse or errors committed by employees companies fall short of the initial estimates which of Asseco, the Company may suffer damage to its might prevent us from achieving the rates of return property. Such circumstances might have an adverse that were originally expected from such transactions. impact on the Group’s financial condition and business continuity, and consequently on the Company’s Risk related to losing the key personnel operations, financial position, financial results and The Company’s operations and development outlook prospective development. depend to a large extent on the knowledge, experience Personnel policy risk and professional qualifications of its employees, who implement the IT projects. A substantial demand for IT Asseco Poland may incur costs in connection with specialists and the competitors' activities may induce legitimate or illegitimate claims filed by its employees the key personnel to leave our organization, and also on the grounds of discrimination, working conditions, make it quite difficult to recruit new employees with etc. Such circumstances might have a significant suitable knowledge, experience and professional adverse impact on the operations, financial position, qualifications. Still there is a risk that resignation by the financial results and prospective development of key personnel would have a negative impact on the Asseco. execution of IT contracts conducted by the Company, as well as on ensuring the required quality and range of services provided. This in turn might have a significant adverse impact on the operations, financial position, financial results and prospective development of Asseco Poland S.A.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

OTHER INFORMATION Related party transactions Explanation of differences between the Related party transactions have been presented in financial results disclosed in the annual report explanatory note 25 to the annual financial statements of Asseco Poland S.A. for the year ended 31 December and previous financial forecasts for the year 2014. These transactions were carried out on an arm’s Asseco Poland S.A. did not publish any financial length basis. forecasts for the year 2014. Bank loans, borrowings, sureties and Opinion on feasibility of the Management guarantees Board financial forecasts for 2015 Bank loans drawn, loans granted, as well as sureties The Management Board of Asseco Poland S.A. did not and guarantees granted have been described in publish any financial forecasts for the year 2015 or for explanatory notes 20 and 27 to the annual financial subsequent financial periods. statements of Asseco Poland S.A. for the year ended 31 December 2014. Changes in the Company management policies Loans granted during the financial year During the year 2014, the Company’s management practices remained unchanged. Information on loans granted by Asseco Poland S.A. has been presented in explanatory note 11 to the Remuneration of the management and annual financial statements of Asseco Poland S.A. for supervisory personnel the year ended 31 December 2014. The amounts of remuneration due to our management Off-balance-sheet items and supervisory staff have been disclosed in explanatory note 32 to the separate financial The nature, purpose and value of significant off- statements of Asseco Poland S.A. for the year ended balance-sheet items have been presented in 31 December 2014. explanatory notes 27 and 28 to the annual financial statements of Asseco Poland S.A. for the year ended 31 Agreements concluded by Asseco Poland S.A. December 2014. with its management personnel providing for payment of compensations if such persons Utilization of proceeds from issuance of shares resign or are dismissed from their positions In the period of 12 months ended 31 December 2014, Asseco Poland S.A. did not issue any new shares. Asseco Poland S.A. did not conclude any agreements with their management officers that would provide for Monitoring of employee stock option plans payment of compensations in the event such persons As at the date of preparation of this report, the resign or are dismissed from their positions without Company did not run any share-based employee substantial reason, or when they are dismissed as a result of a company merger by acquisition. incentive scheme. Information on the agreements known to the Significant agreements concluded by the Issuer which may result in future changes of the Company equity interests held by the existing During the year ended 31 December 2014, the shareholders and bondholders Company did not sign any significant agreements. There are no agreements which may result in future Information on judicial proceedings where the changes of the equity interests held by the existing value in dispute exceeds 10% of the amount of shareholders and bondholders. equity Organizational and equity relationships At the publication date of this report, the Company was not a party to any proceedings pending before any Asseco Poland S.A. is the parent company of Asseco Poland Group, and its equity relationships have been court, arbitration authority or public administration presented in explanatory note 9 to the annual financial authority, under which the value in dispute would exceed 10% of the Company’s equity. statements of Asseco Poland S.A. for the year ended 31 December 2014.

Report on Operations of Asseco Poland S.A. for the year ended 31 December 2014

Information on adhering to the corporate governance standards Information on adhering to the corporate governance standards has been contained in the separate Report on compliance of Asseco Poland S.A. with the corporate governance standards in the year 2014. Agreement with the entity authorized to audit financial statements The agreement with the entity authorized to audit financial statements, namely Ernst & Young Audyt Polska Sp. z o.o. sp. k. (formerly: Ernst & Young Audit Sp. z o.o.), to carry out audits of the separate and consolidated financial statements of Asseco Poland S.A. drawn up for the year ended 31 December 2014 was signed on 24 June 2014. Remuneration of the entity authorized to audit financial statements Information on remuneration due to the entity authorized to audit financial statements has been provided in explanatory note 31 to the annual financial statements of Asseco Poland S.A. for the year ended 31 December 2014. This Management Report on Operations has been approved for publication by the Management Board of Asseco Poland S.A. on 13 March 2015.

STATEMENTS BY THE MANAGEMENT BOARD OF ASSECO POLAND S.A.

TO THE ANNUAL REPORT for the year ended 31 December 2014

Statement by the Management Board of Asseco Poland S.A. on the reliability of preparation of the annual financial statements of Asseco Poland S.A. for the year ended 31 December 2014 The Management Board of Asseco Poland S.A. hereby declares that, to the best of its knowledge, the annual financial statements of Asseco Poland S.A. for the year ended 31 December 2014 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.

Adam Góral President of the Management Board

Przemysław Borzestowski Vice President of the Management Board

Andrzej Dopierała Vice President of the Management Board

Tadeusz Dyrga Vice President of the Management Board

Rafał Kozłowski Vice President of the Management Board

Marek Panek Vice President of the Management Board

Paweł Piwowar Vice President of the Management Board

Zbigniew Pomianek Vice President of the Management Board

Włodzimierz Serwiński Vice President of the Management Board

Przemysław Sęczkowski Vice President of the Management Board

Robert Smułkowski Vice President of the Management Board

Statement by the Management Board of Asseco Poland S.A. on the entity authorized to audit the annual financial statements of Asseco Poland S.A. for the year ended 31 December 2014 The Management Board of Asseco Poland S.A. hereby declares that the entity authorized to audit the annual financial statements of Asseco Poland S.A. for the year ended 31 December 2014, namely Ernst & Young Audyt Polska 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.

Adam Góral President of the Management Board

Przemysław Borzestowski Vice President of the Management Board

Andrzej Dopierała Vice President of the Management Board

Tadeusz Dyrga Vice President of the Management Board

Rafał Kozłowski Vice President of the Management Board

Marek Panek Vice President of the Management Board

Paweł Piwowar Vice President of the Management Board

Zbigniew Pomianek Vice President of the Management Board

Włodzimierz Serwiński Vice President of the Management Board

Przemysław Sęczkowski Vice President of the Management Board

Robert Smułkowski Vice President of the Management Board

Asseco Poland S.A. 14 Olchowa St. 35-322 Rzeszów, Poland

phone: +48 17 888 55 55 fax: +48 17 888 55 50 2 e-mail: [email protected]

Investor Relations Department phone +48 22 574 86 58 fax: +48 22 574 82 82 e-mail: [email protected]