asseco group annual report_16.03... · asseco group annual report. present in over 54 countries...

Annual Report

for the year ended 31 December 2015

Asseco Group Annual Report

Present in over

54

countries

7,256 mPLN in sales revenues

366 mPLN

in net profit for Shareholders of

the Parent Company

5,025 mPLN

in order backlog for 2015

6th

largest software vendor in Europe

20,961 highly committed

employees

Consolidated Financial Statements of Asseco Group for the year ended 31 December 2015

All figures in millions of PLN, unless stated otherwise 3

CONSOLIDATED FINANCIAL STATEMENTS OF ASSECO GROUP

For the year ended 31 December 2015

Table of contents Page

FINANCIAL HIGHLIGHTS OF ASSECO GROUP ................................................................................. 6

CONSOLIDATED FINANCIAL STATEMENTS .......................................................................................... 7

CONSOLIDATED INCOME STATEMENT .............................................................................................................................. 9

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................................................... 10

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................................... 11

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................................................... 13

CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................................ 15

SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................... 17

I. GENERAL INFORMATION ...................................................................................................... 17

II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS ................................................... 18

1. Basis for preparation ......................................................................................................................... 18 2. Compliance statement ...................................................................................................................... 18 3. Estimates ........................................................................................................................................... 18 4. Professional judgement and estimates ............................................................................................. 18 5. Accounting policies applied ............................................................................................................... 21 6. New standards and interpretations published but not in force yet .................................................. 22 7. Changes in the presentation methods applied ................................................................................. 23 8. Corrections of material errors ........................................................................................................... 23 9. Changes in comparable data ............................................................................................................. 23

III. SIGNIFICANT ACCOUNTING POLICIES .................................................................................... 27

1. Consolidation rules ............................................................................................................................ 27 2. Investments in associates ................................................................................................................. 27 4. Participation in a joint venture .......................................................................................................... 29 5. Treatment of non-controlling interest put options in the consolidated financial statements ......... 29 6. Combination of businesses under common control ......................................................................... 29 7. Translation of items expressed in foreign currencies ....................................................................... 29 8. Property, plant and equipment ......................................................................................................... 30 9. Investment property ......................................................................................................................... 30 10. Intangible assets ................................................................................................................................ 31 11. Government grants ........................................................................................................................... 32 12. Borrowing costs ................................................................................................................................. 32 13. Impairment of non-financial assets ................................................................................................... 32 14. Financial assets .................................................................................................................................. 33 15. Inventories ........................................................................................................................................ 34 16. Prepayments and accrued income .................................................................................................... 34 17. Trade receivables .............................................................................................................................. 35 18. Cash and cash equivalents ................................................................................................................ 36 19. Interest-bearing bank loans and borrowings .................................................................................... 36 20. Leases ................................................................................................................................................ 36 21. Trade payables .................................................................................................................................. 36 22. Provisions .......................................................................................................................................... 36 23. Provision for warranty repairs........................................................................................................... 37 24. Revenues ........................................................................................................................................... 37 25. Revenues and costs related to the execution of implementation contracts .................................... 38 26. Operating costs ................................................................................................................................. 40 27. Income tax and value added tax ....................................................................................................... 40 28. Earnings per share (basic and diluted) .............................................................................................. 41



IV. ORGANIZATION AND CHANGES IN THE STRUCTURE OF ASSECO GROUP, INCLUDING THE ENTITIES SUBJECT TO CONSOLIDATION ................................................................................. 42

V. INFORMATION ON OPERATING SEGMENTS ........................................................................... 53

VI. EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................... 56

1. Sales revenues and operating costs .................................................................................................. 56 2. Other operating income and expenses ............................................................................................. 59 3. Financial income and expenses ......................................................................................................... 60 4. Corporate income tax ........................................................................................................................ 61 5. Discontinued operations ................................................................................................................... 64 6. Earnings per share ............................................................................................................................. 64 7. Information on dividends paid out .................................................................................................... 65 8. Property, plant and equipment ......................................................................................................... 66 9. Intangible assets ................................................................................................................................ 68 10. Investment property ......................................................................................................................... 74 11. Goodwill ............................................................................................................................................ 75 12. Impairment testing ............................................................................................................................ 89 13. Entities with significant non-controlling interests ............................................................................ 92 14. Investments accounted for using the equity method ....................................................................... 94 15. Other financial assets ........................................................................................................................ 95 16. Prepayments and accrued income .................................................................................................... 96 17. Long-term and short-term receivables ............................................................................................. 97 18. Implementation contracts ................................................................................................................. 98 19. Inventories ........................................................................................................................................ 99 20. Cash and cash equivalents ................................................................................................................ 99 21. Non-current assets held for sale ....................................................................................................... 99 22. Share capital .................................................................................................................................... 100 23. Interest-bearing bank loans and debt securities issued .................................................................. 101 24. Finance lease liabilities .................................................................................................................... 104 25. Financial liabilities ........................................................................................................................... 106 26. Provisions ........................................................................................................................................ 108 27. Long-term and short-term liabilities ............................................................................................... 109 28. Accruals and deferred income ........................................................................................................ 110 29. Related party transactions .............................................................................................................. 110 30. Notes to the Statement of Cash Flows ............................................................................................ 113 31. Off-balance-sheet liabilities towards other entities ........................................................................ 114 32. Objectives and principles of financial risk management ................................................................. 115 33. Employment .................................................................................................................................... 119 34. Remuneration of the entity authorized to audit financial statements ........................................... 120 35. Remuneration of the Management Board and Supervisory Board of Asseco Poland S.A. ............. 120 36. Capital management ....................................................................................................................... 121 37. Significant events after the balance sheet date .............................................................................. 122

Financial Highlights Asseco Group

Selected financial data for the year ended 31 December 2015



FINANCIAL HIGHLIGHTS OF ASSECO GROUP

The following table presents selected financial data of Asseco Group.

12 months ended

31 Dec. 2015 12 months ended



31 Dec. 2014

mPLN mPLN mEUR mEUR

Sales revenues 7,256.2 6,231.9 1,734.0 1,487.6

Operating profit 745.2 636.7 178.1 152.0

Profit before tax and share of profits of associates

743.4 648.1 177.6 154.7

Net profit 575.8 528.5 137.6 126.2

Net profit attributable to Shareholders of the Parent Company

365.5 358.4 87.3 85.6

Net cash provided by (used in) operating activities

846.0 686.4 202.2 163.8

Net cash provided by (used in) investing activities

(380.9) (374.9) (91.0) (89.5)

Net cash provided by (used in) financing activities

(259.0) (120.8) (61.9) (28.8)

Cash and cash equivalents at the end of period 1,599.7 1,223.8 375.4 287.1

Basic earnings per ordinary share attributable to Shareholders of the Parent Company (in PLN/EUR)

4.40 4.32 1.05 1.03

The financial highlights disclosed in these consolidated financial statements were translated into EUR in the following way:

Items of the consolidated income statement and consolidated statement of cash flows have been translated into EUR at the arithmetic average of mid exchange rates as published by the National Bank of Poland and in effect on the last day of each month. These exchange rates were respectively:

o in the period from 1 January 2015 to 31 December 2015: EUR 1 = PLN 4.1848 o in the period from 1 January 2014 to 31 December 2014: EUR 1 = PLN 4.1892

The Group’s cash and cash equivalents as at the end of the reporting period and the comparable period of the previous year have been translated into EUR at daily mid exchange rates as published by the National Bank of Poland. These exchange rates were respectively:

o exchange rate effective on 31 December 2015: EUR 1 = PLN 4.2615 o exchange rate effective on 31 December 2014: EUR 1 = PLN 4.2623

Consolidated Financial Statements for the year ended 31 December 2015

prepared in accordance with the International Financial Reporting Standards as endorsed by the EU

Consolidated Financial Statements Asseco Group



CONSOLIDATED FINANCIAL STATEMENTS

of Asseco Group for the year ended 31 December 2015

These consolidated financial statements have been approved for publication by the Management Board of Asseco Poland S.A. on 16 March 2016.

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



CONSOLIDATED INCOME STATEMENT

ASSECO GROUP

12 months ended 31 Dec. 2015

12 months ended

31 Dec. 2014

Note mPLN mPLN

Continuing operations

Sales revenues 1 7,256.2 6,231.9

Cost of sales 1 (5,506.6) (4,712.1)

Gross profit on sales 1,749.6 1,519.8

Selling costs 1 (451.5) (393.8)

General and administrative expenses 1 (543.7) (477.1)

Net profit on sales 754.4 648.9

Other operating income 2 38.3 32.2

Other operating expenses 2 (47.5) (44.4)

Operating profit 745.2 636.7

Financial income 3 81.2 82.3

Financial expenses 3 (83.0) (70.9)

Profit before tax and share of profits of associates from continuing operations

743.4 648.1

Corporate income tax (current and deferred tax expense)

4 (165.9) (131.2)

Share of profits of associates and joint ventures 14 (1.7) 1.9

Profit from continuing operations for the reporting period 575.8 518.8

Discontinued operations

Profit from discontinued operations for the reporting period 5 - 9.7

Net profit for the reporting period 575.8 528.5

Attributable to:

Shareholders of the Parent Company 365.5 358.4

Non-controlling interests 13 210.3 170.1

Basic consolidated earnings per share from continuing operations for the reporting period, attributable to shareholders of the Parent Company (in PLN)

6 4.40 4.21

Basic consolidated earnings per share for the reporting period, attributable to shareholders of the Parent Company (in PLN)

6 4.40 4.32



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

ASSECO GROUP

12 months ended

31 Dec. 2015


mPLN mPLN

Net profit for the reporting period 575.8 528.5

Other comprehensive income:

Components that may be reclassified to profit or loss

Net profit/loss on valuation of financial assets available for sale (1.0) (0.7)

Income tax relating to components of other comprehensive income

- 0.1

Exchange differences on translation of foreign operations 252.6 101.6

Components that will not be reclassified to profit or loss

Amortization of intangible assets recognized directly in equity (0.8) (0.8)

Actuarial gains/losses (2.7) (6.2)

Income tax relating to components of other comprehensive income

1.4 1.8

Total other comprehensive income 249.5 95.8

TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 825.3 624.3

Attributable to:

Shareholders of the Parent Company 393.5 232.4

Non-controlling interests 431.8 391.9



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSECO GROUP

ASSETS Note

31 Dec. 2015 31 Dec. 2014 1 Jan. 2014

(restated)

(restated)

mPLN mPLN mPLN

Non-current assets

Property, plant and equipment 8 776.1 724.1 707.2

Intangible assets 9 991.6 954.5 1,006.0

Investment property 10 28.0 27.0 32.9

Goodwill 11 5,554.7 5,210.7 5,035.8

Investments accounted for using the equity method

14 10.6 17.6 18.8

Long-term receivables 17 61.1 33.3 35.1

Deferred tax assets 4 93.3 77.2 86.3

Other long-term financial assets 15 245.5 165.6 42.9

Long-term prepayments and accrued income 16 34.1 32.4 24.1

7,795.0 7,242.4 6,989.1

Current assets

Inventories 19 71.9 59.8 95.9

Prepayments and accrued income 16 133.8 105.4 85.4

Trade receivables 17 2,099.0 1,767.3 1,596.1

Corporate income tax receivable 17 72.3 61.0 39.1

Receivables from the state and local budgets 17 40.3 28.1 24.5

Other receivables 17 28.3 36.3 34.7

Other non-financial assets 7.9 3.5 26.4

Other financial assets 15 197.2 142.9 86.0

Cash and short-term deposits 20 1,599.7 1,223.8 968.6

Non-current assets held for sale 21 6.7 13.2 22.7

4,257.1 3,441.3 2,979.4

TOTAL ASSETS 12,052.1 10,683.7 9,968.5



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSECO GROUP

EQUITY AND LIABILITIES Note

31 Dec. 2015 31 Dec. 2014 1 Jan. 2014

(restated) (restated)

mPLN mPLN mPLN

Equity (attributable to shareholders of the Parent Company)

Share capital 22 83.0 83.0 83.0

Share premium 4,180.1 4,180.1 4,180.1

Transactions with non-controlling interests (106.6) (32.7) (51.5)

Exchange differences on translation of foreign operations

(57.9) (87.1) 37.3

Retained earnings / accumulated losses 1,263.2 1,139.6 998.6

5,361.8 5,282.9 5,247.5

Non-controlling interests 2,981.1 2,690.5 2,177.1

Total equity 8,342.9 7,973.4 7,424.6

Non-current liabilities

Interest-bearing bank loans, borrowings and debt securities

23 741.1 514.7 365.3

Long-term finance lease liabilities 24 95.1 110.1 129.2

Other financial liabilities 25 218.7 103.5 144.5

Deferred tax liabilities 4 131.0 135.2 120.3

Long-term provisions 26 69.4 49.4 46.9

Long-term deferred income 28 51.5 65.6 62.7

Other long-term liabilities 27 17.8 12.6 8.7

1,324.6 991.1 877.6

Current liabilities


23 396.5 211.8 163.4

Finance lease liabilities 24 25.5 21.4 22.7

Other financial liabilities 25 96.5 64.8 76.7

Trade payables 27 844.5 583.4 599.2

Corporate income tax payable 27 40.1 29.0 21.0

Liabilities to the state and local budgets 27 165.0 130.4 136.6

Other liabilities 27 200.1 161.5 168.6

Provisions 26 115.2 39.4 44.3

Deferred income 28 252.1 261.3 243.8

Accruals 28 249.1 216.2 190.0

22 2,384.6 1,719.2 1,666.3

TOTAL LIABILITIES 3,709.2 2,710.3 2,543.9

TOTAL EQUITY AND LIABILITIES 12,052.1 10,683.7 9,968.5



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ASSECO GROUP

Share capital Share premium Transactions with

non-controlling interests

Exchange differences on translation of

foreign operations

Retained earnings and current net

profit

Equity attributable to shareholders of

the Parent Company

Non-controlling interests

Total equity

mPLN mPLN mPLN mPLN mPLN mPLN mPLN mPLN

As at 1 January 2015 (restated)

83.0 4,180.1 (32.7) (87.1) 1,139.6 5,282.9 2,690.5 7,973.4

Net profit for the reporting period - - - - 365.5 365.5 210.3 575.8

Other comprehensive income for the reporting period

- - - 29.2 (1.2) 28.0 221.5 249.5

Total comprehensive income for the reporting period

- - - 29.2 364.3 393.5 431.8 825.3

Dividend for the year 2014 - - - - (240.7) (240.7) (118.2) (358.9)

Share-based payment transactions with employees

- - - - - - 19.8 19.8

Transactions with non-controlling interests (including settlement of contingent financial liabilities to non-controlling shareholders (put option))

- - (73.9) - - (73.9) (78.1) (152.0)

Loss of control over subsidiaries - - - - - - (0.9) (0.9)

Obtaining control over subsidiaries - - - - - - 36.2 36.2

As at 31 December 2015 83.0 4,180.1 (106.6) (57.9) 1,263.2 5,361.8 2,981.1 8,342.9



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ASSECO GROUP (continued)

Share capital Share premium Transactions with

non-controlling interests

Exchange differences on translation of

foreign operations

Retained earnings and

current net profit

Equity attributable to shareholders of

the Parent Company

Non-controlling interests

Total equity


As at 1 January 2014 83.0 4,180.1 (51.5) 37.3 998.6 5,247.5 2,177.1 7,424.6

Net profit for the reporting period - - - - 358.4 358.4 170.1 528.5

Other comprehensive income for the reporting period

- - - (124.4) (1.6) (126.0) 221.8 95.8

Total comprehensive income for the reporting period

- - - (124.4) 356.8 232.4 391.9 624.3

Dividend for the year 2013 - - - - (215.8) (215.8) (102.3) (318.1)

Share-based payment transactions with employees

- - - - - - 21.9 21.9

Transactions with non-controlling interests (including settlement of contingent financial liabilities to non-controlling interests (put options)

- - 18.8 - - 18.8 216.9 235.7

Loss of control over subsidiaries - - - - - - (18.6) (18.6)

Obtaining control over subsidiaries - - - - - - 3.6 3.6

As at 31 December 2014 83.0 4,180.1 (32.7) (87.1) 1,139.6 5,282.9 2,690.5 7,973.4



CONSOLIDATED STATEMENT OF CASH FLOWS

ASSECO GROUP

Note



mPLN mPLN

Cash flows – operating activities

Profit before tax and share of profits of associates from continuing operations

743.4 648.1

Profit before tax from discontinued operations for the reporting period 5 - 15.3

Total adjustments:

300.2 153.2

Depreciation and amortization 1 262.5 268.4

Changes in working capital 30 26.8 (81.2)

Interest income/expenses

26.5 13.9

Gain/loss on foreign exchange differences

4.2 (21.9)

Gain/loss on financial assets

(3.9) (19.5)

Other financial income/expenses

(0.9) (19.8)

Gain/loss on disposal of property, plant and equipment and intangible assets

3.6 (4.1)

Gain on disposal of a subsidiary (39.6) -

Gain on disposal of discontinued operations 5 - (9.7)

Costs of share-based payment transactions with employees 1 18.5 21.9

Impairment write-downs on intangible assets, on property, plant and equipment, and on investment property

- 5.8

Other adjustments to profit before tax 2.5 (0.6)

Cash provided by (used in) operating activities

1,043.6 816.6

Corporate income tax paid

(197.6) (130.2)


846.0 686.4

Cash flows – investing activities

Disposal of property, plant and equipment and intangible assets

11.0 7.9

Disposal of assets classified as held for sale 6.4 4.9

Acquisition of property, plant and equipment and intangible assets 30 (191.7) (204.1)

Acquisition of subsidiaries and associates 30 (262.9) (93.5)

Cash and cash equivalents in subsidiaries acquired 30 (45.4) 11.0

Disposal of shares in related companies

97.6 37.7

Cash and cash equivalents in subsidiaries disposed of

(4.3) 3.9

Disposal/settlement of financial assets carried at fair value through profit or loss

30.8 4.0

Acquisition/settlement of financial assets carried at fair value through profit or loss

(12.3) (1.0)

Disposal of financial assets available for sale 8.1 7.3

Acquisition of financial assets available for sale

(33.3) (149.0)

Loans granted 30 (86.3) (53.0)

Loans collected 30 77.3 25.9

Interest received 20.8 18.3

Dividends received

3.3 4.8


(380.9) (374.9)



(continued) Note 12 months ended


31 Dec. 2014

mPLN mPLN

Cash flows – financing activities

Proceeds from transactions with non-controlling interests

7.5 180.2

Expenditures for the acquisition of non-controlling interests 30 (32.4) (105.3)

Proceeds from bank loans and borrowings 30 145.2 369.4

Proceeds from issuance of debt securities 23, 30 221.6 -

Repayment of bank loans and borrowings

(159.7) (185.8)

Finance lease liabilities paid

(23.3) (21.9)

Interest paid

(42.4) (39.7)

Dividends paid out by the Parent Company

(240.7) (215.8)

Dividends paid out to non-controlling shareholders 13 (135.7) (102.2)

Other cash flows from financing activities 0.9 0.3


(259.0) (120.8)

Net increase (decrease) in cash and cash equivalents

206.1 190.7

Net foreign exchange differences

61.8 65.8

Net cash and cash equivalents as at 1 January

1,220.7 964.2

Net cash and cash equivalents as at 31 December 20 1,488.6 1,220.7



SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED FINANCIAL STATEMENTS

I. GENERAL INFORMATION

Asseco Group (“Asseco Group”, the “Group”) is a group of companies, whose Parent Company is Asseco Poland S.A. (the “Parent Company”, “Company”, “Issuer”) with registered office at 14 Olchowa St., Rzeszów, Poland.

The Company was established on 18 January 1989 as a limited liability company and subsequently, under notary deed of 31 August 1993, it was transformed into and since then has operated as a joint-stock company with registered office at 72a, 17 Stycznia St., Warsaw, Poland. The Company is entered in the Register of Entrepreneurs of the National Court Register under the number KRS 0000033391 (previously it was entered in the Commercial Register maintained by the District Court of the Capital City of Warsaw, Commercial Court, XVI Commercial and Registration Department, under the number RHB 17220).

On 4 January 2007, the Issuer changed its name from Softbank S.A. to Asseco Poland S.A., and moved its registered office from 72a, 17 Stycznia St., Warsaw to 80 Armii Krajowej Av., Rzeszów. On 8 March 2010, the Issuer moved its registered office from 80 Armii Krajowej Av., Rzeszów to 14 Olchowa St., Rzeszów.

Since 1998, the Company’s shares have been listed on the main market of the Warsaw Stock Exchange S.A. The Company has been assigned the statistical ID number REGON 010334578.

The period of the Company’s operations is indefinite.

Asseco Poland S.A. is the largest IT company listed on the Warsaw Stock Exchange. The Company is also a major player in the European software producers market.

As a leader of the Group, Asseco Poland S.A. is actively engaged in business acquisitions both in the domestic and foreign markets, seeking to strengthen its position across Europe and worldwide. Now the Company is expanding its investment spectrum for software houses, with an eye to gain insight into their local markets and customers, as well as access to innovative and unique IT solutions.

Our comprehensive offering includes products dedicated for the sectors of banking and finance, public institutions, as well as industry, trade, and services. The Group has got a wide-range portfolio of proprietary products, unique competence and experience in the execution of complex IT projects, and a broad customer base, including the largest financial institutions, major industrial enterprises as well as public administration bodies.



II. BASIS FOR THE PREPARATION OF FINANCIAL STATEMENTS

1. Basis for preparation

These consolidated financial statements were prepared in accordance with the historical cost convention, except for financial assets carried at fair value through profit or loss, financial assets available for sale, and investment property which are also measured at fair value.

The presentation currency of these consolidated financial statements is the Polish zloty (PLN), and all figures are presented in millions of PLN (mPLN), unless stated otherwise.

These consolidated financial statements were prepared on a going-concern basis, assuming the Group will continue its business operations over a period not shorter than 12 months from 31 December 2015. Till the date of approving these consolidated financial statements, we have not observed any circumstances that would threaten the Group companies’ ability to continue as going concerns.

2. Compliance statement

These financial statements have been prepared in compliance with the International Financial Reporting Standards (“IFRS”) as endorsed by the European Union (“EU IFRS”).

IFRS include standards and interpretations accepted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC).

As at the date of approving publication of these financial statements, given the ongoing process of implementing IFRS in the European Union as well as the Group’s operations, in the scope of accounting policies applied by the Group there is no difference between IFRS that came into force and IFRS endorsed by the EU.

IFRS include standards and interpretations accepted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC).

Some of the Group companies maintain their accounting books in accordance with the accounting policies set forth in their respective local regulations. The consolidated financial statements include adjustments not disclosed in the accounting books of the Group’s entities, which were introduced to adjust the financial statements of those entities to IFRS.

3. Estimates

In the year ended 31 December 2015, our approach to making estimates was not subject to any substantial change.

4. Professional judgement and estimates

Preparation of consolidated financial statements in accordance with IFRS requires making estimates and assumptions which have an impact on the data disclosed in such financial statements. Despite the estimates and assumptions have been adopted based on the Group’s management best knowledge on the current activities and occurrences, the actual results may differ from those anticipated.

Presented below are the main areas which in the process of applying our accounting policies were subject not only to accounting estimates, but also to the management’s professional judgement. Therefore, a change in estimates made for the following areas might have a significant impact on the Group’s future results.

i. Consolidation of entities in which the Group holds less than 50% of voting rights

The Group has concluded that despite the lack of an absolute majority of voting rights at the general meeting of shareholders of Sapiens International Corporation N.V. (hereinafter “Sapiens”), Magic Software Enterprises Ltd (hereinafter “Magic”), Formula Systems (1985) Ltd (hereinafter “Formula”), Asseco Resovia S.A. as well as Gdyński Klub Koszykówki Arka S.A., in accordance with IFRS 10, these companies are still controlled by the Group.

As at 31 December 2015, the Group had less than 50% of voting rights at the general meeting of shareholders of Sapiens International Corporation NV (hereinafter “Sapiens”). Despite the lack of an absolute majority of voting rights at the general meeting of shareholders of Sapiens in the period of 12 months ended 31 December 2015, the Group has concluded that, in accordance with IFRS 10, it still controlled the company of Sapiens.

In the case of Sapiens, the conclusion regarding the existence of control in the period of 12 months ended 31 December 2015, in line with IFRS 10, was made considering the following factors:



1. Governing bodies of Sapiens:

decisions of the general meeting are taken by a simple majority of votes represented at the general meeting;

the annual (ordinary) general meeting adopts resolutions to appoint individual directors, choose the company’s financial auditors for the next year, as well as to approve the company’s financial statements and the management’s report on operations;

in accordance with the company’s articles of association, the board of directors of Sapiens is responsible for managing the company’s current business operations and is authorized to take substantially all decisions which are not specifically reserved to shareholders by the articles of association, including the decision to pay out dividends;

the company’s board of directors is composed of 7 members, 4 of whom are independent directors. For the last 6 years, Formula Systems has consistently reappointed the same members of the board of directors. Likewise, the previous composition of the board of directors was re-elected during the general meeting that was held in December 2014, this is when Formula’s equity interest in Sapiens was already below 50%.

2. Shareholder structure of Sapiens:

the company’s shareholder structure is dispersed because, apart from Formula Systems, just one shareholder holds more than 5% of voting rights at the general meeting (5.38% of votes);

there is no evidence that any shareholders have or had any agreement for common voting at the general meeting;

over the last three years from 2013 to 2015, the company’s general meetings were attended by shareholders representing in total between 70% and 74% of total voting rights. This means that the level of activity of the company’s shareholders is relatively moderate or low. Bearing in mind that Formula presently holds approx. 49.13% of total voting rights, the attendance from shareholders would have to be higher than 96% in order to deprive Formula of an absolute majority of votes at the general meeting. The Management believes that achieving such high attendance seems unlikely.

With regard to the above, the Group has determined that Formula Systems, despite the lack of an absolute majority of shares in Sapiens during the year 2015, is still able to influence the appointment of directors at Sapiens, and therefore may affect the directions of development as well as current business operations of that company. Therefore, Formula has power over the company of Sapiens and is able to use that power to affect the amount of generated returns, and is also exposed to such variable returns.

In the case of Magic, the conclusion regarding the existence of control in line with IFRS 10 was made considering the following factors:

1. Governing bodies of Magic:

decisions of the general meeting are taken by a simple majority of votes represented at the general meeting;

the annual (ordinary) general meeting adopts resolutions to appoint individual directors, choose the company’s financial auditors for the next year, as well as to approve the company’s financial statements and the management’s report on operations;

in accordance with the company’s articles of association, the board of directors of Magic is responsible for managing the company’s current business operations and is authorized to take substantially all decisions which are not specifically reserved to shareholders by the articles of association, including the decision to pay out dividends;

the company’s board of directors is composed of 5 members, 3 of whom are independent directors. In recent years, Formula Systems has consistently reappointed the same members of the board of directors.

2. Shareholder structure of Magic:

the company’s shareholder structure may be considered as dispersed because, apart from Formula Systems, just one shareholder holds more than 5% of voting rights and the next major shareholder holds approx. 4.5% of voting rights;

there is no evidence that any shareholders have or had any agreement for common voting at the general meeting;

over the last three years from 2013 to 2015, the company’s general meetings were attended by shareholders representing in total between 60% and 70% of total voting rights. This means that the level of activity of the



company’s shareholders is relatively moderate or low. Bearing in mind that Formula presently holds approx. 46.4% of total voting rights, the attendance from shareholders would have to be higher than 86% in order to deprive Formula of an absolute majority of votes at the general meeting. The Management believes that achieving such high attendance seems unlikely.

With regard to the above, the Group has determined that Formula Systems, despite the lack of an absolute majority of shares in Magic, is still able to influence the appointment of directors at Magic, and therefore Formula has power over the company of Magic and is able to use that power to affect the amount of generated returns, and is also exposed to such variable returns.

The Parent Company maintains control over Formula Systems (1985) Ltd. despite holding less than 50% of its shares, because in 2015 the CEO of Formula Systems granted to one of the Management Board Members of Asseco Poland S.A. an irrevocable authorization to exercise voting rights with respect to all shares held by the CEO of Formula Systems (1985) Ltd. These provisions have been described in detail in explanatory note 1 to these consolidated financial statements.

The Parent Company maintains control over Asseco Business Solutions S.A. despite holding less than 50% of its shares, because, according to the articles of association of Asseco Business Solutions S.A., 3 out of the total 5 members of the supervisory board of that subsidiary are appointed by Asseco Poland S.A.

Moreover, the Group has analyzed its relationships with entities related through the key management personnel and concluded that, in accordance with IFRS 10, it maintains control over Asseco Resovia S.A. and Gdyński Klub Koszykówki Arka S.A. Such decision resulted from the following factors:

the management boards and supervisory boards of both those companies are mostly composed of the key management personnel of Asseco Poland S.A.;

both those companies are to a large extent dependent on financing obtained from Asseco Poland S.A.

Hence, in these consolidated financial statements, the results of Magic, Sapiens, Asseco Resovia and Arka Gdynia, Formula Systems and Asseco Business Solutions have been accounted for using the full consolidation method.

ii. Valuation of IT contracts and measurement of their completion

The Group executes a number of contracts for construction and implementation of information technology systems. Additionally, some of those contracts are denominated in foreign currencies. Valuation of IT contracts requires that future operating cash flows are determined in order to arrive at the fair value of income and expenses and to provide the fair value of the embedded currency derivatives, as well as it requires measurement of the progress of contract execution. The percentage of contract completion shall be measured as the relation of costs already incurred (provided such costs contribute to the progress of work) to the total costs planned, or as a portion of man-days worked out of the total work effort required.

Assumed future operating cash flows are not always consistent with the agreements with customers or suppliers due to modifications of IT projects implementation schedules.

iii. Rates of depreciation and amortization

The level of depreciation and amortization rates is determined on the basis of anticipated period of useful economic life of the components of tangible and intangible assets.

The Group verifies the adopted periods of useful life on an annual basis, taking into account the current estimates. In 2015 the rates of depreciation and amortization applied by the Group were not subject to any substantial modifications.

iv. Goodwill and intangible assets with indefinite useful life – impairment testing

In line with the Group’s policy, every year as at 31 December, the Management Board of the Parent Company performs an annual impairment test on cash-generating units to which goodwill as well as intangible assets with an indefinite period of useful life have been allocated. Whereas, as at each interim balance sheet date, the Management Board of the Parent Company performs a review of possible indications of impairment of cash-generating units to which goodwill and/or intangible assets with indefinite useful life have been allocated. In the event such indications are identified, an impairment test should be carried out as at the interim balance sheet date.



Each impairment test requires making estimates of the value in use of cash-generating units or groups of cash-generating units to which goodwill and/or intangible assets with indefinite useful life have been allocated. The value in use is estimated by determining both the future cash flows expected to be achieved from the cash-generating unit or units and a discount rate to be subsequently used in order to calculate the net present value of those cash flows.

The impairment test has been described in detail in explanatory note 12 to these consolidated financial statements.

v. Liabilities under put options granted to non-controlling shareholders

As at 31 December 2015, the Group recognized liabilities resulting from future payments to non-controlling shareholders. Determination of the amounts payable under such liabilities required making estimates of future financial results of our subsidiaries. As at 31 December 2015, such liabilities amounted to PLN 238.4 million (see explanatory note 25 to these consolidated financial statements).

vi. Liabilities for deferred contingent payments for controlling interests in subsidiaries

As at 31 December 2015, the Group recognized liabilities for deferred contingent payments for controlling interests in subsidiaries in the amount of PLN 60.1 million. Determination of the amounts payable under such liabilities required making estimates of future financial results of our subsidiaries (see explanatory note 25 to these consolidated financial statements).

vii. Classification of lease agreements (the Group as a lessee)

The Group classifies its lease contracts as operating or financial depending on whether substantially all the risks and rewards incidental to ownership of leased assets are retained by the lessor or transferred to the lessee. Such assessment is based on the economic substance of each leasing transaction.

viii. Classification of lease agreements (the Group as a lessor)

The Group generates revenues, among others, from lease agreements whereby the Group’s assets are leased to clients for a fee.

The analysis of such agreements showed that the lease terms are shorter than the estimated useful lives of leased assets, and that significant risks and rewards incidental to ownership of leased assets

have not been transferred to the Group’s clients. Hence, the Group concluded that these agreements shall be treated as operating leases.

ix. Internally generated intangible assets

The costs of internally generated intangible assets are measured and capitalized in line with the Group’s accounting policy. The determination of when to begin the capitalization of such costs is subject to the management’s professional judgement as to the technological and economic feasibility of completing the development project. This moment is determined by reaching a stage (milestone) of the project, at which the Group is reasonably certain of being able to complete the intangible asset so that it will be available for use or sale, and that future economic benefits to be obtained from use or sale of such intangible asset will exceed its production cost.

Thus, when determining the amount of capitalizable expenditures, the Management Board needs to estimate the present value of future cash flows to be generated by the intangible asset.

In the period of 12 months ended 31 December 2015, the Group capitalized PLN 81.8 million of project development costs (see explanatory note 9 to these consolidated financial statements).

5. Accounting policies applied

The accounting policies adopted in the preparation of these consolidated financial statements are consistent with those followed when preparing the Group’s annual consolidated financial statements for the year ended 31 December 2014, which were published on 13 March 2015.

The Group did not decide on early adoption of any other standard, interpretation or amendment which has been published but has not yet become effective.



6. New standards and interpretations published but not in force yet

The following standards and interpretations were issued by the International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC), but have not yet come into force:

IFRS 9 Financial Instruments (issued on 24 July 2014) – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2018;

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions (issued on 21 November 2013) – effective for annual periods beginning on or after 1 July 2014 – to be applied in the EU at the latest for annual periods beginning on or after 1 February 2015;

Annual Improvements to IFRSs: 2010-2012 Cycle (issued on 12 December 2013) – some amendments are effective for annual periods beginning on or after 1 July 2014, and some prospectively for transactions occurring on or after 1 July 2014 – to be applied in the EU at the latest for annual periods beginning on or after 1 February 2015;

IFRS 14 Regulatory Deferral Accounts (issued on 30 January 2014) – the European Commission has decided not to initiate the process of endorsement of this standard until the release of its final version – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2016;

Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (issued on 6 May 2014) – effective for annual periods beginning on or after 1 January 2016;

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortization (issued on 12 May 2014) – effective for annual periods beginning on or after 1 January 2016;

IFRS 15 Revenue from Contracts with Customers (issued on 28 May 2014), including the amendment of the Effective Date of IFRS 15 (issued on 11 September 2015) – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2018;

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants (issued on 30 June 2014) – effective for annual periods beginning on or after 1 January 2016;

Amendments to IAS 27 Equity Method in Separate Financial Statements (issued on 12 August 2014) – effective for annual periods beginning on or after 1 January 2016;

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (issued on 11 September 2014) – it has not yet been decided when the EFRAG shall perform specific steps for the endorsement of these amendments – not yet endorsed by the EU till the date of approval of these financial statements – the effective date of these amendments has been deferred indefinitely by the IASB;

Annual Improvements to IFRSs: 2012-2014 Cycle (issued on 25 September 2014) – effective for annual periods beginning on or after 1 January 2016;

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception (issued on 18 December 2014) – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2016;

Amendments to IAS 1 Disclosure Initiative (issued on 18 December 2014) – effective for annual periods beginning on or after 1 January 2016;

IFRS 16 Leases (issued on 13 January 2016) – it has not yet been decided when the EFRAG shall perform specific steps for the endorsement of these amendments – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2019;

Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses (issued on 19 January 2016) – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2017;

Amendments to IAS 7 Disclosure Initiative (issued on 29 January 2016) – not yet endorsed by the EU till the date of approval of these financial statements – effective for annual periods beginning on or after 1 January 2017.



The Group is currently conducting an analysis of how the above-mentioned amendments are going to impact its financial statements.

7. Changes in the presentation methods applied

As of 1 January 2015, the Group has changed the method of classification of certain receivables and liabilities, and in particular the way of recognizing receivables/liabilities as related to trade or other activities. Starting from 1 January 2015, the Group decided that all receivables resulting in the recognition of sales revenues shall be presented as trade receivables. Hence, as of 1 January 2015, trade receivables include the following categories:

receivables from issued invoices,

receivables from uninvoiced deliveries,

receivables from valuation of IT contracts.

Until 31 December 2014, the two last-mentioned categories used to be presented by the Group in “other receivables”.

Changes in the presentation of receivables resulted in the necessity of introducing analogous changes in the methods of presentation of liabilities. This involved in particular the following reclassifications:

liabilities arising from valuation of IT contracts as well as liabilities for uninvoiced deliveries have been, as of 1 January 2015, classified as trade payables;

provisions for losses on IT contracts have been reclassified as “Provisions”.

8. Corrections of material errors

In the reporting period, no events occurred that would require making corrections of any material misstatements.

9. Changes in comparable data

In these consolidated financial statements, the comparable data have been subject to the following restatements:

a. Changes resulting from the application of new presentation methods

The comparable data contained in these consolidated financial statements have been restated as a result of changes in the applied presentation methods as described in item 7 above.

b. Changes resulting from the completion of purchase price allocation

In September 2015, the Group completed the process of allocation of the purchase price of Silverback MDM Pty Ltd that was acquired by Matrix42 AG. This necessitated a restatement of certain items of assets and liabilities reported as at 31 December 2014.

c. Changes related to operating segments

Bearing in mind that, starting from 1 January 2015, the financial results of Sintagma UAB have been reviewed by the Management Board of Asseco Poland S.A. as part of the Western European market, the financial results of this company for the year ended 31 December 2015 as well as for the comparable period have been presented in that segment. This is a change in relation to the financial statements published for the period of 12 months ended 31 December 2014 when Sintagma UAB was included in the Eastern European market.

The tables below present the impact of the above-mentioned changes on the comparable data of the statement of financial position as at 31 December 2014 and 1 January 2014.



Restatement of comparable data as at 31 December 2014

Statement of financial

position as at 31 Dec. 2014

Changes in presentation

methods

Changes resulting from purchase price

allocation

Restated statement of

financial position as at 31 Dec. 2014

Restatement of comparable data as at 31 December 2014

Statement of financial

position as at 31 Dec. 2014


methods

Changes resulting from purchase price

allocation

Restated statement of

financial position as at 31 Dec. 2014


Non-current assets 7,238.3 - 4.1 7,242.4 Total equity 7,973.4 - - 7,973.4

Property, plant and equipment 724.1 - - 724.1 Equity (Parent Company) 5,282.9 - - 5,282.9

Intangible assets 954.5 - - 954.5 Non-controlling interests 2,690.5 - - 2,690.5

Investment property 27.0 - - 27.0

Goodwill 5,206.6 - 4.1 5,210.7 Non-current liabilities 988.3 - 2.8 991.1

Investments in associates 17.6 - - 17.6 Interest-bearing bank loans and borrowings 514.7 - - 514.7

Long-term receivables 33.3 - - 33.3 Finance lease liabilities 110.1 - - 110.1

Deferred tax assets 77.2 - - 77.2 Financial liabilities 100.7 - 2.8 103.5

Financial assets 165.6 - - 165.6 Deferred tax liabilities 135.2 - - 135.2

Prepayments and accrued income 32.4 - - 32.4 Provisions 48.6 0.8 - 49.4

Deferred income 65.6 - - 65.6

Current assets 3,441.3 - - 3,441.3 Other liabilities 13.4 (0.8) - 12.6

Inventories 59.8 - - 59.8

Prepayments and accrued income 105.4 - - 105.4 Current liabilities 1,717.9 - 1.3 1,719.2

Trade receivables 1,326.7 440.6 - 1,767.3 Interest-bearing bank loans and borrowings 211.8 - - 211.8

Corporate income tax receivable 61.0 - - 61.0 Finance lease liabilities 21.4 - - 21.4

Receivables from the state and local budgets

28.1 - - 28.1

Financial liabilities 64.8 - - 64.8

Other receivables 476.9 (440.6) - 36.3 Trade payables 416.7 165.4 1.3 583.4

Other non-financial assets 3.5 - - 3.5 Corporate income tax payable 29.0 - - 29.0

Financial assets 142.9 - - 142.9 Liabilities to the state and local budgets 130.4 - - 130.4

Cash and cash equivalents 1,223.8 - - 1,223.8 Other liabilities 233.9 (72.4) - 161.5

Assets held for sale 13.2 - - 13.2 Provisions 29.3 10.1 - 39.4

Deferred income 261.3 - - 261.3

Accruals 319.3 (103.1) - 216.2

TOTAL LIABILITIES 2,706.2 - 4.1 2,710.3

TOTAL ASSETS 10,679.6 - 4.1 10,683.7 TOTAL EQUITY AND LIABILITIES 10,679.6 - 4.1 10,683.7



Restatement of comparable data as at 1 January 2014:

Statement of financial position as at

1 January 2014

Changes in presentation methods

Restated statement of financial position as at

1 January 2014

Restatement of comparable data as at 1 January 2014:

Statement of financial position as at

1 January 2014

Changes in presentation methods

Restated statement of financial position as at

1 January 2014

mPLN mPLN mPLN mPLN mPLN mPLN

Non-current assets 6,989.1 - 6,989.1 Total equity 7,424.6 - 7,424.6

Property, plant and equipment 707.2 - 707.2 Equity (Parent Company) 5,247.5 - 5,247.5

Intangible assets 1,006.0 - 1,006.0 Non-controlling interests 2,177.1 - 2,177.1

Investment property 32.9 - 32.9

Goodwill 5,035.8 - 5,035.8 Non-current liabilities 877.6 - 877.6

Investments in associates 18.8 - 18.8 Interest-bearing bank loans and borrowings 365.3 - 365.3

Long-term receivables 35.1 - 35.1 Finance lease liabilities 129.2 - 129.2

Deferred tax assets 86.3 - 86.3 Financial liabilities 144.5 - 144.5

Financial assets 42.9 - 42.9 Deferred tax liabilities 120.3 - 120.3

Prepayments and accrued income 24.1 - 24.1 Provisions 46.4 0.5 46.9

Deferred income 62.7 - 62.7

Current assets 2,979.4 - 2,979.4 Other liabilities 9.2 (0.5) 8.7

Inventories 95.9 - 95.9

Prepayments and accrued income 85.4 - 85.4 Current liabilities 1,666.3 - 1,666.3

Trade receivables 1,238.6 357.5 1,596.1 Interest-bearing bank loans and borrowings 163.4 - 163.4

Corporate income tax receivable 39.1 - 39.1 Finance lease liabilities 22.7 - 22.7


24.5 - 24.5

Financial liabilities 76.7 - 76.7

Other receivables 392.2 (357.5) 34.7 Trade payables 436.5 162.7 599.2

Other non-financial assets 26.4 - 26.4 Corporate income tax payable 21.0 - 21.0

Financial assets 86.0 - 86.0 Liabilities to the state and local budgets 136.6 - 136.6

Cash and cash equivalents 968.6 - 968.6 Other liabilities 264.0 (95.4) 168.6

Assets held for sale 22.7 - 22.7 Provisions 31.3 13.0 44.3

Deferred income 243.8 - 243.8

Accruals 270.3 (80.3) 190.0

TOTAL LIABILITIES 2,543.9 - 2,543.9

TOTAL ASSETS 9,968.5 - 9,968.5 TOTAL EQUITY AND LIABILITIES 9,968.5 - 9,968.5



Changes in the presentation of operating segments: Restatement of comparable data for the period of 12 months ended 31 December 2014

Western European market


methods


Restatement of comparable data for the period of 12 months ended 31 December 2014

Eastern European market


methods


restated restated


Sales to external customers 460.3 38.0 498.3 Sales to external customers 151.8 (38.0) 113.8

Inter-segment sales 0.3 - 0.3 Inter-segment sales 0.1 - 0.1

Operating profit/(loss) of operating segment 33.7 3.1 36.8 Operating profit/(loss) of operating segment 20.5 (3.1) 17.4

Interest income 2.8 - 2.8 Interest income 0.4 - 0.4

Interest expenses (1.2) - (1.2) Interest expenses - - -

Corporate income tax (7.9) (0.5) (8.4) Corporate income tax (4.1) 0.5 (3.6)

Non-cash items: Non-cash items:

Depreciation and amortization (continuing operations)

(16.0) (0.4) (16.4) Depreciation and amortization (continuing

operations) (8.4) 0.4 (8.0)

Impairment write-downs on segment assets: (0.7) - (0.7) Impairment write-downs on segment assets: (0.6) - (0.6)

Share of profits of associates and jointly controlled companies

- - - Share of profits of associates and jointly

controlled companies - - -

Net profit/loss attributable to shareholders of the Parent Company

20.6 2.1 22.7 Net profit/loss attributable to shareholders

of the Parent Company 12.7 (2.1) 10.6

Cash provided by (used in) operating activities

58.9 5.8 64.7 Cash provided by (used in) operating

activities 20.4 (5.8) 14.6

Goodwill 239.1 16.0 255.1 Goodwill 20.4 (16.0) 4.4



III. SIGNIFICANT ACCOUNTING POLICIES

1. Consolidation rules

These consolidated financial statements include the financial statements of the Parent Company – Asseco Poland S.A. as well as financial statements of entities remaining under its control (subsidiaries) in each case prepared for the year ended on 31 December 2015.

Annual financial statements of our subsidiaries, after being adjusted to comply with IFRS, are prepared for the same reporting period as adopted by the Parent Company and using consistent accounting treatment of similar transactions and economic activities. Any discrepancies in the applied accounting policies are eliminated by making appropriate adjustments.

All significant outstanding settlements and transactions between the Group companies, including unrealized profits resulting from transactions within the Group, have been fully eliminated. All unrealized losses are eliminated as well, except for impairment losses.

Subsidiaries are subject to consolidation from the date the Group obtains control over such entities until such control ceases. The Parent Company controls a subsidiary only when it:

has power over a given entity;

is exposed, or has rights, to variable returns from its involvement with a given entity; and

has the ability to use power over a given entity to affect the amount of generated returns.

The Company reassesses whether it maintains control over other entities if there is any indication of changes to at least one of the above-mentioned elements of control.

In a situation when the Company holds less than a majority of voting rights in a given entity, but it is sufficient to unilaterally direct the relevant activities of such entity, then the control is exercised. When assessing whether voting rights held by the Company are sufficient to give it power, the Company considers all facts and circumstances, including:

the size of its holding of voting rights relative to the size and dispersion of other vote holders;

potential voting rights held by the Company and other shareholders or parties;

rights arising from other contractual arrangements;

significant personal ties;

any additional facts and circumstances that may indicate that the Company has, or does not have, the ability to direct the relevant activities when decisions need to be made, inclusive of voting patterns observed at previous meetings of shareholders.

Subsidiaries are consolidated for the period in which they were controlled by the Group (from the beginning of such control to its end). Should the Group lose control over a subsidiary company, the consolidated financial statements shall include the results of such subsidiary for the part of the year during which it was controlled by the Group. Acquisitions of subsidiaries are entered in the accounting books using the acquisition method.

Any changes in equity interest / voting rights in a subsidiary that do not result in a loss of control are accounted for as capital transactions. In such events, in order to reflect changes in the ownership of a respective subsidiary, the Group shall adjust the carrying value of controlling interests and non-controlling interests. Any differences between the change in non-controlling interests and the fair value of consideration paid or received are recognized directly in equity (transactions with non-controlling interests) and attributed to the owners of the parent company.

2. Investments in associates

Associates are entities which remain under significant, direct or indirect, influence of the Parent Company which are however neither subsidiaries nor joint ventures.

Investments in associates are disclosed in the Group’s consolidated financial statements using the equity method. Under the equity method of accounting, any investment in an associate is initially recognized at cost and is subsequently adjusted to reflect the Group’s share of profit or loss and other comprehensive income of the associate.



Financial statements of associates, adjusted to comply with IFRS, constitute the basis for valuation of the Group’s shareholdings in such entities using the equity method. The reporting dates of associates are the same as those adopted by the Group.

Any investment in an associate shall be accounted for using the equity method from the date when a given entity becomes an associate. On the acquisition date of the investment in an associate, any excess of the acquisition cost over the Group’s share of the net fair value of identifiable assets and liabilities of that associate shall be recognized as goodwill and included in the carrying value of such investment. Whereas, any excess of the Group’s share of the net fair value of identifiable assets and liabilities over the acquisition cost shall be recognized directly as financial income in the period when such investment is made.

When assessing the need for recognition of impairment of the investment in an associate, the Group follows the requirements of IAS 39. If necessary, the entire carrying value of the investment is tested for impairment as a single asset, in accordance with IAS 36 “Impairment of Assets”, by comparing its recoverable amount with the carrying value. Any recognized impairment loss is included in the carrying value of the investment. Such impairment loss may be reversed, in accordance with IAS 36, to the extent of a subsequent increase in the recoverable amount of the investment.

The Group shall cease to apply the equity method of accounting from the date when a particular investment is no longer its associate or when it is classified as held for sale. The difference between the carrying value of the associate, at the date of ceasing to use the equity method, and the fair value of the retained interest and proceeds from the sale of a stake in such entity shall be taken into account when calculating the gain or loss on disposal of that associate.

If the Group reduces its shareholding in the associate but continues to use the equity method of accounting, then it shall recognize a financial income or expense for the portion of profit or loss previously recognized in other comprehensive income, corresponding to such decrease in the shareholding, if such profit or loss may be reclassified to financial results upon disposal of the related assets or liabilities.

3. Goodwill

Goodwill arising from the acquisition of an entity is initially recognized at purchase cost, which represents the excess of:

a. the value of the consideration transferred;

b. the amount of any non-controlling interest in the acquired entity; and

c. in a business combination achieved in

stages, the acquisition-date fair value

of the acquirer’s previously-held equity

interest in the acquired entity;

over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

After initial recognition, goodwill is accounted for at purchase cost less any accumulated impairment charges. Goodwill is tested for impairment on an annual basis as at 31 December, or more frequently if there are indications to do so. Goodwill is not subject to amortization.

As at the acquisition date, the acquired goodwill is allocated to every cash-generating unit which may benefit from synergy effects arising from a business combination. Each cash-generating unit or group of units to which the goodwill is so allocated shall:

a. represent the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

b. not be larger than an operating segment identified in accordance with IFRS 8 Operating Segments.

An impairment write-down is determined by estimating the recoverable amount of a cash-generating unit to which goodwill has been allocated. In the event the recoverable amount of a cash-generating unit is lower than its carrying value, an impairment charge shall be recognized.

Such a write-down is recognized as a financial expense.



In the event a cash-generating unit contains goodwill and a part of business of this cash-generating unit is sold, goodwill related to the disposed business shall be included in its carrying value for the purpose of determining a gain or loss on disposal of that business. In such circumstances the value of goodwill sold shall be measured as a proportion of the value of business disposed to the value of the cash-generating unit retained.

4. Participation in a joint venture

Shares in joint ventures which are jointly controlled by the Group are accounted for using the equity method. Before determining the share in net assets of a joint venture, the financial data of such an entity are subject to appropriate adjustments in order to ensure their compliance with IFRS as applied by the Group.

5. Treatment of non-controlling interest put options in the consolidated financial statements

An entity’s contractual obligation to purchase equity instruments gives rise to a financial liability for the estimated present value of future payment, even if such purchase obligation is conditional on the counterparty’s exercise of its contractual right to cause such redemption, e.g. in situation where non-controlling shareholders are entitled to put shares of a subsidiary to be purchased by the parent company. If the purchase agreement does not provide for a transfer to the parent company of any benefits incidental to the ownership of an equity instrument subject to a put option, then at each balance sheet date non-controlling interests (to which a portion of net profit attributable to non-controlling interests is still allocated) are reclassified as a financial liability, as if such puttable equity instrument was redeemed on that date. Changes in the amount of such reclassified items are recognized directly in equity of the Group, under “Transactions with non-controlling interests”.

If, under the purchase agreement, benefits incidental to the ownership of such puttable equity instruments shall be transferred to the Parent Company, then at the date of obtaining control as well as at each subsequent balance sheet date, non-controlling interests resulting from such puttable equity instruments are not recognized. Hence, a business combination is accounted for as if, at the date of obtaining control, the Parent Company acquired not only an equity interest in a subsidiary but also any

existing puttable equity instruments. Liabilities under put options are measured at fair value at each balance sheet date; whereas, any changes in such estimates are recognized in the income statement (as financial income/expense). The share of profits attributable to puttable equity interests is allocated to the Parent Company.

6. Combination of businesses under common control

A business combination involving business entities under common control is a business combination whereby all of the combining business entities are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not transitory.

This refers in particular to transactions such as a transfer of companies or ventures between individual companies within a capital group, or a merger of a parent company with its subsidiary.

In the event of a business combination in which an investment in one subsidiary is contributed to another subsidiary or in which two subsidiaries of Asseco Poland S.A. are combined, the carrying value of our investment in the acquiree subsidiary is only transferred at the level of separate financial statements. Hence, a takeover of one subsidiary by another subsidiary has no impact on the Group’s financial results whatsoever.

7. Translation of items expressed in foreign currencies

The currency of measurement applied by the Parent Company as well as the reporting currency used in these consolidated financial statements is the Polish zloty (PLN). The functional currencies of the Group’s foreign subsidiaries include: NIS (Israeli new shekel), EUR (euro), USD (American dollar), CZK (Czech koruna), RON (Romanian new leu), RSD (Serbian dinar), and RUB (Russian ruble).

Transactions denominated in foreign currencies are first recognized at the functional currency exchange rate of the transaction date. Assets and liabilities expressed in foreign currencies are converted at the functional currency exchange rate prevailing at the balance sheet date. Foreign currency non-cash items valued at historical cost are converted at the exchange rate as at the initial transaction date. Foreign currency non-cash items valued at fair value are converted using the exchange rate as of the date when such fair value is determined.



As at the balance sheet date, assets and liabilities denominated in currencies other than Polish zloty are translated to Polish zlotys at the mid exchange rates of such currencies as published by the National Bank of Poland and in effect on the last day of the reporting period. Foreign currency differences resulting from such translation are accounted for respectively as financial income (expenses) or in equity, but they may also be capitalized as assets in case it is provided for in the adopted accounting policies.

In the case of indirect foreign subsidiaries, the financial statements are translated from their functional currencies to Polish zlotys in several stages, meaning their functional currency figures are first converted to the functional currency of their immediate parent company (lower-level parent), and subsequently the consolidated financial statements of such lower-level parent are translated into the functional currency of its parent company.

8. Property, plant and equipment

Property, plant and equipment are disclosed at purchase cost or production cost decreased by accumulated depreciation and any impairment write-downs. The initial value of a tangible asset corresponds to its purchase cost increased by expenditures related directly to the purchase and adaptation of such asset to its intended use. Such expenditures may also include the cost of replacing parts of machinery or equipment at the time that cost is incurred if the recognition criteria are met. Any costs incurred after a tangible asset is made available for use, such as maintenance or repair fees, are expensed in the income statement at the time when incurred.

At the time of purchase tangible assets are divided into components of significant value for which separate periods of useful life may be adopted. General overhaul expenses constitute a component of assets as well.

Such assets are depreciated using the straight-line method over their expected useful lives.

A tangible asset may be derecognized from the balance sheet after it is disposed of or when no economic benefits are expected from its further use. Any gains or losses resulting from derecognition of an asset from the balance sheet (measured as the difference between net proceeds from disposal of such asset and its carrying value) are recognized in the income statement for the period when such derecognition is made.

Investments in progress relate to tangible assets under construction or during assembly and are recognized at purchase cost or production cost, decreased by any potential impairment write-downs. Tangible assets under construction are not depreciated until being completed and available for use.

Tangible assets or groups of tangible assets are classified as held for sale when their carrying value will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition and its sale must be highly probable. The fact of classifying an asset as held for sale means that the management of a particular company intends to complete the sale transaction within one year from the date of such classification. Fixed assets that have been classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.

9. Investment property

An investment property is initially recognized at purchase cost including any transaction-related expenses. The carrying value of an investment property includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met, excluding the costs of day-to-day servicing of such a property.

After initial recognition, an investment property is measured at fair value. A gain or loss arising from a change in the fair value of investment property shall be recognized in profit or loss for the period in which it arises, net of the related deferred tax impact.



10. Intangible assets

Intangible assets purchased in a separate transaction shall be capitalized at purchase cost. Intangible assets acquired as a result of a company takeover shall be capitalized at fair value as at the takeover date.

The period of useful life of an intangible asset shall be assessed and classified as definite or indefinite. Intangible assets with a definite period of useful life are amortized using the straight-line method over the expected useful life, and amortization charges are expensed adequately in the income statement.

Impairment tests shall be performed every year for intangible assets with an indefinite period of useful life and those which are no longer used. The remaining intangible assets shall be tested for impairment if there are indications of a possible impairment. Should the carrying value exceed the estimated recoverable amount (the higher of the following two amounts: net sales price or value in use), the value of these assets shall be reduced to the recoverable amount.

Any gains or losses resulting from derecognition of an intangible asset from the balance sheet (measured as the difference between net proceeds from disposal of such asset and its carrying value) are recognized as other operating income or expenses in the income statement at the time when such derecognition is made.

Internally generated intangible assets

The Company presents in separate categories the final products of development projects (“internally generated software”) and the products which have not been finished yet (“costs of development projects in progress”). An intangible asset generated internally as a result of development work (or completion of the development phase of an internal project) may be recognized if, and only if, the Company is able to demonstrate:

a. the technical feasibility of completing such intangible asset so that it would be available for use or sale;

b. the intention to complete the construction of such intangible asset;

c. the ability to use or sell such intangible asset;

d. how such intangible asset is going to generate probable future economic benefits;

e. the availability of adequate technical, financial and other resources to complete the development work and to make the intangible asset ready for use or sale;

f. its ability to measure reliably the expenditure for the development work attributable to such intangible asset.

The cost of an internally generated intangible asset is the sum of expenditures incurred from the date when the intangible asset first meets the above-mentioned recognition criteria. Expenditures previously recognized as expenses may not be capitalized. The cost of an internally generated intangible asset comprises directly attributable costs necessary to create, produce, and prepare that asset to be capable of operating in the manner intended by management. Such costs shall include:

a. costs of benefits for employees who are directly involved in the generation of an intangible asset;

b. all directly attributable costs necessary to create, produce, and adjust an intangible asset, including any legal title registration fees and amortization of patents and licenses that are used to generate such intangible asset;

c. costs of materials and services that are used or consumed directly in generating an intangible asset;

d. indirect costs that are directly attributable to the generation of an intangible asset, including depreciation of equipment used in the generation process as well as rental costs of any office space utilized by the work team.



The cost of an internally generated intangible asset shall not include:

a. selling, administrative and other general overhead expenditures;

b. clearly identified work inefficiencies and initial operating losses incurred before an intangible asset achieves planned performance; and

c. expenditures on training staff to operate such intangible asset.

Until completion of the development work, accumulated costs directly attributable to such development work are disclosed as “costs of development projects in progress”. Upon completion of the development work, the ready-made product of the development work is reclassified to the category of “Internally generated software” and from that time the Group companies begin to amortize such internally generated software. Costs of development work which satisfy the above-mentioned criteria are recognized at purchase cost less accumulated amortization and accumulated impairment write-downs. All the expenditures carried forward to future periods are subject to amortization over the estimated period in which the related undertaking generates sales revenues.

11. Government grants

Government grants are recognized if, and only if, there is reasonable assurance that a beneficiary company will comply with the conditions attached to such grants and that such grants will be received. A grant shall be accounted for using the same approach irrespective of whether it is received in cash or as a reduction of liabilities towards the government.

If a grant is related to a specific cost item, then it shall be recognized as income (or as a reduction of expense) proportionally to the costs that the grant is intended to compensate.

Whereas, if a grant is related to a specific asset, then its fair value is accounted for as deferred income which is afterwards systematically, by way of equal annual write-offs, recognized in the income statement over the estimated useful life of the related asset as a reduced depreciation expense.

12. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that requires substantial time to be prepared to its intended use or sale, shall be capitalized as part of such asset’s purchase cost or production cost. Other borrowing costs shall be recognized as an expense in the period in which they are incurred. Borrowing costs include interest expense as well as foreign exchange gains or losses to the extent achievable by an adjustment of interest expense.

13. Impairment of non-financial assets

At each balance sheet date, the Group determines whether there are any indications of impairment of non-financial fixed assets. In the event such indications occur, or when it is necessary to carry out an annual impairment test, the Group estimates the recoverable amount of a given asset or cash-generating unit to which such asset has been allocated.

The recoverable amount of an asset or cash-generating unit corresponds to the fair value of such asset or cash-generating unit less the costs necessary to make the sale of such asset or cash-generating unit, or to the value in use of such asset or cash-generating unit, whichever is higher. This recoverable amount is measured for individual assets unless a given asset does not generate cash flows significantly independent from cash flows generated by other assets or groups of assets. Impairment takes place when the carrying value of an asset is higher than its recoverable amount, in which case such asset shall be written-down to the determined recoverable amount. In order to determine the value in use, estimated future cash flows shall be discounted to their present value by applying a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks related to the given asset. Impairment write-downs on assets used in continuing operations are recognized as operating expenses.



At each balance sheet date, the Group determines whether there are any indications for reversal or reduction of an impairment charge that was recognized on a given asset in the prior periods. If such indications exist, the Company needs to estimate the recoverable amount of relevant asset. A formerly recognized impairment charge may be reversed only when, from the date of the last recognition of impairment, changes in the estimates applied for determination of the recoverable amount of the relevant asset occurred. If this is the case, the carrying value of such asset shall be increased to its recoverable amount. The increased amount cannot exceed the given asset’s book value (net of depreciation) that would be carried in case no impairment charge was recognized on such asset in the prior years. A reversal of an impairment charge shall be immediately recognized as a reduction of operating expenses. Following a reversal of an impairment write-down, the depreciation charges made on the relevant asset during subsequent financial periods shall be adjusted in such a way as to enable systematic depreciation of the asset’s verified book value (net of residual value) over the remaining period of its useful life.

14. Financial assets

Financial assets are divided into the following categories:

a. financial assets held to maturity,

b. financial instruments carried at fair value through profit or loss,

c. loans and receivables,

d. financial assets available for sale.

Financial assets held to maturity are financial assets quoted on an active market that are not derivative instruments, have identified or identifiable payments and a fixed maturity date, which the Company intends and is able to hold till maturity, and are different from:

a. financial assets designated at the initial recognition as carried at fair value through profit or loss,

b. financial assets designated as available for sale,

c. assets qualifying as loans and receivables.

Financial assets held to maturity are valued at amortized cost using the effective interest rate. Financial assets held to maturity shall be classified as fixed assets if their maturity exceeds 12 months from the balance sheet date.

Financial assets carried at fair value through profit or loss include assets that satisfy one of the following conditions:

a. have been classified as assets held for trading. Financial assets are classified as held for trading if they are:

purchased for resale in short term (up to 3 months),

a part of the portfolio of specific financial instruments which are managed together, and which are likely to generate short-term gains,

derivative instruments, except for derivatives which are used as the elements of hedge accounting or financial guarantee contracts;

b. have been classified in this category, in accordance with IAS 39, at the time of initial recognition.

Financial assets carried at fair value through profit or loss are measured at the market value of financial instruments as at the balance sheet date with no regard to any costs of their disposal transaction. Changes in the value of such financial instruments are recognized as financial income or expenses in the income statement. In the event a contract includes one or more embedded financial derivatives, the whole contract may be classified as a financial asset carried at fair value through profit or loss. This is not applicable where the embedded derivative instrument does not significantly modify the cash flows that otherwise would be required by the contract, or it is clear with little or no analysis when a similar hybrid instrument is first considered that separation of the embedded derivative is prohibited. Financial assets may be initially recognized as assets carried at fair value through profit or loss provided the following criteria are met: (i) such qualification eliminates or substantially decreases any inconsistency in recognition or measurement (accounting mismatch); or (ii) such assets belong to the group of financial assets which are managed and evaluated on a fair value basis, according to a documented risk management strategy; or (iii) such assets contain embedded financial derivatives which should be recognized separately.



Loans and receivables are financial assets, not classified as derivative instruments, with identified or identifiable payments which are not quoted on an active market. They are recognized as current assets unless their maturity periods are longer than 12 months from the balance sheet date. Loans granted and receivables with maturity periods longer than 12 months from the balance sheet date are recognized as fixed assets.

Financial assets available for sale comprise financial assets which are not derivative instruments, and which have been designated as available for sale, or do not belong to any of the above three categories of financial assets. Financial assets available for sale are carried at fair value, increased by the transaction-related costs that are directly attributable to the acquisition or issuance of a financial asset. If financial instruments are not quoted on an active market and it is impossible to determine their fair value reliably with alternative methods, such financial assets available for sale shall be measured at purchase cost adjusted by impairment charges. Any positive or negative differences between the fair value of financial assets available for sale (on condition the price of such assets is determined in a regulated active market or their fair value can be measured in another reliable way) and their purchase cost, shall be recognized net of deferred tax in other comprehensive income. A decrease in the value of assets available for sale, resulting from their impairment, shall be recognized as a financial expense.

Purchases or disposals of financial assets are recognized in the accounting books at the transaction date. At the initial recognition, financial assets are measured at fair value which, in case of assets not classified as carried at fair value through profit or loss, shall be increased by directly attributable transaction-related expenses.

A financial asset shall be derecognized from the balance sheet if the Group no longer controls the contractual rights arising from such financial instrument. This usually takes place when the instrument is sold or when all cash flows generated by that instrument are transferred to an independent third party.

15. Inventories

The Company distinguishes two categories of inventories: goods for resale, and service parts (spare parts and computer hardware that have been purchased for the purposes of maintenance service contracts).

At each balance sheet date, an ageing analysis of goods for resale is performed, providing rationale for making any write-downs subject to the following rules:

a. 100% write-down on goods stored for 24 months or longer,

b. 75% write-down on goods stored between 18 and 24 months,

c. 50% write-down on goods stored between 12 and 18 months,

d. 25% write-down on goods stored between 6 and 12 months.

The initial value of service parts is expensed on a straight-line basis over the duration of the maintenance service contract, for which such parts have been purchased.

Every year the Company verifies whether the adopted principles for recognition of write-downs correspond to the actual impairment of its inventories.

Write-downs on inventories shall be recognized as operating expenses.

16. Prepayments and accrued income

Prepayments comprise expenses incurred before the balance sheet date that relate to future periods or to future revenues.

Prepayments may in particular include the following items:

a. prepaid third-party services (inclusive of maintenance services) which shall be provided in future periods,

b. advance payments of insurance, subscription, rental fees, etc.

c. any other expenses incurred in the current period, but related to future periods.



17. Trade receivables

Trade receivables are recognized and disclosed at the amounts initially invoiced, less any allowances for doubtful accounts. Receivables with remote payment terms are recognized at the present value of expected payments.

Allowances for doubtful receivables are estimated when it is no longer probable that the entire amount of original receivables will be collected. The amount of allowances represents the difference between the nominal amount of receivables and their recoverable amount, which corresponds to the net present value of expected cash flows discounted using the interest rate applicable to similar debtors. Doubtful receivables are expensed as operating costs at the time when they are deemed uncollectible.

Receivables are revaluated taking into account the probabilities of their collection, by making allowances for:

a. receivables from debtors who went into liquidation or bankruptcy – up to the amount receivable not covered by any guarantee or other collateral, reported to the liquidator or magistrate in bankruptcy proceedings;

b. receivables from debtors in case the declaration of bankruptcy is dismissed and the debtor’s assets are insufficient to satisfy the costs of bankruptcy proceedings – in full amount receivable;

c. receivables disputed by debtors and past-due where, following an assessment of the debtor’s property and financial condition, collection of full contractual amounts is unlikely – up to the amount receivable not covered by any guarantee or other collateral;

d. receivables that constitute an increase of other receivables subject to prior allowances – in full amount receivable until they are received or written-off as uncollectible;

e. past-due (or not yet due) receivables, where it is highly probable they will become uncollectible because of the type of business or structure of customers – in the amount of reliably measured or full allowance for doubtful receivables.

Furthermore, the minimum levels of allowances for receivables as recognized by the Company are:

a. 100% in relation to receivables in litigation, unless the Management Board believes that obtaining a favourable judgment by the Company is almost certain;

b. 100% in relation to receivables past-due over 12 months (from the payment deadline), taking into account any partial payments or arrangements made after the balance sheet date;

c. 50% in relation to receivables past-due between 6 and 12 months (from the payment deadline), taking into account any partial payments or arrangements made after the balance sheet date.

When deciding on any allowances, the Group takes into consideration not only events that took place before the balance sheet date, but also later events that took place prior to the preparation of financial statements if such events are related to receivables carried in the books as at the balance sheet date. Every year the Company verifies whether the adopted principles for recognition of allowances correspond to the actual impairment of its receivables.

Allowances for trade receivables are recognized as operating expenses. Allowances for other receivables are recognized as other operating expenses. Allowances for accrued interest receivable are recognized as financial expenses.

If the cause for recognition of an allowance is no longer valid, such allowance shall be reversed, in the whole amount or in appropriate portion, being recognized as an increase in the value of a relevant asset or as an adjustment to respective cost items.



18. Cash and cash equivalents

Cash and cash equivalents presented in the balance sheet consist of cash kept in banks and on hand by the Company, short-term bank deposits with maturities not exceeding 3 months, and other highly liquid instruments.

The balance of cash and cash equivalents disclosed in the consolidated statement of cash flows consists of the above-defined cash and cash equivalents. For the purposes of the statement of cash flows, the Group decided not to present bank overdraft facilities (used as an element of financing) nor restricted cash in the balance of cash and cash equivalents.

19. Interest-bearing bank loans and borrowings

All bank loans, borrowings and debt securities are initially recognized at their purchase cost, being the fair value of cash received net of any costs associated with obtaining a credit or loan, or with issuing debt securities.

Subsequently to initial recognition, bank loans, borrowings and debt securities are measured at amortized purchase cost using the effective interest rate. Determination of the amortized cost shall take into account the costs related to obtaining a credit or loan, or issuing debt securities, as well as any discounts or bonuses obtained on repayment of the liability.

The difference between the cash received (net of costs related to obtaining a credit or loan, or issuing debt securities) and the repayment amount shall be disclosed in the income statement over the term of such financing.

20. Leases

Finance lease agreements, under which substantially all the risks and rewards incidental to ownership of the leased asset are transferred to the Company, are recognized in the balance sheet at the commencement of the lease term, at fair value of the leased tangible asset or at present value of the minimum lease payments, whichever is lower. Lease payments are allocated between the finance charge and the reduction of the outstanding lease liability so as to obtain a constant periodic rate of interest on the outstanding amount of the liability.

Financial expenses are recognized in the income statement unless they are eligible for capitalization (both in 2015 and the comparable period, the Company did not capitalize any interest expenses incurred under finance lease agreements).

Property, plant and equipment used under finance lease agreements are subject to depreciation over their estimated useful life or the lease term, whichever is shorter. However, if the lease agreement provides that after its termination the lessee shall obtain ownership of the leased asset, then such an asset shall be depreciated over its estimated useful life, i.e. following the depreciation rules applicable to similar owned assets.

Lease agreements, whereby the lessor retains substantially all the risks and rewards incidental to ownership of the leased asset, are considered as operating lease. Leasing fees and instalments under operating lease are recognized as operating expenses in profit or loss on a straight-line basis over the lease term. The conditional leasing fees are expensed in the period when they become due.

21. Trade payables

Trade payables relating to operating activities are recognized and disclosed at the amounts due for payment, and are recognized in the reporting periods which they relate to.

22. Provisions

A provision should be recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Where the Group expects that the expenditure required to settle a provision is to be reimbursed, e.g. under an insurance contract, this reimbursement should be recognized as a separate asset. When, and only when, it is virtually certain that such reimbursement will be received, expenses relating to such provision shall be disclosed in the income statement, net of the amount of any reimbursements.

The Group recognizes provisions for onerous contracts in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.



Where the effect of the time value of money is material, the amount of a provision shall be determined by discounting the expected future cash flows to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks related to the liability. Where discounting method is used, the increase in a provision due to the passage of time is recognized as a financial expense.

23. Provision for warranty repairs

The provision for warranty repairs is created to cover anticipated future costs of warranty or service obligations resulting from the executed IT contracts. The costs of fulfilment of our warranty obligations comprise mainly labour costs (number of man-days multiplied by the standard rate) as well as the cost of goods, materials and third-party services used in performing such warranty obligations.

This provision is set aside in the cases where:

a. the client has not signed any contract for maintenance services;

b. the scope of the maintenance services contract does not fully cover all anticipated costs of the fulfilment of warranty obligations;

c. the scope of the manufacturer’s warranty for any equipment resold is narrower than the scope of warranty the Company is contractually committed to provide to its client.

The provision amount recognized at the balance sheet date shall be proportional to the progress of the IT contract execution.

Any costs associated with the provision of our warranty services shall be, when incurred, deducted from the previously created provision. At each balance sheet date, the Company verifies the amount of carried provision for warranty repairs. If the actual costs of warranty services or anticipated future costs are lower/higher than assumed at the time of initial recognition of a provision, such provision shall be decreased/increased accordingly to reflect the Company’s current expectations in respect of fulfilment of its warranty obligations in future periods.

24. Revenues

a. Sales revenues

Sales revenues are recognized if the amount of revenue can be measured reliably and if it is highly probable that economic benefits associated with the transaction will flow to the Group.

Should it be impossible to estimate reliably the amount of revenue from a service transaction, such revenue shall only be recognized in the amount of costs incurred which the Group expects to recover.

The Group identifies the following types of revenues:

Revenues from the sale of proprietary licenses and services,

Revenues from the sale of third-party licenses and services, and

Revenues from the sale of hardware.

The category of “Proprietary licenses and services” includes revenues from contracts with customers under which we supply our own software and provide related services. Such services may be performed by the Company’s employees (internal resources) as well as by subcontractors (external resources). The engagement of subcontractors in this category of revenues has no impact on the scope of responsibility or relationship between the Group companies and the customer to whom a service is provided. It is entirely up to the Group to decide whether services required for this type of projects should be performed by subcontractors or own employees. In addition, this category includes revenues from the provision of own services for third-party software and infrastructure.

The category of “Third-party licenses and services” includes revenues from the sale of third-party licenses as well as from the provision of services which, due to technological or legal reasons, mast be carried out by subcontractors (this applies to hardware and software maintenance and outsourcing services provided by their manufacturers).



Revenues from the sale of own software licenses and/or services, which are supplied/rendered under an implementation contract, shall be recognized proportionally to the completion of the entire contract. The rules for recognition of sales revenues from implementation contracts are described item 24 of Significant accounting policies.

In the case of own software licenses and/or services, revenues are recognized in the period in which the Group expects to be required to provide such services to the client.

Revenues from the sale of third-party software licenses and/or services may be recognized as sales of goods or as sales of services, depending on the nature of the contract with the client.

In the case of third-party software licenses and/or services for which the significant risks and rewards of ownership are transferred to the buyer at the time of the sale, revenues are recognized as sales of goods, this is in a lump sum at the time of the sale, regardless of whether a third-party license and/or service is provided for a specified or unspecified period of time. The Group considers that significant risks are transferred to the buyer when, after the delivery of a license/service, the Group is not obligated to provide any additional and potentially costly benefits to the client.

In other cases, i.e. when the significant risks and rewards incidental to the ownership of a third-party license and/or service are not transferred to the buyer at the time of the sale, revenues are recognized as sales of services, this is over a period in which such services are performed and proportionally to the completion of the entire transaction.

Revenues from the sale of hardware are recognized as sales of goods, provided that the significant risks and rewards resulting from a contract have been transferred to the buyer and the amount of revenue can be measured reliably.

b. Interest

Interest income shall be recognized on a time proportion basis (taking into account the effective yield, this is the interest rate which accurately discounts future cash flows during the estimated useful life of a financial instrument) on the net book value of a financial asset.

Interest income comprises interest on loans granted, investments in securities held to maturity, bank deposits and other items, as well as the discounts on costs (liabilities) according to the method of the effective interest rate.

c. Dividends

Dividends shall be recognized when the shareholders’ right to receive payment is vested.

25. Revenues and costs related to the execution of implementation contracts

Revenues from implementation contracts shall include highly probable revenues resulting from the concluded contracts and/or orders, which can be measured reliably. Therefore, the pool of such revenues does not include any proceeds that are considered as doubtful despite being determined in a signed contract (e.g. the Group anticipates that a client may decide to resign from a portion of contracted work).

Contract revenues include the following:

a. revenues resulting from issued invoices,

b. future revenues resulting from signed agreements and/or orders placed on the basis of framework agreements.

Contract costs include the following:

a. costs of goods, materials and third-party services sold (COGS), and

b. costs of internal resources being involved in the contract execution.

The costs of internal resources employed in the contract execution are calculated on the basis of actual workload (for ended periods) or estimated workload (for forecast periods), and appropriate standard (cost) rate covering the production costs.

The standard rate corresponds to the cost of man-hour (or man-day) of our own production resources calculated on the basis of production costs budgeted for a given year.



Valuation of implementation contracts

The purpose for valuation of an IT implementation contract is to determine the amount of revenues to be recognized in a given period. The Group performs such valuation using the percentage of completion method.

Should the percentage progress of incurred costs, decreased by expected losses and increased by profits included in the income statement, exceed the percentage progress of invoiced sales, the amount of uninvoiced sales resulting from such difference shall be disclosed as trade receivables in the balance sheet, under “Receivables arising from valuation of IT contracts”. Conversely, if the percentage progress of invoiced sales exceeds the percentage progress of costs incurred, decreased by expected losses and increased by profits included in the income statement, then future-related (unearned) revenues resulting from such difference shall be disclosed as trade payables, under “Liabilities arising from valuation of IT contracts”.

Loss generating contracts

Loss generating contract is a contract, under which total revenues are lower than total costs.

In the event it is highly probable that the total contract execution costs exceed the total contract revenues, the anticipated loss shall be recognized as cost in the reporting period in which it has been detected, by creating a provision for contractual losses.

The amount of such provision and/or its legitimacy are subject to verification at each subsequent reporting date, until the completion of the contract.

The amount of created provisions for losses shall be disclosed under “Provisions for potential losses arising from valuation of IT contracts”.

Methods for measuring the percentage of contract completion

In order to measure the progress of contract completion, the Company applies a variety of methods allowing to determine reliably the percentage of work executed under the contract. Depending on the contract nature, these methods may include:

a. determination of the proportion of costs incurred for work performed up to the balance sheet date to the estimated total contract costs;

b. measurement of work performed; or

c. comparison of work performed as a physical proportion of total work under the contract.

The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenues and contract costs. The effects of changes in estimates of contract revenues or contract costs are recognized in the period in which such changes occur.

Combining and segmenting of implementation contracts

Valuation is usually performed on single contracts or contracts with annexes thereto, if such annexes modify the main contract by extending or limiting the subject thereof. In the event an annex represents an additional order, going beyond the subject of the main contract, and the price of such order is determined without reference to the main contract price, such annex shall be valued separately.

When a contract covers a number of elements, the implementation of each element should be treated as a separate contract, only if the following conditions are jointly met:

a. separate offers have been submitted for each of the identified elements;

b. each element has been subject to separate negotiations; and

c. the costs and revenues of each element can be identified – revenues must be specified in the contract and/or order.

Whereas, a group of contracts may be treated as a single contract, if the following conditions are jointly met:

a. the group of contracts is negotiated as a single package;

b. the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin; and

c. the contracts are performed concurrently or in a continuous sequence.



26. Operating costs

The Company maintains cost accounting both by cost nature and by cost function. Cost of sales comprises the costs resulted directly from purchases of goods sold and generation of services sold. Selling costs include the costs of distribution, marketing and sponsoring activities. General and administrative expenses include the costs of the Company’s management and administration activities.

27. Income tax and value added tax

Current income tax

Liabilities and receivables resulting from current income tax, for the current and prior periods, are measured at the amounts of expected payments to the tax authorities (or repayments from the tax authorities), applying the tax rates and tax regulations legally or factually in force at the balance sheet date.

Deferred income tax

For the purpose of financial reporting, deferred income tax is calculated applying the balance sheet liability method to all temporary differences that exist, at the balance sheet date, between the tax base of an asset or liability and its carrying value disclosed in the financial statements. Deferred tax liabilities are recognized in relation to all positive temporary differences – except for situations when a deferred tax liability arises from initial recognition of goodwill or initial recognition of an asset or liability on a transaction other than combination of businesses, which at the time of its conclusion has no influence on pre-tax profit, taxable income or tax loss, as well as in relation to positive temporary differences arising from investments in subsidiaries or associates or from interests in joint ventures – except for situations when the investor is able to control the timing of reversal of such temporary differences and when it is probable that such temporary differences will not be reversed in the foreseeable future.

Deferred tax assets are recognized in relation to all negative temporary differences, as well as unutilized deferred tax assets or unutilized tax losses carried forward to subsequent years, in such amount that it is probable that future taxable income will be sufficient to allow the above-mentioned temporary differences, assets or losses to be utilized. This does not apply to situations when deferred tax assets related to negative temporary differences arise from initial recognition of an asset or liability on a transaction

other than combination of businesses, which at the time of its conclusion has no influence on pre-tax profit, taxable income or tax loss. In relation to negative temporary differences arising from investments in subsidiaries or associates or from interests in joint ventures, deferred tax assets are recognized in the balance sheet in such amount only that it is probable that the above-mentioned temporary differences will be reversed in the foreseeable future and that sufficient taxable income will be available to offset such negative temporary differences.

The carrying value of an individual deferred tax asset shall be verified at every balance sheet date and shall be adequately decreased or increased in order to reflect any changes in the estimates of achieving taxable profit sufficient to utilize such deferred tax asset partially or entirely.

Deferred tax assets and deferred tax liabilities shall be valued using the future tax rates anticipated to be applicable at the time when a deferred tax asset is realized or a deferred tax liability is reversed, based on the tax rates (and tax regulations) legally or factually in force at the balance sheet date.

Deferred tax assets are compensated against deferred tax liabilities if and only if the Group holds an enforceable legal title to make a compensation of current income tax receivables and liabilities, and the deferred income tax is related to the same taxpayer and the same tax authority.

Income tax relating to items that are directly recognized in equity shall be disclosed under equity and not in the income statement.



Value added tax

Revenues, expenses and assets shall be disclosed in the amounts excluding value added tax unless:

a. value added tax paid at the purchase

of goods or services is not recoverable

from tax authorities; in such event the

value added tax paid shall be

recognized as a part of the purchase

cost of an asset or as an expense, and

b. receivables and liabilities are presented including value added tax.

Net amount of value added tax which is recoverable from or payable to tax authorities shall be included in the balance sheet as a part of receivables or liabilities.

28. Earnings per share (basic and diluted)

Basic earnings per share attributable to shareholders of the Parent Company for each reporting period shall be computed by dividing the net profit from continuing operations for the reporting period by the weighted average number of shares outstanding in that period. Diluted earnings per share attributable to shareholders of the Parent Company for each reporting period shall be calculated by dividing the net profit from continuing operations for the reporting period by the total of weighted average number of shares outstanding in that period and all shares from potential new issuances.



IV. ORGANIZATION AND CHANGES IN THE STRUCTURE OF ASSECO GROUP, INCLUDING THE ENTITIES SUBJECT TO CONSOLIDATION

The chart below presents the organizational structure of Asseco Group as at 31 December 2015 and in the comparable period:

Western European market Eastern European market South Eastern European market

Asseco Business Solutions S.A. KKI-BCI Sp. z o.o. * Asseco Western Europe S.A. Exictos SGPS S.A. R-Style Softlab JSC Asseco South Eastern Europe S.A.

Poland Poland Poland Portugal Russia Poland

46.47/46.47 (46.47/46.47) 100/100 (100/100) 100/100 (100/100) 61.38/61.38 (0/0) 70/70 (70/70) 51.06/51.06 (51.06/51.06)

Gladstone Consulting Ltd SIGILOGIC Sp. z o.o. Peak Consulting Group ApS Portexictos S.A R-Style Softlab Kiev South Eastern European market

Cyprus Poland Denmark Portugal Ukraine

100/100 (100/100) 100/100 (100/100) 73.68/70 (73.68/70) 100/100 (0/0) 100/100 (100/100) Central European market

SKG S.A. Podkarp. Fund. Nieruchomości Sp. z o.o. Asseco Danmark A/S Labatechnology S.A. R-Style Softlab South LLC Asseco Central Europe, a.s.

Poland Poland Denmark Angola Ukraine Slovakia

60/60 (60/60) 100/100 (100/100) 61.11/55 (61.11/55) 99.86/99.86 (0/0) 100/100 (100/100) 93.51/93.51 (93.51/93.51)

ZUI Novum Sp. z o.o. PFN Nord Sp. z o.o. SINTAGMA UAB Promosoft Angola S.A. * Asseco Kazakhstan LLP Central European market

Poland Poland Lithuania Angola Kazakhstan

51/51 (51/51) 100/100 (100/100) 81.34/81.34 (81.34/81.34) 51/51 (0/0) 51/51 (51/51) Israeli market

Postdata S.A. Park Wodny Sopot Sp. z o.o. Asseco Lietuva UAB Mzexictos Lda. Asseco Georgia LLC Formula Systems Ltd

Poland Poland Lithuania Mozambique Georgia Israel

49/49 (49/49) 100/100 (100/100) 81.34/81.34 (81.34/81.34) 90/90 (0/0) 51/51 (51/51) 46.33/46.33 (46.33/46.33)

Asseco Data Systems S.A. Asseco Software Nigeria Ltd CodeConnexion Ltd Cvexictos Lda. Asseco Bel LLC Matrix IT Ltd

Poland Nigeria Sri Lanka Republic of Cape Verde Belarus Israel

100/100 (100/100) 51/51 (51/51) 45/45 (45/45) 90/90 (0/0) 60/60 (0/0) 50.04/50.04 (50.18/50.18)

C.K. ZETO S.A. (Łódź) Infovide - Matrix S.A. Magic Software Enterprises Ltd

Poland Poland Western European market Eastern European market Israel

100/100 (100/100) 100/100 (0/0) 46.4/46.4 (45.14/45.14)

PI ZETO S.A. (Bydgoszcz) CT Partners S.A. Sapiens International Corp. NV

Poland Poland Netherlands Antilles

100/100 (100/100) 100/100 (0/0) 49.13/49.13 (50.16/50.16)

Unizeto Technologies S.A. DahliaMatic Sp. z o.o. Insync Staffing Inc Poland Poland USA

100/100 (0/0) 100/100 (0/0) 90/90 (90/90)

ADH Soft Sp. z o.o. Solver Sp. z o.o. 100/100 voting rights / equity interest as at 31 December 2015 (in %) Israeli market

Poland Poland (100/100) voting rights / equity interest as at 31 December 2014 (in %)

100/100 (100/100) 100/100 (0/0)

Combidata Poland Sp. z o.o. one2tribe Sp. z o.o. subsidiary company

Poland Poland associated company

100/100 (100/100) 45.66/45.66 (0/0)

* company in liquidation

ZUI OTAGO Sp. z o.o. Axial Sp. z o.o.

Poland Poland A - Group structure presented in chart A

100/100 (100/100) 100/100 (0/0) B - Group structure presented in chart B

C - Group structure presented in chart C

IMX tow D - Group structure presented in chart D

Ukraine E - Group structure presented in chart E

100/100 (0/0) F - Group structure presented in chart F

Polish market

Asseco Poland S.A.

Polish market

C)

B)

D)

F)

E)

A)



A. Organizational structure of Asseco Western Europe Group

Asseco Western Europe S.A.

Poland

100/100 (100/100)

Asseco Spain S.A. Necomplus, S.L. Matrix42 AG

Spain Spain Germany

70.32/70.32 (70.32/70.32) 65/65 (65/65) 0/0 (100/100)

Valorista S.L.U. Necomplus Serveis Andorra, S.L. Matrix42 Development Holding GmbH Matrix42 Helvetia AG

Spain Andorra Germany Switzerland

100/100 (100/100) 33.33/33.33 (33.33/33.33) 0/0 (60/60) 0/0 (100/100)

Logis IT S.L.U. Necomplus Portugal Lda. Matrix42 Australia Pty Ltd Matrix42 Ukraine

Spain Portugal Australia Ukraine

100/100 (100/100) 100/100 (100/100) 0/0 (100/100) 0/0 (99/99)

Random Centro de Informática, S.A.U. Necomplus Dominicana, Srl Silverback MDM Pty Ltd Matrix42 Marketplace GmbH

Spain Dominican Republic Australia Germany

100/100 (100/100) 100/100 (100/100) 0/0 (100/100) 0/0 (100/100)

Necomplus Colombia SAS Silverback MDM Unit Trust

Colombia Australia

90/90 (0/0) 0/0 (99/99)

Necomplus PERÚ SAC Silverback MDM LLC

Peru USA

90/90 (0/0) 0/0 (100/100)

T EMPLEAMOS ETT, S.L.

Spain

100/100 (0/0)

100/100 voting rights / equity interest as at 31 December 2015 (in %)

(100/100) voting rights / equity interest as at 31 December 2014 (in %)

subsidiary company

Asseco Western Europe S.A.

Poland



B. Organizational structure of Asseco Central Europe Group

Asseco Solutions, a.s. Asseco Central Europe, a.s. Statlogics Zrt. Asseco Solutions AG

Slovakia Czech Republic Hungary Germany

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Axera, s.r.o. Asseco Berit GmbH (Germany) Globenet Zrt. Asseco Solutions GmbH

Slovakia Germany Hungary Austria

50/50 (50/50) 100/100 (100/100) 100/100 (100/100) 75/75 (75/75)

Asseco Berit AG (Switzerland) Asseco Hungary Zrt. Asseco Solutions AG

Switzerland Hungary Switzerland

100/100 (100/100) 51/51 (51/51) 100/100 (100/100)

Asseco Solutions, a.s. DanubePay, a.s.

Czech Republic Slovakia

100/100 (100/100) 55/55 (55/55)

NZ Servis s.r.o. (CZ) InterWay a.s.

Czech Republic Slovakia

100/100 (100/100) 66/66 (0/0)

exe a.s.

Slovakia

100/100 (0/0)

eDocu a.s.

Slovakia

23/23 (23/23)



subsidiary company

associated company

Asseco Central Europe, a.s.

Slovakia

Prvni Certifikacni Autorita, a.s.

Czech Republic23.25/23.25 (23.25/23.25)



C. Organizational structure of Asseco South Eastern Europe Group

Asseco SEE d.o.o, Beograd Asseco SEE Sh.p.k. (Pristina) Asseco SEE d.o.o. (Sarajevo)

Serbia Kosovo Bosnia and Herzegovina

100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

E-Mon d.o.o., Podgorica Asseco SEE Sh.p.k., Tirana Asseco SEE o.o.d, Sofia

Montenegro Albania Bulgaria

50/50 (50/50) 100/100 (100/100) 100/100 (100/100)

EMS d o.o., Beograd Asseco SEE s.r.l. (Bucharest) Asseco SEE d.o.o. (Zagreb)

Serbia Romania Croatia

100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Uni4Gold d.o.o., Nis Asseco s.r.l. MOLDOVA Asseco SEE d.o.o. Podgorica

Serbia Moldova Montenegro

100/100 (70/70) 100/100 (100/100) 100/100 (100/100)

Asseco SEE Teknoloji A.Ş. ASSECO SEE DOOEL, Skopje

Turkey Macedonia

100/100 (100/100) 100/100 (100/100)

Nestpay Ödeme Hizmetleri A.Ş. Asseco SEE d.o.o., (Ljubljana)

Turkey Slovenia

100/100 (100/100) 100/100 (100/100)



subsidiary company

jointly controlled company

associated company

Asseco South Eastern Europe S.A.

Poland

Multicard d.o.o., Beograd

Serbia45/45 (45/45)



D. Organizational structure of Magic Software Enterprises Group

Magic Software Enterprises Neth. B.V. F.T.S. Formula Telecom Solutions Ltd Magix Integration (Proprietary) Ltd Magic Software Enterprises Inc Complete Business Solutions Ltd

Netherlands Israel Republic of South Africa USA Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (96.3/96.3)

Onyx Magyarorszag Szsoftverhaz F.T.S. Bulgaria Ltd Magic Software Enterprises India Pvt. BridgeQuest, Inc. DataMind Ltd

Hungary Bulgaria India USA Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 80/80 (80/80)

Magic Software Enterprises Spain Ltd* Magic Software Enterprises (UK) Ltd Magic Software Japan K.K. BridgeQuest Labs, Inc. Todan Ltd

Spain United Kingdom Japan USA Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (0/0)

Magic Software Enterprises France Hermes Logistics Technologies Ltd Magic Software Enterprises (Israel) Ltd Allstates Consulting Services LLC Pilat Europe Ltd

France United Kingdom Israel USA United Kingdom

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Magic Software Enterprises GmbH Magic Beheer B.V. AppBuilder Solutions Ltd Coretech Consulting Group Inc Pilat (North America) Inc

Germany Netherlands United Kingdom USA USA

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Magic Benelux B.V. CommIT Technology Solutions Ltd Coretech Consulting Group LLC Comblack

Netherlands Israel USA Israel

100/100 (100/100) 80/80 (80/80) 100/100 (100/100) 70/70 (0/0)

CommIT Embedded Ltd Xsell Resources Inc Yes - IT

Israel USA Israel

75/75 (50.1/50.1) 100/100 (100/100) 100/100 (0/0)

100/100 voting rights / equity interest as at 31 December 2015 (in %) CommIT Software Ltd Fusion Solutions LLC INFINIGY (UK) HOLDINGS LIMITED

(100/100) voting rights / equity interest as at 31 December 2014 (in %) Israel USA United Kingdom

100/100 (100/100) 100/100 (100/100) 100/100 (0/0)

subsidiary company

* company in liquidation Valinor Ltd Fusion Technical Solutions LLC INFINIGY (US) Holdings Inc

Israel USA USA

100/100 (100/100) 49/49 (0/0) 100/100 (0/0)

Dario IT Solutions Ltd INFINIGY Solutions LLC

Israel USA

100/100 (100/100) 70/70 (0/0)

INFINIGY Solutions West Coast LLC

USA

100/100 (0/0)

Magic Software Enterprises Ltd

Israel



E. Organizational structure of Matrix IT Group

Tikshuv Systems In Education (Shacham) Ltd Sibam Ltd Sigma Knowledge Inc. * Matrix Consulting Ltd K.B.I.S Ltd 2Bsecure USA Inc

Israel Israel USA Israel Israel USA

100/100 (100/100) 100/100 (100/100) 0/0 (51/51) 100/100 (100/100) 51/51 (51/51) 100/100 (100/100)

Hi-Tech Colleage Technology Training Ltd*** Matrix J Rap Ltd Tact Computers & Systems Ltd Sivan.com Ltd** Matrix IT E.R.P Solutions Ltd 2BNet Ltd

Israel Israel Israel Israel Israel Israel

0/0 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Mediatech College John Bryce Ltd Matrix IT Solutions Ltd Blue IT Ltd Doby Ofier Industrial Design Ltd*** JBT Cyprus Cyber box Ltd

Israel Israel Israel Israel Cyprus Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 0/0 (100/100) 85/85 (85/85) 70/70 (70/70)

Matrix IT System Management Ltd Matrix IT Advanced Inf. System Ltd Matrix IT Global Services Ltd Netwise Applications Ltd Highview LtdMatrix Information Technology (Changzhou)

Limited

Israel Israel Israel Israel Israel China

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Aluna Information Technologies Ltd Matrix BI Ltd Comprise Tecnologies Lts Hoshva Ltd*** Beyond Information Technology Ltd Matrix IT Global Services Macedonia DOOEL

Israel Israel Israel Israel Israel Macedonia

100/100 (100/100) 60/60 (60/60) 100/100 (100/100) 0/0 (100/100) 100/100 (100/100) 100/100 (100/100)

Matrix IT Integration & Infrastructures Ltd Net-shore Ltd John Bryce Training Ltd Effect Advanced Solutions Ltd Tiltan Systems Engineering Ltd Supra Information Technology Ltd

Israel Israel Israel Israel Israel Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (36/36) 100/100 (100/100)

Periscope Enterpr. And Managment Ltd Matrix IT Training Ltd*** John Bryce Projects Ltd*** The Israel Management Center Matrix Exzac UK Ltd Hoshen-Eliav System Engineering Ltd.

Israel Israel Israel Israel United Kingdom Israel

100/100 (100/100) 0/0 (100/100) 0/0 (100/100) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

A Soft Ltd IQ-SOFT John Bryce Ltd Eight Three Hundred (8300) Ltd Matchpoint IT Ltd Exzac Inc Infinity Labs R&D Ltd

Israel Hungary Israel Israel USA Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 90/90 (90/90) 100/100 (100/100) 50.1/100 (50.1/100)

Matrix IT Software Products Ltd Tangram Soft Ltd Blue Education Ltd*** Babcom Centers Ltd Exzac HK Ltd* Top Q (Aqua) Software Ltd

Israel Israel Israel Israel Hong Kong Israel

100/100 (100/100) 100/100 (100/100) 0/0 (100/100) 50.1/50.1 (50.1/50.1) 0/0 (100/100) 100/100 (100/100)

Matrix IT Systems Ltd Tact System Testware Ltd Net Bryce Ltd*** Matrix IT Global Services Bulgaria Matrix-Exzac Financial Risk Advisory LLC Managware Ltd

Israel Israel Israel Bulgaria USA Israel

100/100 (100/100) 100/100 (100/100) 0/0 (100/100) 100/100 (100/100) 70/70 (0/0) 100/100 (100/100)

Hydus Inc. Ono Apps Ltd. Elon Software Systems Ltd Xtivia Technologies Inc 2Bsecure Ltd SEEV Solutions Ltd

USA Israel Israel USA Israel Israel

100/100 (0/0) 100/100 (0/0) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100) 75/75 (0/0)

100/100 voting rights / equity interest as at 31 December 2015 (in %) Xtivia Inc

(100/100) voting rights / equity interest as at 31 December 2014 (in %) Israel

100/100 (100/100)

subsidiary company

associated company

* liquidated company

** company in liquidation

*** company liquidated following a business combination within the Matrix group

Matrix IT Ltd

Israel



F. Organizational structure of Sapiens International Corp. Group

Sapiens Technologies (1982) Ltd. Sapiens Americas Corporation

Israel USA

100/100 (100/100) 100/100 (100/100)

Ibexi Solutions Pvt Ltd Sapiens Software Solutions (IDIT) Ltd. Sapiens Software Solutions (Pension and Life) Ltd. Sapiens North America Inc

India Israel Israel Canada

100/100 (0/0) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Ibexi Singapore IDIT Europe N.V. Sapiens NA Insurance Solutions Inc. Sapiens Japan Co.

Singapore Belgium USA Japan

100/100 (0/0) 100/100 (100/100) 100/100 (100/100) 90/90 (90/90)

Ibexi Solutions FZE (Dubai) IDIT APAC PTY. Ltd. Neuralmatic Ltd. Sapiens (UK) Ltd.

United Arab Emirates Australia Israel United Kingdom

100/100 (0/0) 100/100 (100/100) 66/66 (66/66) 100/100 (100/100)

Ibexi Solutions UK Ltd Sapiens (Singapore) Insurance Solution Sapiens (UK) Insurance Sofware Solutions Ltd. Sapiens France S.A.S.

United Kingdom Singapore United Kingdom France

100/100 (0/0) 100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Ibexi Solutions Hong Kong Ltd Sapiens Software Solutions (Decision) Ltd. Formula Insurance Solutions (FIS) France Sapiens Deutschland GmbH

Hong Kong Israel France Germany

100/100 (0/0) 95.65/95.64 (97/97) 100/100 (100/100) 100/100 (100/100)

Sapiens Decision NA Inc. FIS-AU Pty Ltd. Sapiens Israel Software Systems Ltd.

USA Australia Israel

100/100 (100/100) 100/100 (100/100) 100/100 (100/100)

Knowledge Partners International LLC

USA

100/100 (100/100)

Sapiens (UK) Decisions Limited 100/100 voting rights / equity interest as at 31 December 2015 (in %)

United Kingdom

100/100 (100/100) (100/100) voting rights / equity interest as at 31 December 2014 (in %)

Insseco Sp. z o.o.

Poland subsidiary company

100/100 (0/0)

Sapiens International Corp. NV

Netherlands Antilles

Sapiens International Corporation B.V.

Netherlands

100/100 (100/100)



During the period of 12 months ended 31 December 2015, the Group’s composition changed as follows:

Asseco Poland

Acquisition of shares in Portugal-based Exictos SGPS by Asseco Poland S.A.

On 3 September 2015, Asseco Poland S.A. acquired a 61.38% stake in Exictos Sociedade Gestora de Participações Sociais, S.A. (“Exictos”), an IT company based in Portugal. The total value of this transaction amounted to EUR 21.5 million (PLN 91.2 million).

Exictos is specialized in the production and implementation of software solutions for the banking industry. The company conducts its business operations in Portugal and, through its subsidiaries, also in African countries, such as Angola, Mozambique and the Republic of Cape Verde. Having acquired a majority stake in Exictos, Asseco will be able to strengthen its presence in the Iberian Peninsula as well as in Africa.

Acquisition of Infovide-Matrix S.A.

On 23 September 2015, Asseco Poland S.A. signed with major shareholders in Infovide-Matrix S.A. an agreement concerning the sale of a majority stake in Infovide-Matrix S.A. and subsequently announced a tender offer for shares in that company. Tenders to sell the shares were accepted until 12 November 2015.

On 20 October 2015, Asseco Poland S.A. obtained approval from the Office of Competition and Consumer Protection (“OCCP”) to conduct a business concentration by taking over control of Infovide-Matrix S.A. Obtaining such consent from the OCCP was a legal condition specified in the tender offer.

As a result of the tender offer, on 20 November 2015, Asseco Poland S.A. acquired 12,215,609 shares in Infovide-Matrix S.A., representing 97.91% of the share capital and total voting rights in that company. Within the tender offer, the shares were purchased at the price of PLN 6.01 per share.

Subsequently, on 21 December 2015, Asseco Poland S.A. announced the demand for the sale of all shares held by minority shareholders Infovide-Matrix S.A. through a squeeze-out procedure. As a result of this demand, on 28 December 2015, Asseco Poland S.A. acquired 261,096 shares in Infovide-Matrix S.A., representing 2.09% of the share capital of that company. Within the squeeze-out procedure, the shares were purchased at the price of PLN 6.01 per share.

Following both the above-mentioned transactions, Asseco Poland S.A. holds 12,476,705 shares in Infovide-Matrix S.A., representing 100% of the share capital and 100% of voting rights in that company.

Establishing of Insseco Sp. z o.o. and the sale of shares in Insseco Sp. z o.o. to Sapiens International Corporation

On 16 January 2015, Asseco Poland S.A. established a company called Insseco Sp. z o.o. in order to build and develop a center of competence responsible for the provision of services and software for the commercial insurance industry.

On 27 July 2015, Asseco Poland S.A. and its affiliated Sapiens International Corporation signed an agreement under which the Company sold all the shares it held in its subsidiary Insseco Sp. z o.o., representing 100% of its share capital. The transaction was finalized by transferring the ownership of these shares on 18 August 2015.

The total consideration payable to Asseco Poland for the takeover of control and acquisition of 100% percent of shares in Insseco, transfer of property rights as well as selected projects amounted to PLN 34.3 million.

On 10 September 2015, the General Meeting of Insseco Sp. z o.o. passed a resolution to change the company’s name to Sapiens Software Solutions (Poland) Sp. z o.o. The name change was officially registered on 5 February 2016.

Establishing of Asseco Bel LLC

On 18 June 2015, Asseco Poland S.A. established a company called Asseco Bel LLC and acquired 60% of its shares representing also 60% of voting rights at the company’s general meeting of shareholders.

Asseco Systems S.A.

Acquisition of shares in Szczecin-based Unizeto Technologies S.A. by Asseco Systems S.A.

On 13 February 2015, Asseco Systems S.A. (presently Asseco Data Systems S.A.) signed an agreement to purchase 911,150 shares representing 81.35% of the share capital and voting rights at the general meeting of Unizeto Technologies S.A. (hereinafter referred to as “Unizeto”). The agreement was concluded between our subsidiary Asseco Systems S.A. and 45 individual shareholders of Unizeto, acting jointly as the sellers. This agreement was conditional because the Articles of Association of Unizeto provide the shareholders of Unizeto with pre-emptive rights for the acquisition of shares.



As the previous shareholders of Unizeto did not exercise their pre-emption rights, on 23 February 2015, within the deadline determined in the above-mentioned agreement, Asseco Systems S.A. effectively purchased 911,150 shares in Unizeto.

Subsequently, Asseco Systems S.A. concluded the next conditional agreements to purchase a total of 202,844 registered shares representing 18.11% of the share capital and voting rights at the general meeting of Unizeto.

On 18 May 2015, Asseco Systems S.A. concluded an agreement to acquire 6,006 registered shares in Unizeto, representing 0.54% of the share capital of that company. Following the above-described transaction, the equity interest and voting rights held by Asseco Systems S.A. in Unizeto increased to 100%.

All of the above-mentioned agreements for the acquisition of shares in Unizeto were concluded on the same terms and conditions.

Increasing the share capital of Asseco Systems S.A. and changing its name to Asseco Data Systems S.A.

On 17 July 2015, Asseco Systems S.A. and Asseco Poland S.A. signed an agreement on the acquisition of shares in exchange for a non-cash contribution of shares in three limited liability companies. On the same day, the Extraordinary General Meeting of Shareholders of Asseco Systems passed a resolution to increase the company’s share capital by the amount of PLN 9,000,530 through the issuance of 900,053 shares with a par value of PLN 10 each, excluding pre-emptive rights.

These shares were offered by private subscription to Asseco Poland S.A., being the sole shareholder of Asseco Systems S.A. The issuance price equalled PLN 100 per new share, adding up to PLN 90,005,300 for the whole issuance. The newly issued shares were acquired by Asseco Poland S.A. pursuant to the said agreement and paid up with non-cash contributions in the form of shares in Zakład Usług Informatycznych Otago Sp. z o.o., shares in ADH Soft Sp. z o.o., shares in Combidata Poland Sp. z o.o., in each case representing 100% of the company’s share capital.

Furthermore, on 5 August 2015, the company of Asseco Systems S.A. was renamed as Asseco Data Systems S.A. which was registered in court.

Asseco DACH

Conversion of receivables held by Matrix42 AG into shares of Asseco DACH S.A.

On 8 January 2015, Matrix42 AG acquired 223,435,293 shares in Asseco DACH (the parent company of Matrix42 AG), representing 11.98% of the share capital and voting rights at the general meeting of Asseco DACH.

This transaction was carried out in connection with the settlement of receivables arising from a loan that was granted by Matrix42 AG to Matrix42 Inc in previous years. The key shareholder and manager of Matrix42 Inc, Mr. Herbert Uhl, was also a non-controlling shareholder in Asseco DACH where he held 223,435,293 shares, representing 11.98% of the share capital and voting rights at the general meeting of Asseco DACH S.A. All the shares held by Mr. Herbert Uhl served as collateral for liabilities of Marix42 Inc towards Matrix42 AG. The said liabilities of Matrix42 Inc became due at the end of 2013 and because they were not paid off, Matrix42 AG has satisfied its receivables from the provided collateral. As at the transaction date, the carrying value of the settled receivables amounted to PLN 23.8 million.

Subsequently, on 27 April 2015, Asseco Dach concluded an agreement to buy its own shares for treasury stock. The company purchased 55,858,824 shares with a par value of PLN 0.10 each for the total consideration of EUR 1.7 million.

On the same day, the companies of Matrix 42 AG and Asseco Dach S.A. conducted a transaction under which Asseco Dach acquired 223,425,293 shares with a par value of PLN 0.10 each that were held by Matrix42 AG. The consideration for this transaction was determined at EUR 6.9 million.

As a result of the above-mentioned transactions, voting rights held by Asseco Poland S.A. at the general meeting of Asseco DACH increased from 85% to approx. 99.9%.

This transaction was accounted for as an acquisition of non-controlling interests.

In addition, on 18 May 2015, Asseco Dach concluded an agreement with one of its minority shareholders to purchase shares in Matrix42 AG, a subsidiary of Asseco Dach. This transaction concerned 10,241 shares in Matrix42 AG, representing 2.8% of the share capital of that company. The selling price was established at EUR 1.1 million. Following this transaction, the equity interest and voting rights held by Asseco DACH S.A. in Matrix42 AG decreased from 100% to 97.2%.



Merger of Asseco South Western Europe S.A. and Asseco DACH S.A.

On 24 August 2015, there was passed a resolution on the merger of Asseco South Western Europe S.A. (the taking-over company) and Asseco DACH S.A. (the acquired company) by transferring all the assets of Asseco DACH to Asseco South Western Europe in exchange for new shares to be issued by Asseco South Western Europe and allocated to shareholders of Asseco DACH. The merger was registered in court on 1 September 2015.

In addition, on 1 September 2015, Asseco South Western Europe S.A. changed its corporate name to Asseco Western Europe S.A.

Sale of Matrix42 AG by Asseco Western Europe S.A.

In October 2015, Asseco Western Europe S.A. signed a conditional agreement to sell all the shares it held in Matrix42 AG, in a management buyout transaction conducted in cooperation with funds advised by the private equity firm – EMERAM Capital Partners GmbH. The sale of shares in the subsidiary Matrix42 AG, seated in Frankfurt am Main, has become effective upon the fulfilment of conditions specified in the agreement on 12 November 2015. The agreement was concluded with Blitz D14-310 GmbH (“Blitz”). The effectiveness of the agreement was conditional, among others, upon obtaining approval to the transaction from the Austrian antimonopoly authority.

The total transaction value amounted to EUR 46.3 million, of which EUR 21.7 million was paid in cash, whereas the remaining amount of EUR 24.6 million shall be repaid by Blitz till 31 December 2021, in accordance with a loan agreement that has been concluded between AWE and Blitz. The loan has been secured with a pledge on Matrix42 shares as well as with copyrights on Matrix42 products.

Asseco Central Europe, a.s.

Acquisition of InterWay, a.s.

In July 2015, Asseco Central Europe a.s. acquired a 66% stake in the company InterWay a.s. based in Slovakia. InterWay is engaged in the implementation of technologies and systems (including IDM, SSO, ECM, ERP, BPM, Cloud Computing), integration of e-commerce and SOA solutions, as well as in content management systems based on its own and third-party software. The purchase price amounted to EUR 3.17 million.

Acquisition of exe, a.s.

In August 2015, Asseco Central Europe a.s. acquired 100% of shares in the company called exe a.s. based in Slovakia. Exe is specialized in the provision of infrastructure services, localization services, as well as in the distribution of the related third-party software. The purchase price amounted to EUR 2.4 million.

Asseco South Eastern Europe S.A.

Acquisition of shares in Uni4Gold

In July 2015, ASEE Serbia acquired 30% of shares in Uni4Gold from its non-controlling shareholders. As a result of this transaction, ASEE Serbia held 100% of shares in that company as at 31 December 2015.

Conditional acquisition of shares in Chip Card

In October 2015, ASEE Serbia won a tender for the acquisition of 87,176 shares in Chip Card a.d. based in Serbia, a company engaged in the processing and authentication of payment transactions. At the same time, the company signed a conditional agreement to purchase additional 18,945 shares from one of the existing shareholders of Chip Card a.d. Concurrently, ASEE Serbia made a commitment to acquire 30,000 of newly issued shares in Chip Card a.d. Execution of the above-mentioned transactions is subject to a number of conditions precedent, including the resignation of the existing shareholders of Chip Card a.d. from their pre-emption rights as well as obtaining the consent of the local antimonopoly authority. If the above-mentioned transactions are completed, ASEE Serbia will hold 136,121 shares in Chip Card a.d., representing 53.81% of the share capital of the acquired company. ASEE Serbia is conducting negotiations with the remaining shareholders of Chip Card a.d. in order to buy further shares in the company.



Matrix IT Ltd.

Acquisition of SEEV Solutions Ltd.

On 12 January 2015, a subsidiary of Matrix IT Ltd. acquired 75% of shares in the company SEEV Solutions Ltd. based in Israel (www.seev.co.il). SEEV Solutions is a provider of HR consultancy services in the area of sourcing and recruitment of hi-tech industry staff.

Acquisition of Tiltan Systems Engineering Ltd.

On 1 April 2015, Matrix IT Ltd. acquired a 64% stake in Tiltan Systems Engineering Ltd. based in Israel (www.tiltan-se.co.il), increasing its shareholding in that company from 36% to 100%. This company is a leading provider of solutions for spatial visualization and 3D simulation.

Acquisition of Hydus Ltd.

On 1 April 2015, Xtivia Inc., a subsidiary of Matrix IT Ltd., acquired 100% of shares in Hydus Ltd. based in the United States. The company is engaged in the provision of consulting services as well as EIM (Enterprise Information Management) software solutions.

Acquisition of Ono Apps Ltd.

On 1 May 2015, a subsidiary of Matrix IT Ltd. acquired 100% of shares in the company Ono Apps Ltd. based in Israel. The company is a provider of apps for mobile devices.

Sapiens International Corp. N.V.

Acquisition of IBEXI Solutions Private Limited

On 31 March 2015, Sapiens Technologies (1982) Ltd. signed an agreement to acquire IBEXI Solutions Private Limited based in India (www.ibexi.com). IBEXI is specialized in the provision of software solutions for the insurance industry in India, covering all the areas of insurance operations – from basic back-office and front-office applications to CRM and data warehouse upgrades, while it also develops and implements customer-tailored applications. This takeover was finalized on 6 May 2015.

Magic Software Enterprises Ltd. (hereinafter “Magic”)

Acquisition of Comblack IT Ltd.

On 14 April 2015, Magic Software Enterprises Ltd. purchased 70% of shares in Comblack IT Ltd., a company based in Israel. Comblack IT is specialized in the provision of professional software and mainframe management services for large corporate clients and government organizations.

The acquired company has a broad base of blue chip customers.

Acquisition of Infinigy Solutions LLC

On 30 June 2015, Infinigy (US) Holdings Inc., a subsidiary of Magic Software Enterprises Ltd., purchased 70% of shares in Infinigy Solutions LLC, a company based in the U.S. Infinigy Solutions focuses on the implementation and upgrading of wireless technology solutions for the telecommunications industry.

Acquisition of Todan Information Technologies Ltd.

On 13 August 2015, Complete Business Solutions Ltd., a subsidiary of Magic, took over 100% of business operations of Todan Information Technologies Ltd., a company based in Israel. Todan is a provider of IT services in the scope of consulting, implementation and development of information systems based on SAP Business One.

Acquisition of Connell Designed Group LLC

On 16 October 2015, Infinigy Solutions LLC, a subsidiary of Magic, took over 100% of business operations of Connell Designed Group LLC, a company based in the U.S. Connell Designed Group focuses on the design of telecommunications infrastructure.

Acquisition of Yes-IT Ltd.

In December 2015, Infinigy Solutions LLC, a subsidiary of Magic, acquired 100% of shares in Yes-IT Ltd, a company based in Israel. Yes-IT is a group of experienced IT professionals providing the services of support and strategic IT planning for companies.

The details concerning the allocation of the purchase price of the above-mentioned companies have been presented in explanatory note 9 to these consolidated financial statements.

Formula Systems Ltd (hereinafter “Formula”)

Acquisition of minority interests in the companies of Magic and Sapiens

During the period of 12 months ended 31 December 2015, Formula Systems purchased (on the stock market) minority stakes of shares in its subsidiaries, namely Magic and Sapiens, which resulted in increasing the equity interests and voting rights held by Formula Systems in these companies. These transactions have been accounted for as transactions with non-controlling interests.

http://www.ibexi.com/



V. INFORMATION ON OPERATING SEGMENTS

According to IFRS 8, an operating segment is a separable component of the Group’s business for which separate financial information is available and regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

Asseco Group has identified the following reportable segments (a reportable segment is an operating segment that is required for disclosure under IFRS 8):

Polish market – this segment groups our companies which generate revenues mostly in the domestic market. Performance of this segment is analyzed on a regular basis by the Parent Company’s Management Board acting as the chief operating decision maker. The Polish market segment comprises the following companies: Asseco Poland, Asseco Business Solutions, Combidata, ZUI Novum, ADH Soft, ZUI Otago, Asseco Data Systems, CK ZETO, SKG, PI ZETO Bydgoszcz, Podkarpacki Fundusz Nieruchomości, Insseco (until June 2015), and Gladstone Consulting. The aforementioned companies offer comprehensive IT services intended for a broad range of clients operating in the sectors of financial institutions, public institutions and general business.

South Eastern European market – this segment groups our companies which generate revenues mostly in the markets of Serbia, Romania, Croatia, Macedonia, and Turkey. Performance of these companies is assessed on a periodic basis by the Management Board of Asseco South Eastern Europe. This segment is identical with the composition of Asseco South Eastern Europe Group. The segment’s performance as a whole is subject to regular verification by the Management Board of Asseco Poland. The aforementioned companies offer comprehensive IT services intended for a broad range of clients operating primarily in the sector of financial institutions.

Central European market – this segment groups our companies which generate revenues mostly in the markets of Slovakia, Czech Republic, and Hungary. Performance of these companies is assessed on a periodic basis by the Management Board of Asseco Central Europe. This segment is identical with the composition of Asseco Central Europe Group. The segment’s performance as a whole is subject to regular verification by the Management Board of Asseco Poland. The aforementioned companies offer comprehensive IT services

intended for a broad range of clients operating in the sectors of financial institutions, public administration and general business.

Israeli market – this segment includes our companies which generate revenues mostly in North America, Japan, and Europe, Middle East, and Africa (EMEA region). Performance of these companies is assessed on a periodic basis by the Management Board of Formula Systems; hence, the segment’s composition corresponds to the structure of Formula Systems Group. The segment’s performance as a whole is subject to regular verification by the Management Board of Asseco Poland.

Western European market – this segment includes our companies which generate revenues mostly in the countries of Western Europe, including Germany, Spain, Portugal, and Denmark. The segment’s performance as a whole is subject to regular verification by the Management Board of Asseco Poland. In 2015, this segment was comprised of the following companies: Matrix42, Asseco Spain Group, Necomplus Group, Exictos, Asseco Danmark, Peak Consulting, Sintagma, and Asseco Lietuva.

Eastern European market – this segment gathers our companies which generate revenues mostly in the countries of Eastern Europe. The segment’s performance as a whole is subject to regular verification by the Management Board of Asseco Poland. This segment is comprised of the following companies: R-Style Softlab, Asseco Georgia, Asseco Kazakhstan, and Asseco Bel.

Revenues from none of our clients exceeded 10% of total sales generated by the Group in the period of 12 months ended 31 December 2015.



12 months ended 31 Dec. 2015 Polish market Central European

market South Eastern

European market Israeli market



Eliminations Total


Sales to external customers 1,769.1 647.7 486.2 3,648.5 598.7 106.0 7,256.2

Inter-segment sales 9.4 1.6 1.0 28.3 0.2 - (40.5) -

Operating profit/(loss) of operating segment 277.6 63.1 52.6 280.8 37.9 23.4 9.8 745.2

Interest income 1 5.1 0.7 1.5 6.5 1.3 1.0 (0.3) 15.8

Interest expenses 2 (11.4) (0.2) (1.4) (29.5) (1.1) - 0.3 (43.3)

Corporate income tax (51.3) (17.3) (10.2) (58.4) (22.7) (5.4) (0.6) (165.9)

Non-cash items:


(88.1) (16.1) (30.3) (116.9) (17.2) (6.2) 12.3 (262.5)

Impairment write-downs on segment assets (15.5) (0.6) (2.4) (7.3) (8.9) (1.1) - (35.8)


1.4 0.4 0.5 - (4.0) - - (1.7)


194.2 44.1 22.3 35.6 47.5 15.1 6.7 365.5

Cash provided by (used in) operating activities 3

414.8 107.3 84.3 398.9 14.0 24.3 - 1,043.6

Goodwill 2,543.0 426.2 514.9 1,915.7 151.5 3.4 - 5,554.7

1 Interest income on loans granted, debt securities, finance leases, trade receivables, and bank deposits 2 Interest expense on bank loans, borrowings, debt securities, finance leases, and trade payables 3 Cash generated from operating activities before income tax paid



12 months ended 31 Dec. 2014 Polish market Central European

market South Eastern

European market Israeli market



Eliminations Total

(restated) mPLN mPLN mPLN mPLN mPLN mPLN mPLN mPLN

Sales to external customers 1,677.2 492.3 499.3 2,951.0 498.3 113.8 - 6,231.9

Inter-segment sales 4.3 1.2 1.6 - 0.3 0.1 (7.5) -

Operating profit/(loss) of operating segment 298.3 50.3 46.0 187.8 36.8 17.4 0.1 636.7

- - - - -

Interest income 1 11.2 0.8 1.1 4.8 2.8 0.4 (4.2) 16.9

Interest expenses 2 (16.9) (0.4) (1.9) (25.4) (1.2) - 4.2 (41.6)

Corporate income tax (64.6) (11.7) (7.2) (35.7) (8.4) (3.6) - (131.2)

Non-cash items:


(92.3) (19.8) (23.0) (98.8) (16.4) (8.0) 2.5 (255.8)

Impairment write-downs on segment assets (2.3) (2.6) (1.3) (2.9) (0.7) (0.6) - (10.4)


1.4 1.1 0.3 (0.9) - - - 1.9


229.5 49.1 19.9 26.5 22.7 10.6 0.1 358.4

Cash provided by (used in) operating activities 3

341.0 101.0 76.8 218.4 64.7 14.6 0.1 816.6

Goodwill 2,374.8 402.7 523.4 1,650.3 255.1 4.4 - 5,210.7

1 Interest income on loans granted, debt securities, finance leases, trade receivables, and bank deposits 2 Interest expense on bank loans, borrowings, debt securities, finance leases, and trade payables 3 Cash generated from operating activities before income tax paid



VI. EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Sales revenues and operating costs

Operating revenues generated and operating costs incurred during the period of 12 months ended 31 December 2015 and in the comparable period were as follows:


12 months ended

31 Dec. 2014

mPLN mPLN

Sales revenues by type of products

Proprietary software and services 5,782.6 4,998.9

Third-party software and services 532.8 465.0

Hardware and infrastructure 935.5 763.9

Other sales 5.3 4.1

Total 7,256.2 6,231.9

Sales revenues by sectors

Banking and Finance 2,688.5 2,213.9

General Business 2,829.4 2,512.8

Public Institutions 1,738.3 1,505.2

Total 7,256.2 6,231.9

Operating costs

Cost of goods and third-party services sold (1,296.4) (1,071.8)

Employee benefits (3,327.8) (2,840.2)

Depreciation and amortization (261.2) (253.4)

Third-party services (992.1) (861.4)

Other (624.3) (556.2)

Total (6,501.8) (5,583.0)

Cost of sales (5,506.6) (4,712.1)

Selling costs (451.5) (393.8)

General and administrative expenses (543.7) (477.1)

Total (6,501.8) (5,583.0)

In the period of 12 months ended 31 December 2015, other operating costs included primarily the maintenance of property and business cars in the amount of PLN 381.7 million, as well as business trips in the amount of PLN 93.8 million. Whereas, in the comparable period other operating costs included primarily the maintenance of property and business cars in the amount of PLN 356.4 million, as well as business trips in the amount of PLN 74.8 million.

Under agreements with our clients, the Group implements a number of contracts, among others, for outsourcing of payment transaction processes. The total amounts of future minimum lease revenues (fees to be paid by our clients) under such contracts have been estimated as follows:

PLN 32.3 million within 1 year,

PLN 56.6 million within 1 to 5 years, and

PLN 4.2 million within more than 5 years.



i. Costs of employee benefits


12 months ended

31 Dec. 2014

mPLN mPLN

Remuneration (2,786.5) (2,365.9)

Social insurance contributions (207.9) (176.7)

Retirement benefit expenses (245.6) (220.4)

Costs of share-based payment transactions with employees (18.5) (21.9)

Other costs of employee benefits (69.3) (55.3)

Total employee benefit expenses (3,327.8) (2,840.2)

The average level of employment during the reporting period presented in full-time salaried jobs, i.e. employment in full-time jobs adjusted for (reduced by) positions which are not salaried by the Group companies (such as an unpaid leave, maternity leave, etc.), exclusive of companies whose financial results are disclosed under other operating activities or discontinued operations, however inclusive of companies which joined the Group during the reporting period (calculated proportionally to the period of their consolidation) equalled 19,325 persons as compared with 17,721 persons in the comparable period.

ii. Share-based payment transactions with employees

The costs of share-based payment transactions with employees correspond to stock option plans that were awarded to employees and management members of companies incorporated within Formula Systems Group. During the period of 12 months ended 31 December 2015, such costs amounted to PLN 18.5 million as compared with PLN 21.9 million in the comparable period.


12 months ended

31 Dec. 2014

mPLN mPLN

Stock option plan for managers of Formula Systems (5.9) (11.1)

Stock option plan for managers and employees of InSync Staffing Inc. - (0.1)

Stock option plan for managers and employees of Matrix IT Group (4.4) (0.8)

Stock option plan for managers and employees of Magic Software Enterprises Group

(0.9) (5.0)

Stock option plan for managers and employees of Sapiens International Corporation Group

(7.3) (4.9)

Total costs of share-based payment transactions with employees (18.5) (21.9)

In March 2012, in connection with extending the managerial contract of Mr. Guy Bernstein (CEO of subsidiary Formula Systems), the Board of Directors of Formula Systems awarded a new stock option plan for Mr. Guy Bernstein, at the same time cancelling the previous option plan of September 2010, under which he was entitled to acquire 543,840 ordinary shares in Formula Systems.

Under the stock option plan awarded in 2012, the CEO of Formula Systems is entitled to receive 1,122,782 options for Formula Systems shares. The option vesting condition is to remain at the position of CEO of Formula Systems or at least one of the subsidiaries of Formula Systems over the period defined in the stock option plan. However, regardless of the CEO’s readiness to take the above-mentioned positions, the option plan requirements shall also be considered satisfied if the failure to do so results from a direct request submitted to the CEO by the Board of Directors of Formula Systems or of any of its direct subsidiaries, or from the fact that performance of the above-mentioned functions is not possible due to formal obstacles arising from the applicable laws, stock exchange regulations or corporate documents of Formula Systems or its subsidiaries, where the CEO might serve as a director.

The vesting period will last till December 2019, whereas the option rights will be acquired in stages. The first 6.25% tranche of stock options available under the plan (i.e. 70,174 options) were already acquired in September 2012. The remaining stock options have been vested on a quarterly basis starting from 30 September 2012. Hence, as from 30 September 2012, in each quarter the CEO has acquired the right to 35,087 options or 3.125% of the total number of stock options awarded. The exercise price of each option is



NIS 0.01. Pursuant to the terms of the option plan, all shares to be issued on the exercise of these options will be deposited in a trust account, and the CEO of Formula Systems will not be able to exercise voting rights or sell such shares until they are released from the trust account. Only those shares for which the vesting period has expired may be released to Mr. Bernstein by the trustee.

In June 2013, all these options were exercised into shares and subsequently deposited with the trustee. As at the exercise date, this is as at 3 June 2013, the vesting period for 175,435 options has already lapsed, whereas rights to the remaining 947,347 options shall be acquired on a quarterly basis, during the period from 1 April 2014 till 31 December 2019. Following the issuance of 1,122,782 shares by Formula Systems, the equity interest held by Asseco Poland in Formula Systems dropped from 50.19% to 46.33%.

All the issued shares participate in dividends and carry voting rights; however, on 17 November 2015, Mr. Bernstein granted an irrevocable authorization to exercise voting rights with respect to all of his shares, including the shares deposited with the trustee, to Mr. Marek Panek, Member of the Management Board of Asseco Poland S.A., or to another Member of the Management Board of Asseco Poland S.A. acting in his place. Pursuant to this authorization, when exercising voting rights with respect to the above-mentioned shares, Mr. Marek Panek is obligated to vote as recommended by the Management Board of Asseco Poland S.A.

Consequently, taking into account the principles of voting, despite the lack of an absolute majority of shares in Formula Systems (1985) Ltd. in the period of 12 months ended 31 December 2015, Asseco Poland S.A. retained an absolute majority of voting rights at the general meeting of shareholders of that company.

iii. Reconciliation of depreciation and amortization charges

The table below presents the reconciliation of depreciation and amortization charges reported in the income statement with those disclosed in the tables of changes in property, plant and equipment (note 8) and in intangible assets (note 9):

Note


12 months ended

31 Dec. 2014

mPLN mPLN

Depreciation charge for the year as disclosed in the table of changes in property, plant and equipment

8 (106.8) (109.4)

Amortization charge for the year as disclosed in the table of changes in intangible assets

9 (159.1) (165.4)

Amortization charge recognized directly in other comprehensive income

0.8 0.8

Reduction of amortization charge due to recognition of a grant to internally generated licenses

2.0 5.3

Amortization charges capitalized for development projects in progress

0.6 0.4

Other - (0.1)

Total depreciation and amortization charges disclosed in the statement of cash flows

(262.5) (268.4)

Depreciation charge transferred to other operating activities* 1.3 2.4

Depreciation and amortization charges recognized in discontinued operations

- 12.6

Total depreciation and amortization charges recognized in operating costs

(261.2) (253.4)

* including primarily the depreciation charge on property, plant and equipment of the company Park Wodny Sopot Sp. z o.o.



2. Other operating income and expenses

Other operating income and expenses in the period of 12 months ended 31 December 2015 and in the comparable period were as follows:

Other operating income 12 months ended

31 Dec. 2015


mPLN mPLN

Gain on disposal of property, plant and equipment 2.6 4.3

Reversal of provision 5.3 1.4

Cash discounts and bonuses received 0.2 0.1

Proceeds from sports and recreational activities 25.5 21.5

Other 4.7 4.9

Total 38.3 32.2

“Proceeds from sports and recreational activities” include revenues generated by the companies Asseco Resovia S.A., Gdyński Klub Koszykówki Arka S.A., and Park Wodny Sopot Sp. z o.o., whose business profiles are substantially different from the Group’s core operations.

Other operating expenses 12 months ended

31 Dec. 2015


mPLN mPLN

Loss on disposal of property, plant and equipment - (0.2)

Liquidation costs of property, plant and equipment, intangible assets, and inventories (0.5) (1.1)

Change in the value of investment property (1.6) (5.5)

Creation of provisions (0.6) (1.9)

Charitable contributions to unrelated parties (2.5) (1.0)

Costs related to proceeds from sports and recreational activities (36.7) (30.5)

Other (5.6) (4.2)

Total (47.5) (44.4)



3. Financial income and expenses

Financial income earned during the period of 12 months ended 31 December 2015 and in the comparable period was as follows:

Financial income 12 months ended

31 Dec. 2015


mPLN mPLN

Interest income on loans granted, debt securities, finance leases, trade receivables, and bank deposits

15.8 16.9

Other interest income 0.5 0.4

Foreign exchange differences 11.6 12.2

Valuation/revaluation of financial assets and equity investments at the balance sheet date

5.4 28.1

Revaluation of deferred payments for controlling interests in subsidiaries 2.1 16.8

Exercise and/or valuation of financial assets carried at fair value through profit or loss

5.0 4.0

Gain on disposal of shares in subsidiaries 39.7 -

Negative goodwill - 3.0

Other financial income 1.1 0.9

Total financial income 81.2 82.3

The line “Gain on disposal of shares in subsidiaries” for the period of 12 months ended 31 December 2015, presents the Group’s gain on the sale of all shares held in its subsidiary Matrix 42 AG. This transaction has been described in section IV of these consolidated financial statements.

The line “Valuation/revaluation of financial assets and equity investments at the balance sheet date” for the period of 12 months ended 31 December 2015, discloses the Group’s income arising from the reversal of an allowance for a loan granted to Matrix42 Inc. As described in section III of these consolidated financial statements, on 8 January 2015, Matrix42 AG acquired 223,435,293 shares in Asseco DACH S.A. (as at the balance sheet date, merged with the Asseco Western Europe S.A.) as a result of satisfying its receivables from Matrix42 Inc. by taking over shares in Asseco DACH S.A. which were provided as the loan collateral. The shares acquired in this transaction were formerly held by Mr. Herbert Uhl, the key shareholder and manager of Matrix42 Inc. As at the transaction date, the nominal amount of receivables from Matrix42 Inc amounted to PLN 29.4 million (EUR 6.9 million), whereas their carrying value (this is net of allowances recognized in previous years) was PLN 23.8 million (EUR 5.6 million). The Group believes that the shares taken over in Asseco DACH are worth no less than the nominal amount of receivables from Matrix42 Inc, hence the Group has reversed the previously recognized allowance amounting to PLN 5.4 million (EUR 1.3 million). Whereas, this line for the period of 12 months ended 31 December 2014, discloses the Group’s income of PLN 28.1 million resulting from the reversal of allowances for commercial papers and other receivables from Prokom Investments as all of such receivables have been entirely settled by Prokom. This transaction has been described in more detail in the consolidated financial statements of Asseco Group for the period of 12 months ended 31 December 2014.

Negative goodwill recognized in the period of 12 months ended 31 December 2014 resulted primarily from the final allocation of the purchase price of Insync Staffing Inc.



Financial expenses incurred during the period of 12 months ended 31 December 2015 and in the comparable period were as follows:

Financial expenses 12 months ended

31 Dec. 2015


mPLN mPLN

Interest expense on bank loans, borrowings, debt securities, finance leases and trade payables

(43.3) (41.6)

Other interest expenses (5.9) (5.0)

Negative foreign exchange differences (20.4) (10.3)

Expenses related to obtaining control over subsidiaries (1.1) (2.0)

Loss on valuation/revaluation of financial assets at the balance sheet date

- (4.5)

Loss on exercise and/or valuation of financial assets carried at fair value through profit or loss

(6.3) (4.1)

Loss on revaluation of deferred payments for controlling interests in subsidiaries

(1.5) (0.9)

Dividends paid out to non-controlling shareholders (1.2) (2.0)

Expense on unwinding of discounts (2.2) -

Other financial expenses (1.1) (0.5)

Total financial expenses (83.0) (70.9)

Positive and negative foreign exchange differences are presented in net amounts (reflecting the surplus of positive differences over negative differences or otherwise) at the level of individual subsidiaries.

Gain/loss on revaluation of deferred payments for controlling interests in subsidiaries resulted from changes in the estimates of deferred contingent liabilities arising from the acquisition of controlling interests in subsidiaries.

Dividends paid out to non-controlling shareholders represent dividends payable on non-controlling interests subject to put options, in respect of which the Group has concluded that, under the terms and conditions of the option contract, benefits incidental to the ownership of such puttable equity instruments shall be transferred to the Group subsidiaries. If, under the purchase agreement, benefits incidental to the ownership of such puttable equity instruments shall be transferred to the Parent Company, then at the date of obtaining control as well as at each subsequent balance sheet date, non-controlling interests resulting from such puttable equity instruments are not recognized. Hence, a business combination is accounted for as if, at the date of obtaining control, the Parent Company acquired not only an equity interest in a subsidiary but also any existing puttable equity instruments. Liabilities under put options are measured at fair value at each balance sheet date; whereas, any changes in such estimates are recognized in the income statement (as financial income/expense). The share of profits attributable to puttable equity interests is allocated to the Parent Company, whereas dividends paid out to non-controlling shareholders are recognized as financial expenses.

4. Corporate income tax

The main charges on pre-tax profit resulting from corporate income tax (current and deferred portions):


12 months ended

31 Dec. 2014

mPLN mPLN

Current portion of income tax and prior years’ adjustments (181.6) (116.6)

Deferred portion of income tax 15.7 (14.6)

Income tax expense as disclosed in the income statement (165.9) (131.2)

Regulations applicable to the value added tax, corporate income tax, personal income tax or social security contributions are subject to frequent amendments, thereby depriving taxpayers of a possibility to refer to well established legal decisions and precedents. The current regulations in force are not always unambiguous, which may cause additional discrepancies in their interpretation. Tax settlements are subject



to control by the taxation authorities. Should any irregularities in tax settlements be detected, a taxpayer is obliged to pay the outstanding amounts along with the statutory interest thereon. Payment of tax arrears does not always release a taxpayer from penal and fiscal liability. In effect, the amounts of taxes payable disclosed in the financial statements may be later changed, after they are finally determined by the taxation authorities.

The table below presents the reconciliation of corporate income tax payable at the statutory tax rate on profit before tax and share of profits of associates with the corporate income tax computed at the Group’s effective tax rate.


12 months ended

31 Dec. 2014

mPLN mPLN

Pre-tax profit 743.4 648.1

Statutory corporate income tax rate 19% 19%

Corporate income tax computed at the statutory tax rate 141.2 123.1

Difference due to different rates of corporate income tax paid abroad

18.4 17.4

Income tax on dividends 9.5 6.9

Utilization of formerly unrecognized deferred tax asset related to the prior years’ losses

(6.4) (7.1)

Reversal of a provision for potential tax liabilities - (7.5)

Changes in the calculation of corporate income tax for the prior years

(1.6) (2.4)

Costs of share-based payment transactions with employees 2.2 3.0

Gain on revaluation of a conditional payment - (3.8)

Taxes and charges (PFRON) 0.8 0.8

Depreciation and amortization charges 0.6 -

Representation expenses 1.1 1.2

Non-tax-deductible expenses related to the disposal of Slovanet - 1.9

Negative goodwill - (1.0)

Non-taxable income / non-tax-deductible expenses incurred in a technological zone

(0.6) (1.3)

Other permanent differences 0.7 -

Corporate income tax at the effective tax rate of 22.3% in 2015 and 20.2% in 2014

165.9 131.2



The table below presents information on deferred tax assets and liabilities:

Deferred tax liabilities, gross Deferred tax assets, gross

31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

Property, plant and equipment 44.1 37.7 11.5 11.8

Investment property - - 2.5 2.2

Intangible assets 151.1 145.9 16.2 3.5

Shares in subsidiaries - - 0.7 0.4

Financial assets available for sale - - 1.5 1.3

Financial assets held to maturity - - - 0.5

Financial assets carried at fair value through profit or loss

0.5 1.2 0.1 0.1

Loans granted 0.4 0.4 - 1.7

Inventories - - 1.9 1.4

Prepayments and accrued income 1.7 0.7 12.3 15.7

Trade receivables 28.5 40.0 12.0 5.8

Other receivables 5.2 7.8 3.7 9.6

Cash and cash equivalents 9.6 7.1 - -

Non-current assets classified as held for sale 0.3 0.7 - 0.6


- - 0.3 0.2

Provisions - - 39.5 15.3

Trade payables - - 9.3 5.8

Financial liabilities - - 21.1 23.7

Other liabilities 0.6 - 1.3 1.5

Accruals - - 34.0 24.8

Deferred income 0.1 - 4.8 6.3

Deferred income tax on share-based payment transactions

- - 8.6 6.5

Deferred income tax on dividend payments - 2.1 - -

Losses deductible against future taxable income - - 176.0 139.4

Deferred tax liabilities, gross 242.1 243.6 n/a n/a

Deferred tax assets, gross n/a n/a 357.3 278.1

Write-down due to inability to realize a deferred tax asset

n/a n/a (152.9) (92.5)

Deferred tax assets, net n/a n/a 204.4 185.6

Deferred tax assets/liabilities, net 131.0 135.2 93.3 77.2



The Group made an estimate of taxable income planned to be achieved in the future and concluded it will enable full recovery of deferred tax assets disclosed in these consolidated financial statements.

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Deferred tax assets 93.3 77.2

Deferred tax liabilities (131.0) (135.2)

Deferred tax assets (+)/liabilities (-), net (37.7) (58.0)

Deferred tax assets resulting from the prior years’ tax losses, which were not recognized by the Group amounted to PLN 152.9 million as at 31 December 2015 as compared with PLN 92.5 million as at 31 December 2014.

5. Discontinued operations

During the period of 12 months ended 31 December 2015, the Group did not discontinue any operations that would constitute a separate line of business.

On 27 June 2014, Asseco Central Europe, a.s. (hereinafter “ACE”) signed an agreement to sell 51% of shares in Slovanet, a.s. to the company SNET which, at the transaction date, already held the remaining 49% stake in Slovanet. Following this transaction, SNET has become a sole shareholder of Slovanet. As a result of that agreement, our control over Slovanet was lost on 27 June 2014.

The operations of Slovanet represented a separate major business line of the Group and therefore, in accordance with IFRS 5, the results of Slovanet have been classified as discontinued operations.

This transaction has been described in more detail in the consolidated financial statements of Asseco Group for the period of 12 months ended 31 December 2014.

6. Earnings per share

Basic earnings per share are computed by dividing net profit for the reporting period attributable to shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during that reporting period.

Diluted earnings per share are computed by dividing net profit for the reporting period attributable to shareholders of the Parent Company by the adjusted (for the diluting impact of potential shares) weighted average number of ordinary shares outstanding during that financial period, adjusted by the impact of diluting elements.

Both during the reporting period and the comparable period, there were no elements that would cause a dilution of earnings per share.

The table below presents net profits and numbers of shares used for the calculation of earnings per share:


12 months ended

31 Dec. 2014

Weighted average number of ordinary shares outstanding, used for calculation of basic earnings per share

83,000,303 83,000,303

Net profit attributable to shareholders of the Parent Company from continuing operations for the reporting period (in millions of PLN)

365.5 349.7

Consolidated earnings per share from continuing operations for the reporting period (in PLN)

4.40 4.21

Net profit attributable to shareholders of the Parent Company for the reporting period (in millions of PLN)

365.5 358.4

Consolidated earnings per share for the reporting period (in PLN) 4.40 4.32



7. Information on dividends paid out

In 2015, the Parent Company paid out to its shareholders a dividend for the year 2014. On 29 April 2015, the Ordinary General Meeting of Shareholders of Asseco Poland S.A. passed a resolution to allocate PLN 240.7 million out of the Company’s net profit for the financial year 2014 to payment of a dividend amounting to PLN 2.90 per share. The remaining portion of net profit in the amount of PLN 49.6 million was allocated to retained earnings. The dividend record date was set for 15 May 2015; whereas, the dividend payment was scheduled for 2 June 2015.

In 2014, the Parent Company paid out to its shareholders a dividend for the year 2013. On 12 May 2014, the Ordinary General Meeting of Shareholders of Asseco Poland S.A. passed a resolution to allocate PLN 215.8 million out of the Company’s net profit for the financial year 2013 to payment of a dividend amounting to PLN 2.60 per share. The remaining portion of net profit in the amount of PLN 64.5 million was allocated to retained earnings. The dividend record date was set for 21 May 2014; whereas, the dividend payment was scheduled for 5 June 2014.



8. Property, plant and equipment

The net book value of property, plant and equipment, during the period of 12 months ended 31 December 2015 and in the comparable period, changed as a result of the following transactions:

for the period of 12 months ended 31 December 2015 Land and buildings Computers and other

office equipment Transportation

vehicles Other tangible

assets Tangible assets

under construction Total


Net book value of property, plant and equipment as at 1 January 2015

468.2 200.8 28.8 26.0 0.3 724.1

Additions, of which: 41.7 90.6 19.8 13.3 11.8 177.2

Purchases and modernization 3.8 67.7 12.1 4.9 10.3 98.8

Obtaining control over subsidiaries* 37.2 8.9 3.1 8.2 0.1 57.5

Finance leases - 0.7 3.8 - - 4.5

Transfers from tangible assets under construction to tangible assets 0.6 11.4 0.8 0.2 - 13.0

Transfers from inventories to tangible assets - 1.7 - - 1.4 3.1

Other 0.1 0.2 - - - 0.3

Reductions, of which: (25.5) (65.2) (13.6) (9.6) (13.0) (126.9)

Depreciation charges for the reporting period (25.3) (61.1) (11.1) (9.3) - (106.8)

Disposal and liquidation (0.2) (1.8) (2.5) (0.3) - (4.8)

Loss of control over subsidiaries** - (2.2) - - - (2.2)

Transfers from tangible assets under construction - - - - (13.0) (13.0)

Transfers to inventories - (0.1) - - - (0.1)

Other (3.3) (10.9) 2.2 5.0 5.4 (1.6)

Exchange differences on translation of foreign operations 3.5 3.3 0.1 (3.5) (0.1) 3.3

Net book value of property, plant and equipment as at 31 December 2015

484.6 218.6 37.3 31.2 4.4 776.1

* of which PLN 46.1 million representing the value of property, plant and equipment in Unizeto Technologies, PLN 4.2 million representing the value of property, plant and equipment in Exictos SGPS, and PLN 3.8

million representing the value of property, plant and equipment in Infovide-Matrix S.A.

** Disposal of shares in Matrix 42 AG



for the period of 12 months ended 31 December 2014 Land and buildings Computers and other

office equipment Transportation

vehicles Other tangible

assets Tangible assets

under construction Total


Net book value of property, plant and equipment as at 1 January 2014

433.0 206.6 29.7 28.4 9.5 707.2

Additions, of which: 96.1 94.7 14.1 5.2 33.2 243.3

Purchases and modernization 4.6 54.4 11.2 4.1 33.2 107.5

Obtaining control over subsidiaries* 89.3 0.4 - 1.1 - 90.8

Finance leases - 2.6 2.4 - - 5.0

Transfers from tangible assets under construction to tangible assets 2.2 34.1 0.5 - - 36.8

Transfers from inventories to tangible assets - 3.2 - - - 3.2

Reductions, of which: (63.0) (104.0) (15.1) (8.0) (42.6) (232.7)

Depreciation charges for the reporting period (28.2) (62.6) (11.2) (7.4) - (109.4)

Disposal and liquidation - (2.3) (2.0) (0.6) - (4.9)

Loss of control over subsidiaries** 5 (34.8) (39.1) (1.9) - (5.8) (81.6)

Transfers from tangible assets under construction - - - - (36.8) (36.8)

Exchange differences on translation of foreign operations 2.1 3.5 0.1 0.4 0.2 6.3

Net book value of property, plant and equipment as at 31 December 2014

468.2 200.8 28.8 26.0 0.3 724.1

* of which PLN 89.5 million representing the value of property, plant and equipment in Park Wodny Sopot Sp. z o.o.

** Disposal of shares in Slovanet a.s.; this transaction has been described in more detail in explanatory note 5 to these consolidated financial statements.

During the period of 12 months ended 31 December 2014, several of the Group’s real estate properties (land, business premises and office buildings), which are intended for disposal, were reclassified from ‘investment property’ to ‘non-current assets held for sale’.



9. Intangible assets

The net book value of intangible assets, during the period of 12 months ended 31 December 2015 and in the comparable period, changed as a result of the following transactions:

for the period of 12 months ended 31 December 2015

Internally generated

software and licenses

Costs of development

projects in progress

Purchased software, patents, licenses and

other intangibles

Intangible assets recognized in

business combinations

“ASSECO” trademark

Total


Net book value of intangible assets as at 1 January 2015 125.1 109.5 59.9 522.4 137.6 954.5

Additions, of which: 88.7 84.8 17.3 62.8 - 253.6

Purchases and modernization - - 16.6 - - 16.6

Obtaining control over subsidiaries 23.7 3.0 0.7 62.8 - 90.2

Capitalization of project development costs - 81.8 - - - 81.8

Transfers from the costs of development projects in progress 65.0 - - - - 65.0 Reductions, of which: (74.7) (79.3) (20.7) (85.8) - (260.5)

Amortization charges for the reporting period (67.2) - (11.5) (80.4) - (159.1)

Disposal and liquidation (1.3) (2.0) (5.6) - - (8.9)

Loss of control over subsidiaries (6.2) (12.3) (3.6) (5.4) - (27.5)

Transfers to internally generated software - (65.0) - - - (65.0) Impairment write-down (1.1) - - - - (1.1)

Other 20.2 (3.9) 4.9 (16.2) - 5.0

Exchange differences on translation of foreign operations 1.3 7.3 (0.3) 31.8 - 40.1

Net book value of intangible assets as at 31 December 2015 159.5 118.4 61.1 515.0 137.6 991.6



For impairment testing purposes, intangible assets are allocated to individual cash-generating units or groups of cash-generating units, which are constituted by individual subsidiaries or groups of subsidiaries. The conducted annual impairment tests have been described in more detail in explanatory note 12 to these consolidated financial statements. The recoverable amount of the costs of development projects in progress was measured as at the balance sheet date by analyzing the future cash flows to be generated by each of such ongoing projects. Based on the carried out analysis, it was determined that the costs of development projects in progress were not impaired as at the balance sheet date.


Internally generated software and

licenses

Costs of development

projects in progress

Purchased software, patents, licenses and

other intangibles

Intangible assets recognized in

business combinations


Total


Net book value of intangible assets as at 1 January 2014 124.4 93.8 73.1 577.1 137.6 1,006.0

Additions, of which: 63.6 70.4 12.5 29.7 - 176.2

Purchases and modernization - - 11.8 - - 11.8

Obtaining control over subsidiaries - - 0.7 29.7 - 30.4

Capitalization of project development costs - 70.4 - - - 70.4

Transfers from the costs of development projects in progress 63.6 - - - - 63.6 Reductions, of which: (62.9) (63.6) (27.9) (93.7) - (248.1)

Amortization charges for the reporting period (62.9) - (22.2) (80.3) - (165.4)

Disposal and liquidation - - (2.3) (0.3) - (2.6)

Loss of control over subsidiaries 5 - - (3.4) (13.1) - (16.5)

Transfers to internally generated software - (63.6) - - - (63.6)

Impairment write-downs (+/-) (2.8) (0.2) 5.1 0.3 - 2.4

Other 5.2 - (4.8) (0.4) - -

Exchange differences on translation of foreign operations (2.4) 9.1 1.9 9.4 - 18.0

Net book value of intangible assets as at 31 December 2014 125.1 109.5 59.9 522.4 137.6 954.5



Development projects

In 2015 as well as in the comparable period, the development projects carried out by the Group focused on the generation of new software or significant modification/extension of already marketed applications. The Group’s policy pertaining to the capitalization of the costs of development projects in progress is described item 9 of chapter III “Significant accounting policies”.

In the year ended 31 December 2015, total development project costs which qualified for capitalization amounted to PLN 81.8 million (vs. PLN 70.4 million in the comparable period) and they were incurred by the following operating segments:


12 months ended

31 Dec. 2014

mPLN mPLN

Polish market 30.4 15.1

South Eastern European market 5.2 8.2

Western European market 5.9 9.6

Central European market 1.9 0.2

Israeli market 38.1 32.7

Eastern European market 0.3 4.6

Total 81.8 70.4

Polish market

During the period of 12 months ended 31 December 2015, within the “Polish market” segment, the largest expenditures for development work were made by Asseco Poland S.A. (PLN 20.1 million), Asseco Business Solutions S.A. (PLN 6.4 million), and Unizeto Technologies S.A. (PLN 1.4 million).

The largest development projects conducted by the Parent Company during the year ended 31 December 2015 included the following:

Public Services Card

The main task of this project is to automate the process of collecting cashless smart card payments for services provided by public administration, local government and public benefit institutions, as well as to create an interface to external payment clearing systems.

The research phase was performed as part of the Silesian Public Services Card project carried out for KZK GOP, whereas its development phase has been commenced from the beginning of the third quarter of 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 9.4 million, of which PLN 5.9 million in 2015. The project is scheduled to be completed till 31 March 2016.

AUMS

The project is aimed at developing a version of AUMS (Asseco Utility Management Solutions) that would be ready for international distribution and implementation, which will in particular involve the translation of the UMTS system into English, its preparation for translation into other languages, as well as expansion of its functionality in order to meet the requirements in foreign markets.

The research phase of this project was initiated in the second quarter of 2014, whereas its development phase in the first quarter of 2015. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 3.9 million. The project is scheduled to be completed till 30 June 2018.

Asseco Medical Network

This system is dedicated for the networks of public and non-public healthcare centers, which provide medical services within in-house, closed or specialized treatment schemes, this is for the networks of hospitals and specialist outpatient clinics. This software is distinguished by its interoperability and expandable functionality, cooperation with Data Centers, definable workflow, as well as scalable system architecture.



The research phase of this project was initiated in March 2014, whereas its development phase in June 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 2.9 million, of which PLN 2.1 million in 2015. The project is scheduled for completion in the third quarter of 2016.

def3000/CBP

The main objective of def3000/CBP (Customer Banking Platform) solution will be to enable access to the system’s business functionality by means of the so-called mini-applications, i.e. software components that communicate with other elements of the system through a defined, open interface. In addition, the software will provide the following functionality:

multiple banking products and services for bank customers within one platform accessible over the Internet;

flexible arrangement of the offered functions by grouping them within dedicated mini-applications;

active responding to the needs of bank customers through the interpretation and prediction of activities;

possibility of extending the offered functionality by external service providers; ability to use the system on any desktop, tablet or mobile device with a web browser.

The development phase of this project was initiated in January 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 4.0 million, of which PLN 3.4 million in 2015. The project is scheduled to be completed in May 2016.

CCR

CCR (Comprehensive Consolidated Reporting) is a web-based application, operating in the cloud, which is designed to support the process of preparation of consolidated financial reports. The application features flexible mechanisms allowing to define various types of statements and reports. It also enables the creation of summaries to facilitate the analysis of financial data. Built-in mechanisms allow for rapid implementation of changes in the templates applied for financial reporting.

In addition to the functionality of entering and verification of financial reports and intragroup transactions, the CCR application provides support for the entire process of consolidation, including the calculation of consolidation eliminations (automatic and manual), as well as conversion of currencies. Furthermore, the application is capable of importing and exporting files and has a built-in communicator, allowing to share comments among participants in the consolidation process.

The research phase of this project was initiated in January 2012, whereas its development phase in October 2012. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.5 million, of which PLN 0.1 million in 2015. The project is scheduled for completion in the first quarter of 2016.

BSS Cloud

The aim of this project is to create a product allowing for comprehensive handling of processes performed by Business Support Systems of retail and wholesale telecommunications and television operators, both small-sized (with up to 1,000 subscribers) and medium-sized (with up to 10,000 subscribers). As a result, Asseco Poland will be able to offer comprehensive BSS and Network Inventory for the above-mentioned service providers.

The research phase of this project was initiated in April 2014, whereas its development phase in May 2014. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.3 million, of which PLN 0.9 million in 2015. The project is scheduled to be completed till 31 December 2016.

Smart

This project is aimed at developing an integrated system to support telecom operators in their sales processes and customer service involved in the provision of VOICE, SMS and DATA services.

The development phase of this project was initiated in October 2015. Until 31 December 2015, total expenditures that have been capitalized as intangible assets amounted to PLN 1.7 million. The project is scheduled to be completed till 31 December 2018.



Asseco Business Solutions S.A. incurred expenditures for the development of five products. The largest expenditures (PLN 3.0 million) were made to develop the Mobile Touch 5.0 application – a mobile SFA/CRM system taking advantage of the latest touchscreen technologies. ABS Mobile Touch is a multiplatform application designed to run on mobile devices, such as tablets and smartphones with iOS (Apple) and Android operating systems. This application is intended to support sales operations conducted in the field.

Another product developed by Asseco Business Solutions in 2015 was Asseco ERP 8.0 – an innovative, advanced and comprehensive ERP/MRP system that has been designed to support major functions of an enterprise. Configuration of the target solution depends on the nature of business operations and actual management needs. The system can facilitate work in such areas as finance and accounting, human resources and payroll, sales, logistics, controlling, production, BI and WMS. Expenditures capitalized under this project in 2015 totalled to PLN 1.4 million.

The third major product, in terms of development spending in 2015, was the WAPRO project which is a set of applications for the management of small and medium-sized enterprises, designed to help operate the departments of sales, finance and accounting, human resources, and mobile employees. In 2015, expenditures capitalized under this project amounted to PLN 1.2 million.

Additionally, in 2015, ABS capitalized the development costs of two other products Asseco ERP HR 8.0 and Faktor 3.1, which amounted to PLN 0.3 million and PLN 0.5 million, respectively. The first tool is intended to support the personnel management functions, while adapting to individual needs and specific HR environments. This application provides comprehensive assistance in the processes of HR and payroll, resource management, recruitment, social processes, and planning of trainings. Whereas, Faktor 3.1 is a program designed to provide full support for businesses engaged in factoring services, management of receivables, as well as debt collection services. This system can be operated by independent providers of factoring services as well as by banks, offering such services as part of their banking operations.

The capitalized development expenditures incurred by Unizeto Technologies S.A. were associated primarily with their application for the protection of non-public information. The application is used for access control and data encryption on mobile devices. Total expenditures capitalized for this development project amounted to PLN 3.9 million, of which PLN 1.4 million were capitalized in 2015.

Central European market

In the year ended 31 December 2015, companies of the “Central European market” segment spent a total of PLN 1.9 million for capitalized development projects.

The largest expenditures (amounting to PLN 0.8 million) were incurred by DanubePay, a.s. to develop their StarCARD program used for handling and processing of payment transactions made by customers of the banking sector. The system enables authentication and settlement of transactions and provides support for POS terminals and ATMs.

Additionally, the company InterWay, a.s. capitalized the development costs of WebJET CMS, WebJET Cloud and DMS Green products. It is a series of proprietary software designed for the management of electronic documents, internet and intranet pages, as well as for cloud computing. Total expenditures for the development of these products amounted to PLN 2.3 million, of which PLN 0.3 million were incurred in 2015.

Other development costs that were capitalized in the Central European segment were related to the following projects: NEW HIS (PLN 0.3 million; hospital information system), Credilogic (PLN 0.3 million; applications supporting loan decisions), and Interlis4LIDS (0.2 million PLN; geographic information system).

South Eastern European market

In the year ended 31 December 2015, capitalized costs of development projects carried out in the “South Eastern European market” segment amounted in total to PLN 5.2 million.

Within the Banking Solutions segment, capitalized development expenditures (amounting to PLN 3.2 million) were related primarily to the new lines of ASEBA Experience products – state-of-the-art banking software offered in the areas of distribution channels, core banking systems, and Business Intelligence solutions. As part of the Experience software development, in 2015 we capitalized expenditures for the Experience



solutions platform and Multichannel solution, which is an integrated e-banking solution designed to enable the distribution of banking services via new, alternative channels.

Furthermore, expenditures capitalized in 2015 included the development of InACT – transaction monitoring, anti-fraud and anti-money laundering solution.

Within the Payment Solutions segment, capitalized development expenditures amounted to PLN 0.4 million and were related to the Nestpay® solution. It is a B2B platform handling the settlements of online card payments between headquarters and a network of dealers, which is designed to enable banks to offer card acceptance services for web merchants.

Major products developed by the Systems Integration segment in 2015 included Fidelity – comprehensive solution that automates the full lifecycle of assets and spending processes, and LeaseFlex – fully-fledged lease product and asset lifecycle management solution dedicated to leasing companies. In this segment, the costs of capitalized development projects aggregated to PLN 1.6 million.


In the “Western European market” segment, development expenditures totalled at PLN 5.9 million in 2015, and were incurred by Matrix 42 AG (PLN 4.5 million) and Necomplus S.L. (PLN 1.4 million).

In 2015, Matrix42 AG worked on the development of My Workspace project.

My Workspace project is associated with using cloud-based technologies. This solution provides users with an easy, secure, centralized and controlled remote access to applications and data, regardless of the operated hardware platform. This software can be easily and seamlessly integrated with the client’s infrastructure. Expenditures capitalized under this development project in 2015 amounted to PLN 4.6 million (EUR 1.1 million).

Necomplus S.L. made expenditures for the development of ArtemisPay which amounted to PLN 1.4 million. It is a platform designed for handling and processing of payment card transactions performed both at traditional and online stores. The program is currently used in the Spanish market, but it is planned to be implemented also in other countries.

Israeli market

In the “Israeli market” segment, expenditures for development work amounted to PLN 38.1 million and were made by Magic Software and Sapiens International.

In 2015, Magic continued to develop its flagship products: Magic xpa 3.1 (PLN 4.8 million of capitalized development costs), as well as Magic xpi (PLN 4.8 million of capitalized development costs). In addition, in response to the market demand, the company worked on the development of new offline applications that could be operated on mobile devices without connecting to the Internet, equally efficiently as if being connected.

Described below are the key development projects carried out by Magic in 2015:

Magic xpa – development platform to be upgraded with a “mobile client” application for Android and iOS platforms (the company has already offered such solutions for Windows Mobile and BlackBerry systems). The development work was mainly aimed to ensure backward compatibility with previous versions, upgrade the Studio component, enrich the xpa platform with the support for GigaSpaces XAP solutions acting as an intermediate layer, as well as to add a gateway enabling the use of GigaSpaces database.

Magic xpi – platform integrating miscellaneous IT systems, allowing for management of data flows. The development work performed in 2015 enabled more efficient use of the platform and resulted in the creation of a new version based on the Visual Studio Isolated Shell and supporting the JavaScript Object Notation data format.

Magic xpi Connectors – a set of tools allowing for integration with the following systems: Dynamics CRM 2014, Dynamics CRM 2015, Dynamics AX, SugarCRM, as well as Google applications: Google Drive, Google Docs, and Google Calendar.

The development work carried out by Sapiens International in 2015 focused on upgrading the solutions of ALIS (v6.5) and IDIT (v12.2).



ALIS is a comprehensive L&P (Life&Pension) software package for the management of individual, group and employee insurance products. ALIS manages the entire lifecycle of insurance policies, from marketing activities, through underwriting processes and claims processing, to all tasks related to termination of the insurance period. ALIS v6.5 delivers innovative solutions to support life and endowment insurance operations, and in the future it will be also enhanced with new functionalities within the existing modules. The total costs capitalized for the development of ALIS suite amounted to PLN 38 million until 31 December 2015, of which PLN 13.7 million in 2015 alone. This project is planned to be completed in 2016.

The second product developed by Sapiens in 2015 was IDIT (v12.2), a component-based insurance solution intended primarily for European and Asian markets. This software supports traditional property and casualty insurances, direct insurance and bank assurance products, as well as other operations of insurance brokers. IDIT integrates front- and back-office processes, allowing for development of new insurance products, management of insurance policies, underwriting, running a call center, and handling remote users and partners. Expenditures capitalized under this project in 2015 amounted to PLN 9.2 million. Development of the current version of this software is scheduled to be finalized at the beginning of 2016.


The ASSECO trademark is the only intangible asset considered by the Management Board of the Parent Company to have an indefinite useful life. Therefore, this asset is not amortized and only tested for impairment on an annual basis. The Management Board has decided that the useful life of this trademark is indefinite, because it is expected to contribute to the generation of net cash flows by the Company in the future for an indefinite period of time.

10. Investment property

The net book value of investment property, during the period of 12 months ended 31 December 2015 and in the comparable period, changed as a result of the following transactions:


12 months ended

31 Dec. 2014

mPLN mPLN

Net book value of investment property as at 1 January 27.0 32.9

Changes, of which: 1.0 (5.9)

Revaluation 1.0 (0.1)

Disposal and liquidation - (0.3)

Impairment write-downs - (5.5)

Net book value of investment property as at 31 December 28.0 27.0

In the year ended 31 December 2014, the Company verified the value of its investment properties. Property valuations prepared by professional appraisers showed that the carrying values of some of our properties exceeded their market values and therefore, as at 31 December 2014, the Group recognized an impairment write-down on its investment properties in the amount of PLN 5.5 million. As a result of recognizing such a write-down, the carrying value of our investment properties reflected their market value at 31 December 2014.



11. Goodwill

For impairment testing purposes, goodwill arising from obtaining control over subsidiaries is allocated by the Group in the following way:

to the groups of cash-generating units that constitute an operating segment; or

to individual subsidiaries; or

to operating segments identified by the Parent Company (including: Banking and Finance, Public Administration, General Business, or Infrastructure).

The following table presents the amounts of goodwill as at 31 December 2015 and in the comparable period, indicating the type of cash-generating units to which it has been allocated:

31 Dec. 2015 31 Dec. 2014

(restated)

mPLN mPLN

groups of companies that constitute an operating segment 941.1 926.1

Asseco Central Europe Group 426.2 402.7

Asseco South Eastern Europe Group 514.9 523.4

individual subsidiaries or groups of subsidiaries (narrower than a segment)

2,557.9

2,207.4

Israeli market (Formula Systems Group), of which: 1,915.7 1,650.3

Magic Software Enterprises Ltd. 663.8 569.4

Matrix IT Ltd. 757.5 660.1

Sapiens International Corporation N.V. 494.4 420.8

Western European market, of which: 151.5 255.1

Matrix42 A.G. - 172.2

Asseco Spain S.A. 18.2 18.2

Necomplus S.L. 16.3 16.3

Sintagma UAB 2) 16.0 16.0

Asseco Danmark 1) 32.3 32.4

Exictos SGPS S.A. 68.7 -

Eastern European market, of which: 3.4 4.4

Asseco Georgia LLC 2.3 2.6

Asseco Kazakhstan LLP 1.1 1.8

Polish market, of which: 487.3 297.6

Asseco Business Solutions S.A. 172.3 172.3

Combidata Poland Sp. z o.o. 36.1 36.1

Gladstone Consulting Ltd 37.3 33.8

ADH-Soft Sp. z o.o. 4.2 4.2

ZUI OTAGO Sp. z o.o 22.0 22.0

ZUI Novum Sp. z o.o 0.3 0.3

C.K. Zeto Łódź 3.1 3.1

SKG S.A. 4.4 4.4

P.I. Zeto Bydgoszcz S.A. 19.9 19.9

Asseco Software Nigeria Ltd. 1.5 1.5

Unizeto Technologies S.A. 26.3 -

Infovide-Matrix S.A. 159.9 -

operating segments identified within the Parent Company 2,055.7 2,077.2

Goodwill allocated to the segment of “Banking and Finance” 3) 878.6 900.1

Goodwill allocated to the segment of “Public Administration” 916.4 916.4

Goodwill allocated to the segment of “General Business” 129.7 129.7

Goodwill allocated to the segment of “Infrastructure” 131.0 131.0

5,554.7 5,210.7

1) Goodwill recognized on the acquisition of Asseco Danmark and Peak Consulting. 2) Goodwill recognized on the acquisition of Sintagma UAB and Asseco Lietuva UAB.



3) Goodwill arising from the acquisition of R-Style Softlab has been allocated to the cash-generating unit constituted by the “Banking and Finance” segment identified in the Parent Company. The Group’s management expects that the synergies arising from this transaction will bring the greatest benefits to the “Banking and Finance” segment which will be able to sell its products to the clients of R-Style Softlab.

During the period of 12 months ended 31 December 2015, the following changes in goodwill arising from consolidation were observed (the table includes changed items only):

Goodwill as allocated to reportable segments:

Goodwill at the beginning of the period

Transfers between segments

Increases due to obtaining of

control

Decrease due to loss of control

Foreign exchange

differences (+/-)

Goodwill at the end of

the period


Polish market

Gladstone Consulting Ltd 33.8 - - - 3.5 37.3

Unizeto Technologies S.A. - - 26.3 - - 26.3

Infovide-Matrix S.A. - - 159.9 - - 159.9

Goodwill allocated to the segment of “Banking and Finance”

900.1 (17.2) - - (4.3) 878.6

Central European market

Asseco Central Europe Group 402.7 - 15.9 - 7.6 426.2

South Eastern European market

Asseco South Eastern Europe Group

523.4 - - - (8.5) 514.9

Israeli market

Magic Software Enterprises Ltd. 569.4 - 30.8 - 63.6 663.8

Matrix IT Ltd. 660.1 - 24.6 - 72.8 757.5

Sapiens International Corporation N.V.

420.8 17.2 9.8 - 46.6 494.4


Matrix42 A.G. 172.2 - - (158.0) (14.2) -

Asseco Danmark A/S 32.4 - - - (0.1) 32.3

Exictos SGPS S.A. - - 68.3 - 0.4 68.7


Asseco Georgia LLC 2.6 - - - (0.3) 2.3

Asseco Kazakhstan LLP 1.8 - - - (0.7) 1.1

Total changes - 335.6 (158.0) 166.4



In the period of 12 months ended 31 December 2015, the balance of goodwill arising from consolidation was affected by the following transactions:

i. Acquisition of Exictos SGPS

On 3 September 2015, Asseco Poland S.A. acquired a 61.38% stake in Exictos Sociedade Gestora de Participações Sociais, S.A. (“Exictos”), an IT company based in Portugal. The purchase price amounted to EUR 21.5 million, of which EUR 15 million have been already paid, whereas the remaining amount of EUR 6.5 million constitutes a deferred payment to be settled in the years 2016-2018. In addition, under the Exictos shares acquisition agreement, the largest two non-controlling shareholders have been granted put options to sell all of their shares to Asseco Poland S.A. These options may be exercised after 2020, and their exercise price shall depend on consolidated financial results generated by Exictos Group for 2015 and successive years. As part of the provisional purchase price allocation, the excess of the purchase price paid over the fair value of net assets acquired has been allocated to intangible assets in the amount of EUR 6.8 million (PLN 28.9 million). As at 31 December 2015, the process of purchase price allocation has not yet been completed. Therefore, in the period of 12 months from the acquisition date, i.e. till 3 September 2016, goodwill recognized on the acquisition of Exictos may be subject to change. The provisional values of identifiable assets and liabilities of Exictos as at the date of obtaining control were as follows (converted at the exchange rate of PLN/EUR effective as at the acquisition date):

Provisional value as at

the acquisition date Provisional value as at

the acquisition date

millions of EUR millions of PLN

Assets acquired

Property, plant and equipment 1.0 4.2

Intangible assets 7.0 29.7

Goodwill 1.9 8.1

Trade receivables 12.0 50.9

Loans granted 1.5 6.4

Cash and cash equivalents 3.9 16.6

Other assets 5.0 21.2

Total assets 32.3 137.1

Liabilities acquired

Bank loans and borrowings 5.9 25.0

Provisions 2.4 10.2

Deferred tax liabilities 1.5 6.4

Trade payables 6.4 27.1

Other liabilities 1.9 8.1

Prepayments and accrued income 2.3 9.8

Total liabilities 20.4 86.6

Net assets value 11.9 50.5

Value of non-controlling interests 4.6 19.5

Equity interest acquired 61.38% 61.38%

Purchase price 21.5 91.2

Goodwill as at the acquisition date 14.2 60.2



ii. Acquisitions made by Asseco Central Europe Group

Acquisition of InterWay, a.s.

In July 2015, Asseco Central Europe, a.s. acquired a 66% stake in the company InterWay, a.s. based in Slovakia. InterWay is specialized in the professional implementation of technologies and systems (including IDM, SSO, ECM, ERP, BPM, Cloud Computing), integration of systems, and provision of e-commerce solutions.

The purchase price of 66% of shares amounted to EUR 3.3 million (PLN 13.1 million) and was paid in full. In addition, under the InterWay shares acquisition agreement, both the parties (i.e. non-controlling shareholders and Asseco Central Europe) have been granted put or call options, respectively, for all the remaining non-controlling interests. These options may be exercised in 2018 or 2019, and their exercise price shall depend on financial results achieved by InterWay for the year 2017 or 2018.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of July 2016, goodwill recognized on the acquisition of InterWay may be subject to change.

The provisional values of identifiable assets and liabilities of InterWay as at the date of obtaining control were as follows (converted at the exchange rate of PLN/EUR effective as at the acquisition date):




thousands of EUR millions of PLN

Assets acquired

Property, plant and equipment 225 0.9

Intangible assets 103 0.4

Trade receivables 2,887 11.9

Other receivables 99 0.4

Financial assets 98 0.4

Cash and cash equivalents 2,094 8.7

Other assets 115 0.5

Total assets 5,621 22.7


Trade payables 3,346 13.8

Other liabilities 91 0.4

Finance lease liabilities 58 0.2

Provisions 192 0.8

Deferred income 137 0.6

Deferred tax liabilities 2 0.0


Total liabilities 4,048 16.7

Net assets value 1,573 6.0

Value of non-controlling interests 535 2.2

Equity interest acquired 66% 66%

Purchase price 3,173 13.1

Goodwill as at the acquisition date 2,135 9.3



Acquisition of exe, a.s.

In August 2015, Asseco Central Europe a.s. acquired 100% of shares in the company called exe a.s. based in Slovakia. Exe is specialized in infrastructure services, distribution of the third-party software, as well as in localization services based on Microsoft products.

The purchase price of 100% of shares amounted to EUR 2.4 million (PLN 10.0 million), of which EUR 1.9 million has been already paid, and the remaining EUR 0.5 million shall be paid in August 2016.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of August 2016, goodwill recognized on the acquisition of exe company may be subject to change.

The provisional values of identifiable assets and liabilities of exe company as at the date of obtaining control were as follows (converted at the exchange rate of PLN/EUR effective as at the acquisition date):





Assets acquired




Other receivables 10 0.0

Cash and cash equivalents 242 1.0

Prepayments and accrued income 673 2.8

Other assets 16 0.1





Provisions 175 0.7




Net assets value 722 3.1






iii. Acquisitions made by Matrix IT Group

Acquisition of SEEV Solutions Ltd.

On 12 January 2015, a subsidiary of Matrix IT Ltd. acquired 75% of shares in the company SEEV Solutions Ltd. based in Israel (www.seev.co.il). SEEV Solutions is a provider of HR consultancy services in the area of sourcing and recruitment of hi-tech industry staff. The purchase price of 75% of shares amounted to NIS 4.9 million (PLN 4.5 million) and was paid in cash.

In addition, under the agreement for the purchase of shares in SEEV Solutions, both the parties (i.e. non-controlling shareholders as well as Matrix IT) have been granted put or call options, respectively, for all the remaining non-controlling interests. These options may be exercised after 3 years from the acquisition date, and their exercise price shall depend on financial results achieved by SEEV Solutions in the years 2015-2017.

Intangible assets that have been identified in the final purchase price allocation amounted to NIS 1.1 million (PLN 1.0 million).

As at 31 December 2015, the process of purchase price allocation has not yet been completed.

The fair values of identifiable assets and liabilities of SEEV Solutions as at the date of obtaining control were as follows (converted at the exchange rate of PLN/NIS effective as at the acquisition date):

Fair value as at

the acquisition date Fair value as at


thousands of NIS millions of PLN

Assets acquired


Intangible assets 1,067 1.0






Bank loans and borrowings 20 -

Trade payables 122 0.1

Other liabilities 1,336 1.2




Value of non-controlling interests 1,713 1.6




Acquisition of Tiltan Systems Engineering Ltd.

On 1 April 2015, Matrix IT Ltd. acquired 64% of shares in the company Tiltan Systems Engineering Ltd. based in Israel. This company is a leading provider of solutions for spatial visualization and 3D simulation.

Until 31 March 2015, Tiltan Systems Engineering Ltd. was an associated entity and the fair value of investment in this company amounted to NIS 1.5 million. The purchase price of 64% of shares amounted to NIS 2.6 million. Following this transaction, Matrix IT Ltd. holds 100% of shares in Tiltan Systems Engineering Ltd.



As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of March 2016, goodwill recognized on the acquisition of Tiltan Systems Engineering Ltd. may be subject to change.

The provisional values of identifiable assets and liabilities of Tiltan Systems Engineering Ltd. as at the date of obtaining control were as follows (converted at the exchange rate of PLN/NIS effective as at the acquisition date):





Assets acquired

Deferred tax assets 640 0.6







Prepayments and accrued income 2,018 1.9



Value of non-controlling interests - -

Fair value of investment before obtaining control 1,494 1.4



Goodwill as at the acquisition date 2,765* 2.6

*In the calculation of goodwill as at the acquisition date, it should be taken into account that the acquired company was already an associated entity, and therefore the shareholding of Matrix IT Ltd. in the acquired company was valued at fair value.

Acquisition of Hydus Inc.

On 1 April 2015, Xtivia Inc., a subsidiary of Matrix IT Ltd., acquired 100% of shares in Hydus Inc. based in the United States. The company is engaged in the provision of consulting services as well as EIM (Enterprise Information Management) software solutions.

The purchase price of the acquired equity interest amounted to USD 2.5 million (PLN 9.4 million). In addition, the shares acquisition agreement provides for a conditional payment if the specified financial results are achieved by the acquired company in the future. As at 31 December 2015, financial liabilities resulting from such conditional payment amounted to USD 1.8 million (PLN 6.8 million).

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of March 2016, goodwill recognized on the acquisition of Hydus Inc. may be subject to change. As part of the provisional purchase price allocation, the excess of the purchase price paid over the fair value of net assets acquired has been allocated to intangible assets in the amount of USD 3.9 million (PLN 14.7 million), to customer relations in the amount of USD 0.5 million, while the remaining amount was recognized in goodwill.

The provisional values of identifiable assets and liabilities of Hydus Inc. as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):






thousands of USD millions of PLN

Assets acquired



Deferred tax assets 39 0.1

Trade receivables 666 2.5







Total liabilities 614 2.4


Value of non-controlling interests - -




Acquisition of Ono Apps Ltd.

On 1 May 2015, a subsidiary of Matrix IT Ltd. acquired 100% of shares in the company Ono Apps Ltd. based in Israel. The company is a provider of apps for mobile devices.

The purchase price has been established at the level of NIS 4.6 million (PLN 4.1 million), of which NIS 4.0 million (PLN 3.8 million) shall be a conditional payment depending on the achievement of specified financial results by the acquired company. As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of April 2016, goodwill recognized on the acquisition of Ono Apps Ltd. may be subject to change.

The provisional values of identifiable assets and liabilities of Ono Apps as at the date of obtaining control were as follows (converted at the exchange rate of PLN/NIS effective as at the acquisition date):





Assets acquired








Provisions 4,041 3.5


Corporate income tax payable 299 0.3






Net assets value (2,331) (2.1)




iv. Acquisition of IBEXI Solutions Private Limited

This takeover was finalized on 6 May 2015.

The purchase price for 100% of shares in IBEXI amounted to USD 4.8 million (PLN 17.2 million), of which USD 2.6 million was paid in May 2015, USD 1.2 million was paid in August 2015, while the remaining amount of USD 0.9 million constitutes a deferred contingent payment.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of March 2016, goodwill recognized on the acquisition of IBEXI Solutions Private Limited may be subject to change. Intangible assets that have been identified in the provisional purchase price allocation amounted to USD 1.3 million (PLN 4.7 million).

The provisional values of identifiable assets and liabilities of IBEXI Solutions Private Limited at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):





Assets acquired





Other assets 1,209 4.4



Other liabilities 6 -

Provisions 2,083 7.5









v. Acquisitions made by Magic Software Enterprises Group

Acquisition of Comblack IT Ltd

On 14 April 2015, Magic Software Enterprises Ltd. purchased 70% of shares in Comblack IT Ltd., a company based in Israel. Comblack IT is specialized in the provision of professional software and mainframe management services for large corporate clients and government organizations. The acquired company has a broad base of blue chip customers.

The purchase price has been established at the level of USD 2.1 million (PLN 8.1 million), of which USD 0.3 million (PLN 1.1 million) shall be a conditional payment depending on the achievement of specified financial results by the acquired company.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of March 2016, goodwill recognized on the acquisition of Comblack may be subject to change. As part of the provisional purchase price allocation, the company recognized customer relations worth USD 1.3 million as well as goodwill in the amount of USD 2.1 million.

The provisional values of identifiable assets and liabilities of Comblack as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):





Assets acquired




Other assets 1,155 4.4





Provisions 19 0.1







Acquisition of Infinigy Solutions LLC

On 30 June 2015, Infinigy (US) Holdings Inc., a subsidiary of Magic Software Enterprises Ltd., purchased 70% of shares in Infinigy Solutions LLC, a company based in the U.S. Infinigy Solutions focuses on the implementation and upgrading of wireless technology solutions for the telecommunications industry.

The purchase price has been established at the level of USD 7.8 million (PLN 29.2 million), of which USD 0.8 million (PLN 3.0 million) shall be a conditional payment depending on the achievement of specified financial results by the acquired company.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of June 2016, goodwill recognized on the acquisition of Infinigy may be subject to change. As part of the provisional purchase price



allocation, the company recognized customer relations worth USD 3 million, orders backlog worth USD 0.7 million, as well as goodwill in the amount of USD 4.8 million.

The provisional values of identifiable assets and liabilities of Infinigy as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):





Assets acquired





Other assets 55 0.2











Acquisition of Todan Information Technologies Ltd.

On 13 August 2015, Complete Business Solutions Ltd., a subsidiary of Magic, took over 100% of business operations of Todan Information Technologies Ltd., a company based in Israel. Todan is a provider of IT services in the scope of consulting, implementation and development of information systems based on SAP Business One. The purchase price has been established at the level of USD 0.8 million (PLN 2.9 million).

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of July 2016, goodwill recognized on the acquisition of Todan may be subject to change. As part of the provisional purchase price allocation, the company recognized customer relations worth USD 0.4 million as well as goodwill in the amount of USD 0.5 million.

The provisional values of identifiable assets and liabilities of Todan as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):





Net assets acquired 291 1.0


Purchase price 782 2.9

Goodwill as at the acquisition date 491 1.9



Acquisition of Connell Designed Group LLC

On 16 October 2015, Infinigy Solutions LLC, a subsidiary of Magic, took over 100% of business operations of Connell Designed Group LLC, a company based in the U.S. Connell Designed Group focuses on the design of telecommunications infrastructure.

The purchase price has been established at the level of USD 1.1 million (PLN 4.0 million).

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of September 2016, goodwill recognized on the acquisition of Connell may be subject to change. As part of the provisional purchase price allocation, the company recognized customer relations worth USD 0.4 million, orders backlog worth USD 0.1 million, as well as goodwill in the amount of USD 0.5 million. The provisional values of identifiable assets and liabilities of Connell as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):





Net assets acquired 521 2.0




Acquisition of Yes-IT Ltd.

In December 2015, Infinigy Solutions LLC, a subsidiary of Magic, acquired 100% of shares in Yes-IT Ltd, a company based in Israel. Yes-IT is a group of experienced IT professionals providing the services of support and strategic IT planning for companies. The purchase price has been established at the level of USD 0.5 million (PLN 2.0 million).

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, in the period of 12 months from the acquisition date, i.e. till the end of December 2016, goodwill recognized on the acquisition of Yes-IT may be subject to change. As part of the provisional purchase price allocation, the company recognized goodwill in the amount of USD 0.2 million. The provisional values of identifiable assets and liabilities of Yes-IT as at the date of obtaining control were as follows (converted at the exchange rate of PLN/USD effective as at the acquisition date):

Provisional value as at the acquisition date

Provisional value as at the acquisition date


Assets acquired




Other assets 62 0.2

Total assets 488 1.8






Purchase price 539 2.0




vi. Acquisition of Unizeto Technologies S.A.

These shares were acquired in four tranches, however the purchase agreements were each time concluded on the same terms and conditions. Hence, for the purpose of accounting for the acquisition of Unizeto Technologies S.A., we assumed that the Group obtained control over Unizeto by acquiring 100% of the equity interest and voting rights in that company.

The total purchase price of shares was PLN 22.4 million, while the acquisition-related costs amounted to PLN 0.8 million.

As at 31 December 2015, the process of purchase price allocation has not yet been completed by the Group. Therefore, goodwill recognized on the acquisition of Unizeto Technologies may be subject to change till the end of February 2016. As part of the provisional purchase price allocation, the excess of the purchase price paid over the fair value of net assets acquired has been allocated to intangible assets in the amount of PLN 22.1 million to be amortized over a period of 10 years, while the remaining amount of PLN 26.3 million was recognized in goodwill.

The provisional values of identifiable assets and liabilities of Unizeto Technologies as at the date of obtaining control were as follows:



millions of PLN

Assets acquired

Property, plant and equipment 46.1

Intangible assets 26.3

Trade receivables and other receivables 9.2

Other receivables 1.5

Cash and cash equivalents 0.9

Other assets 1.9

Total assets 85.9


Bank loans 29.0

Finance lease liabilities 4.5

Provisions 33.3

Trade payables 16.6

Other liabilities 4.1

Deferred tax liabilities 2.3

Total liabilities 89.8

Net assets value (3.9)

Equity interest acquired 100%

Purchase price 22.4

Goodwill as at the acquisition date 26.3

vii. Completion of the allocation of the purchase price of Silverback MDM Pty Ltd.

As described in the consolidated financial statements for the year ended 31 December 2014, Matrix Development Holding GmbH, a subsidiary of Matrix42 AG, acquired 60% of shares in the Australian company Silverback MDM Pty Ltd. on 23 September 2014.

The Group completed the process of allocation of the purchase price of Silverback MDM Pty Ltd. in the third quarter of 2015.



The fair values of identifiable assets and liabilities of Silverback MDM Pty Ltd. as at the date of obtaining control were as follows (converted at the exchange rate of PLN/EUR effective as at the acquisition date):

Fair value as at

the acquisition date Fair value as at



Assets acquired












Value of non-controlling interests 669 2.8




viii. Sale of Matrix 42 AG

As described in section IV of these financial statements, in October 2015 the company Matrix 42 AG, which used to be a subsidiary of Asseco Western Europe S.A., was sold to a buyer from outside of Asseco Group. As a result of this transaction, goodwill allocated to our Western European segment decreased by PLN 158 million.

ix. Acquisition of Infovide-Matrix S.A.

On 23 September 2015, Asseco Poland S.A. signed with major shareholders in Infovide-Matrix S.A. an agreement to acquire a majority stake in Infovide-Matrix S.A. and subsequently announced a tender offer for shares in that company. Tenders to sell the shares were accepted until 12 November 2015. As a result of the tender offer, on 20 November 2015, Asseco Poland S.A. acquired 12,215,609 shares in Infovide-Matrix S.A., representing 97.91% of the share capital and total voting rights in that company. Within the tender offer, the shares were purchased at the price of PLN 6.01 per share. Subsequently, on 21 December 2015, Asseco Poland S.A. announced the demand for the sale of all shares held by minority shareholders Infovide-Matrix S.A. through a squeeze-out procedure. As a result of this demand, on 28 December 2015, Asseco Poland S.A. acquired 261,096 shares in Infovide-Matrix S.A., representing 2.09% of the share capital of that company. Within the squeeze-out procedure, the shares were purchased at the price of PLN 6.01 per share. Because both in the tender offer and the squeeze-out procedure the shares were purchased at the same price, and in the period from the completion of the tender offer till the announcement of the squeeze-out procedure the price of Infovide-Matrix shares remained fairly stable, the Group decided that the purchase price allocation process should be performed as if 100% of those shares were acquired right in the tender offer.



The provisional values of identifiable assets and liabilities of Infovide-Matrix S.A. as at the date of obtaining control were as follows:



millions of PLN

Assets acquired

Property, plant and equipment 3.8

Goodwill 142.8

Trade receivables 90.8

Loans granted 0.5

Cash and cash equivalents 1.7

Other assets 28.4

Total assets 268.0


Bank loans and borrowings 68.6

Provisions 88.2

Deferred tax liabilities 9.4

Trade payables 32.0

Finance lease liabilities 2.4

Other liabilities 7.9

Prepayments and accrued income 1.6

Total liabilities 210.1

Net assets value 57.9

Equity interest acquired 100%

Purchase price 75.0

Goodwill as at the acquisition date 17.1

12. Impairment testing

In line with the Group’s policy, each year as at 31 December, the Management Board of the Parent Company performs an annual impairment test on cash-generating units or groups of cash-generating units to which goodwill or/and intangible assets with an indefinite period of useful life have been allocated.

Each impairment test requires making estimates of the recoverable amount of a cash-generating unit or a group of cash-generating units to which goodwill is allocated.

In the case of cash-generating units constituted by companies or groups of companies quoted on an active market, the recoverable amount may equal the market value (i.e. stock market capitalization) of a company/group or its value in use, whichever is higher. Therefore, for cash-generating units constituted by companies or groups of companies quoted on an active market, impairment testing was performed in two stages. First of all, the carrying value of a cash-generating unit was compared to its market value (stock market capitalization). If the market value exceeded the carrying value, the cash-generating unit was deemed not to have been impaired. Otherwise, the value in use of such cash-generating unit was estimated by applying the model of discounted free cash flow to firm (FCFF).

In the case of companies or groups of companies not quoted on an active market, the recoverable amount of cash-generating units was determined as their value in use by applying the model of discounted free cash flow to firm (FCFF).



Both as at 31 December 2015 and during the period of 12 months ended 31 December 2015, the stock market capitalization of Asseco Poland remained under the book value of the Group’s assets. The Management Board of Asseco considered such situation as an indication of possible impairment of our cash-generating units to which goodwill has been allocated.

Our companies or groups of companies quoted on an active market include: Asseco Central Europe a.s., Asseco Business Solutions S.A., Magic Software Enterprises Ltd, Matrix IT Ltd, Sapiens International Corporation N.V., Asseco South Eastern Europe S.A., and Infovide-Matrix S.A.

The table below compares the market values of our cash-generating units constituted by companies or groups of companies quoted on an active market against their carrying values as at 31 December 2015:

31 Dec. 2015

Asseco Central

Europe a.s.

Asseco South

Eastern Europe S.A.

Asseco Business Solutions

S.A.

Magic Software

Enterprises Ltd.

Matrix IT Ltd.

Sapiens International Corporation

N.V.

Infovide-Matrix S.A.

mPLN mPLN mPLN mPLN mPLN mPLN mPLN

carrying value of cash-generating unit

550.0 699.8 202.7 961.1 1,245.0 571.3 167.4

fair value 376.7 513.5 523.4 957.7 1,385.9 2,064.0 74.3

surplus (+) / deficit (-) of fair value over book value

(173.3) (186.3) 320.7 (3.4) 140.9 1,492.7 (93.1)

As shown in the table above, as at 31 December 2015, the low market capitalization might indicate a possible impairment of the following companies or groups of companies quoted on an active market: Asseco Central Europe, Asseco South Eastern Europe, Magic Software Enterprises Ltd, and Infovide-Matrix S.A. Therefore, for the above-mentioned companies as well as for all companies or groups of companies which are not quoted on an active market, the value in use was estimated by applying the model of discounted free cash flow to firm (FCFF).

In the calculation of the value in use of cash-generating units or groups of cash-generating units, the following assumptions have been adopted:

for each subsidiary, the so-called business units were analyzed which, when put together, comprise the budget and forecasts of the whole subsidiary company;

detailed forecasts covered the period of 5 years with an assumed increase in cash flows, while the residual value for later operations of each subsidiary was computed assuming no growth in cash flows;

the assumed increases in cash flows depend upon the strategy of the entire Group, tactical plans of individual companies, they take due account of conditions prevailing in particular markets by region and sector, at the same time reflecting the present and potential order backlogs;

the forecasts for foreign subsidiaries assumed growth of sales in their functional currencies;

the discount rates applied were equivalent to the weighted average cost of capital for a given cash-generating unit. Particular components of the discount rate were determined taking into account the market values of risk-free interest rates, the beta coefficient leveraged to reflect the average market debt/equity ratio, as well as the expected market yield.

The conducted impairment tests, which involved the estimation of the value in use by applying the model of discounted free cash flow to firm (FCFF), indicated that the value in use of our cash-generating units or groups of cash-generating units is than their book value. Hence, the conducted impairment test did not indicate a necessity for the Parent Company to recognize any impairment charges on its cash-generating units as at 31 December 2015.



Analysis of sensitivity

We carried out a sensitivity analysis for all the impairment tests performed as at 31 December 2015 which involved the estimation of the value in use. Such sensitivity analysis examined the impact of changes in:

real discount rate applied for the residual period, i.e. for cash flows generated after 2020;

average annual effective rate of change in free cash flows over the period of forecast, i.e. in the years 2016-2020;

as factors with influence on the recoverable amount of a cash-generating unit, assuming other factors remain unchanged.

The objective of such sensitivity analysis was to find out how much the selected parameters applied in the model could be changed so that the estimated value in use of each cash-generating unit equalled its carrying value. The results of the conducted analysis are presented in the table below.

Carrying value of cash-generating

unit

Discount rate Average rate of change

in cash flows applied for the residual

period terminal

applied for the forecast

period terminal

mPLN % % % %

Cash-generating units constituted by companies or groups of companies

Asseco Central Europe Group 550.0 6.7% 20.4% (3.5%) (14.9%)

Asseco South Eastern Europe Group 699.8 8.7% 17.8% 17.1% 7.4%

Infovide-Matrix Group 167.4 9.0% 9.8% 10.7% 9.6%

Magic Software Enterprises Group 961.1 8.9% 12.2% 15.1% 8.8%

Asseco Spain S.A. 69.8 10.1% 38.8% 2.0% (29.2%)

Necomplus S.L. 49.3 10.1% 24.9% 4.6% (6.5%)

Asseco Data Systems S.A. 263.3 9.0% ∞ 5.3% 0.5%

Asseco Danmark 56.0 7.6% 17.3% 16.4% 2.2%

UAB Sintagma 14.0 11.4% 39.7% (13.6%) (26.2%)

Gladstone Consulting Ltd 40.2 10.8% 15.2% 10.5% 5.1%

SKG S.A. 12.7 11.4% 39.7% (13.6%) (26.2%)

Asseco Georgia LLC 5.0 23.6% ∞ 32.4% (1.2%)

Asseco Kazakhstan LLP 2.1 18.0% ∞ 106.1% (23.0%)

Cash-generating units constituted by operating segments identified by the Parent Company

“Banking and Finance” segment 1,246.5 7.9% 73.4% (2.3%) (26.7%)

“Public Administration” segment 1,270.4 7.9% 9.7% 2.7% (1.9%)

“General Business” segment 280.0 7.9% 30.0% (1.2%) (16.8%)

“Infrastructure” segment 166.0 7.9% 10.4% 11.0% 7.2%

∞ - means that the terminal discount rate for the residual period is greater than 100%.



13. Entities with significant non-controlling interests

In section IV of these consolidated financial statements, we have presented information on entities in which the Group holds less than 100% of shares, including their company names, countries of registration, as well as equity interests and voting rights held by the Group. In the Management’s opinion, the entities with significant individually held non-controlling interests are: Asseco South Eastern Europe S.A., Asseco Business Solutions S.A., Magic Software Enterprises Ltd, Matrix IT Ltd, and Sapiens International Corporation N.V. In the case of other entities with non-controlling interests, individually held non-controlling interests do not exceed 2% of total non-controlling interests therein, hence they have not been considered as entities with significant non-controlling interests. The tables below present the selected financial data of entities with significant individually held non-controlling interests for the period of 12 months ended 31 December 2015 and as at 31 December 2015.

These figures do not include eliminations of intercompany transactions.


Asseco South Eastern

Europe S.A.

Asseco Business

Solutions S.A.

Magic Software

Enterprises Ltd.

Matrix IT Ltd.


N.V.

Other individually insignificant


Sales revenues 487.2 151.8 667.7 2,224.8 689.3 2,202.5

Operating profit 52.6 40.5 72.5 147.6 73.1 208.1

Net profit for the reporting period 43.5 33.5 58.0 93.5 60.1 144.3

Profit for the reporting period attributable to non-controlling interests

21.3 17.9 46.4 72.2 46.4 6.1


75.3 46.5 81.5 116.0 163.9 95.0


(41.6) (35.0) (62.6) (10.0) (103.5) 61.0


(20.5) (28.3) (45.5) (49.1) (28.1) 50.5

Dividends paid out to non-controlling shareholders

(10.2) (15.2) (17.6) (38.0) (13.9) (40.8)

as at 31 December 2015


Europe S.A.

Asseco Business

Solutions S.A.

Magic Software

Enterprises Ltd.

Matrix IT Ltd.


N.V.



Current assets 235.2 95.7 530.5 1,064.1 432.6 1,074.7

Current liabilities (131.3) (23.4) (113.7) (800.3) (251.4) (525.1)

Working capital 103.9 72.3 416.8 263.8 181.2 549.6

Non-current assets 614.9 194.3 431.4 803.8 596.4 280.3

Non-current liabilities (29.4) (0.8) (55.6) (295.5) (34.4) (493.0)

Cash and cash equivalents 101.1 40.7 242.6 208.6 212.1 606.9

Long-term and short-term debt (47.6) - (1.8) (429.9) (33.3) (546.6)

Net cash (+)/Net debt (-) 53.5 40.7 240.8 (221.3) 178.8 60.3



The tables below present the selected financial data of entities with significant individually held non-controlling interests for the period of 12 months ended 31 December 2014 and as at 31 December 2014. These figures do not include eliminations of intercompany transactions.



Europe S.A.

Asseco Business

Solutions S.A.

Magic Software

Enterprises Ltd.

Matrix IT Ltd.


N.V.



Sales revenues 502.5 145.0 522.2 1,859.1 500.4 1,226.2

Operating profit 46.0 34.2 55.9 109.4 42.3 105.8

Net profit for the reporting period - 28.6 47.0 73.9 42.0 49.1

Profit for the reporting period attributable to non-controlling interests

19.1 15.3 37.7 57.0 32.7 8.4


72.9 39.1 54.7 83.4 69.8 129.1


(59.0) (9.7) (82.3) (22.9) (135.9) (73.6)


14.8 (26.7) 147.8 (56.1) 4.7 10.6

Dividends paid out to non-controlling shareholders

(8.1) (14.3) (14.3) (31.6) (0.3) (33.6)

as at 31 December 2014


Europe S.A.

Asseco Business

Solutions S.A.

Magic Software

Enterprises Ltd.

Matrix IT Ltd.


N.V.



Current assets 235.4 90.3 449.6 853.8 310.9 703.5

Current liabilities (142.6) (23.0) (88.2) (614.8) (162.3) (405.9)

Working capital 92.8 67.3 361.4 239.0 148.6 297.6

Non-current assets 612.9 194.1 325.7 575.7 483.9 469.5

Non-current liabilities (26.5) (0.7) (20.5) (272.6) (24.6) (264.8)

Cash and cash equivalents 89.0 57.5 254.3 145.7 167.9 320.9

Long-term and short-term debt (44.5) - (11.7) (350.5) - (258.5)

Net cash (+)/Net debt (-) 44.5 57.5 242.6 (204.8) 167.9 62.4



14. Investments accounted for using the equity method

As at 31 December 2015, we had the following associated companies: Postdata, CodeConnexion, Prvni Certifikacni Autorita a. s., Axera, s. r. o., eDocu a. s., Multicard d.o.o. Beograd, one2tribe Sp. z o.o., and a jointly controlled entity called E-Mon d.o.o.

As at 31 December 2014, our associated companies included Postdata, CodeConnexion, Prvni Certifikacni Autorita a. s., Axera, s. r. o., eDocu a. s., and Tiltan System Engineering.

The table below presents condensed information on the Asseco Group’s investments in associates and joint ventures:

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Non-current assets 9.1 3.3

Current assets 30.7 14.9

Non-current liabilities (1.6) (3.7)

Current liabilities (14.5) (2.3)

Net assets 23.7 12.2

Book value of investments 10.6 17.6

12 months ended

31 Dec. 2015


mPLN mPLN

Revenues 44.0 26.4

Net profit/(loss) (3.8) 0.2

Share of profits of associates and joint ventures (1.7) 1.9

As at 31 December 2015, the Management Board of the Parent Company made a decision to write down the entire value of our investment in the company CodeConnection. This decision was a consequence of the permanent impairment of this investment as at that date. The recognized impairment write-down amounted to PLN 3.4 million. This charge has been disclosed in the consolidated income statement in the line “Share of profits of associates and joint ventures”.



15. Other financial assets

As at 31 December 2015 and in the comparable period, apart from receivables and cash, the Group also held the following financial assets:

31 Dec. 2015 31 Dec. 2014

Long-term Short-term Long-term Short-term

mPLN mPLN mPLN mPLN

Loans, of which:

loans granted to entities related through the key management personnel

- 0.2 23.8 -

granted to employees 0.4 2.4 0.7 0.5

granted to other entities 112.6 17.8 7.8 1.8

term cash deposits 1.0 47.3 1.9 38.8

114.0 67.7 34.2 41.1

Financial assets carried at fair value through profit or loss, of which:

forward contracts 0.6 2.3 2.7 3.5

corporate bonds (quoted on active markets) - 23.3 - 17.1

Treasury bonds - 6.8 - 25.0

shares in companies quoted on active markets - 12.9 - 13.3

other assets - 2.6 - 0.1

0.6 47.9 2.7 59.0

Financial assets available for sale, of which:

shares in companies quoted on active markets 0.9 0.9 3.1 0.8

shares in companies not listed on stock markets 9.5 - 9.5 -

Treasury and corporate bonds (quoted on active markets)

120.5 80.7 116.1 42.0

130.9 81.6 128.7 42.8

Total 245.5 197.2 165.6 142.9

Loans granted are measured at amortized cost at each balance sheet date. Loans to related parties were granted on an arm’s length basis.

The largest portion of loans granted to other entities is represented by a loan granted to the company Blitz D14-310 GmbH (Blitz). This loan was granted in connection with the transaction of selling our shareholding in Matrix 42 AG, which was conducted on 12 November 2015. The total transaction value amounted to EUR 46.3 million, of which EUR 21.7 million was paid in cash, whereas the remaining amount of EUR 24.6 million was covered by a loan agreement concluded between Asseco Western Europe S.A. and Blitz. As at 31 December 2015, the amount outstanding under this loan was PLN 105.3 million. The loan bears interest determined at market conditions and it shall be repaid till 31 December 2021.

Term cash deposits include bank deposits with an original maturity of more than 3 months.

Financial assets carried at fair value through profit or loss include forward transactions for purchase or sale of foreign currencies and the portfolio of financial assets held for trading, which comprise corporate bonds quoted on active markets and investment-rated Treasury bonds, as well as shares in companies quoted on active markets. Investments in debt securities and company shares are an alternative form of spare cash management applied by Matrix IT Ltd. Forward transactions have been concluded chiefly in order to hedge against the foreign currency risk resulting from finance leases of real estate.

The fair value of currency forward contracts is determined at each balance sheet date using calculation models based on inputs that are directly observable in active markets. Whereas, the fair value of the portfolio of financial assets is determined on the basis of quoted prices for such assets in active markets.



Financial assets available for sale include primarily equity investments not exceeding 20% of the target company’s outstanding stock as well as bonds purchased without an intention to be held to maturity.

Investments in companies quoted on active markets are measured at fair value at each balance sheet date, on the basis of their closing prices on the balance sheet date. Any changes in such valuation are recognized in other comprehensive income. Investments in companies not quoted on active markets are measured at their purchase cost adjusted by any impairment charges.

Financial assets available for sale increased substantially mainly as a result of the acquisition of long-term corporate bonds by our subsidiary Sapiens International. The company chose this form of investing its spare cash as an alternative to bank deposits, because bonds are expected to bring a higher return than bank deposits. All the purchased bonds are investment grade and are measured at fair value on the basis of their market quoted prices (level 1). As at 31 December 2015, the fair value of bonds available for sale and held by Sapiens International amounted to PLN 156.0 million, of which PLN 120.4 million represented long-term assets. The remaining portion of bonds available for sale represented bonds held by companies of Magic Software Group, with a carrying value of PLN 45.2 million as at 31 December 2015.

16. Prepayments and accrued income

As at 31 December 2015 and in the comparable period, prepayments and accrued income included the following items:

31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

Prepaid services, of which: 34.1 126.1 32.4 100.7

maintenance services and license fees 33.0 105.5 30.5 80.7

rents and averaging of instalments under operating leases

0.3 2.8 - 5.7

insurance 0.1 4.8 - 3.4

other services 0.7 13.0 1.9 10.9

Expenses related to services performed for which revenues have not been recognized yet

- 2.4 - 2.0

Other prepayments and accrued income - 5.3 - 2.7

Total 34.1 133.8 32.4 105.4



17. Long-term and short-term receivables

31 Dec. 2015 31 Dec. 2014



mPLN mPLN mPLN mPLN

Trade receivables, of which:

Invoiced receivables 5.2 1,682.1 0.8 1,384.6

from related parties - 3.6 - 6.1

from other entities 5.2 1,678.5 0.8 1,378.5

Uninvoiced receivables 2.9 297.2 - 200.3

from related parties - 0.4 - -

from other entities 2.9 296.8 - 200.3

Receivables from valuation of IT contracts - 215.0 - 240.3

from related parties - - - -

from other entities - 215.0 - 240.3

Allowance for doubtful receivables (-) - (95.3) - (57.9)

8.1 2,099.0 0.8 1,767.3

Corporate income tax receivable - 72.3 - 61.0


Value added tax - 17.9 - 14.7

Other - 22.4 - 13.4

- 40.3 - 28.1

Other receivables

Other receivables 53.5 30.9 32.5 40.6

Allowance for other uncollectible receivables (0.5) (2.6) - (4.3)

53.0 28.3 32.5 36.3

Total receivables 61.1 2,239.9 33.3 1,892.7

Related party transactions have been presented in explanatory note 29 to these consolidated financial statements.

Other receivables from the state and local budgets include primarily receivables of Matrix IT arising from government grants awarded for employing workers of Arabic origin as well as of other religious and ethnic minorities.

Receivables from valuation of IT (implementation) contracts result from the surplus of the percentage of completion of implementation contracts over invoices issued.

Receivables relating to uninvoiced deliveries result from sales of services which were performed during the reporting period, but have not been invoiced until the balance sheet date.

The balance of other receivables includes, among others, receivables relating to guarantees of due performance of contracts (i.e. security in cash extended in favour of customers in order to compensate for their potential losses should the Company fail to fulfil its contractual obligations), receivables from disposal of tangible assets, receivables from security deposits paid-in, as well as receivables from disposal of shares.

The Group has an adequate policy in place that allows for selling products to reliable clients only. Owing to that, in the Management’s opinion the credited sales risk would not exceed the level covered with allowances for doubtful receivables. The Group’s policy for creation of allowances for doubtful receivables is described in item 17 of the “Significant accounting policies” chapter.



The following table presents the ageing structure of gross receivables (i.e. before allowances and discounts) as at 31 December 2015 and 31 December 2014, which provides the basis for recognition of allowances following the general rules:

Ageing of trade receivables 31 Dec. 2015 31 Dec. 2014

restated

mPLN % mPLN %

Receivables not yet due 1,652.6 75.04% 1,449.1 79.36%

Past-due receivables not subject to allowances 549.8 24.96% 376.9 20.64%

Receivables past-due up to 3 months 379.1 17.20% 274.7 15.05%

Receivables past-due from 3 to 6 months 65.1 2.96% 26.8 1.47%

Receivables past-due from 6 to 12 months 33.0 1.50% 34.6 1.89%

Receivables past-due over 12 months 72.6 3.30% 40.8 2.23%

Total trade receivables, gross (before allowances) 2,202.4 100% 1,826.0 100%

Allowances for trade receivables (95.3) (57.9)

Book value of trade receivables 2,107.1 1,768.1

Total allowances for receivables as at 31 December 2015 were higher than those reported as at 31 December 2014 primarily due to the recognition of allowances for receivables in the newly acquired subsidiaries (PLN 26.0 million) as well as creation of additional allowances by Asseco Poland.

18. Implementation contracts

In the years 2015 and 2014, the Group executed a number of the so-called IT implementation contracts. In line with IAS 11, sales generated from such contracts are recognized according to the percentage of completion of relevant contracts. The Group measures the percentage of completion of IT implementation contracts using basically the “cost-to-cost” method (this is by determining the relation of costs incurred to the overall project costs) or by the “effort-expended” method (by determining the portion of work completed out of the total work effort required in a project).

The following table includes basic data about the ongoing IT implementation contracts:


12 months ended

31 Dec. 2014

mPLN mPLN

Revenues from execution of IT contracts recognized in the reporting period

764.5 680.4

For all projects being in progress at the balance sheet date:

Revenues recognized from execution of IT contracts (cumulative) 1,753.3 3,185.9

Costs incurred due to execution of IT contracts (cumulative) (1,319.2) (2,246.0)

Change in provisions for losses on IT contracts 33.4 (9.4)

Profit (loss) on execution of IT contracts 467.5 930.5

Invoiced revenues from execution of IT contracts (cumulative) 1,583.6 2,965.7

Receivables arising from valuation of IT contracts 215.0 240.3

Liabilities arising from valuation of IT contracts (45.2) (19.6)

Exchange differences on translation of foreign operations (0.1) (0.5)



19. Inventories

The Group holds two main categories of inventories: goods for resale, and service parts. The category of goods for resale includes mainly computer hardware and third-party software licenses intended for resale under the implementation or supply contracts. Hence, majority of goods for resale are purchased for the purpose of execution of already signed or highly probable contracts.

The category of service parts includes computer hardware, spare parts and other materials that have been purchased for the performance of maintenance services.

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Computer hardware, third-party software licenses and other goods for resale

74.6 61.3

Computer hardware, spare parts and other materials intended for the performance of repair/maintenance services

9.8 9.4

Impairment write-down (-) (12.5) (10.9)

Total 71.9 59.8

The largest portion of total impairment write-downs on inventories is represented by a write-down recognized by Asseco South Eastern Europe Group (PLN 8.8 million).

In the year ended 31 December 2015, the Group made revaluation write-downs on inventories in the amount of PLN 3.7 million, while it utilized write-downs of PLN 0.7 million and reversed write-downs of PLN 1.7 million. Moreover, the amount of impairment write-downs decreased by PLN 0.5 million as a result of the sale of Matrix 42 AG. All the remaining changes resulted from foreign exchange differences.

20. Cash and cash equivalents

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Cash at bank 1,010.1 702.3

Cash on hand 1.1 0.8

Short-term bank deposits (up to 3 months) 588.5 520.7

Other cash equivalents - -

Total cash and cash equivalents as disclosed in the balance sheet 1,599.7 1,223.8

Interest accrued on cash and cash equivalents (0.1) (0.3)

Bank overdraft facilities utilized for current liquidity management (111.0) (2.8)

Total cash and cash equivalents as disclosed in the cash flow statement

1,488.6

1,220.7

The interest on cash at bank is calculated with variable interest rates, depending on interest rates offered on bank deposits. Short-term deposits are made for varying periods of between one day and three months and earn interest at their respective fixed interest rates.

21. Non-current assets held for sale

Non-current assets held for sale include several properties owned by Asseco Poland S.A. (land, business premises and office buildings). All such properties are available for immediate sale in their existing condition (presently these properties are not used by the Group). As at 31 December 2015, the fair values of these properties exceeded their carrying values; hence, as at 31 December 2015, there were no indications of impairment of any property classified as held for sale. The value of assets held for sale declined partially because, on 24 February 2015, the Company signed an agreement to sell its real estate located in Warsaw, at 74, 17-go Stycznia St.



22. Share capital

The Company’s share capital as at 31 December 2015 and in the comparable period amounted to PLN 83,000,303.00 and has been fully paid up. The share capital is divided into 83,000,303 ordinary shares with a par value of PLN 1 each. The Company has not issued any preference shares.

During the year ended 31 December 2015, the amount of the share capital remained unchanged.

The Company’s authorized capital is equal to its share capital.



23. Interest-bearing bank loans and debt securities issued

Loan currency Effective interest rate Repayment date

Outstanding debt as at: Maximum debt as at:

31 Dec. 2015 31 Dec. 2015 31 Dec. 2015 31 Dec. 2014

mPLN mPLN mPLN mPLN

Ba

nk

ove

rdra

ft f

aci

litie

s

EUR

EONIA + margin not specified 4.0 0.4 8.6 2.1

EURIBOR + margin

Q1 2015 - 2.7 - 12.1

Q2 2015 - 0.2 - 2.1

Q4 2015 - - - 1.3

Q1 2016 2.7 - 3.2 -

Q2 2016 41.6 - 66.8 -

Q4 2016 - - 4.3 -

not specified - - 8.6 -

fixed interest rate Q1 2015 - - - 2.4

Q1 2016 0.1 - 0.1 -

MKD fixed interest rate Q4 2014 - - - 0.2

PLN

fixed interest rate Q3 2016 1.5 - 6.0 -

WIBOR + margin

Q2 2015 - 6.4 - 25.5

Q4 2015 1.1 - 1.1 150.0

Q1 2016 46.8 - 49.0 70.0

Q2 2016 9.0 - 28.5 -

Q3 2016 - - 350.0 300.0

Q4 2016 11.0 - 150.0 -

2017 7.8 - 7.8 -

2018 - - 70.0 -

not specified - - - 0.5

Multi-currency EURIBOR + margin Q2 2015 - - - 6.4

2017 - - - 4.3

USD fixed interest rate Q1 2015 - - - 19.2

NIS Prime (Israel) + margin

Q1 2016 83.0 - not specified not specified

not specified - 55.2 not specified not specified

fixed interest rate Q1 2016 0.2 - not specified not specified

BAM fixed interest rate Q3 2016 0.6 - not specified not specified

209.4 64.9 754.0 596.1




31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

No

n-r

evo

lvin

g b

an

k lo

an

s

EUR EURIBOR + margin

Q1 2015 - - 0.5 1.8

Q2 2015 - - - 5.2

Q3 2015 - - - 0.7

Q1 2016 - 0.5 - -

Q2 2016 - 7.3 - -

Q4 2016 - 0.5 - -

2017 0.9 1.7 1.9 1.3

2018 1.0 0.5 1.5 0.5

2020 15.1 - - -

2022 0.1 - 0.1 -

fixed interest rate 2018 - - 0.9 0.4

NIS

Prime (Israel) + margin

Q4 2015 - - - 15.7

Q1 2016 - 0.4 - 0.1

Q2 2016 - - 1.4 1.1

fixed interest rate

Q2 2015 - - 13.5 -

Q1 2016 - - - 0.2

Q2 2016 - 8.3 4.5 9.0

Q3 2016 - 3.0 2.7 3.6

Q4 2016 - 15.0 - -

2017 20.9 23.4 36.9 17.9

2018 61.5 32.5 89.3 30.5

2019 41.0 14.8 50.5 13.7

2020 212.0 41.1 180.4 4.8

2022 65.8 9.4 - -

PLN WIBOR + margin 2022 77.2 13.2 90.3 13.1

USD fixed interest rate Q4 2016 - - - 9.8

TRY - Q1 2015 - - - 0.2

Q1 2016 - 0.1 - -

HRK/EUR

12M Treasury bonds + margin Q4 2016 - 1.9 1.9 1.9

EURIBOR + margin 2017 0.8 3.4 4.2 3.4

2019 8.4 3.6 11.9 2.6

BAM fixed interest rate 2017 0.2 0.3 0.5 0.4

CVE BCA Index Q4 2016 - 0.1 - -

RSD fixed interest rate Q1 2016 - - 0.4 4.8

504.9 181.0 493.3 142.7



The Group’s liabilities under non-revolving bank loans and borrowings amounted to PLN 704.5 million as at 31 December 2015, of which PLN 518.2 million represented debt with maturities of over 12 months. As at 31 December 2014, liabilities under non-revolving bank loans and borrowings amounted to PLN 661.6 million, of which PLN 514.7 million represented long-term debt.

In the reporting period, the margins realized by lenders to Asseco Group companies ranged from 1 to 6 percentage points on an annual basis. Whereas, in the comparable period such margins ranged from 1 to 7 percentage points per annum.

In September 2015, Formula Systems issued bonds with a total face value of NIS 227.2 million. These bonds have been issued in two series: series A, with a total face value of NIS 102.2 million, represents bonds that have been secured with shares in subsidiaries of Formula Systems, bearing a fixed interest

rate of 2.8% per annum; series B, with a total face value of NIS 125.0 million, represents bonds that can be converted into shares of Formula Systems, bearing a fixed interest rate of 2.74% per

annum. These convertible bonds can be exchanged for the company’s ordinary stock at the price of NIS 157 per share.

As at 31 December 2015, liabilities of Formula Systems under the above-mentioned bonds amounted to PLN 223.7 million.

Debt securities issued by Formula Systems (1985) Ltd.

Division into short- and long-term portion

Series 31 Dec. 2015 31 Dec. 2014

Effective interest rate Currency mPLN mPLN

long-term portion Series A 101.1 - 2.80% NIS

Series B 121.8 - 2.74% NIS/USD

short-term portion Series A 0.8 - 2.80% NIS

223.7 -

The Group’s total liabilities under all bank loans and borrowings taken out and debt securities issued aggregated at PLN 1,137.6 million as at 31 December 2015, as compared with PLN 726.5 million outstanding as at 31 December 2014.


31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

Bo

rro

win

gs EUR fixed interest rate

2018 7.7 4.1 11.6 4.0

2019 0.2 0.1 0.3 0.1

2020 3.3 1.0 7.4 0.1

2021 0.2 - 0.2 -

2022 0.2 - 0.2 -

NIS fixed interest rate Not specified 1.7 - 1.7 -

USD not specified Not specified - 0.1 - -

13.3 5.3 21.4 4.2



Assets serving as security for bank loan facilities:

Category of assets

Net value of assets Utilized amount of loan facility

secured with assets

31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014

mPLN mPLN mPLN mPLN

Land and buildings 231.4 208.7 106.2 105.5

Computers and other office equipment 1.5 4.5 1.0 8.2

Other tangible assets 2.1 - 7.3 -

Long-term investments 915.9 560.8 340.7 221.2

Shares as available for sale 1.2 - -

Inventories - 1.1 - -

Current and future receivables 36.2 72.2 71.0 10.7

TOTAL 1,188.3 847.3 526.2 345.6

Some loans taken from Polish and Israeli banks come with the so-called covenants which impose an obligation to maintain certain financial ratios at the levels required by the bank. These ratios are related to the level of indebtedness, e.g. debt to EBITDA or debt to equity ratios, or to achieving the expected operating profits. In the event a company carrying such a covenanted loan fails to satisfy the said requirements, the bank may apply a sanction in the form of a higher credit margin. Should the bank deem the new level of a ratio to be unacceptable, the bank may in certain cases exercise its rights in the collateral provided as security.

As at 31 December 2015, we did not default on any of such covenants, except for the covenants defined for two bank overdraft facilities granted to Infovide-Matrix S.A. The bank loans for which the required covenants have been violated, amounted in total to PLN 46.7 million, of which PLN 43 million represented a loan taken for the execution of a project for Energa that was settled before the date of publication of these consolidated financial statements, as a result of which the amount of loan was credited to the company’s account, preventing the complete repayment of this debt.

As at 31 December 2014, we did not default on any of such financial covenants.

24. Finance lease liabilities

As at 31 December 2015, the subjects of finance lease agreements, where the Group is a lessee, included:

office buildings,

cars,

IT hardware.

The table below presents the amounts of finance lease liabilities as at 31 December 2015 and in the comparable period:

31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

Leasing of real estate 85.3 19.8 104.6 18.3

Leasing of transportation vehicles 4.2 1.8 2.2 1.3

Leasing of IT hardware 5.6 3.9 3.3 1.8

Total 95.1 25.5 110.1 21.4



Leasing of real estate

The net value of office buildings which are held under finance lease agreements amounted to PLN 39.2 million as at 31 December 2015, as compared with PLN 48.3 million as at 31 December 2014.

Future minimum cash flows and liabilities under the real estate finance lease agreement are as follows:

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Minimum lease payments

in the period shorter than 1 year 25.3 24.6

in the period from 1 to 5 years 95.1 99.0

in the period longer than 5 years - 20.5

Future minimum lease payments 120.4 144.1

Future interest expense 15.3 21.2

Present value of finance lease commitment



in the period longer than 5 years - 20.1

Finance lease commitment 105.1 122.9

As at 31 December 2015, the effective interest rate on the above finance leases equalled 5.9%, as compared with 4.6% in the comparable period.

Leasing of cars, IT hardware and other assets

The net value of IT hardware, cars and other assets which are held under finance lease agreements amounted to PLN 17.2 million as at 31 December 2015, as compared with PLN 9.4 million as at 31 December 2014.

The aggregate future cash flows and liabilities under such finance leases of cars, IT hardware and other assets are as follows:

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Minimum lease payments



in the period longer than 5 years - -

Future minimum lease payments 16.6 9.3

Future interest expense 1.1 0.7

Present value of finance lease commitment



in the period longer than 5 years - -

Finance lease commitment 15.5 8.6



25. Financial liabilities

31 Dec. 2015 31 Dec. 2014


mPLN mPLN mPLN mPLN

Dividend payment liabilities 10.4 0.1 - 14.9

Liabilities for the acquisition of shares – deferred and contingent payments for controlling interests

35.4 24.7 13.2 11.6

Liabilities for the acquisition of shares in subsidiaries (put options)

172.5 65.9 90.3 37.2

Other financial liabilities 0.4 5.8 - 1.1

218.7 96.5 103.5 64.8

As at 31 December 2015 and in the comparable period, dividend payment liabilities comprised basically dividends payable to non-controlling shareholders in our subsidiaries.

As at 31 December 2015 and in the comparable period, the Group carried estimated liabilities resulting from deferred and/or contingent payments for controlling interests. The amounts of the above-mentioned liabilities have been measured using the price calculation formula as defined in the controlling interest acquisition agreements, which shall correspond to a given company’s profit for the contractual term multiplied by a predetermined coefficient.

The table below presents liabilities resulting from deferred and/or contingent payments for controlling interests in subsidiaries as at 31 December 2015 and in the comparable period:

Liabilities for deferred and/or contingent payments for controlling interests 31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Liabilities for acquisitions made by Asseco Central Europe Group 3.4 1.4

Liabilities for acquisitions made by Asseco South Eastern Europe Group - 1.9

Liabilities for acquisitions made by Magic Software Enterprises Group 8.6 1.6

Liabilities for acquisitions made by Matrix IT Group 15.8 11.4

Liabilities for acquisitions made by Sapiens International Group 4.8 -

Liabilities for the acquisition of Silverback PTY Ltd - 8.5

Liabilities for the acquisition of Exictos SGPS 27.5 -

60.1 24.8



As at 31 December 2015 and in the comparable period, the Group had liabilities resulting from the acquisition of non-controlling interests in subsidiaries (put options). The amounts of such liabilities have been estimated using the formula for calculation of the exercise price of options that the Group granted to non-controlling shareholders, which corresponds to a given company’s profit for the contractual term multiplied by a predetermined coefficient.

The table below presents liabilities resulting from put options granted to non-controlling shareholders in subsidiaries as at 31 December 2015 and in the comparable period:

Liabilities under put options granted to non-controlling shareholders

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Asseco Lietuva UAB 0.8 0.8

Asseco South Eastern Europe S.A.* 47.6 37.2

Companies of Matrix IT Group** 18.5 35.1

Companies of Magic Software Enterprises Group*** 32.9 2.2

Companies of Sapiens International Group 4.4 0.6

SKG S.A. 4.8 6.9

R-Style Softlab JSC 47.1 36.8

Asseco Kazakhstan LLP 5.3 3.2

Companies of Asseco Central Europe Group 17.8 4.7

Exictos SGPS 59.2 -

238.4 127.5

*) Put option granted in favour of the European Bank for Reconstruction and Development by Asseco South Eastern Europe

**) Liabilities related to the acquisition of companies: Babcom Centers, Matchpoint, K.B.I.S., and SEEV Solutions

***) Liabilities related to the acquisition of companies: CommIT Software Ltd., Comblack, Infinigy



26. Provisions

Warranty repairs and product returns

Costs related to ongoing court

litigation

Provision for post-employment

benefits

Provision for tax risks

Other provisions Total


As at 1 January 2015 41.0 12.1 15.9 5.9 13.9 88.8

Obtaining control over subsidiaries (+) 18.5 0.5 1.5 3.4 96.0 119.9

Provisions created during the reporting period (+) 79.6 6.7 32.9 2.4 15.2 136.8

Discount change (+) 1.2 - 5.2 - (0.2) 6.2

Provisions utilized during the reporting period (-) (16.5) (8.1) (33.1) (3.4) (6.6) (67.7)

Provisions reversed during the reporting period (-) (39.5) (4.4) (3.6) - (54.2) (101.7)

Exchange differences on translation of foreign operations (0.1) 0.6 1.3 0.7 (0.2) 2.3

As at 31 December 2015, of which: 84.2 7.4 20.1 9.0 63.9 184.6

Short-term as at 31 December 2015 41.6 6.9 1.7 2.0 63.0 115.2

Long-term as at 31 December 2015 42.6 0.5 18.4 7.0 0.9 69.4

As at 1 January 2015, of which: 41.0 12.1 15.9 5.9 13.9 88.8

Short-term as at 1 January 2015 14.0 7.5 0.5 4.5 12.9 39.4

Long-term as at 1 January 2015 27.0 4.6 15.4 1.4 1.0 49.4

The provision for the costs of warranty repairs covers the handling of warranty maintenance services to be ensured by the manufacturers of hardware and proprietary software that was delivered to the Group’s customers.

The provision for post-employment benefits represents basically retirement benefits which are to be paid to the Group’s employees when they go into retirement.

Other provisions reported as at 31 December 2015 include a provision for losses on IT contracts in the amount of PLN 49.4 million.

zdanie finansowe Grupy Asseco Consolidated Financial Statements of Asseco Group for the year ended 31 December 2015

All figures in millions of PLN, unless stated otherwise 109 109

27. Long-term and short-term liabilities

As at 31 December 2015 and in the comparable period, the Group had the following liabilities:

Trade payables are non-interest bearing. Related party transactions are presented in explanatory note 29 to these consolidated financial statements.

31 Dec. 2015 31 Dec. 2014



mPLN mPLN mPLN mPLN

Trade payables, of which:

Invoiced payables 0.1 593.8 0.2 418.0

to related parties - 14.3 - 1.0

to other entities 0.1 579.5 0.2 417.0

Uninvoiced payables 7.2 205.5 1.1 145.8

to related parties - 0.1 - -

to other entities 7.2 205.4 1.1 145.8

Liabilities arising from valuation of IT contracts - 45.2 - 19.6

to related parties - - - -

to other entities - 45.2 - 19.6

7.3 844.5 1.3 583.4

Corporate income tax payable - 40.1 - 29.0

Liabilities to the state and local budgets

Value added tax (VAT) - 110.4 - 86.6

Personal income tax (PIT) - 20.1 - 17.5

Social Insurance Institution (ZUS) - 28.7 - 22.7

Withholding income tax - 2.4 - 2.9

Other - 3.4 - 0.7

- 165.0 - 130.4

Other liabilities

Liabilities to employees (including salaries payable)

- 174.4 - 138.7

Other liabilities 10.5 25.7 11.3 22.8

10.5 200.1 11.3 161.5

17.8 1,249.7 12.6 904.3



28. Accruals and deferred income

31 Dec. 2015 31 Dec. 2014

(restated)


mPLN mPLN mPLN mPLN

Accruals, of which:

Accrual for unused holiday leaves - 101.2 - 81.9

Accrual for employee and management bonuses - 147.9 - 134.3

- 249.1 - 216.2

Deferred income, of which:

Maintenance services and license fees 17.1 209.8 23.8 224.5

Other prepaid services - 36.2 6.6 33.1

Grants for the development of assets 34.4 3.8 35.2 2.4

Other - 2.3 - 1.3

51.5 252.1 65.6 261.3

The total amount of accruals comprises: accruals for unused holiday leaves, as well as accruals for remunerations of the current period to be paid out in future periods which result from the bonus incentive schemes applied by the Group.

The total amount of deferred income comprises mainly future revenues recognized over time for the provision of services, such as maintenance of own licenses or IT systems, as well as grants for the development of assets. Grants for the development of assets represent subsidies received by the Group in connection with its development projects or projects related to the creation of IT competence centers.

29. Related party transactions

Asseco Group sales to related parties: 12 months

ended 31 Dec. 2015

12 months ended

31 Dec. 2014

Name of entity mPLN mPLN

Transactions with associates and jointly controlled companies

Postdata S.A. sale of goods and services related to implemented IT projects 5.3 8.4

E-mon d.o.o. sale of goods and services related to implemented IT projects 0.5 0.3

Multicard d.o.o. sale of goods and services related to implemented IT projects 0.5 0.3

Total 6.3 9.0

Transactions with entities related through the Group’s Key Management Personnel

Decsoft S.A.1) sale of goods and services related to implemented IT projects 9.1 4.6

Ruch S.A.2) sale of goods and services related to implemented IT projects 0.6 0.6

Virte a.s.3) sale of goods and services related to implemented IT projects - 1.9

Konferenta UAB 4) sale of goods and services related to implemented IT projects 0.1 0.1

Other entities related through the key management personnel

0.1 0.4

Total 9.9 7.6

Transactions with Members of Management Boards and Supervisory Boards and Commercial Proxies of other Group companies

0.2 0.1

Total related party transactions 16.4 16.7

1) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Jacek Duch, Chairman of

the Company’s Supervisory Board, served as Member of the Supervisory Board of Decsoft S.A.

2) In the period of 12 months ended 31 December 2015 and in the comparable period, Mr. Dariusz Stolarczyk, Member of the Company’s

Supervisory Board, served as Member of the Management Board of Ruch S.A. He has held this position since 1 September 2014.



3) In the first half of 2014, Mr. Juraj Kováčik performed managerial functions in Virte a.s. and in Slovanet a.s. (a subsidiary of Asseco Central Europe).

4) In the period of 12 months ended 31 December 2015 as well as in the comparable period, shareholders in UAB Konferenta, Mr. Albertas Sermokas and Mr. Evaldas Drasutis were non-controlling shareholders in our subsidiary UAB Sintagma and Asseco Lietuva. Furthermore, they both served as members of the managerial stuff of UAB Sintagma and Asseco Lietuva.

Asseco Group purchases from related parties: 12 months

ended 31 Dec. 2015

12 months ended

31 Dec. 2014

Name of entity mPLN mPLN

Transactions with associates

Postdata S.A. purchase of goods and services related to implemented IT projects

0.6 0.7

Total 0.6 0.7


Koma Nord Sp. z o.o. 1) purchase of services related to implemented IT projects 0.1 0.4

Top Fin Sp. z o.o.2) rental of apartments (including reception, cleaning and security services, etc.) with parking lot spaces for the accommodation of employees on business trips

2.7 2.7

Decsoft S.A. 11) purchase of goods and services related to implemented IT projects

10.7 -

MHM d.o.o.3) rental of office space 4.2 5.6

DM3 d.o.o.4) rental of office space 0.3 0.6

MB Distribution Ltd.5) purchase of goods and services related to implemented IT projects

- 1.6

MPS d.o.o., Skopje 6) rental of office space 0.6 0.6

Sospes d.o.o.7) purchase of goods and services related to implemented IT projects

0.7 0.5

UAB Linkas 8) rental of office space; purchase of services related to other activities

1.2 1.2

MagnaVirtus Consulting SA9) purchase of services related to other activities 1.3 -

Gestso-Soc. De Gestao de Servicos SA10) rental of office space 0.7 -

Other entities related through the key management personnel 2.2 2.2

Total 24.7 15.4


Dariusz Brzeski purchase of advisory services 2.1 1.7

Andrzej Gerlach purchase of advisory services 1.3 0.1

Piotr Jakubowski purchase of advisory services 0.4 0.4

Jozef Klein purchase of advisory services - 6.3

Jacek Duch purchase of advisory services 0.3 2.1

Transactions with other members of management boards and supervisory boards and commercial proxies of other Group companies

2.5 2.3

Total 6.6 12.9

Total related party transactions 31.9 29.0

1) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Andrzej Gerlach, the Company’s

Commercial Proxy, served as Member of the Supervisory Board of Koma Nord Sp. z o.o. 2) In the period of 12 months ended 31 December 2015 and in the comparable period, Mr. Andrzej Gerlach, the Company’s Commercial

Proxy, and Mrs. Ewa Góral, the wife of Mr. Adam Góral, President of the Company’s Management Board, as well as Mrs. Jolanta

Wiza, the wife of Mr. Artur Wiza, the Company’s Managing Director, were partners in the company Top Fin Sp. z o.o. Moreover, in

the analyzed period Mrs. Jolanta Wiza served as President of the Management Board of Top Fin Sp. z o.o. Since July 2013, Mr. Adam

Góral, President of the Company’s Management Board, has been the owner of business premises rented out to Top Fin Sp. z o.o. 3) In the period of 12 months ended 31 December 2015 as well as in the comparable period, shareholders in MHM d.o.o. served as

members of the managerial stuff of subsidiaries of Asseco South Eastern Europe. 4) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Mihail Petreski, a shareholder in DM3

d.o.o., served as Vice Chairman of the Supervisory Board of Asseco South Eastern Europe.



5) Until 20 October 2014, the company MB Distribution Ltd. was related through the key management personnel of a subsidiary of

Asseco South Eastern Europe. 6) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Mihail Petreski, a shareholder in MPS

d.o.o., Skopje, served as Vice Chairman of the Supervisory Board of Asseco South Eastern Europe. 7) In the period of 12 months ended 31 December 2015 as well as in the comparable period, the company Sospes d.o.o. was related

through the key management personnel of a subsidiary of Asseco South Eastern Europe. 8) In the period of 12 months ended 31 December 2015 as well as in the comparable period, shareholders in UAB Linkas, Mr. Albertas

Sermokas and Mr. Evaldas Drasutis were non-controlling shareholders in our subsidiary UAB Sintagma and Asseco Lietuva.

Furthermore, they both served as members of the managerial stuff of UAB Sintagma and Asseco Lietuva. 9) From 3 September 2015, Mr. Miguel Lucio, a shareholder and Member of the Management Board of MagnaVirtus Consulting SA,

served as Member of the Management Board of Exictos SGPS SA 10) From 3 September 2015, Mr. Jose Rocha, a shareholder and Member of the Management Board of Gestso-Soc. De Gestao de Servicos

SA, served as Member of the Management Board of Exictos SGPS SA 11) In the period of 12 months ended 31 December 2015 as well as in the comparable period, Mr. Jacek Duch, Chairman of

the Supervisory Board of Asseco Poland, served as Member of the Supervisory Board of Decsoft S.A.

Trade receivables and other receivables

as at Trade payables and other

liabilities as at

Name of entity 31 Dec. 2015 31 Dec. 2014 31 Dec. 2015 31 Dec. 2014

mPLN mPLN mPLN mPLN

Associates and jointly controlled companies

Postdata S.A. 1.3 3.0 0.1 0.2

Multicard d.o.o. 0.4 0.1 - -

Total 1.7 3.1 0.1 0.2


Decsoft S.A. - 3.3 13.1 -

Ruch S.A. 0.7 0.7 - -

Top Fin Sp. z o.o. 0.3 0.3 0.2 0.2

Sospes d.o.o. - - 0.1 -

UAB Linkas - - 0.2 0.4

Higher School of Finance and Administration in Sopot 1.5 1.5 - -

Other 0.2 0.4 0.2 0.3

Total 2.7 6.2 13.8 0.9


Dariusz Brzeski - - 0.1 0.1

Andrzej Gerlach - - 0.1 -

Other persons 1.0 1.5 0.3 0.1

Total 1.0 1.5 0.5 0.2

Transactions with related parties are carried out on an arm’s length basis.

As at 31 December 2015, receivables from related parties comprised trade receivables (PLN 4.0 million) as well as other receivables (PLN 1.4 million).

As at 31 December 2014, receivables from related parties comprised trade receivables (PLN 6.1 million) as well as other receivables (PLN 4.7 million).

As at 31 December 2015, liabilities to related parties comprised trade payables (PLN 14.4 million).

As at 31 December 2014, liabilities to related parties comprised trade payables (PLN 1.0 million) as well as other liabilities (PLN 0.3 million).



30. Notes to the Statement of Cash Flows

Cash flows – operating activities

The table below presents items included in the line “Changes in working capital”:

12 months ended

31 Dec. 2015


mPLN mPLN

Change in inventories (1.3) 33.3

Change in receivables (99.8) (69.6)

Change in liabilities 171.2 (57.0)

Change in prepayments and accruals (22.8) 27.1

Change in provisions (20.5) (15.0)

26.8 (81.2)

Cash flows – investing activities

In the period of 12 months ended 31 December 2015, the amount of cash flows from investing activities was affected primarily by the following proceeds and expenditures:

Acquisitions of property, plant and equipment and intangible assets include purchases of property, plant and equipment for PLN 97.8 million, purchases of intangible assets for PLN 13.8 million, as well as expenditures for ongoing development projects amounting to PLN 80.1 million.

Expenditures for the acquisition of subsidiaries and associates, and cash and cash equivalents in the acquired subsidiaries as at the date of obtaining control:

for the period of 12 months ended 31 December 2015 Acquisition of

subsidiaries Cash and cash equivalents

in subsidiaries acquired

mPLN mPLN

Acquisitions made by Magic Software Enterprises Group (41.3) 6.4

Acquisitions made by Matrix IT Group (21.1) 3.0

Acquisitions made by Sapiens International Corp. Group (14.5) 3.3

Acquisitions made by Asseco Central Europe Group (21.6) 9.8

Unizeto Technologies S.A. (23.2) 0.6

Exictos SGPS S.A. (63.7) (6.9)

Infovide-Matrix S.A. (75.0) (61.9)

Other acquisitions (2.5) 0.3

(262.9) (45.4)

The following table presents detailed cash flows relating to loans during the period of 12 months ended 31 December 2015:

for the period of 12 months ended 31 December 2015 Loans collected

Loans granted

mPLN mPLN

Loans for employees 1.4 (1.8)

Loans for other entities 0.4 (0.3)

Term cash deposits with original maturities exceeding 3 months 75.5 (84.2)

Total 77.3 (86.3)



Cash flows – financing activities

“Proceeds from issuance of debt securities” represent proceeds from the issuance of bonds and convertible bonds, which is described in explanatory note 23 to these consolidated financial statements;

“Proceeds from bank loans and borrowings” include primarily bank loans amounting in total to PLN 144.8 million (NIS 148.4 million) that were taken by companies of Matrix IT Group during the year 2015;

“Expenditures for the acquisition of non-controlling interests” include the following items:

for the period of 12 months ended 31 December 2015 mPLN

Acquisition of an additional stake in Magic by Formula Systems (14.2)

Acquisition of an additional stake in Sapiens International (1.4)

Acquisition of treasury shares by Asseco Dach (7.1)

Acquisitions made by Magic Group (4.8)

Acquisitions made by Matrix IT Group (4.9)

Total (32.4)

31. Off-balance-sheet liabilities towards other entities

The Group is a party to a number of rental, leasing and other contracts of similar nature, resulting in the following off-balance-sheet liabilities for future payments:

31 Dec. 2015 31 Dec. 2014

(restated)

mPLN mPLN

Liabilities under leases of space

In the period up to 1 year 115.6 89.1

In the period from 1 to 5 years 244.5 205.0

Over 5 years 11.0 9.5

371.1 303.6

Liabilities under other operating lease agreements

In the period up to 1 year 50.3 46.8

In the period from 1 to 5 years 41.2 40.6

Over 5 years - -

91.5 87.4



32. Objectives and principles of financial risk management

Asseco Group is exposed to a number of risks arising either from the macroeconomic situation of the countries where the Group companies operate as well as from microeconomic situation in individual companies. The main external factors that may have an adverse impact on the Group’s financial performance are: (i) fluctuations in foreign currency exchange rates versus the Polish zloty, and (ii) changes in official interest rates.

Foreign currency risk

The Group’s presentation currency is the Polish zloty; however, many contracts and lease agreements are denominated in foreign currencies. With regard to the above, the Group is exposed to potential losses resulting from fluctuations in foreign currency exchange rates versus the Polish zloty in the period from concluding a contract until it is invoiced or paid for. Moreover, functional currencies of the Group’s foreign subsidiaries are the local currencies of the countries where they operate. Consequently, assets and financial results of such subsidiaries need to be converted to Polish zlotys and their values presented in the Group financial statements may change as they remain under the influence of foreign currency exchange rates.

Identification: According to the Group’s procedures pertaining to entering into commercial contracts, each agreement that is concluded or denominated in a foreign currency, different from the functional currency, shall be subject to special registration.

Measurement: The exposure to foreign currency risk is measured by the amount of an embedded financial instrument on one hand, and on the other by the amount of currency derivatives concluded for hedging purposes. The procedures applicable to the execution of IT projects require making systematic updates of the project implementation schedules as well as the cash flows generated under such projects.

Objective: The purpose of counteracting the risk of fluctuations in foreign currency exchange rates is to reduce their negative impact on the margins realized on our projects.

Contracts settled in foreign currencies are hedged with simple derivatives such as currency forward contracts, while any instruments embedded in contracts denominated in foreign currencies are hedged with non-deliverable forward instruments. Whereas, contracts concluded in foreign currencies are hedged with forward instruments with delivery of cash.

Foreign currency risk hedges are matched by selecting suitable financial instruments to offset the impact of changes in the risk-causing factor on the Group’s financial performance (the changes in embedded instruments and concluded instruments are balanced out). However, due to a considerable variability in project implementation schedules and the resulting variability in cash flows, the Group companies are prone to changes in their exposure to foreign exchange risk. Therefore, the companies dynamically transfer their existing hedging instruments or conclude new ones with the objective to ensure the most effective matching. It has to be taken into account that the valuation of embedded instruments changes with the reference to the parameters as at the contract signing date (spot rate and swap points), while transferring or conclusion of new instruments in the financial market may only be effected on the basis of current rates available. Hence, it is possible that the value of financial instruments will not be matched and the Group’s financial result will be potentially exposed to the foreign currency risk.

Interest rate risk

Changes in the market interest rates may have a negative influence on the financial results of the Group. The Group is exposed to the risk of interest rate changes primarily in the following areas of its business activities: (i) changes in the value of interest charged on loans granted by external financial institutions to the Group companies, which are based on variable interest rates, and (ii) changes in the valuation of debt securities such as Treasury and corporate bonds, as well as derivative instruments held.

Identification: The interest rate risk arises and is recognized by individual companies of the Group at the time of concluding a transaction or a financial instrument exposed to such risk. All such agreements are subject to analysis by appropriate departments within the Group companies.

Measurement: The Group companies measure their exposure to the interest rate risk by preparing the statements of total amounts of all of their financial instruments exposed to the risk of variable interest



rates. Additionally, the Group companies maintain records of debt planned to be incurred during the next 12 months, and in the case of long-term instruments – for the period of their maturity.

Objective: The purpose of reducing such risk is to mitigate against incurring higher expenses due to the concluded financial instruments based on a variable interest rate, or losses on the revaluation of debt securities carried at fair value.

Actions: In order to reduce their interest rate risk, the Group companies may: (i) try to avoid taking out loan facilities based on a variable interest rate or, if not possible, (ii) conclude forward rate agreements.

Matching: The Group gathers and analyzes the current market information concerning its present exposure to the interest rate risk.

Detailed information on bank loans, including their interest rates, currencies, and maturities are presented in explanatory note 23 to these consolidated financial statements.

Financial liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool takes into account the maturity of both financial investments and financial assets, as well as projected cash flows from operations.

The Group’s objective is to maintain a balance between continuity and flexibility of financing by using various sources of funds.

The table below discloses the Group’s trade payables as at 31 December 2015 and 31 December 2014, by maturity period based on contractual undiscounted payments.

Trade payables

31 Dec. 2015 31 Dec. 2014

restated

mPLN % mPLN %

Liabilities due already 58.8 6.90% 79.4 13.58%

Liabilities falling due within 3 months 743.1 87.24% 493.9 84.47%

Liabilities falling due within 3 to 6 months 30.4 3.57% 2.4 0.41%

Liabilities falling due after more than 6 months 19.5 2.29% 9.0 1.54%

851.8 100.0% 584.7 100.0%

The tables below present the ageing structure of other financial liabilities as at 31 December 2015 and 31 December 2014.

Liabilities falling due within 3

months

Liabilities falling due within 3 to 12

months

Liabilities falling due within 1 to 5 years

Liabilities falling due after 5 years

Total

As at 31 December 2015

Bank loans, borrowings and debt securities 104.1 304.1 643.7 127.1 1,179.0

Finance lease liabilities 8.0 25.3 103.8 - 137.1

Total 112.1 329.4 747.5 127.1 1,316.1

As at 31 December 2014

Bank loans, borrowings and debt securities 92.7 124.0 473.4 83.3 773.4

Finance lease liabilities 7.4 20.7 104.8 20.7 153.6

Total 100.1 144.7 578.2 104.0 927.0



Items of income, expenses, gains and losses recognized in the income statement

As at 31 December 2015, the following items of income, expenses, gains and losses were recognized in the Group’s income statement:

Items of income, expenses, gains and losses recognized in the income statement

Interest income/

(expenses):

Reversal/ (recognition)

of impairment write-downs

Gain/(loss) on valuation and

exercise Total

For the period of 12 months ended 31 Dec. 2015 mPLN mPLN mPLN mPLN

Financial assets

Financial assets carried at fair value through profit or loss 1.8 - 3.0 4.8

Debt securities 1.8 - (0.6) 1.2

Currency forward contracts - - 4.4 4.4

Shares - - (0.8) (0.8)

Cash and cash equivalents 7.1 - - 7.1

Financial assets available for sale 3.6 - 0.3 3.9

Shares - - 1.2 1.2

Debt securities 3.6 - (0.9) 2.7

Loans granted and receivables 3.3 (25.5) - (22.2)

Loans granted to related parties - 4.8 - 4.8

Loans granted to other entities 1.4 - - 1.4

Trade receivables from other entities 1.9 (30.3) - (28.4)

Financial liabilities

Financial liabilities carried at fair value through profit or loss - (4.9) (4.9)

Forward contracts / futures - - (4.9) (4.9)

Interest-bearing bank loans, borrowings, debt securities issued and finance leases

(43.0) - - (43.0)

Bank loans (21.8) - - (21.8)

Debt securities (2.1) - - (2.1)

Interest-bearing borrowings (11.9) - - (11.9)

Finance lease liabilities (7.2) - - (7.2)

Trade payables (0.3) - - (0.3)

Total (27.5) (25.5) (1.6) (54.6)



Fair value

As at 31 December 2015, the Group held the following financial assets measured at fair value:

As at 31 December 2015 Book value Level 1i) Level 2 ii) Level 3 iii)

mPLN mPLN mPLN mPLN


Currency forward contracts 2.9 - 2.9 -

Treasury and corporate bonds 30.1 30.1 - -

Shares in companies quoted on active markets 12.9 12.9 - -

Other assets 2.6 2.6 - -

Total 48.5 45.6 2.9 -

Financial assets available for sale

Shares in companies listed on regulated markets 1.8 1.8 - -

Shares in companies not listed on regulated markets 9.5 - - 9.5


Total 212.5 203.0 - 9.5

i. fair value determined on the basis of quoted prices offered in active markets for identical assets; ii. fair value determined using calculation models based on inputs that are, either directly or indirectly, observable in active markets; iii. fair value determined using calculation models based on inputs that are not, directly or indirectly, observable in active markets.

As at 31 December 2014, the Group held the following financial assets measured at fair value:

As at 31 December 2014 Book value Level 1i) Level 2 ii) Level 3 iii)

mPLN mPLN mPLN mPLN


Currency forward contracts 6.2 - 6.2 -


Shares in companies quoted on active markets 13.3 13.3 - -

Other assets 0.1 - - 0.1

Total 61.7 55.4 6.2 0.1

Financial assets available for sale

Shares in companies listed on regulated markets 3.9 3.9 - -

Shares in companies not listed on regulated markets 9.5 - - 9.5


Total 171.5 162.0 - 9.5

i. fair value determined on the basis of quoted prices offered in active markets for identical assets; ii. fair value determined using calculation models based on inputs that are, either directly or indirectly, observable in active markets; iii. fair value determined using calculation models based on inputs that are not, directly or indirectly, observable in active markets.

Both as at 31 December 2015 and 31 December 2014, the fair values of financial assets and liabilities were not significantly different from their book values.



33. Employment

Numbers of employees in the Group companies as at:

31 Dec. 2015

31 Dec. 2014

Management Board of the Parent Company 11 11

Management Boards of the Group companies 147 120

Production departments 17,821 15,718

Sales departments 1,347 1,236

Administration departments 1,635 1,396

Total 20,961 18,481

Numbers of employees in the Group companies as at:

31 Dec. 2015

31 Dec. 2014

Asseco Poland S.A. 2,851 3,062

Formula Systems Group 10,578 9,429

Asseco Central Europe Group 1,640 1,450

Asseco South Eastern Europe Group 1,420 1,403

R-Style Softlab JSC 738 726

Asseco Business Solutions S.A. 593 595

Asseco Western Europe Group 839 520

Infovide-Matrix S.A. 611 -

Unizeto Technologies S.A. 296 -

Asseco DACH Group - 211

C.K. Zeto Łódź S.A. 146 141

Sintagma UAB Sp. z o.o. 150 166

Combidata Poland Sp. z o.o. 87 126

ZUI OTAGO Sp. z o.o. 142 144

PI Zeto Bydgoszcz S.A. 109 115

ZUI Novum Sp. z o.o. 63 63

Sigilogic Sp. z o.o. 43 56

ADH-Soft Sp. z o.o. 48 50

SKG S.A. 34 43

Asseco Georgia LLC 23 30

Asseco Danmark A/S 34 30

Peak Consulting ApS 21 18

Asseco Kazakhstan LLP 12 16

Asseco Software Nigeria Ltd. 11 6

Park Wodny Sopot Sp. z o.o. 56 70

Gdyński Klub Koszykówki “Arka” S.A. 7 7

Asseco Resovia S.A. 4 4

Exictos SGPS S.A. 400 -

Asseco Bel LLC 5 -

Total

20,961

18,481



34. Remuneration of the entity authorized to audit financial statements

The table below discloses the amounts of remuneration paid or payable to the entity authorized to audit financial statements of the Company, namely Ernst & Young Audyt Polska Sp. z o.o. sp.k., for the years ended 31 December 2015 and 31 December 2014, in a breakdown by type of service:


12 months ended

31 Dec. 2014

mPLN mPLN

Obligatory audit of the annual financial statements 1.0 1.4

Other certification services - -

Transaction advisory services - -

Total 1.0 1.4

35. Remuneration of the Management Board and Supervisory Board of Asseco Poland S.A.

The table below presents the amounts of remuneration paid to individual Members of the Parent Company’s Management Board and Supervisory Board for performing their duties during the years 2015 and 2014.


12 months ended

31 Dec. 2014

mPLN mPLN

Management Board

Adam Góral 1.9 2.2

Przemysław Borzestowski 1.3 1.4

Andrzej Dopierała 1.2 1.2

Tadeusz Dyrga 1.4 1.6

Rafał Kozłowski 0.7 1.0

Marek Panek 1.1 1.3

Paweł Piwowar 1.6 1.8

Zbigniew Pomianek 2.0 2.3

Włodzimierz Serwiński 0.8 1.2

Przemysław Sęczkowski 1.1 1.9

Robert Smułkowski 1.7 2.0

Total 14.8 17.9

Supervisory Board

Jacek Duch 0.20 0.20

Piotr Augustyniak 0.10 0.10

Dariusz Brzeski 0.10 0.10

Artur Kucharski 0.10 0.10

Adam Noga 0.14 0.14

Dariusz Stolarczyk 0.10 0.10

Total 0.74 0.74



The table below presents remuneration paid to Members of the Management Board and Supervisory Board of Asseco Poland for acting as Members of the Management Boards and/or Supervisory Boards in subsidiaries of Asseco Poland during the years 2015 and 2014:


12 months ended

31 Dec. 2014

mPLN mPLN

Members of the Management Board of Asseco Poland performing functions in subsidiaries

2.1 1.2

Members of the Supervisory Board of Asseco Poland performing functions in subsidiaries

0.3 -

Total 2.4 1.2

36. Capital management

The primary objective of the Group’s capital management is to maintain a favourable credit rating and a safe level of capital ratios in order to support the Group’s business operations and maximize shareholder value.

The Group manages its capital structure and makes necessary adjustments in response to the changing economic conditions. In order to maintain or adjust its capital structure, the Group may decide to pay out a dividend, return some capital to shareholders, or issue new shares.

The Group consistently monitors the level of its capital using the leverage ratio, which is calculated as a relation of net liabilities to total equity increased by net liabilities. Net liabilities include interest-bearing bank loans, borrowings, trade payables and other liabilities, decreased by cash and cash equivalents.

31 Dec. 2015 31 Dec. 2014

mPLN mPLN

Interest-bearing loans and borrowings 1,137.6 726.5

Finance lease liabilities 120.6 131.5

Trade payables, state budget liabilities, and other liabilities 1,267.5 916.9

Minus cash and cash equivalents (-) (1,599.7) (1,223.8)

Net debt 926.0 551.1

Equity 5,361.8 5,282.9

Equity and net debt 6,287.8 5,834.0

Leverage ratio 14.7% 9.4%



37. Significant events after the balance sheet date

Acquisition of an 8% stake in Exictos SGPS S.A. by Asseco Poland S.A.

On 13 January 2016, Asseco Poland S.A. acquired 34,783 shares in Exictos SGPS S.A., representing 8% of the share capital of that company. The transaction value amounted to EUR 2.8 million (PLN 12.3 million).

As a result of this transaction, Asseco Poland’s equity interest and voting rights at the general meeting of Exictos SGPS increased from 61.38% to 69.38%.

Merger of Asseco Data Systems, ADH-Soft, Otago, Zeto Łódź, Zeto Bydgoszcz and Combidata

On 4 January 2016, six Polish subsidiaries of Asseco Group, namely Asseco Data Systems S.A., ADH Soft Sp. z o.o., CK Zeto Łódź S.A., Combidata Poland Sp. z o.o., Z.U.I. Otago Sp. z o.o., and PI Zeto Bydgoszcz S.A. merged into one company.

Asseco Data Systems S.A. (“ADS”) acted as taking-over company, and the merger was carried out by transferring all the assets of the acquired companies to the taking-over company, without increasing the share capital of ADS because all the acquired companies had been already wholly-owned by ADS.

Dematerialization of shares in Infovide-Matrix S.A.

On 10 February 2016, the Extraordinary General Meeting of Shareholders of Infovide-Matrix S.A. adopted a resolution to reverse the dematerialization of all of the company’s shares that had been previously admitted and introduced to public trading on the regulated market of the Warsaw Stock Exchange. Furthermore, the General Meeting instructed the company’s Management Board to take appropriate actions in order to delist the shares of Infovide-Matrix S.A. from trading on the regulated market of the Warsaw Stock Exchange.

Acquisition of 40% of shares in SCS Smart Connected Solutions GmbH (ACE Group)

On 8 February 2016, Asseco Solutions A.G. (a subsidiary of Asseco Central Europe) established the company called SCS Smart Connected Solutions GmbH seated in Karlsruhe, Germany. Asseco Solutions AG acquired 40% of shares in the newly founded company, which represent also 40% of voting rights at the general meeting of that company.

Acquisition of TSG

On 14 January 2016, Formula Systems (1985) Ltd. signed an agreement to acquire a 50% stake in TSG for a consideration of USD 25 million. Concurrently, the company informed that the remaining 50% of shares in TSG were purchased at the same price by Israel Aerospace Industries (IAI) Ltd.; hence the company of TSG shall be jointly controlled by both the above-mentioned acquirers. TSG operates primarily in the area of military industry solutions. TSG is a leading provider of IT systems to Israel’s defense organizations, including the national military forces and the police. This acquisition is in line with Formula’s strategy for development through M&A in the market associated with the defense and cybersecurity industries.

Resignation of Member of the Management Board of Asseco Poland S.A.

On 22 February 2016, the Company received a letter of resignation from Mr. Włodzimierz Serwiński, who resigned from the position of Member of the Management Board of Asseco Poland S.A. The resignation shall be effective as of 31 March 2016.

Acquisition of Chip Card, a.d.

On 14 March 2016, Asseco SEE d.o.o, Beograd SEE Serbia, a subsidiary of Asseco South Eastern Europe S.A., was registered as the owner of 136,121 shares, representing 53.81% of the share capital in Chip Card a.d. (Serbia), a company that is engaged in the processing and authentication of payment transactions. The total acquisition cost amounted to EUR 1.2 million.

Recommendation for the distribution of net profit for the financial year 2015

On 16 March 2016, the Management Board of Asseco Poland S.A. submitted a request to the Supervisory Board for recommending to the General Meeting of Shareholders to distribute the Company’s net profit for the financial year 2015 amounting to PLN 257.1 million, by allocating PLN 249.8 million to the payment of a dividend of PLN 3.01 per share, and by allocating the remaining amount of PLN 7.3 million to the Company’s reserve capital.



Resolution on the intent to sign a plan of merger between Asseco Poland S.A. and Infovide-Matrix S.A.

On 16 March 2016, the Management Board of Asseco Poland S.A. adopted a resolution on the intent to sign a plan of merger between Asseco Poland S.A. and Infovide-Matrix S.A. The companies shall be merged pursuant to art. 492 § 1 item 1 of the Commercial Companies Code as well as art. 515 § 1 and art. 516 § 6 of the Commercial Companies Code, this is by transferring all the assets of Infovide-Matrix S.A. to Asseco Poland S.A.



Asseco Poland S.A.

14 Olchowa St.

35-322 Rzeszów, Poland

phone: +48 17 888 55 55

fax: +48 17 888 55 50

e-mail: [email protected]

inwestor.asseco.pl

mailto:[email protected]

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