4iG PLC ANNUAL REPORT APPROVED BY THE GENERAL MEETING; 27 April Supplementary Notes to the 2016 Annual Financial Statements of 4iG Plc.

Transcription

1 2016 ANNUAL REPORT APPROVED BY THE GENERAL MEETING; 27 April 2017

2 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS AND THE BOARD OF DIRECTORS OF 4iG PLC Opinion We have audited the financial statements of 4iG Plc ( the Company ) for the year 2016 consisting of the balance sheet closed at 31 December 2016 showing total assets and total liabilities of HUF 3,501,248,000 with a net loss HUF -285,956,000, and the income statement for the business year then ended and the Notes containing a summary of the main elements of the accounting policy. In our opinion, the attached annual financial statements give a true and fair view of the Company's net assets and financial position as at 31 December 2016 and of the results of operations for the business year then ended in accordance with Act C of 2000 on Accounting of Hungary (hereinafter referred to as the 'Accounting Act'). Basis for our Opinion We conducted our audit in accordance with the Hungarian National Auditing Standards and the other Hungarian laws and regulations applicable to accounting. Our responsibilities under those standards are further described in the 'Auditor s responsibilities for the audit of the annual financial statements' section of our report. In compliance with the generally accepted ethical requirements in Hungary concerning our audit of the annual report, we are independent from the Company and, we have also met our other ethical responsibilities based on the same ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are matters which were, in our professional opinion, the most relevant ones during our audit of the financial statements of the reporting period. We have examined these matters in the context of our audit of the financial statements and in making our opinion thereon, and we did not issue a separate opinion on these matters. Key audit matters Evaluation of FreeSoft's goodwill The matter is described in detail in the 'FreeSoft goodwill' chapter contained in Section of the Notes to the annual financial statements. The Company has accounted for HUF 103 million scheduled depreciation in 2016 in relation to the HUF 722 million historical cost value of the IT-related goodwill of its former subsidiary (FreeSoft Ltd.) realized during its merger. The return on investment of goodwill is determined by the Company using the Discounted Cash Flow (DCF) model. Based on the return value so established at 31 December 2016, no unscheduled depreciation had to be accounted for. Associated audit procedures We have checked the assumptions and the calculation method of the DCF model during our audit. The audit also included consultation with the Company's partner in charge of business and goodwill valuation. The management of 4iG Plc has confirmed also in its declaration of completeness that the assumptions and estimate used for the calculation were reasonable and wellfounded. We have found the business valuation prepared by the Company and its findings to be well-founded, accordingly, we also believe that the goodwill value recognised is appropriate. The year-end valuation (possible unscheduled depreciation) of FreeSoft's goodwill is a key issue because the DCF model used for determining the market value is based on the management's professional opinion and material assumptions. Prepared by INTERAUDITOR Ltd. 1

3 Valuation of the participation in BankSoft Ltd The matter is described in detail in the 'Invested funds' chapter contained in Section of the Notes to the annual financial statements. During 2015, Company accounted for HUF 136,060,000 impairment in relation to the above participation. BankSoft's market value is determined by the Company using the Discounted Cash Flow (DCF) model. Based on the market value so established at 31 December 2016, no impairment had to be accounted for. The year-end valuation (possible impairment) of the above participation is a key issue due to the trend experienced in the previous year and because the DCF model used for determining the market value is based on the management's professional opinion and material assumptions. We have checked the assumptions and the calculation method of the DCF model during our audit. The audit also included consultation with the Company's partner in charge of business and goodwill valuation. The management of 4iG Plc has confirmed also in its declaration of completeness that the assumptions and estimate used for the calculation were reasonable and wellfounded. In conjunction with the valuation, we also analysed the Company's future plans concerning BankSoft Ltd. which have been presented in the section of the Notes referred to above. We have found the business valuation prepared by the Group and its findings to be well-founded, accordingly, we also believe that the participation value recognised is appropriate. Other Information: Business Report The other information consist of the 2016 business report of 4iG Plc. Management is responsible for the other information as well as for preparing the business report in accordance with the provisions of the Accounting Act and other relevant laws. Our opinion on the annual financial statements in the 'Opinion' section of our report does not apply to the business report. In connection with our audit of the annual financial statements, our responsibility is to read the business report, and, in doing so, consider whether the business report is materially inconsistent with the financial data contained in the annual report or with our knowledge obtained during the audit, or otherwise appears to contain material misstatements. In connection with the financial statements, our responsibility pursuant to the Accounting Act is to read the business report, and, in doing so, consider whether the business report were prepared in accordance with the Accounting Act and the other relevant laws, including whether the business report meets the requirements set out in paragraphs e) and f) of Sub-section (2) of Section 95/B. Pursuant to the Accounting Act, we also have to make a declaration on whether the information required under paragraphs a)-d) and g) of Sub-section (2) of Section 95/B of the Accounting Act was made available in the business report. In our opinion, the 2016 Business Report of 4iG Plc. is consistent with the disclosures in the 2016 Annual Financial Statements of 4iG Plc, and the business report has been prepared in accordance with the provisions of the Accounting Act. The information required under paragraphs a)-d) and g) of Sub-section (2) of Section 95/B of the Accounting Act was made available in the business report. As no other requirements are set for the Company in any other law with respect to the business report, therefore our opinion on the business report does not include the opinion required under paragraph h) of Sub-section (5) of Section 156 of the Accounting Act. In addition to the above, based on the knowledge we gained about the Company and its environment, we are required to report if we learned about any material misstatement in the business report and if we did, the nature of the misstatement concerned. We have nothing to report in this regard. The responsibility of the management and those charged with governance for the annual financial statements The Management is responsible for the preparation and fair presentation of the annual financial statements in accordance with the Accounting Act, as well as with the principle of true and fair presentation, and for such internal control as management determines is necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the annual report, management is responsible for assessing the Company s ability to continue as a going concern, disclosing, as appropriate under the given circumstances, matters related to going concern, and management is also Prepared by INTERAUDITOR Ltd. 2

4 responsible for using the going concern basis of accounting in the annual report, unless management either intends to liquidate the Company or to cease its business activity, or has no realistic alternative but to do so. Those charged with governance are responsible for supervising the Company's financial reporting process. The Auditor s responsibilities for the audit of the annual financial statements During the audit, our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Hungarian National Accounting Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the annual financial statements As part of an audit performed in accordance with the Hungarian National Accounting Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. In addition: We identify and assess the risks of material misstatement of the annual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. We judge the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our independent auditor s report to the related disclosures in the annual report or, if such disclosures are inadequate in this respect, to issue a qualified opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the report, including the disclosures in the Notes, and whether the annual financial statements represent the underlying transactions and events in a manner which achieves true and fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in the Company's internal controls that we identify during our audit. Péter Honti Managing Director INTERAUDITOR Ltd. H-1037 Budapest Vörösmarty Street Building A Tax identification number: INTERAUDITOR Ltd Budapest, Vörösmarty Street 16-18, Building A, Ground Floor 1/F Julianna Tóth Auditor, Member of the Chamber Prepared by INTERAUDITOR Ltd. 3

5 Statistical code Company registration number 4iG Plc. H-1037 Budapest, Montevideo Street 8. Balance Sheet and Income Statement 31 December 2016 Date: 6 April 2017 seal Manager (representative) of the enterprise

6 Statistical code Company registration number BALANCE SHEET A Assets Item No. Name of item 31 December 2015 Modifications of the previous year(s) data in thousand HUF 31 December 2016 a b e d e 1 A. Fixed assets 2,864,218-2,734,521 2 I. INTANGIBLE ASSETS 1,526,572-1,225, The capitalized value of foundation and restructuring 4 2. Capitalized value of experimental development 5 3. Rights representing assets 6 4. Intellectual property 576, , Goodwill 950, , Advance payments on intangible assets 9 7. Revaluation of intangible assets 10 II. TANGIBLE ASSETS 124,751-88, Real estate and related property rights Technical equipment, machinery, vehicles 119,661 83, Miscellaneous equipment, fitting, vehicles Breeding stock Projects and renovations Advance payments on investments Revaluation of tangible assets 18 III. FIXED FINANCIAL ASSETS 1,212,895-1,420, ,951 1, Long-term investments in associated companies 1,212, Long-term loans to associated companies Material long-term ownership interest 22 Long-term loans to other related company in controlling ownership No Other long-term investments Long-term loans to other related company Other long-term loan Long-term debt securities Revaluation of invested financial assets 3,698 1,184 1,420, Revaluation difference of invested funds Date: 6 April 2017 seal Manager (representative) of the enterprise

7 Statistical code Company registration number BALANCE SHEET A Assets Item No. Name of item 31 December 2015 Modifications of the previous year(s) data in thousand HUF 31 December 2016 a b e d e 29 B. Current assets 1,020, , I. INVENTORY 109, Raw materials Work in progress and semi-finished products Breeding, fattening and other animals Finished products 109, Commodities Advance payments on stocks 37 II. RECEIVABLES 534, , Receivables from goods and services (customers) 114, , Receivables against associated companies 363, Receivables against other related company in controlling ownership Receivables against other related companies Bill of exchange receivables Other receivables 57,030 22, Valuation difference of accounts receivable Positive valuation difference of derivative transactions 46 III. SECURITIES 313, , Share in associated companies Material ownership interest Other shares 73, Own shares and business quotas 94, Debt securities held for trading 313, , Valuation difference of securities 53 IV. LIQUID ASSETS 62,965-4, Cash on hand and cheques Bank deposits 62,609 3, C. Accrued Income and Prepaid Expenses 28,728-4, Accrued incomes 20,106 1, Prepaid expenses and costs 8,622 2, Deferred expenses 60 Total assets 3,913,328-3,501,248 Date: 6 April 2017 Manager (representative) of the enterprise

8 seal Statistical code Company registration number A BALANCE Assets (liabilities) Item No. Name of item 31 December 2015 a b e Modifications of the previous year(s) d data in thousand HUF 31 December D. Shareholders' equity 3,296,052-2,826, I. SUBSCRIBED CAPITAL 1,880,000 1,880,000 e 63 of which: treasury shares repurchased at nominal value 45, II. ISSUED BUT NOT PAID CAPITAL (-) 65 III. CAPITAL RESERVES 1,074,500 1,074, IV. RETAINED EARNINGS 249,401 63, V. NON-DISTRIBUTABLE RESERVES 94, VI. REVALUATION RESERVE Revaluation reserve of value adjustment Revaluation reserve of fair-value valuation 71 VII. PROFIT/LOSS AFTER TAX 92, , E. Provisions Provisions for expected liabilities Provisions for future expenses Other provisions 76 F. Liabilities 534, , I. SUBORDINATED LIABILITIES Subordinated liabilities against associated companies 2. Subordinated liabilities against other related company in controlling ownership 3. Subordinated liabilities against other related company 4. Subordinated liabilities against other operators 82 II. LONG-TERM LIABILITIES Long-term loans received Convertible bonds Debts on issue of bonds Construction loans Other long-term loans Long-term liabilities against associated companies 7. Long-term liabilities against other related company in controlling ownership 8. Long-term liabilities against other related company Other long-term liabilities

9 Date: 6 April 2017 seal Manager (representative) of the enterprise Statistical code Company registration number A BALANCE Assets (liabilities) Item No. Name of item 31 December 2015 Modifications of the previous year(s) data in thousand HUF 31 December 2016 a b e d e 92 SHORT-TERM LIABILITIES 534, , Short-term loans 82, of which: convertible and exchangeable bonds Short-term loans 178, Advance payments from customers Liabilities from goods and services (suppliers) 138,230 24, Debt on bills of exchange 253, Short-term liabilities against associated companies 7. Short-term liabilities against other related company in controlling ownership 8. Short-term liabilities against other related company 112, , Other short-term liabilities 29,943 37, Valuation difference of accounts payable Negative valuation difference of derivative transactions 105 G. Deferred Income and Accrued Expenses 82,680-53, Deferred income and accrued expenses on revenues Accrued expenses and costs 15,648 6, Deferred revenues 67,032 47, Total liabilities 3,913,328-3,501,248 Date: 6 April 2017 seal Manager (representative) of the enterprise

10 Statistical code Company registration number A INCOME STATEMENT (total costs) Item No. Name of item 31 December 2015 Modifications of the previous year(s) data in thousand HUF 31 December 2016 a b c d e 1 1. Net domestic sales revenue 1,625, , Net export sales revenue 63,478 3 I. Net sales revenues (01+02) 1,688, , ± changes in the stock of self-produced stocks -10, Capitalized value of self-produced assets 6 II. Capitalised value of own performance (±03+04) ,924 7 III. Other revenues 73,801 20,290 8 of which: reversal of impairment 9 5. Material costs 3,889 3, Value of services used 147, , Value of other services 15,525 8, Cost of goods sold 24, , Value of (intermediated) services sold 1,286, , IV. Material type expenses ( ) 1,477, , Payroll expenses 210, , Other payments to personnel 9,409 3, Payroll tax employer contributions 59,603 36, V. Personnel expenses ( ) 279, , VI. Depreciation 111, , VII. Other expenses 145,048 10, of which: impairment 22 A. PROFIT / LOSS FROM NET OPERATING ACTIVITIES (I±II+III-IV-V-VI-VII) -251, ,718 Date: 6 April 2017 seal Manager (representative) of the enterprise

11 Statistical code Company registration number A INCOME STATEMENT (total costs) Item No. Name of item 31 December 2015 Modifications of the previous year(s) data in thousand HUF 31 December 2016 a b c d e Dividend and share received (due) 350, of which: received from associated companies Exchange rate gains on share sales 350, of which: received from associated companies 15 Interest and exchange rate gains on invested financial assets of which: received from associated companies 16 Other interest and similar income received (due) of which: received from associated companies Other income from financial operations 586 1, of which: valuation difference VIII. Revenues from financial transactions ( ) 18 Expenditures and exchange rate losses originating from participations of which: provided to associated companies 19 Costs and exchange rate losses on invested financial assets (securities, loans) of which: provided to associated companies 350,665-1, Interest and similar costs payable 3,850 3, of which: provided to associated companies 2,289 1, Depreciation of shares, securities and bank deposits 22 Other expenses related to financial operations 40 of which: valuation difference IX. Expenses of financial transactions (18+19± ) B. PROFIT / LOSS OF FINANCIAL TRANSACTIONS (VIII-IX) 3,406 37,029 7,256-40, , , C. PRE-TAX PROFIT (±A±B) 92, , X. Tax liability - - 1, D. PROFIT / LOSS AFTER TAX (±C-X) 92, ,956 Date: 6 April 2017 Manager (representative) of the enterprise

12 seal 4iG Plc Annual Report Supplementary Notes 4iG Plc. H-1037 Budapest, Montevideo Street 8. Tel: Fax:

13 Contents 4iG Plc Brief Presentation of the Company General Comments Branch offices of the Company: Scope of Activities Information on shares Executives, Controlled Undertakings Senior Executives as of 31 December Remuneration and Authorisation of the Board Members to Represent the Company Remuneration of the Members of the Supervisory Board Remuneration of the Members of the Audit Committee Authorized Signatories of the Financial Statements Details of Controlled Business Entities as at the Balance Sheet Date Consolidated Financial Statements of the Company Group Ownership structure on 31 December Application of the Accounting Policy Method of Record Keeping Form and Type of the Financial Statements Fiscal Year, Reporting Date Date of Compilation of the Balance Sheet Interpretation of Errors with Material Amounts Small unit value stocks Definition of small value accounts receivable by buyer or debtor Material impact on the profit or loss due to the revaluation of accounts payable and accounts receivable denominated in a foreign currency Unreasonable costs in connection with irrecoverable debts Depreciation Policy Reversals Value Adjustments Capitalization of Experimental Development... 24

14 2.14 Valuation of Purchased Inventory Provisioning Valuation of Items not Highlighted Impact of Other Changes in the Accounting Policy Recording and Recognising Material Stock Rules for Stocktaking Rules for Cash Handling Deviation from Provisions of the Act Information Related to Specific Activities Valuation of Amounts in Foreign Currencies Derivative and hedging transactions Calculation of Corporate Tax Data of the Person Responsible for Compiling the Balance Sheet: Auditor Main Lines in the 2016 Balance Sheet of 4iG Plc. and Supplementary Notes Thereto Modifications for the Previous Years Comparability Layout of the Balance Sheet New Items in the Balance Sheet Assets in Management of the Balance Sheet Impairment Loss Fixed assets Intangible Assets Tangible assets Invested Financial Assets Current assets Inventory Receivables Valuation of securities Liquid Assets, Cash-Flow Accrued Income and Prepaid Expenses Shareholders' equity Provisions... 35

15 3.12 Liabilities Long-term Liabilities Short-term Liabilities Secured Liabilities Deferred Income and Accrued Expenses Balance Sheet Total Income Statement and Notes Thereto Modifications for the Previous Years Incomparable Data Layout of the Income Statement, New Items in the Income Statement Net sales revenues Sales revenues originating from affiliated companies Other revenues Material-type Expenses Costs originating from affiliated companies Personnel expenses Depreciation R&D costs Other expenses Profit / Loss from Net Operating Activities Profit / Loss on Financial Transactions Profit before taxes (PBT) Corporate Tax Loss Carry Forward Profit / Loss after Tax Informative Data Financial Indicators Wages and Number of Employees R&D Activity Environmental Protection Other Services Provided by the Auditor Further Information Guaranteeing a Reliable and True View, Off-balance Sheet Items Key Changes after the Balance Sheet Date of the Financial Statements... 44

16 8 Disclaimer Brief Presentation of the Company 1.1 General Comments The name of the Company: Legal form of the company 4iG Public Limited Company (previously FreeSoft Plc., previously Fríz 68 Szolgáltató és Kereskedelmi Inc.) Public Limited Company Registered office: H-1037 Budapest, Montevideo Street Branches: H-8000 Székesfehérvár, Seregélyesi Road 96. Company registration number: Tax number: H-8230 Balatonfüred, Fürdő street 17/B. Statistical code: Share capital: HUF 1,880,000,000 Date founded: 8 January 1995 Date of transformation: 2 April 2004 Date of admission to the Stock Exchange 22 September 2004 The Company's website: The predecessor of 4iG Plc., FreeSoft Ltd., a market player on the domestic IT market since 1990, merged with Fríz 68 Inc. in 2003, whereby capital was raised by Fríz using cash and by FreeSoft merging its total goodwill, thus establishing a limited company with the name FreeSoft and keeping the previous activities of FreeSoft Ltd. This was followed by a public share offering in Trading of the publicly offered FreeSoft shares started on 22 September 2004 in category "B" of the Budapest Stock Exchange. The IPO was followed by two private placements on 27 October 2007 and 14 April Listing of the shares of the private placements on the Stock Exchange started on 17 March 2008 and 27 August Since the decision of the General Meeting held on 24 April 2014 on renaming the Company, its name has been 4iG Public Limited Company, with the short name being 4iG Plc. At the time of compiling the Notes, 4iG Plc. is a public limited company employing 16 employees, owning 100% of the shares in four companies and 100% of the shares of one company indirectly through its subsidiary. 1.2 Branch offices of the Company: H-8000 Székesfehérvár, Seregélyesi Road 96. H-8230 Balatonfüred, Fürdő Street 17/B.

17 1.3 Scope of Activities The Company's scope of activity as per the Standardized Sectoral Classificatory System of Economic Activities (TEÁOR) is as follows: 2620 '08 Manufacturing of computers, peripheral units 2823 '08 Manufacturing of business machines (except for: computers and peripheral units) 3320 '08 Installation of industrial machines 4651 '08 Wholesale of computers, computer peripheral equipment and software '08 Non-specialised wholesale trade services Retail sale of computers, peripheral units and software in specialised stores 4742 '08 Retail of telecommunication products 5811 '08 Book publishing 5812 '08 Publishing of directories and mailing lists 5821 '08 Publishing of computer games 5829 '08 Other software publishing 6201 '08 Computer programming activities 6203 '08 Computer facilities management activities 6209 '08 Other information technology and computed service (main activity) 6311 '08 Data processing, web-hosting and related activities 6312 '08 Web portals 6420 '08 Services of holding companies 6920 '08 Accounting, auditing and tax consultancy 7021 '08 Public relations and communication services 7022 '08 Business and other management consulting services 7219 '08 Research and experimental development services in other natural sciences and engineering 7490 '08 Other professional, scientific and technical activities n.e.c '08 Other human resources provision services 8532 '08 Technical and vocational secondary education services 8551 '08 Sports and recreation education services 8552 '08 Cultural education services 8559 '08 Other education n.e.c '08 Educational support services 9511 '08 Repair services of computers and peripheral equipment

18 1.4 Information on shares Type of shares: registered ordinary share, dematerialised Nominal value of shares: HUF 1,000/unit Number of shares: 1,880,000 unit ISIN code of shares: HU Share class: "A Serial number of shares: Share price (31 December 2014): HUF 2,650/unit Shares are listed in the Standard category of the Budapest Stock Exchange. 1.5 Executives, Controlled Undertakings Senior Executives as of 31 December 2016 Board of Directors: Dr. Gábor Felső - Chairperson of the Board of Directors, CEO Judit Hegedűs - Member of the Board of Directors István Fehér - Member of the Board of Directors Dr. Zsolt Kovács - Member of the Board of Directors Attila Zoltán Merényi - Member of the Board of Directors Béla Zsolt Tóth - Member of the Board of Directors Supervisory Board: Audit Committee: Dr. Csaba Kerekes - Chairperson of the SB Dr. Ildikő Andriskáné Ernöházai - Member of the SB Dr. Júlia Kishegyi - Member of the SB Dr. Judit Bakó - Member of the SB Ágnes Rátkainé Fehér - Member of the SB Dr. Csaba Kerekes - Chairperson of the AC Dr. Júlia Kishegyi - Member of the AC Dr. Judit Bakó - Member of the AC In the reporting year, the members of the Company's Board of Directors, Supervisory Board and Audit Committee received remuneration in the amount presented in the table below; no loans were disbursed to them.

19 Name Company Function Wage Honorarium Commission Other benefits Total fee Dr. Gábor Felső 4iG Chairperson of the 18,000, ,000 18,800,000 Board of Directors Member of the Judit Hegedűs 4iG 6,500,000 6,500,000 Board of Directors István Fehér Attila Zoltán Merényi Béla Zsolt Tóth Dr. Zsolt Kovács Dr. Csaba Kerekes Dr. Ildikó Andriskáné Ernőházai Dr. Judit Bakó Dr. Júlia Kishegyi Dr. Dániel Gábor Pongor HUMANsoft Managing Director 14,018, ,200 14,217,531 4iG 4iG Member of the Board of Directors Member of the Board of Directors 2,160,000 2,160, , ,524 Axis Rendszerház Managing Director 7,440,000 7,440,000 BankSoft Ltd. Managing Director 4,440,000 4,440,000 HUMANsoft Managing Director 309, ,524 4iG Member of the Board of Directors 5,000,000 5,000,000 HUMANsoft Director 15,400, ,240 15,712,240 4iG 4iG Member of the Board of Directors Chairman of the SB and the AC 2,100,000 2,100,000 2,100,000 2,100,000 4iG Member of the SB 1,860,000 1,860,000 4iG 4iG 4iG Member of the SB and the AC Member of the SB and the AC Member of the SB and the AC 1,775,000 1,775,000 1,860,000 1,860,000 90,000 90,000 Ágnes Rátkainé Fehér 4iG Member of the SB 1,860,000 1,860,000 Total 73,267,855 11,954, , ,440 86,533, Remuneration and Authorisation of the Board Members to Represent the Company From the Board of Directors, Dr. Gábor Felső (1125 Bp. Galgóczy Street 37.) is authorised to represent the Company alone, while the other members of the Board of Directors must act jointly. The Board of Directors elected Dr. Gábor Felső as Chairperson. Signing of the Managing Director on behalf of the Company shall be performed jointly with another member of the Board of Directors. The General Meeting accepting the proposal of the Remuneration Committee in its resolution No 37./2014(10.27) decided on the fact that each member of the Board of Directors shall be entitled to a remuneration of HUF 175,000 per month, while the Chairperson of the Board of Directors shall be entitled to a remuneration of HUF 200,000 per month Remuneration of the Members of the Supervisory Board The General Assembly has approved the proposal of the Remuneration Committee and by decision 42./2014 (10.27) has decided that each Member of the Supervisory Board shall receive a HUF 155,000/month fee, while the Chairperson of the Supervisory Board shall receive a HUF 175,000/month fee Remuneration of the Members of the Audit Committee Members of the Audit Committee shall not be remunerated for the tasks they perform in the Audit Committee.

20 1.5.5 Authorized Signatories of the Financial Statements Authorized signatories of the Financial Statements are the Chairperson of the Board of Directors individually or two members of the Board of Directors or the Managing Director jointly Details of Controlled Business Entities as at the Balance Sheet Date Name Address Ownership ratio Company registration HUMANsoft Ltd. Axis Rendszerház Ltd. BankSoft Ltd. H-1037 Budapest, Montevideo Street 8. H-1037 Budapest, Montevideo Street 8. H-1037 Budapest, Montevideo Street % % % Subsidiary of HUMANsoft: Mensor3D Ltd. H-6782 Mórahalom, Röszkei Road % Name of the company HUMANsoft Ltd. Axis Rendszerház Ltd. Subscribed capital (thousand HUF) Shareholders' equity (thousand HUF) Retained earnings (thousand HUF) Capital reserves (thousand HUF) Nondistributable reserves Profit / Loss after Tax (thousand HUF) 34, , ,915 38, ,990 30, , , ,050 BankSoft Ltd. 9,000 67,574 52,283-6,291 Mensor3D Ltd. 171, ,150 5, ,031 4iG Plc. and its affiliated, controlled business associations, due to the obligation of consolidation qualify as large corporations Consolidated Financial Statements of the Company Group The Consolidated Financial Statements of the Company Group are prepared by the parent company, 4iG Plc., in accordance with IAS-IFRS international standards. The Consolidated Financial Statements are publicly available. They are available at at and at websites, as well as at 4iG Plc.'s office at H-1037 Budapest, Montevideo Street Ownership structure on 31 December December December 2016 István Fehér 12.32% 15.24% Dr. Gábor Móricz 10.72% 13.03% KAPTÁR Investment Plc. 9.93% 6.50% Vilmos Vaspál 6.27% n.a. Béla Zsolt Tóth* n.a. 5.71% Edit Vincze 6.65% n.a. HS Board Ltd. 5.67% 5.67% Tief Terra Építőipari és Szolgáltató Ltd. 6.21% n.a. Dániel Móricz 5.27% n.a.

21 Free float* 36.96% 53.85% Total % % *Béla Zsolt Tóth has a total share package of 107,266 pieces, of which 35,522 pieces (1.89%) are owned indirectly through HS Board Ltd. which must be excluded with respect to free float (it has been added). 2 Application of the Accounting Policy 2.1 Method of Record Keeping The books of the Company are recorded in Hungarian language, in Hungarian forint, according to the Hungarian principles and rules of double-entry bookkeeping. The Company's accounting policy is based on the Hungarian Accounting Standards (HAS). Based on statutory regulations, the Company has been keeping its books and preparing its annual financial statements according to the IFRS (International Financial Reporting Standards) since 1 January Its entries are recorded in the Microsoft Axapta program. 2.2 Form and Type of the Financial Statements 4iG Plc. prepares a type "A" report, and compiles its income statement using the total cost method. 2.3 Fiscal Year, Reporting Date The financial year is identical with the calendar year; these financial statements include economic transactions of the period between 1 January 2016 and 31 December 2016, with a balance sheet date of 31 December Date of Compilation of the Balance Sheet The Financial Statements include the impacts of economic events, circumstances that were known until the date of compilation of the balance sheet, relating to the reporting year or the preceding years. Chosen date of compilation of the balance sheet: the 28 th of February of the year following the reporting year. 2.5 Interpretation of Errors with Material Amounts An error is considered material, if in the year of revealing the error during the various inspections the aggregate value of errors and error impacts affecting the same year which either increase or decrease the profit and or the equity exceeds 2 percent of the annual balance sheet total of the business year concerned or, if 2 percent of the annual balance sheet total is less than HUF 1 million, it exceeds HUF 1 million. An error is not considered material if, in the year of revealing the error during the various inspections, the aggregate value of errors and error impacts affecting the same year which either increase or decrease the profit and or the equity does not exceed the threshold for material errors. In accordance with the Accounting Act, material errors and error impacts are presented in a separate column in the current year's balance sheet and income statement. Errors and error impacts that are considered material based on the above must be booked on a separate general ledger account number within the given account group separately for each year. 2.6 Small unit value stocks For the purpose of accounting for impairment, small unit value items are stocks in whose case the impairment of the given stock group (general ledger account number) does not exceed 5% of the book value.

22 2.7 Definition of small value accounts receivable by buyer or debtor Small value accounts receivable are receivables whose amount is not more than three times the execution costs. 2.8 Material impact on the profit or loss due to the revaluation of accounts payable and accounts receivable denominated in a foreign currency When evaluating items denominated in a foreign currency, the aggregate exchange rate difference is considered material if its amount exceeds 5% of all foreign currency or foreign exchange items at the balance sheet date. 2.9 Unreasonable costs in connection with irrecoverable debts In case of irrecoverable debts, the maximum amount above which the costs of debt collection are considered to be unreasonably higher than the potential amount of the recoverable sum is set at three times the collection costs Depreciation Policy In accounting for scheduled depreciation, the starting point is the historical cost less the residual value expected at the end of the asset's useful life. Useful life: the period during which the business can account for the amortised asset against the profit on a pro-rata basis or in proportion with performance. Residual value: the value which can be realised at the end of the asset's useful life as determined on the basis of information available upon taking into use or commissioning, depending on the length of the asset's useful life. The residual value may be zero if its value is likely to be immaterial. The asset's residual value is determined, according to the principle of individual valuation, on the basis of the market value of similar assets existing at the time of commissioning the given asset, calculated to the end of its useful life. If, at the end of its useful life, the asset's market value is likely to be immaterial then the residual value shall be deemed to be zero. The residual value is deemed immaterial if its amount does not reach the amount of depreciation which can be accounted for in the given year according to the Tax Act. It is also immaterial if the asset can only be sold without its original function (disassembled) or as waste or if the asset is not expected to be sellable. In case of software products and IT equipment, the residual value is always zero. Applied write-off methods: The rate of annual amortisation to the historical cost (gross value) shall be calculated on the basis of the expected use and useful life of the individual asset, its physical deterioration and obsolescence and the circumstances of the given business activity, and it shall be applied starting from the moment the asset has been recorded in the company's books i.e. taken into use or commissioned. Depreciation is written off on a straight-line basis using constant depreciation rates Tangible assets are presented at a reduced acquisition cost adjusted with the accumulated depreciation. The accumulated depreciation includes the accounted costs of planned depreciation due to the continued use and operation of the asset as well as extraordinary depreciation due to extraordinary and significant damage of the asset caused by unexpected events. The acquisition cost of tangible assets includes the purchase cost of the assets, material and wage costs in case of proprietary investment as well as other direct costs. Interest on fixed asset investments loans increases the acquisition cost of the asset until it is brought to its intended purpose.

23 The carrying value of tangible assets is reviewed at specified intervals in order to ensure that the carrying amount does not exceed the fair market value of the assets, as in this case, extraordinary depreciation must be calculated up to the real market value of the assets. The real market value of the assets is the higher value between the purchase price and the utility value of the assets. The utility value is the discounted value of future cash flows generated by the assets. The discount rate includes the interest rate before tax, taking into account the time value of money and the impact of other risk factors associated with the asset as well. If no future cash flow can be allocated independently to the asset, the calculation will be based on the cash flow of the unit to which the asset belongs. The impairment thus determined is recognized as extraordinary depreciation in the income statement. Repair, maintenance and spare parts costs related to fixed assets are borne by the maintenance budget. Valueadded investments and renovations are capitalized. The acquisition cost and accumulated depreciation of sold or nil, unused assets is derecognized. Any profit or loss which may result from such operations is recognized as part of current year's result. The value of the Company's assets is recognized during the useful life of the assets using the straight-line method, usually according to the rates specified in the Tax Act or, where it is justified, it may deviate from the general rules for the individual firm or asset. The service life of different asset groups is as follows: Real estate: the Company has no real estate property; Depreciation rate of work in progress on third-party-owned or leased real estate property: year (6%) Machinery and equipment: Vehicles: during 3-7 years; during 5 years; assets with HUF 100,000 individual value: immediate depreciation unless specific factors require otherwise Depreciation of tangible assets and amortisation of software used with regard to R&D activity are accounted for in 3 to 10 years. If the Company's management judges the useful life to be longer than described above, accordingly, they shall individually determine the rate of depreciation. Determination of the useful lives of assets is based on past experience with similar assets, anticipated technological development and changes in broad economic or industry factors. The Company has no assets with indefinite life. Useful life values and depreciation methods are reviewed at least once a year on the basis of actual economic benefits gained from that asset. If necessary, adjustments are recognized in the income statement. Individually purchased intangible assets are added at the purchase price, intangible assets acquired through business combinations are added at their fair value at the acquisition date. The items are included in the books if it is proven that the use of the asset shall result in the future inflow of economic goods, and the related cost is clearly defined. The amortization of intangible assets is calculated on a straight-line basis, using the best estimate regarding their useful life. The amortization method and period are reviewed annually at the end of the financial year. Proprietary intangible assets are not capitalized, except for development costs, but are recognized in the given year in the income statement. Intangible assets are reviewed annually for impairment, either individually or at the level of the income-generating unit.

24 Purchasing costs of trademarks, licenses, assets under industrial property rights and software are capitalized and written off according to the straight-line method over their estimated useful lives: Intellectual property (software): Goodwill: Negative goodwill (badwill): during 2-10 years; in 7 years to be accounted for as income in 7 years Self-developed intellectual property is amortised during a period of 2 to 10 years. Deprecation is accounted for on a quarterly basis. Cases of unscheduled depreciation and impairment and reversal: If the historical cost (purchase value) or book value of purchased inventories (raw materials, goods) is higher substantially and permanently (i.e. by 20% and for more than 6 months) than their actual market value known at the closing date of the balance sheet, then it shall be recognised in the balance sheet at the actual market price, while if the historical cost (production value) or book value of self-manufactured stocks (work in progress, semi-finished and finished products and livestock) is substantially and permanently higher than their sales price known and expected at the closing date of the balance sheet, then it shall be recognised in the balance sheet at the sales price reduced by the costs expected to be incurred and increased by potential subsidies, and the value of inventories shall be reduced by accounting the difference as loss in value. Based on the information available at the time of preparing the balance sheet and in view of the buyer's or debtor's credit rating, impairment must be accounted for in respect of accounts receivable outstanding at the balance sheet closing date and unsettled until the balance sheet date (including accounts receivable from credit institutions and financial ventures, amounts paid as loans or advances, and accounts receivable included in deferred income) if there is a permanent and material difference which is a loss between the book value and the expected recoverable amount of the liability, i.e. where such difference is outstanding for more than one year and exceeds HUF 100,000. In respect of small-value receivables of individual buyers and debtors, based on the collective rating of buyers and debtors, the amount of impairment is determined at 50 percent of the book value of these accounts receivable. If at the balance sheet date the market value of the individual asset exceeds its book value significantly (by 20%), or the net value of intangible or tangible asset determined on the basis of scheduled depreciation, then the unscheduled depreciation or impairment accounted for shall be reduced by the difference and the given asset's book value shall be increased against other income. The book value shall be increased by the difference up to the value of the given asset initially recorded or up to the net value of intangible or tangible asset determined on the basis of scheduled depreciation (reversal amount). The amount of reversal shall not be more than the amount previously accounted for as unscheduled depreciation or impairment Impact of depreciation changes: No such changes happened in the course of the 2016 financial year Reversals Reversal of unscheduled depreciation and impairment losses recorded are in line with the general rules Value Adjustments 4iG Plc. uses general rules when accounting for value adjustments Capitalization of Experimental Development 4iG Plc. does not intend to make use of the possibility to capitalize experimental development costs, and accounts for them in each case among costs of the current period.

25 2.14 Valuation of Purchased Inventory Purchased Inventory is recorded in the balance sheet at actual historical cost Provisioning In iG Plc. did not set aside provisions for guarantee- and other obligations, expected future costs. Otherwise the generally accepted provisions are used for setting aside provisions Valuation of Items not Highlighted Balance sheet items not highlighted above are valued in accordance with general accounting rules; there were no changes in valuation thereof apart from changes in regulations Impact of Other Changes in the Accounting Policy On 1 January 2016, 4iG Plc. started to use Microsoft Axapta_2012. There were no significant changes in other essential elements of the accounting policy apart from changes in regulations; each member company of the 4iG Group uses an integrated chart of accounts Recording and Recognising Material Stock The Company does not recognise its material stocks in value in the course of general ledger bookkeeping, purchases are immediately accounted for as costs during the year Rules for Stocktaking Stocktaking of assets and liabilities is carried out according to the general rules Rules for Cash Handling Cash is handled according to rules stipulated in the accounting policy as well as guidelines on the cash desk and cash handling Deviation from Provisions of the Act Financial Statements were compiled in accordance with the provisions of the Act on Accounting, no circumstances have emerged which would necessitate deviation from the provisions of the Act Information Related to Specific Activities 4iG Plc. is not subject to disclosing information by other legislation with regard to additional, special activity based on its activities Valuation of Amounts in Foreign Currencies The Company uses the commercial selling rates of Raiffeisen Bank Ltd. for calculating its foreign exchange and currency items Derivative and hedging transactions The Company did not have any derivative or hedging transactions on the money market in Calculation of Corporate Tax 4iG Plc. applies provisions of Act LXXXI of 1996 on Corporate Tax and Dividend Tax when calculating corporate tax. In the 2016 fiscal year corporate tax was calculated pursuant to the provisions on minimum income Data of the Person Responsible for Compiling the Balance Sheet: Ferenc Piros (H-2097 Pilisborosjenő, Tulipán Alley 1.; registration number: ) 2.27 Auditor Auditor of 4iG Plc.: INTERAUDITOR Neuner, Henzl, Honti Tanácsadó Korlátolt Felelősségű Társaság (registered seat: H-1074 Budapest, Vörösmarty Street 16-18; company reg. no.: , chamber registration number: )

26 Auditor personally responsible for the audit: Julianna Tóth (home address: H-1088 Budapest, Szentkirályi Street 22-24, floor I, 9/b; place and date of birth: Dömsöd, ; membership number: ; mother s name at birth: Mária Csegei)

27 3 Main Lines in the 2016 Balance Sheet of 4iG Plc. and Supplementary Notes Thereto 31 December December 2016 data in thousand HUF Change in % Description Fixed assets 2,864,218 2,734,521-5% INTANGIBLE ASSETS 1,526,572 1,225,522-20% TANGIBLE ASSETS 124,751 88,123-29% FIXED FINANCIAL ASSETS 1,212,895 1,420,876 17% Current assets 1,020, ,704-25% INVENTORY 109, % RECEIVABLES 534, ,709-46% SECURITIES 313, ,698 49% LIQUID ASSETS 62,965 4,297-93% Accrued Income and Prepaid Expenses 28,728 4,023-86% Total assets 3,913,328 3,501,248-11% Description 31 December 31 December Change in % Shareholders' equity 3,296,052 2,826,690-14% SUBSCRIBED CAPITAL 1,880,000 1,880,000 0% of which: treasury shares repurchased at nominal value - - n.a. ISSUED BUT NOT PAID CAPITAL (-) - - n.a. CAPITAL RESERVES 1,074,500 1,074,500 0% RETAINED EARNINGS 249,401 63,948-74% NON-DISTRIBUTABLE RESERVES - 94,198 n.a. REVALUATION RESERVE - - n.a. PROFIT/LOSS AFTER TAX 92, , % Provisions - - n.a. Liabilities 534, ,693 16% SUBORDINATED LIABILITIES - - n.a. LONG-TERM LIABILITIES - - n.a. SHORT-TERM LIABILITIES 534, ,693 16% Deferred Income and Accrued Expenses 82,680 53,865-35% Total liabilities 3,913,328 3,501,248-11% 3.1 Modifications for the Previous Years The after-tax profit and the liability due to dividend payment at 31 December 2015 are presented in accordance with the year 2016 new rules so as to ensure comparability.

28 3.2 Comparability 2016 figures of the Company's Balance Sheet are comparable with the 2015 figures since operations of both years cover a full year, changes were implemented in the system of compiling the balance sheet in accordance with the amendment to the Accounting Act. 3.3 Layout of the Balance Sheet When preparing the financial statements the Company did not make use of the option of choosing the simplified form, thus there is no point in further breaking down the balance sheet items in the reporting period. Where a more detailed breakdown of the balance sheet rows is justified, details thereon are provided in the notes. 3.4 New Items in the Balance Sheet In the financial statements of the reporting year there are no new balance sheet items apart from the layout specified in the new regulations in Assets in Management of the Balance Sheet In the balance sheet there are no assets that constitute part of the assets of the Treasury taken over for management. 3.6 Impairment Loss The Company's Balance Sheet does not include impairment loss recorded in relation to invested financial assets, inventories, securities in the reporting year; no readjustment was recorded in relation thereto. 3.7 Fixed assets The value of the Company's fixed assets as of 31 December 2016 was HUF 2,734,521,000.

29 3.7.1 Intangible Assets CHANGE OF INTANGIBLE ASSETS Name of the Company: 4iG Plc. 31 December 2016 in thousand HUF DESCRIPTION RIGHTS REPRESENTING ASSETS GOODWILL INTELLECTUAL PROPERTY EXPERIMENTAL DEVELOPMENT ORGANISATIONAL COSTS TOTAL INTANGIBLE ASSETS Above HUF 99,000 Below HUF 100,000 Total OPENING GROSS V ,086, ,174 1,757,522 Purchase Contribution Preparation Other growth 98,315 98,315 Total growth , ,475 Writing to 0 - Scrapping - Sale - Transfer into contribution in kind - Other disposal 363, ,662 Total disposal , ,662 CLOSING GROSS V , , ,492,335 Opening value package 136,060 94, ,949 Growth - 103,443 68, ,924 Disposal - 136, ,060 Closing value package , , ,813 OPENING NET V , , ,526,573 CLOSING NET V , , ,225,522 Depreciation rate according to the Accounting Policy; % Amortisation accounted for in the current year/ (Gross opening + closing value)/2; % Write-off pursuant to the Accounting Act: min/max year 14.29% 10% % 14.31% 9.51% min 6. min. 5 - max 10. none none max 5.

30 At the end of 2016, self-developed software products of HUF 98,315,000 were reclassified into intellectual property (see the comment at Section 3.8.1), moreover, new products were purchased for HUF 160,000. The other major element of intangible assets is goodwill. Due to the amendment to the Accounting Act on 1 January 2016, the goodwill value of subsidiaries had to be transferred to the line 'long-term participation in affiliated companies' in a value of HUF 363,662,000. FreeSoft goodwill: Pursuant to Sub-section (1) of Section 53 of the Accounting Act, unscheduled depreciation shall be accounted for if the book value of goodwill exceeds permanently and materially its market value (the amount determined as the expected return on investment) as a result of circumstances that influence expectations concerning future earnings. The HUF 722,686,000 goodwill of the merged FreeSoft Ltd. continues to be recognised among intangible assets in accordance with the Accounting Act. Based on our accounting policy, the Company writes off goodwill in 7 years starting from 1 January 2016 as a result of which HUF 103,443,000 amortisation was written off. The market value of the IT business connected with the goodwill was determined by the Company using the Discounted Cash Flow (DCF) model. Based on the market value so established, the goodwill value recognised at 31 December 2016 is appropriate, therefore no unscheduled depreciation had to be accounted for. No unscheduled depreciation was accounted for with respect to intangible assets.

31 3.7.2 Tangible assets Name of the Company: CHANGES IN THE STOCK OF TANGIBLE ASSETS WITH REGARD TO THE HUF 100,000 VALUE LIMIT 4iG Plc. 31 December 2016 in thousand HUF DESCRIPTION OPENING GROSS V. Investment project on TECHNICAL EQUIPMENT OTHER EQUIPMENT INCOMPLETE alien property INVESTMENT ASSETS Below HUF 100,000 Above HUF 100,000 Total Below HUF 100,000 Above HUF 100,000 4, , , , ,765 Total FIXED TOTAL Purchase Contribution Preparation Other growth Increase in the stock of unfinished investment (advance) Total growth Writing to 0 Scrapping Sale Transfer into contribution in kind Other disposal Decrease in the stock of unfinished investment (advance) Total disposal CLOSING GROSS V. 4, , ,204 2, , ,400 Opening value package , , , ,014 Growth ,420 36, ,263 Disposal Closing value package , , , ,277 OPENING NET V. 3, , , , ,751 CLOSING NET V. 3,698 83,241 83, ,184 88,123 Depreciation rate according to the Accounting Policy; % Amortisation accounted for in the current year/ (Gross opening + closing value)/2; % 100% 10% % 100% 33.33% 6.02% 14.65% 4.24%

32 With regard to tangible assets, no unscheduled depreciation/amortisation was accounted for in the reporting year. There was no ex-post modification of depreciation in the period under review. The profit/loss amount has not changed due to the changes in determining the depreciation of fixed assets of key importance Invested Financial Assets This line presents investments held by 4iG Plc in its three subsidiaries. Long-term investments in associated companies Investment value (thousand HUF) Rate of ownership in % HUMANsoft Ltd. 992, % Axis Rendszerház Ltd. 240, % BankSoft Ltd. 187, % Total: 1,420,877 At the end of the year, the result of the cash-flow based DCF test run on invested funds did not make it necessary to account for impairment with respect to invested funds valued at the historical cost. Due to the permanent and material decrease in market value, we have accounted for HUF 136,060,000 impairment in relation to 4iG Plc's participation in BankSoft Ltd. in In evaluating the HUF 187,940,000 participation in BankSoft Ltd., the following assumptions were made: In determining the independent business value of BankSoft Ltd., the Company's current business value calculated on the basis of the expected growth in sales revenues in view of its current market trends exceeded 4iG Plc's participation in BankSoft Ltd. at the end of As BankSoft Ltd. and Axis Rendszerház Ltd. are to be merged in the near future, the goodwill established by the analysis of the consolidated activities of the two companies was much higher than the consolidated amount of participation held by 4iG Plc in these companies which is estimated at HUF 428,860,000. In view of the above, the value of participations recognised in 4iG Plc's books is appropriate and no impairment had to be accounted for. 3.8 Current assets The closing value of the stock of current asset as of 31 December 2016 was HUF 762,704. The Company accounted for no impairment loss for its current assets in this year, and there was no need for revaluation Inventory The Company had no stocks at the end of Software products that had been recognised among stocks in the previous years were reclassified by the Company into investments because, due to the change in market conditions, there has been a change in the valuation of software products, and the Company expects them to return not by means of sale but by means of their continuous long-term use.

33 3.8.2 Receivables Out of the HUF 290,709,000 value of receivables, HUF 268,134,000 was due from buyers and there was no account receivable from affiliated companies. Receivables and liabilities of affiliated companies against one another as of 31 December 2016 were as follows: Assets and liabilities of 4iG Plc. and its subsidiaries as of 31 December 2016 (in thousand HUF) Accounts receivable management Accounts receivable 4iG Plc. HUMANsoft Ltd. Axis Rendszerház Ltd. BankSoft Ltd. Mensor3D Ltd. 4iG Plc HUMANsoft Ltd. 287,087, ,860 6,400,213 Axis Rendszerház Ltd. 9,527,540 14,496, ,000 - BankSoft Ltd Mensor3D Ltd Other receivables amounting to HUF 22,575,000 are detailed in the table below: Other receivables as of 31 December 2016 Amount (thousand HUF) Security deposit for rental fees 7,440 VAT receivable on continuous service 7,659 Overpayment of TAO advance payment 1,995 Innovation contribution 652 Overpayment of advance payment on local business tax 4,829 Total other receivables 22, Valuation of securities The HUF 300,500,000 stock of securities consists of OTC shares. In determining the market value of the share portfolio, we have taken into consideration the proportion of their shareholder's equity to their subscribed capital in the year 2015 as these papers are not traded on the open market. Since the proportion of the SE to the SC exceeded 100%, we did not see it necessary to account for impairment. In determining the market value of other participations, which are planned to be short-term investments, we applied the same procedure as for shares. No impairment seemed necessary in this case, either. On 31 December 2016, the Company held 45,950 pieces (2.44%) of treasury share, the purchase price of which was HUF 94,198,000, which means an average per-share price of HUF 2,050. The closing price for 4iG Plc's shares on was HUF 2,650, accordingly, it was not necessary to account for impairment. Treasury shares were purchased for reasons of acquisition Liquid Assets, Cash-Flow 4iG Plc s 2016 closing stock of cash amounted to HUF 4,297,000, of which HUF 551,000 was cash on hand and HUF 3,746,000 was held on bank account.

34 Item No. Name of item 31 December 2015 Modifications of the previous year(s) 31 December 2016 a b c d e I. Changes in cash flow from usual activity (operative cash flow, Rows , ,862 n.a. 13) 1 Profit before taxes (PBT) -257, ,216 n.a. 2 Amortization included + 247, ,186-16% 3 Impairment and reversal included ± 0 n.a. 4 Difference between created and used provisions ± 0 n.a. 5 Result of fixed asset sales ± 0 19,620 n.a. 6 Changes in supplier liabilities ± 23, ,426 n.a. 7 Changes in other short-term liabilities ± 254, ,219 n.a. 8 Changes of deferred income and accrued expenses ± -81,170-28,815 n.a. 9 Changes in accounts receivable from buyers ± 89, ,359 n.a. 10 Changes in current assets (without receivables and cash) ± -410, ,369 n.a. 11 ± changes of accrued income and prepaid expenses -28,728 24,705-14% 12 Paid and payable tax (after profit) - 0 1,739 n.a. 13 Paid and payable dividend and share - 188, ,406-2% II. Changes in cash flow from investments (investment cash flow, Rows 14-16) 95, ,890 n.a. 14 Purchase of fixed assets - 254,683-99,110-61% 15 Sale of fixed assets % 16 Dividends and share received + 350, ,000 0% Changes in cash flow from investments (financing cash flow, 253,078 8,304 n.a. Rows 17-27) 17 Income from issue of shares, capital raising + 0 n.a. 18 Income from issue of bonds and debt securities + 253,478 n.a. III. 19 Taking credit and loan ,782 n.a. 20 Repayment, termination and redemption of long-term loans and bank 0 n.a. deposits + 21 Permanent liquid assets received + 0 n.a. 22 Redemption of shares, withdrawal of capital (capital reduction) - 0 n.a. 23 Repayment of bonds and long-term debt securities ,478 n.a. 24 Redemption and repayment of credit and loan - 0 n.a. 25 Long-term loans and bank deposits - 0 n.a. 26 Permanent liquid assets spent n.a. 27 Changes in long-term liabilities towards founders and other similar ± 0

35 IV. Change of Cash (Lines ±I±II±III) ± -2,224-58,668 n.a. 3.9 Accrued Income and Prepaid Expenses At the end of the year HUF 1,271,000 of income for the year and HUF 2,752,000 of costs for 2017 had to be accrued Shareholders' equity The changes in Shareholders' Equity are presented in the table below. Statement of changes in equity for the year ending on 31 December 2016 Description Subscrib ed capital Capital reserves Nondistributa ble reserves Retained earnings Revaluatio n reserve Net Total Profit/Lo Shareholders' ss for the Equity Year Balance as at 31 December ,880,000 1,074, , ,759 3,203,901 Transfer of Net profit or loss of the previous 6,759-6,759 0 period External shareholders participations 0 Shares issued Derecognition of non-distributable reserves 0 Creating non-distributable reserves 0 Reserve from fair valuation difference 0 Retained earnings used for dividends -95,849-95,849 Net Profit/Loss for the year Balance as of 31 December ,880,000 1,074, , ,108,052 Transfer of net profit or loss of the previous period 95,849 Adjustment due to dividend 92,151 95,849 Balance as of 31 December 2015, according to the new rules. 1,880,000 1,074, , ,296,052 External shareholders participations Rounding difference Derecognition of non-distributable reserves 94,198-94,198 0 Creating non-distributable reserves 0 Reserve from fair valuation difference 0 Dividends paid -183, ,405 The year 2016 after-profit tax -285, ,956 Balance as of 31 December ,880,000 1,074,500 94,198 63, ,956 2,826,690 The Company purchased 45,950 pieces of treasury share in a total value of HUF 94,198,000 in Based on the relevant accounting rules, the amount equal to the value of treasury shares was carried over from retained earnings to tied-up reserves. On 2 November 2016, the Company paid a dividend of HUF 100 per share (except for treasury shares) Provisions The Company set aside no provisions Liabilities The closing amount of liabilities as at 31 December 2016 was HUF 620,693, Long-term Liabilities The Company had no long-term liabilities or liabilities maturing over five years in the reporting period Short-term Liabilities At the end of 2016, accounts payable to suppliers amounted to HUF 24,804,000 while accounts payable to affiliated companies were HUF 296,325,000 which were also related to supplies.

36 Of the HUF 37,782,000 of other short-term liabilities, HUF 6,496,000 represents wages payable in December 2016 and the remaining HUF 31,286,000 is tax debt due in January 2017, as follows: Amount (thousand Other receivables as of 31 December 2016 HUF) Dividend liabilities to shareholders Personal income tax liability Percentage of health contribution liabilities 1, VAT liabilities 25,321 Wage payment obligations 6,496 Payroll contribution liabilities 4,408 Total other liabilities 37, Secured Liabilities Of the current year's liabilities shown on the balance sheet, HUF 27,625,000 was the overdraft facility received from CIB Bank Plc and secured with pledge Deferred Income and Accrued Expenses The value of deferred income and accrued liabilities was HUF 53,865,000 of which HUF 6,710,000 is the amount of costs affecting 2016 but invoiced in The HUF 47,155,000 deferred income comprises government subsidies that can be accounted for in the following years. 4 Balance Sheet Total The Balance Sheet of 4iG Plc. as at 31 December 2016, shows a balance sheet total of HUF 3,501,248,000 on both the assets and liabilities side, which is 11% lower than the balance sheet total of 2015.

37 5 Income Statement and Notes Thereto Description 31 December December 2016 Change in % data in thousand HUF 1 Net domestic sales revenue 1,625, ,154-48% 2 Net export sales revenue 63, % I. Net sales revenues 1,688, ,154-50% II. Capitalized value of own performance - -10,924 n.a. III. Other revenues 73,801 20,290-73% 3 of which: impairment reversal Material costs 3,889 3,321-15% 4 Value of services used 147, ,096-22% 5 Value of other services 15,525 8,726-44% 6 Cost of goods sold 24, , % 7 Value of (intermediated) services sold 1,286, ,940-70% IV. Material type expenses ( ) 1,477, ,459-51% 8 Payroll expenses 210, ,396-41% 9 Other payments to personnel 9,409 3,172-66% 10 Payroll tax employer contributions 59,603 36,094-39% V. Personnel expenses ( ) 279, ,662-41% VI. Depreciation 111, ,186 87% VII. Other expenses 145,048 10,931-92% of which: impairment loss - - n.a. A. VIII. PROFIT / LOSS FROM NET OPERATING ACTIVITIES (I+II+III-IV- V-VI-VII) Revenues from financial transactions -251, ,718 n.a. 350,665 1, % IX. Expenses of financial transactions 7,256 40, % B. PROFIT / LOSS OF FINANCIAL TRANSACTIONS (VIII-IX) 343,409 39,499 n.a. C. PROFIT BEFORE TAXES (±C±D) 92, ,217 n.a. X. Tax liability - 1,739 n.a. D. PROFIT AFTER TAXES (±E-XII) 92, ,956 n.a.

38 5.1 Modifications for the Previous Years There were no modifications for the preceding year. 5.2 Incomparable Data Figures in the Income Statement of the Company are comparable. 5.3 Layout of the Income Statement, New Items in the Income Statement In the financial statements of the reporting year the Income Statement includes no new items apart from the layout specified. 5.4 Net sales revenues The Company realised sales revenues of HUF 848,154,000 in 2016, which is 48% lower than the corresponding figure of All of our sales revenues originated from the home country. 5.5 Sales revenues originating from affiliated companies The Company realised sales revenues of HUF 27,423,000 from its affiliated companies in Other revenues Out of other revenues of HUF 20,290,000, HUF 19,877,000 was government subsidy and HUF 413,000 was made up of minor items. 5.7 Material-type Expenses The composition of Material-type Expenses is presented in the table below: Description Change in % Material costs 3,889 3,321-15% Value of services used 147, ,096-22% Value of other services 15,525 8,726-44% Cost of goods sold 24, , % Value of (intermediated) services sold 1,286, ,940-70% Material type expenses 1,477, ,459-51% Material expenses decreased in proportion with the 50% decrease in sales revenues, the overall decrease was 51%. Main items of services used Advertising and promotion costs 44,954 Rent of properties 13,047 Book-keeping services 11,112 Lawyer's fees 9,240 Auditor's Fee 5,000 Other services 31,744 Total 115,097

39 5.8 Costs originating from affiliated companies Of material expenses, material services received from affiliated companies amounted to HUF 11,112,000, sub-contractors' fees were HUF 93,062,000 and HUF 204,199,000 was CoGS. 5.9 Personnel expenses In 2016 the Company had an average staff of 15 employees. After the conclusion of the R&D projects in 2015, the average headcount decreased by 7 as a result of which personnel-related expenses dropped by 41% Depreciation Recognised amortisation increased by HUF 98 million or by 87% due to the scheduled depreciation of goodwill R&D costs HUF 40,326,000 depreciation was accounted for the R&D project GOP in Other expenses The HUF 10,931,000 miscellaneous expenses consisted of HUF 2,500,000 foundation sponsorship, HUF 5,070,000 local business tax, HUF 3,306,000 irrecoverable debts and HUF 55,000 miscellaneous items Profit / Loss from Net Operating Activities Mainly as a result of the decreased sales revenues and increased amortisation costs, the Company's operating (business) profit did not improve considerably, the operating loss decreased by HUF 6.5 million as compared to The net operating result was a loss of HUF 244,718, Profit / Loss on Financial Transactions The Company's profitability could not be raised by the subsidiary dividends to the positive domain due to the changes in legislation in Starting from 2016, subsidiary dividends may be accounted for in the financial results only in that year in which the decision is made on the dividend concerned. The Company's balance of financial transactions was HUF 39,499,000 loss in Profit before taxes (PBT) Due to the missing subsidiary dividends, the pre-tax profit shows a loss of HUF 284,217,000 despite the insignificant improvement of the operating profit Corporate Tax The corporate tax was calculated according to the minimum tax rules in Its calculation is as follows:

40 Calculation of the minimum tax for 4iG Plc for the year Description Section Current period data Net sales revenues Sections Act C of ,154 Revenue Other revenues Income from financial transactions Section 77 Act C of 2000 Section 84 Act C of ,290 1,185 Extraordinary income Sub-sections (2)-(5) of Section 86 Act C of 2000 Total revenues: Sub-section (29) Section 4 869,629 Profit before taxes (PBT) Corporate tax base Tax base according to minimum income (profit) (2% of the adjusted sales revenues) Sections of Act XC of 2010 do not provide for the proportional division of the tax base of the minimum income (profit) Sub-section (5) Section 6 Sub-section (1) Section 6 Sub-section (7) Section 6 284,217-17,393 Part of minimum taxable base taxed with 10% 17,393 Part of minimum taxable base taxed with 19% - Tax liability (based on minimum earnings-(profit)) 1, Loss Carry Forward 4iG Plc accrued a deferred tax base of HUF 428,451,000 for the year 2016 which can be used in the following years.

41 Figures rounded to thousand HUF Description 2016 Profit before taxes (PBT) - 284,217 Items modifying the tax base 1 Use of loss deferred from previous years - - Accounted for pursuant to the Accounting Act: - depreciation according plan + 209,186 - depreciation beyond the plan + - Pursuant to the Tax Act: - amortisation accounted for the tax year - 353,226 Costs and expenditures incurred for a purpose other than for the company Other items increasing the tax base + - Other items decreasing the tax base Total items increasing the tax base 209,492 Total items decreasing the tax base 353,726 Profit or loss forming the basis of taxation (tax base) - 428,451 The Company had a combined enforceable deferred loss of HUF 746,370,000 which can be carried over, including the year 2015 deferred and unused tax base (HUF 317,919,000) Profit / Loss after Tax The 2016 after-tax profit of 4iG Plc: HUF 285,956,000 loss. There is no proposal for dividend payment

42 6 Informative Data 6.1 Financial Indicators Ratios on the financial, operational position of the Company are presented in the table below: Name of indicator 31 December December 2016 Liquidity ratios Liquidity ratio Quick liquidity ratio Dynamic liquidity ratio Rotation speed (rpm) of the net working capital Net operating capital Debt ratio and Creditworthiness 431,834 92,169 Share of shareholders equity to assets 84% 81% Ratio of foreign capital to shareholders equity 16% 22% Ratio of long-term liabilities to permanent assets 0% 0% Long-term dynamic liquidity ratio 0% 0% Interest coverage indicator 2,494% -7,676% Name of indicator 31 December December 2016 Profitability ratios Return on assets (ROA) ratio in % 2.47% -7.71% Return on sales (ROS) ratio in % 5.46% % Rotation speed of assets (round) Rotation speed of customers (round) Average customer collection time (day) Rotation speed of stocks (round) Average stock storage time (day) Return indicator of fixed assets (round) 12 8 Ratio of personnel expenses compared to added value in % Ratio of return on ordinary share capital interest in % 74% 64% 4.90% % Value added (thousand HUF) 377, ,838 Market rates Profit on ordinary share unit (EUR/unit) Ratio of exchange rate/result (P/E) Value according to the market rate/book (ST) in % 124% 176% Earnings per share (EPS) Diluted EPS index Share price 31 December (HUF/unit) 2,050 2,650

43 6.2 Wages and Number of Employees Stock group Payroll expenses (thousand HUF) Other personnel payments (thousand HUF) Average number of employees (headcount) Full-time employees 110, Part-time employees Honorarium of elected officials 11,555 Contract of engagement 890 Premium, bonus 1,340 Travel contributions 280 Sick leave charged to the company 534 Sick pay contributions 177 Representation 976 Other personnel payments 91 Taxable in-kind benefit 563 Taxes on benefits 551 Total 124,396 3, Payroll tax employer contributions thhuf Social contribution tax 33,241 Special training contribution 1,860 EHO (Healthcare contribution) 993 SZJA (Personal Income Tax) 551 Total 36, R&D Activity The Company did not participate in any R&D development projects in the reporting year. In connection with the GOP project concluded in 2015, there has been depreciation write-off in the amount of HUF 40,326, Environmental Protection The Company concludes contracts for the handling and destruction of hazardous waste with specialist companies. There is an insignificant quantity of harmful substances in view to the nature of the operations.

44 6.5 Other Services Provided by the Auditor The auditor of the Company provided no other services apart from the audit. The year 2016 audit fee was HUF 5,000,000 which includes the individual audit of 4iG Plc as well as the audit of the IFRS consolidated financial statements. 6.6 Further Information Guaranteeing a Reliable and True View, Off-balance Sheet Items 4iG Plc. assumed absolute guarantee for its two subsidiaries in the context of the loan agreement with CIB Bank Zrt. (in the value of HUF 250 million in the case of Axis Rendszerház Ltd. and HUF 15 million in the case of BankSoft Ltd.). On 24 October 2016, the Company concluded a securities loan contract with Concorde Fund Management Ltd. under which it borrowed 15,100 pieces of D securities for a term ending on 8 September 2017 with an interest rate of 0.9% and broker's commission of 0.9%. As of the balance sheet date there were no financial liabilities not appearing in the balance sheet which are considered to be of material importance in terms of evaluating the financial position. Other material items that do not appear in the balance sheet do not need to be presented. 7 Key Changes after the Balance Sheet Date of the Financial Statements 4iG Plc. hereby notifies the participants of the money and capital market that it has concluded a share option contract on 18 January 2017 in Budapest for the buying of 30,000 pc. (that is thirty pieces) of registered 4IG dematerialised common share with a nominal value of HUF 1, (that is one thousand forints) each, with the ISIN code HU According to the contract, the option holder 4iG Plc. may exercise the buying option until 29 October 2017 at a buying price of HUF 2, per share. Member of the Board of Directors Mr. István Fehér (mother s name: Erzsébet Klára Nagy, resident at H-8600 Siófok, Erkel F. street 101.) purchased 1,861 pieces of ordinary share with a nominal value of HUF 1,000 each in a stock-exchange transaction on 18 January 2017 with the mediation of MKB Bank Plc. at an average price of HUF 2,783/pc. As a result of the sale and purchase transaction, Mr. István Fehér s shares in the Company have increased from 15.24% (286,496 pieces of common share) to 15.34% (288,357 pieces of common share), the voting threshold value has not been exceeded. 8 Disclaimer I take full responsibility for the numerical figures and the true content of analyses and conclusions included in present 2016 "Annual Financial Statements". The "Annual Financial Statements" contain figures and statements that are true, not withholding any facts considered to be of material importance in terms of evaluating the Company s position. Budapest, 6 April 2017 Dr. Gábor Felső chairperson of the Board of Directors

45 BUSINESS REPORT of 4iG Plc on the financial year ended on 31 December April iG Plc. H-1037 Budapest, Montevideo Street 8. Phone: Fax:

46 CONTENTS 2 Key Business Events of General Meetings General Information Analysis of the Company's Economic Activities Plans for R&D Activity Environmental Protection Material Changes Occurring after the Balance Sheet Date Risks Responsibility for the 2016 Annual Financial Statements... 65

47 1 Summary Most of the orders of 4iG Plc come from state institutions and state-owned companies, and EU subsidies play an important role in those orders. The new subsidy cycle started very slowly, the first tenders were announced only towards the end of the year, therefore subsidy-based orders were almost completely missing in The impact of this is reflected in the year 2016 sales revenues. Net sales revenues dropped by 50% compared to the previous year but still exceeded the year 2014 sales revenues by 22%. It is very important that the Company mobilise all of its resources, including the recruitment of new experts, in order to win EU projects and find new market opportunities in Due to the completion of R&D projects and declining sales revenues in 2015, 4iG Plc's average staff decreased by 7 to 15 people. The Company's management believes that staff expansion will be a key issue in 2017 in order to keep sales revenues and the profit margin on a sustainable growth path. In the course of the past years in order to support its future results, the Company has allocated more than HUF 100 million for research and development activities, and wishes to allocate more resources in the future as well. For this activity, the Company received considerable amounts of government grants through tenders; however, the average intensity of subsidies was around 50%, and half of the development costs are charged to the profit. Depreciation related to R&D projects completed in 2015 charged the year 2016 earnings by HUF 40 million. Our investments spent on development are expected to be recovered and accrue interest in the 2017 business year and in subsequent years. In December 2016, 4iG Plc won an R&D tender as part of a consortium. In the next three years the Company plans to spend HUF 551 million on examining and identifying the driver genes that are responsible for the development of cancerous tumours, and on developing combined precision treatment methods to treat them. The intensity of subsidy is 63.33%. The Company has spent over HUF 200 million from its own resources on development projects. According to the amendment of the Accounting Act effective from 1 January 2016, amortisation shall be accounted for with respect to goodwill starting from this year. This amortisation charged the earnings by HUF million annually. According to the amendment of the Accounting Act, dividends to subsidiaries shall be recognised at financial income at the date on which the decision on dividend payment is made. The year 2015 dividend was recognised in the year 2015 income statement while the year 2016 dividend will only increase the year 2017 earnings. Due to the above charges and the loss of dividend, the year 2016 after-tax profit shows a loss of HUF 285,956, Key Business Events of Shareholder Béla Zsolt Tóth's acquisition of share exceeding 5% Member of the Board Béla Zsolt Tóth purchased 34,000 pieces of ordinary share issued by the Company with a nominal value of HUF 1,000 each in a stock-exchange transaction on 25 January 2016 with the mediation of Equilor Investment Ltd. at an average price of HUF 2,050/pc. As a result of the sale and purchase transaction, the proportion of Béla Zsolt Tóth's direct and indirect voting rights of in the Company has increased from 3.76% (70,766 pieces of common share, 3.76% shareholding) to 5.57% (104,766 pieces of common share, 5.57% shareholding), by which he exceeded the voting threshold value of 5%. 2.2 Acquisition of shares exceeding 15% by owner István Fehér István Fehér, Member of the Board of Directors, purchased 21,261 pieces of 4iG ordinary share on 29 July As a result of the purchase, the number of ordinary shares held by István

48 Fehér, Member of the Board of Directors increased to 285,545 (15.29% interest). As a result of several changes, he owns 288,357 shares, or 15.34%, at the reporting date. 2.3 Change of Personnel in the Management of 4iG Plc. During 2016, there were changes with regard to elected officers on 18 January 2016 based on the resolutions of the General Meeting held on Details on the elected officers are included in the Supplementary Notes. 2.4 Capital increase at the Group's subsidiary On 19 February 2016 HUMANsoft Ltd. increased the capital of its fully owned subsidiary, Mensor3D Ltd. (Company registration no.: ), by a HUF 90 million in-kind contribution of software to HUF 171 million. 2.5 Disposal of 4iG-IBA Lft., a 100% subsidiary of the Company On 15 June 2016, the Company sold 100% of the shares of its consolidated subsidiary, 4iG-IBA Ltd. (seat: 1037 Budapest, Montevideo s. 8.; Reg. no ). 4iG-IBA Ltd. was acquired by the Company in 2012 for a specific project but eventually the project was not implemented through this company and it did not have any sales revenues. That is why management decided to sell it. 2.6 Purchase of own shares The General Meeting by its resolution no. 25/2016. (04.29.) authorized the Board of Directors to purchase up to 470,000 pieces of the Company's own series "A" dematerialised shares, with a nominal value of HUF each, primarily on the stock exchange at a price no less than HUF 1,000 and no more than HUF 5,000. The authorisation is also provided in Section of the Articles of Association. The Board of Directors used this authorisation in two cases: - Based on resolution 9/2016. (6.09.), 40,556 pieces of type "A" dematerialised common share were purchased by the Company in order to meet its acquisition target at a sales auction announced by EQUILOR Investment Ltd. for 30 June 2016, at the purchase price of HUF 2,030 per share (HUF 82,328,680 in total); and the relevant extraordinary notice has been available on the Company's website since 30 June 2016; and further - Based on resolution 1/2016. (7.07.), 5,394 pieces of type "A" dematerialised common share were purchased by the Company on 7 July 2016 in order to meet its acquisition target on the stock exchange in cooperation with EQUILOR Investment Ltd. at the purchase price of HUF 2,201 per share (HUF 11,872,194 in total); and the relevant extraordinary notice has been available on the Company's website since 7 July The Company has no treasury shares other than the shares acquired in these two transactions, therefore the total number of treasury shares is 45,950 pieces (with a total nominal value of HUF 45,950,000.00), which represent 2.44% of the Company's share capital based on the nominal value of the shares. 2.7 Resignation of the CEO Chief Executive Officer of 4iG Plc., Mr. Viktor Sagyibó resigned from his office as CEO due to an unforeseen personal reason with effect from 3 August 2016.

49 2.8 Winning R&D Tender 4iG Plc. was announced by the National Research, Development and Innovation Office as winner of the R&D tender titled NATIONAL INNOVATION ONCOGENOMICS AND PRECISION ONCOTHERAPY PROGRAM which will be implemented by a consortium of the Joined St. Stephan and St. Ladislaus Hospital-Clinic, the National Institute of Oncology, Oncompass Medicine Hungary Ltd. and 4iG Plc. The objective of the project is to examine and identify the driver genes that are responsible for the development of cancerous tumours, and to design software products relating to the development of combined precision treatment methods to treat them. In the 3-year project, 4iG Plc. will be in charge of performing BigData analyses using the most advanced information technology solutions, by which we will classify tumours in a new manner based on molecular genetic abnormalities, identify individual genetic abnormalities and create a research database combined with the clinical testing data of patients. The project s total budget is HUF 3.5 billion. 3 General Meetings 3.1 Ordinary Annual General Meeting The General Meeting accepted the Reports of the Board of Directors and the Supervisory Board and the Auditor Report, furthermore the annual balance sheet and profit and loss statement of 4iG Plc. for 2015, prepared according to Hungarian Accounting Standards and the consolidated financial statement for 2015, prepared according to IAS-IFRS standards. According to the decision of the General Meeting, a dividend of HUF 100 per share was disbursed for the year The Company disclosed minutes of the General Meeting on the same day. With effect from 29 April 2016, the General Meeting elected Mr. Attila Zoltán Merényi (born: Attila Zoltán Merényi, Budapest, 26 June 1979; mother's name: Margit Balogh; home address: 2045 Törökbálint, Balassi Bálint Street 18. Building 2.) to be member of the Board of Directors of 4iG Plc for a definite period ending on 27 October Pursuant to General Meeting Resolutions no. 37/2014 (10.27) and no. 18/2015 (10.15.), the General Meeting determines the honorarium of Board member Attila Zoltán Merényi at HUF 175,000 per month. Board member Attila Zoltán Merényi shall have a joint right to represent (sign on behalf of) the Company. Attila Zoltán Merényi has given up his honorarium. The General Meeting acting within its competence set out in paragraph (1) Section 3:223 of Act V of 2013 on the Civil Code and paragraph s) of the Company s Articles of Association authorizes the Board of Directors of 4iG Plc. to buy treasury shares within a fixed period ending on 29 October 2017 on the same terms as set out in paragraph of the Articles of Association. Accordingly, with effect from 29 April 2016, paragraph of the Articles of Association shall be amended as follows: Under a maximum 18 months long authorisation by the General Meeting, the Board of Directors is authorised to purchase the own shares of the Company, respecting the limitations in the CC, under the condition that the purchase of own shares is to have acquisition purposes or is to secure the executive and employee incentive schemes and a coverage thereto. The General Meeting of the Company held on 29 April 2016 authorised the Board of Directors for 18 months after the General Meeting resolution, i.e. for the period lasting until 29 October 2017, to purchase a maximum amount of 470,000 pieces from the dematerialised shares of series A having a nominal value of HUF 1,000 each. The purchase shall be made primarily on the Stock Exchange, at a market price not less than HUF 1,000 and no more than HUF 5,000. The Board of Directors shall only purchase

50 treasury shares under an OTC transaction if the price is at least 20% lower than the current stock market price. The General Meeting adopts the amended and consolidated Articles of Association of 4iG Plc, acting within its competence set out in paragraph a), as proposed, with effect from 29 April Extraordinary General Meeting The Company held an extraordinary general meeting on 18 January 2016, with minutes thereof disclosed on the same day. The General Meeting had to be convened due to the resignation of Dr. Dániel Pongor, member of the Supervisory Board and the Audit Committee. In place of the resigned officer, the General Meeting has appointed Dr. Judit Bakó for a fixed period until 27 October The General Meeting appointed INTERAUDITOR Neuner, Henzl, Honti Consultant Ltd. (reg. no.: ) to be 4iG Plc's auditors for a fixed term ending on 30 April Extraordinary General Meeting The Company held an Extraordinary General Meeting on 19 July 2016, with minutes thereof disclosed on the same day. The General Meeting elects Mr. Viktor Sagyibó the chief executive officer of 4iG Plc. entitled to independently sign on behalf of the company for an indefinite term starting on 19 July The employer's rights over the Chief Executive Officer shall be exercised by the Board of Directors. The General Meeting fixes the CEO's gross monthly remuneration at HUF 2,000,000. The General Meeting authorises the Board of Directors to prepare and execute the employment contract to be made with the CEO.

51 4 General Information The name of the Company: Legal form of the company: 4iG Public Limited Company (previously FreeSoft Plc.; previously Fríz 68 Szolgáltató és Kereskedelmi Inc.) Public Limited Company Registered office: H-1037 Budapest, Montevideo Street 8. Branches: H-8000 Székesfehérvár, Seregélyesi Road 96. Company registration number: Tax number: H-8230 Balatonfüred, Fürdő Street 17/B. Statistical registration code: Share capital: HUF 1,880,000,000 Date founded: 8 January 1995 Date of transformation: 2 April 2004 Date of admission to the stock exchange: 22 September Information on shares Type of shares: Nominal value of shares: Number of shares: registered dematerialized ordinary shares HUF 1,000/unit 1,880,000 unit ISIN code of shares: HU Share class: "A Serial number of shares: Share price (31 December 2014): HUF 2,650/unit Other information concerning shares: All shares carry the same rights and each share shall have 1 vote. Shares are listed in the STANDARD category of the Budapest Stock Exchange. The sale and purchase of shares is unrestricted and there are no rights of pre-emption. However, the ownership of shares shall only be transferred by debiting and crediting the securities account. In case of transfer of shares, shareholder may exercise his or her shareholder rights against the Company only if the name of the new holder has been registered in the share register. The Company's share register is kept by KELER Ltd. No special control rights are stipulated We are not aware of any shareholders' agreement related to rights of control. There is no employee share ownership plan in place at the Company. Voting rights are not restricted; only repurchased treasury shares do not carry voting rights. There were 45,950 pieces of repurchased treasury share on 31 December Minority rights: Shareholders representing at least 1% of the votes are entitled to request convening the Company's General Meeting any time indicating the reason and the purpose. The elected officials are appointed by the General Meeting by simple majority according to the Articles of Association.

52 The chief executive officer performs the operative management of the Company. The General Meeting makes the resolution on any share capital increase based on the proposal of the Board of Directors. Resolution of the General Meeting is not required only if and when the increase of the share capital is carried out within the powers of the Board of Directors under authorisation by the Articles of Association. At the time of making the Business Report, the Board of Directors is not authorised to issue new shares. The General Meeting of the Company held on 29 April 2016 authorised the Board of Directors for 18 months after the General Meeting resolution, i.e. for the period lasting until 29 October 2017, to purchase a maximum amount of 470,000 pieces from the dematerialised shares of series A having a nominal value of HUF 1,000 each. The purchase shall be made primarily on the Stock Exchange, at a market price not less than HUF 1,000 and no more than HUF 5,000. The Board of Directors shall only purchase own shares under an OTC contract if the price is at least 20% lower than the current stock market price. There is no agreement which would enter into force or be modified or terminated after a public buying bid due to the change in the control of the business, or the impact of such events, except where the disclosure of this information would seriously harm the entrepreneur's rightful business interests, unless such information must be disclosed pursuant to another law. There is no agreement made between the Company and its executive officer or employee which provides for indemnification in case the executive officer resigns or the employee terminates their employment, or if the executive officer's or the employee's employment is terminated unlawfully or if such employment is terminated due to a public buying bid. 4iG Plc. has a Corporate Governance Report and Declaration and reviews its corporate governance system annually and, if necessary, amends it. The changes are approved by the Ordinary Annual General Meeting, and following the General Meeting a "Corporate Governance Declaration" is disclosed. We are not aware of any investor who has material direct or indirect participation in the shareholder's equity of 4iG Plc. The Corporate Governance Report and Declaration is available at the websites of and as well as at The Company prepares its governance report and declaration based on the Responsible Corporate Governance Recommendations published by the Budapest Stock Exchange Ltd. The Company applies the statutory rules of corporate governance. The Corporate Governance Report and Declaration is adopted by the Board of Directors based on the proposal by the Supervisory Board and it is finally approved by the General Meeting. The Corporate Governance Report and Declaration contains the BSE recommendations and the justification of any practices that deviate therefrom. The Corporate Governance Report and Declaration contains the justification of any practices that deviate from those prescribed by the applicable laws and regulations. In preparing the business report, the Board of Directors is in charge of the Company's operative management and the Board is represented by the President of the Board vis-à-vis third parties. The CEO position defined in the Articles of Association and in the Corporate Governance Report and Declaration is currently not filled, no CEO has been appointed. The Company's internal audit is ensured by in-process controls and continuous controlling. Management meetings are held on a weekly basis in order to address any risks that may arise.

53 4.2 Composition of the subscribed capital The registered capital of the Company is HUF 1,880,000,000.00, that is one billion eight hundred and eighty million Hungarian forints, out of which HUF 555,000,000, that is five hundred and fifty-five million Hungarian forints, is cash, while HUF 1,325,000,000, that is one billion three hundred and twenty-five million Hungarian forints, is non-cash contribution. 4.3 Rules on Appointing and Dismissing Senior Executives The Company's executive officers are elected and removed by the General Meeting. 4.4 Powers of the Executive Officers The Company's executive officers are not entitled either to issue or purchase shares. The General Meeting may authorise the Board of Directors on a case-by-case basis to issue or repurchase treasury shares (see: Section 4.1). 4.5 Executive Officers Board of Directors: Dr. Gábor Felső - President of the Board of Directors Judit Hegedűs - Member of the Board of Directors Béla Zsolt Tóth - Member of the Board of Directors István Fehér - Member of the Board of Directors Dr. Zsolt Kovács - Member of the Board of Directors Attila Zoltán Merényi - Member of the Board of Directors (since 29 April 2016) Supervisory Board Dr. Csaba Kerekes - Chairperson of the SB Ágnes Rátkainé Fehér - Member of the SB Dr. Júlia Kishegyi - Member of the SB Dr. Ildikó Andriskáné Ernöházai - Member of the SB Dr. Judit Bakó Member of the SB (since ) Dr. Dániel Gábor Pongor - Member of the SB (until 18 January 2016) Audit Committee: Dr. Csaba Kerekes - Chairperson of the AC Dr. Júlia Kishegyi - Member of the SB Dr. Judit Bakó Member of the SB (since ) Dr. Dániel Gábor Pongor - Member of the SB (until 18 January 2016) 4.6 Remuneration of officers Remuneration of the Members of the Board of Directors, Supervisory Board and Audit Committee in this period has been determined as follows. The General Meeting decided by Resolution no. 37./2014 (10.27) that each Member of the Board of Directors shall receive a HUF 175,000/month honorarium, while the President of the Board is entitled to receive a honorarium of HUF 200,000/month. Members of the Board of Directors employed by 4iG Plc. or any of its subsidiaries (Dr. Gábor Felső, Judit Hegedűs, István Fehér, Béla Tóth, Attila Zoltán Merényi) renounced their honorariums.

54 The General Meeting decided by its Resolution no. 42./2014 (10.27) that each Member of the Supervisory Board shall receive a honorarium of HUF 155,000/month, while the President of the Supervisory Board is entitled to HUF 175,000/month. Members of the Audit Committee shall not receive remuneration for their work in the Audit Committee. Name Company Function Wage Honorarium Dr. Gábor Felső Judit Hegedűs István Fehér Attila Zoltán Merényi Béla Zsolt Tóth Dr. Zsolt Kovács Dr. Csaba Kerekes Dr. Ildikó Andriskáné Ernőházai Dr. Judit Bakó Dr. Júlia Kishegyi Dr. Dániel Gábor Pongor Ágnes Rátkainé Fehér 4iG 4iG HUMANsoft 4iG 4iG Axis Rendszerház BankSoft Ltd. HUMANsoft 4iG Chairperson of the Board of Directors Member of the Board of Directors Managing Director Member of the Board of Directors Member of the Board of Directors Managing Director Managing Director Managing Director Member of the Board of Directors Commission fee Other benefits Total 18,000, ,000 18,800,000 6,500,000 6,500,000 14,018, ,200 14,217,531 2,160,000 2,160, , ,524 7,440,000 7,440,000 4,440,000 4,440, , ,524 5,000,000 5,000,000 HUMANsoft Director 15,400, ,240 15,712,240 4iG 4iG 4iG 4iG 4iG 4iG 4iG Member of the Board of Directors Chairman of the SB and the AC Member of the SB Member of the SB and the AC Member of the SB and the AC Member of the SB and the AC Member of the SB 2,100,000 2,100,000 2,100,000 2,100,000 1,860,000 1,860,000 1,775,000 1,775,000 1,860,000 1,860,000 90,000 90,000 1,860,000 1,860,000 Total 73,267,855 11,954, , ,440 86,533,819

55 4.7 Shares held by officers on 31 December 2016 Name István Fehér Béla Zsolt Tóth Senior officer Function Member of the Board of Directors Member of the Board of Directors Number of shares as at 31 December 2016 Ownership rate (%) Direct ownership Indirect ownership Direct and Indirect Direct and indirect 286, , % 69,244 35, , % Tamás Kornél Koppány Deputy CEO, Economy ,522 36, % 4.8 The diversity policy of the Company's management The diversity policy applied at the Company's management and supervisory bodies is reflected in the composition of the managing bodies. There are 5 female and 5 male executive officers. Members of the Supervisory Board and of the Audit Committee as well as 2 members of the Board of Directors are independent from the Group. 4.9 Amendments to the Articles of Association: The Articles of Association may be amended exclusively by the General Meeting Authorized Signatories of the Report According to the resolutions of the Extraordinary General Meeting of the Company held on 21 January 2013, the Report may be signed by Dr. Gábor Felső, President of the Board of Directors independently, or by any two Members of the Board of Directors together Main Shareholders of the Company 31 December 2016 István Fehér 15.24% Dr. Gábor Móricz 13.03% KAPTÁR Investment Plc. 6.50% Béla Zsolt Tóth* 5.71% HS Board Ltd. 5.67% Free float* 53.85% Total % *Béla Zsolt Tóth has a total share package of 107,266 pieces, of which 35,522 pieces (1.89%) are owned indirectly through HS Board Ltd. which must be excluded with respect to free float (it has been added).

56 4.12 Information on Sites and Branches The Company has two branch offices: H-8000 Székesfehérvár, Seregélyesi ST 96.) where it pursues development activities related to the successful bid under the GOP Economic Development Operational Programme and new R&D projects are also expected to start here. and H-8230 Balatonfüred, Fürdő ST 17/B., the site of joint R&D developments with other companies Affiliated companies Name Address Ownership rate HUMANsoft Ltd. Axis Rendszerház Ltd. BankSoft Ltd. Subsidiary of HUMANsoft: Mensor3D Ltd. H-1037 Budapest, Montevideo Street 8. H-1037 Budapest, Montevideo Street 8. H-1037 Budapest, Montevideo Street 8. H-6782 Mórahalom, Röszkei Road 43. Company registration number % % % % Analysis of the Company's Economic Activities This section of the report provides an analysis of the 2016 results of the undertaking as compared to its performance in the preceding year and to the plan.

57 5.1 Economic Result of the Reporting Year data in thousand HUF Name of item 31 December December 2016 Change in % 1 Net domestic sales revenue 1,625, ,154-48% 2 Net export sales revenue 63, % I. Net sales revenues 1,688, ,154-50% II. Capitalised value of own performance - 10,924 n.a. III. Other revenues 73,801 20,290-73% 3 of which: impairment reversal Material costs 3,889 3,321-15% 4 Value of services used 147, ,096-22% 5 Value of other services 15,525 8,726-44% 6 Cost of goods sold 24, , % 7 IV. Value of (intermediated) services sold Material type expenses ( ) 1,286, ,940-70% 1,477, ,459-51% 8 Payroll expenses 210, ,396-41% 9 Other payments to personnel 9,409 3,172-66% 10 V. Payroll tax employer contributions Personnel expenses ( ) 59,603 36,094-39% 279, ,662-41% VI. Depreciation 111, ,186 87% VII. Other expenses 145,048 10,931-92% of which: impairment loss - - n.a. A. VIII. IX. B. C. PROFIT / LOSS FROM NET OPERATING ACTIVITIES (I+II+III-IV-V-VI-VII) Incomes from financial transactions Expenses of financial transactions PROFIT / LOSS OF FINANCIAL TRANSACTIONS (VIII-IX) PROFIT BEFORE TAXES (±C±D) -251, ,718 n.a. 350,665 1, % 7,256 40, % 343,409 39,499 n.a. 92, ,217 n.a. X. Tax liability - 1,739 n.a. D. PROFIT AFTER TAXES (±E- XII) 92, ,956 n.a.

58 The Company's sales revenues in 2016 were 50% lower than in the preceding year. Orders were performed by 4iG Plc primarily using its internal resources, and the Company managed to cut its external resources (CoGS and subcontractors) by 55%. The decrease of 7 persons of the average staff resulted in 41% lower staff-related expenses. Even though the HUF 40 million depreciation of R&D activities in the previous years and the depreciation of HUF million connected with goodwill due to the amendment of the Accounting Act in 2016 was charged on the year 2016, still the operating profit has improved by HUF 6.5 million in The loss on financial transactions consisted of exchange rate loss relating to two financial instruments. The disposal of 4iG-IBA Ltd. caused a loss of HUF 17.6 million. The disposal of shares held as short-term financial investments generated a loss of HUF 18.8 million Results as compared to the plan In comparison to the sales revenues of the preceding year, the budgeted figure for 2016 showed a significant decrease of 32% (HUF 1,151,712,000) in view of the expected recession of EU projects. Despite that, the sales target could not be achieved due to the complete halt of EU projects; the actual figure is 26% behind the plan. The decrease is 50% as compared to the sales revenue figure of the preceding year. The Company could not meet its EBITDA target, generating an EBITDA loss of HUF 35.5 million. Operating activities showed a loss of HUF 245 million with HUF 286 million loss after taxes. Fulfilment of the 2016 annual plan of 4iG Plc. Plan (thousand HUF) Fact (thousand HUF) Net turnover 1,151, ,154 Operating profit 4, ,718 Profit/Loss after tax 3, ,956 EBITDA 120,481-35,532 The profitability indices deteriorated due to the factors described in the introduction and in the previous section. 5.2 Financial Indicators Key financial-efficiency ratios of the Company in 2015 and 2016 are included in the table below. In order to ensure comparability, the basic indices of the year 2015 had to be re-calculated due to the movements between balance sheet lines in accordance with the amendments to the Accounting Act.

59 Name of indicator 31 December December 2016 Liquidity ratios Liquidity ratio Quick liquidity ratio Dynamic liquidity ratio Rotation speed (rpm) of the net working capital Net operating capital 431,834 92,169 Debt ratio and Creditworthiness Share of shareholders equity to assets 84% 81% Ratio of foreign capital to shareholders equity 16% 22% Ratio of long-term liabilities to permanent assets 0% 0% Long-term dynamic liquidity ratio 0% 0% Interest coverage indicator 2,494% -7,676% Liquidity Liquidity ratios show well that the Company met its short-term liabilities, was provided with sufficient cash to meet its liabilities within the stipulated payment deadlines. The Company could maintain its solvency despite the fact that it did not meet earnings expectations. The ratios show a negative shift as compared to the figures of the preceding year Debt ratio and Creditworthiness As a result of the above, these ratios also showed a shift, lagging behind their base values; the ratio of shareholders' equity to liabilities dropped to 81%, while the role of foreign capital in financing increased from 16% to 22% Efficiency Ratios Due to the loss-making operations and regarding that dividend income cannot be accounted for as financial income in 2016, the ROA and ROS indices showed a negative value while most of the other indices have also deteriorated. The collection period of receivables outstanding changed from 34 days to 82 days. There was a positive change with regard to inventory turnover, increasing from a turnover of to Due to the loss, all profit indices show a negative value.

60 Name of indicator 31 December December 2016 Profitability ratios Return on assets (ROA) ratio in % 2.47% -7.71% Return on sales (ROS) ratio in % 5.46% % Rotation speed of assets (round) Rotation speed of customers (round) Average customer collection time (day) Rotation speed of stocks (round) Average stock storage time (day) Return indicator of fixed assets (round) Ratio of personnel expenses compared to added value in % % 64% Ratio of return on ordinary share capital interest in % 4.90% % Value added (thousand HUF) 377, ,838 Market rates Profit on ordinary share unit (EUR/unit) Ratio of exchange rate/result (P/E) Value according to the market rate/book (ST) in % 124% 176% Earnings per share (EPS) Diluted EPS index Share price 31 December (HUF/unit) 2,050 2, Development of Business Relationships (Customers and Suppliers) Business relationships of the Company are stable; however, the acquisition of new markets is of high priority in the course of The chart below presents the split of sales revenues in 2016 by market segment:

61 Sales revenues by market segment 3% 1% Competitive sector State administration State-owned company Affiliated company Local government Composition of sales revenues in the year 2015 by segment: 4iG Sales revenues by sector State administration State-owned company Export Affiliated Service Local government State administration and state-owned companies generated 92% of the sales revenues: HUF million originated from this sector in In 2016, sales revenues from the state administration and state-owned companies amounted to HUF 414 million or 49%. At the same time, sales revenues from the competitive sector increased from HUF 30 million (1.8%) to HUF 403 million or 47%. The Company has successfully achieved its aim to free itself from its dependence on government orders