IAlbatros : Change of the Issuer’s strategy

Current report No 106/2016 Date of preparation: 2016-11-18

Abbreviated name of the Issuer: iALBATROS GROUP SA Subject: Change of the Issuer's strategy

Legal basis:

Article 17(1) MAR - confidential information Report content:

The Management Board of iAlbatros Group S.A. with its registered office in Warsaw ('Issuer') notifies of introduction of a significant modification to its business strategy for the years 2017- 2019, of its intention to sell up to 100% of shares of its indirect subsidiary, i.e. iAlbatros Poland

1. A. with its registered office in Warsaw (formerly 'iAlbatros S.A.', hereinafter 'iAlbatros'), and to start searching for a business partner in order to carry out the transaction, subject to the General Meeting of Shareholders' consent for the transaction boundary conditions, as well as of recall of the 2017-2019 forecast for iAlbatros.

2. Previously communicated strategy assumptions

   The original assumptions of the strategy were presented in the current report No 11/2015 of 8 April 2015. One of the strategic goals indicated in the report was business concentration of the iAlbatros Company's activity and disposal of the majority of the remaining Capital Group's assets. On 18 June 2015, the General Meeting of Shareholders adopted a series of resolutions in the wording proposed by the Issuer's Management Board, as a result of implementation of which, inter alia: (i) the Issuer became the sole shareholder of iAlbatros before the end of 2015, (ii) the Issuer sold other significant assets of the capital group (including: disposal of 100% shares packages in Codemedia S.A. and SMT Software Services S.A.). A subsequent step was the change of the company name from SMT S.A. to iAlbatros Group S.A., notified by the Company in the current report No 67/2016 of 7 April 2016. In the current report No 11/2015, the Company published financial forecast for iAlbatros, which were then modified with the current report No 25/2016 of 27 January 2016.

3. Changes on the market

   In the opinion of the Issuer's Management Board, the market environment of iAlbatros underwent significant changes regarding the strategic conditions. The most important ones result from consolidation of the iAlbatros' competitive and partner companies on the main markets of its activity - including mainly the purchase of KDS (French supplier of an IT system for organisation of business trips, having significant share of the market) by the AMEX international travel agency. Following these consolidation processes, iAlbatros is subject to particularly strong pressure from large entities with global range of activity and complex offer, having incomparably larger financial resources.

   An important condition of the iAlbatros' activity is strong dependence of the business effectiveness on the possibilities of cooperation with partners, which are currently being taken over by the leaders of consolidation (an example may be the aforementioned KDS Company).

   These changes on the market may impact the iAlbatros' growth dynamics starting in the second half of 2017.

4. Recall of the iAlbatros' forecast for the years 2017-2019

   Due to the aforementioned changes on the market, the Issuer's Management Board recalls the 2017-2019 forecast for iAlbatros. At the same time, the Issuer's Management Board does not exclude publication of a new forecast for iAlbatros after the market situation becomes stable.

   The Issuer's Management Board sustains the forecast with regard to 2016.

5. Change of strategy

   In the opinion of the Issuer's Management Board, continuation of the hitherto business strategy based on organic development of iAlbatros is too conservative and, in the long perspective, it does not allow for the achievement of the company' strategic goals related to the entry on the global market and acquisition of a lasting market share. This opinion is above all due to the fact that the acceleration of changes in the market environment does not leave the company more than 2-3 years for building its global position, which in practice is not possible without significant additional funding that only a strategic partner may ensure.

   With respect to the foregoing and following informal invitations for negotiations that the company has been receiving for some time now, expressing interest in purchase of the iAlbatros' shares, the Issuer's Management Board has come to the conclusion that the most advantageous strategy for the Issuer's shareholders from the value point of view will be finding an industry or financial partner that will decide to buy the iAlbatros' shares from the Issuer.

   In the opinion of the Management Board, the rate of the consolidation changes on the market does not leave more than 12 months for preparation and performance of the transaction on advantageous conditions. Assuming such a time-frame will allow the use of pressure under which the current market consolidation leaders are operating and which will become weaker in time.

   Therefore, the Management Board informs that it intends to immediately start commercial negotiations with potential partners, including also conclusion of confidentiality contracts or contracts expressing intentions of the parties with potential partners. Information on the course of these talks will be published in compliance with the legal regulations in force.

6. Announcement of General Meeting convocation

In the opinion of the Management Board, the preliminary results of the market reconnaissance and assessment of the iAlbatros' value indicate the possibility for achievement of a satisfactory price. After the final elaboration of the market reconnaissance results, the Issuer's Management Board intends to convene a General Meeting of Shareholders and submit the recommended framework transaction conditions (the so-called term sheet) in the form of an appropriate resolution draft. The Management Board declares that it does not intend to contract any obligations to conclude a sales agreement without the General Meeting's earlier acceptance of the framework transaction conditions, although such consent is not required for the validity of transaction in the light of the Issuer's Statute's provisions. Furthermore, the Management Board will submit to the General Meeting recommendations on the ways to assign income from the possible transaction.

Legal basis: Article 17(1) of the Regulation No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.

Signatures: Moncef Khanfir - President of the Management Board Szymon Pura - Vice-President of the Management Board